[Federal Register Volume 65, Number 28 (Thursday, February 10, 2000)]
[Rules and Regulations]
[Pages 6698-6870]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-19]
[[Page 6697]]
-----------------------------------------------------------------------
Part II
Environmental Protection Agency
-----------------------------------------------------------------------
40 CFR Parts 80, 85, and 86
Control of Air Pollution From New Motor Vehicles: Tier 2 Motor Vehicle
Emissions Standards and Gasoline Sulfur Control Requirements; Final
Rule
Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 /
Rules and Regulations
[[Page 6698]]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 80, 85, and 86
[AMS-FRL-6516-2]
RIN 2060-AI23
Control of Air Pollution From New Motor Vehicles: Tier 2 Motor
Vehicle Emissions Standards and Gasoline Sulfur Control Requirements
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: Today's action finalizes a major program designed to
significantly reduce the emissions from new passenger cars and light
trucks, including pickup trucks, vans, minivans, and sport-utility
vehicles. These reductions will provide for cleaner air and greater
public health protection, primarily by reducing ozone and PM pollution.
The program is a comprehensive regulatory initiative that treats
vehicles and fuels as a system, combining requirements for much cleaner
vehicles with requirements for much lower levels of sulfur in gasoline.
A list of major highlights of the program appears at the beginning of
the SUPPLEMENTARY INFORMATION section of this Federal Register.
The program we are finalizing today will phase in a single set of
tailpipe emission standards that will, for the first time, apply to all
passenger cars, light trucks, and larger passenger vehicles operated on
any fuel. This set of ``Tier 2 standards'' is feasible and the use of a
single set of standards is appropriate because of the increased use of
light trucks for personal transportation. The miles traveled in light
trucks is increasing and the emissions from these vehicles are thus an
increasing problem. This approach builds on the recent technology
improvements resulting from the successful National Low-Emission
Vehicles (NLEV) program.
To enable the very clean Tier 2 vehicle emission control technology
to be introduced and to maintain its effectiveness, we are also
requiring reduced gasoline sulfur levels nationwide. The reduction in
sulfur levels will also contribute directly to cleaner air in addition
to its beneficial effects on vehicle emission control systems. Refiners
will generally install additional refining equipment to remove sulfur
in their refining processes. Importers of gasoline will be required to
import and market only gasoline meeting the sulfur standards. Today's
action also introduces an averaging, banking, and trading program to
provide flexibility for refiners and ease implementation of the
gasoline sulfur control program.
The overall program focuses on reducing the passenger car and light
truck emissions most responsible for causing ozone and particulate
matter problems. Without today's action, we project that emissions of
nitrogen oxides from these vehicles will represent as much as 40
percent of this ozone-forming pollutant in some cities, and almost 20
percent nationwide, by the year 2030.
Today's program will bring about major reductions in annual
emissions of these pollutants and also reduce the emissions of sulfur
compounds resulting from the sulfur in gasoline. For example, we
project a reduction in oxides of nitrogen emissions of at least 856,000
tons per year by 2007 and 1,236,000 by 2010, the time frame when many
states will have to demonstrate compliance with air quality standards.
Emission reductions will continue increasing for many years, reaching
at least 2,220,000 tons per year in 2020 and continuing to rise further
in future years. In addition, the program will reduce the contribution
of vehicles to other serious public health and environmental problems,
including VOC, PM, and regional visibility problems, toxic air
pollutants, acid rain, and nitrogen loading of estuaries.
Furthermore, we project that these reductions, and their resulting
environmental benefits, will come at an average cost increase of less
than $100 per passenger car, an average cost increase of less than $200
for light trucks, and an average cost increase of about $350 for
medium-duty passenger vehicles, and an average increase of less than 2
cents per gallon of gasoline (or about $120 over the life of an average
vehicle).
DATES: This rule is effective April 10, 2000.
The incorporation by reference of certain publications contained in
this rule are approved by the Director of the Federal Register as of
April 10, 2000.
ADDRESSES: Comments: All comments and materials relevant to today's
action have been placed in Public Docket No. A-97-10 at the following
address: U.S. Environmental Protection Agency (EPA), Air Docket (6102),
Room M-1500, 401 M Street, S.W., Washington, D.C. 20460. EPA's Air
Docket makes materials related to this rulemaking available for review
at the above address (on the ground floor in Waterside Mall) from 8:00
a.m. to 5:30 p.m., Monday through Friday, except on government
holidays. You can reach the Air Docket by telephone at (202) 260-7548
and by facsimile at (202) 260-4400. We may charge a reasonable fee for
copying docket materials, as provided in 40 CFR Part 2.
FOR FURTHER INFORMATION CONTACT: Carol Connell, U.S. EPA, National
Vehicle and Fuels Emission Laboratory, 2000 Traverwood, Ann Arbor MI
48105; Telephone (734) 214-4349, FAX (734) 214-4816, E-mail
[email protected].
SUPPLEMENTARY INFORMATION:
Highlights of the Tier2/Gasoline Sulfur Program
For cars, and light trucks, and larger passenger vehicles, the
program will--
Starting in 2004, through a phase-in, apply for the first
time the same set of emission standards covering passenger cars, light
trucks, and large SUVs and passenger vehicles. These emission levels
(``Tier 2 standards'') are feasible for these vehicles. The Tier 2
standards are also appropriate because of the increased use of light
trucks for personal transportation--the miles traveled in light trucks
is increasing and the emissions from these vehicles are thus an
increasing problem.
Introduce a new category of vehicles, ``medium-duty
passenger vehicles,'' thus bringing larger passenger vans and SUVs into
the Tier 2 program.
During the phase-in, apply interim fleet emission average
standards that match or are more stringent than current federal and
California ``LEV I'' (Low-Emission Vehicle, Phase I) standards.
Apply the same standards to vehicles operated on any fuel.
Allow auto manufacturers to comply with the very stringent
new standards in a flexible way while ensuring that the needed
environmental benefits occur.
Build on the recent technology improvements resulting from
the successful National Low-Emission Vehicles (NLEV) program and
improve the performance of these vehicles through lower sulfur
gasoline.
Set more stringent particulate matter standards.
Set more stringent evaporative emission standards.
For commercial gasoline, the program will--
Significantly reduce average gasoline sulfur levels
nationwide as early as 2000, fully phased in in 2006. Refiners will
generally add refining equipment to remove sulfur in their refining
processes. Importers of gasoline will be required to import and market
only gasoline meeting the sulfur limits.
[[Page 6699]]
Provide for flexible implementation by refiners through an
averaging, banking, and trading program.
Encourage early introduction of cleaner fuel into the
marketplace through an early sulfur credit and allotment program.
Apply temporary gasoline sulfur standards to certain small
refiners and gasoline marketed in a limited geographic area in the
western U.S.
Enable the new Tier 2 vehicles to meet the emission
standards by greatly reducing the degradation of vehicle emission
control performance from sulfur in gasoline. Lower sulfur gasoline also
appears to be necessary for the introduction of advanced technologies
that promise higher fuel economy but are very susceptible to sulfur
poisoning (for example, gasoline direct injection engines).
Reduce emissions from NLEV vehicles and other vehicles
already on the road.
Regulated Entities
This action will affect you if you produce new motor vehicles,
alter individual imported motor vehicles to address U.S. regulation, or
convert motor vehicles to use alternative fuels. It will also affect
you if you produce, distribute, or sell gasoline motor fuel.
The table below gives some examples of entities that may have to
comply with the regulations. But because these are only examples, you
should carefully examine these and existing regulations in 40 CFR parts
80 and 86. If you have questions, call the person listed in the FOR
FURTHER INFORMATION CONTACT section above.
----------------------------------------------------------------------------------------------------------------
Examples of potentially
Category NAICS codes SIC Codes \b\ regulated entities
------------------------------------------------------\a\-------------------------------------------------------
Industry...................................... 336111 3711 Motor Vehicle Manufacturers.
336112
336120
Industry...................................... 336311 3592 Alternative fuel vehicle
converters.
336312 3714
422720 5172
454312 5984
811198 7549
541514 8742
541690 8931
Industry...................................... 811112 7533 Commercial Importers of Vehicles
and Vehicle Components.
811198 7549
541514 8742
Industry...................................... 324110 2911 Petroleum Refiners.
Industry...................................... 422710 5171 Gasoline Marketers and
Distributors.
422720 5172
Industry...................................... 484220 4212 Gasoline Carriers.
484230 4213
----------------------------------------------------------------------------------------------------------------
\a\ North American Industry Classification System (NAICS).
\b\ Standard Industrial Classification (SIC) system code.
Access to Rulemaking Documents Through the Internet
Today's action is available electronically on the day of
publication from the Office of the Federal Register Internet Web site
listed below. Electronic copies of this preamble and regulatory
language as well as the Response to Comments document, the Regulatory
Impact Analysis and other documents associated with today's final rule
are available from the EPA Office of Mobile Sources Web site listed
below shortly after the rule is signed by the Administrator. This
service is free of charge, except any cost that you already incur for
connecting to the Internet.
Federal Register Web Site: http://www.epa.gov/docs/fedrgstr/epa-air/
(Either select a desired date or use the Search feature.)
Office of Mobile Sources (OMS) Web Site: http://www.epa.gov/oms/ (Look
in ``What's New'' or under the ``Automobiles'' topic.)
Please note that due to differences between the software used to
develop the document and the software into which the document may be
downloaded, changes in format, page length, etc., may occur.
Outline of This Preamble
I. Introduction
A. What Are the Basic Components of the Program?
1. Vehicle Emission Standards
2. Gasoline Sulfur Standards
B. What Is Our Statutory Authority for Today's Action?
1. Light-Duty Vehicles and Trucks
2. Gasoline Sulfur Controls
C. The Tier 2 Study and the Sulfur Staff Paper
D. Relationship of Diesel Fuel Sulfur Control to the Tier 2/
Gasoline Sulfur Program
II. Tier 2 Determination
A. There Is a Substantial Need for Further Emission Reductions
in Order To Attain and Maintain National Ambient Air Quality
Standards
B. More Stringent Standards for Light-Duty Vehicles and Trucks
Are Technologically Feasible
C. More Stringent Standards for Light-Duty Vehicles and Trucks
Are Needed and Cost Effective Compared to Available Alternatives
III. Air Quality Need For and Impact of Today's Action
A. Americans Face Serious Air Quality Problems That Require
Further Emission Reductions
B. Ozone
1. Background on Ozone Air Quality
2. Additional Emission Reductions Are Needed To Attain and
Maintain the Ozone NAAQS.
a. Summary
b. Ozone Modeling Presented in Our Proposal and Supplemental
Notice
c. Updated and Additional Ozone Modeling
d. Results and Conclusions
e. Issues and Comments Addressed
f. 8-Hour Ozone
3. Cars and Light-Duty Trucks Are a Big Part of the
NOX and VOC Emissions, and Today's Action Will Reduce
This Contribution Substantially
4. Ozone Reductions Expected From This Rule
C. Particulate Matter
1. Background on PM
2. Need for Additional Reductions to Attain and Maintain the
PM10 NAAQS
3. PM25 Discussion
4. Emission Reductions and Ambient PM Reductions
D. Other Criteria Pollutants: Carbon Monoxide, Nitrogen Dioxide,
Sulfur Dioxide
E. Visibility
[[Page 6700]]
F. Air Toxics
G. Acid Deposition
H. Eutrophication/Nitrification
I. Cleaner Cars and Light Trucks Are Critically Important to
Improving Air Quality
IV. What Are the New Requirements for Vehicles and Gasoline?
A. Why Are We Proposing Vehicle and Fuel Standards Together?
1. Feasibility of Stringent Standards for Light-Duty Vehicles
and Light-Duty Trucks a. Gasoline Fueled Vehicles i. LDVs and LDT1s-
LDT4s ii. Medium-Duty Passenger Vehicles (MDPVs) b. Diesel Vehicles
2. Gasoline Sulfur Control Is Needed To Support the Proposed
Vehicle Standards a. How Does Gasoline Sulfur Affect Vehicle
Emission Performance? b. How Large Is Gasoline Sulfur's Effect on
Emissions? c. Sulfur's Negative Impact on Tier 2 Catalysts d. Sulfur
Has Negative Impacts on OBD Systems
B. Our Program for Vehicles
1. Overview of the Vehicle Program a. Introduction b. Corporate
Average NOx Standard c. Tier 2 Exhaust Emission Standard ``Bins' d.
Schedules for Implementation i. Implementation Schedule for Tier 2
LDVs and LLDTs ii. Implementation Schedule for Tier 2 HLDTs e.
Interim Standards i. Interim Exhaust Emission Standards for LDV/
LLDTs ii Interim Exhaust Emission Standards for HLDTs iii. Interim
Programs Will Provide Reductions Over Previous Standards f.
Generating, Banking, and Trading NOx Credits
2. Why Are We Finalizing the Same Set of Standards for Tier 2
LDVs and LDTs?
3. Why Are We Finalizing the Same Standards for Both Gasoline
and Diesel Vehicles?
4. Key Elements of the Vehicle Program a. Basic Exhaust Emission
Standards and ``Bin'' Structure i. Why Are We Including Extra Bins?
b. The Program Will Phase In the Tier 2 Vehicle Standards Over
Several Years i. Primary Phase-in Schedule
ii. Alternative Phase-in Schedule
c. Manufacturers Will Meet a ``Corporate Average''
NOX Standard
d. Manufacturers Can Generate, Bank, and Trade NOX
Credits
i. General Provisions
ii. Averaging, Banking and Trading of NOX Credits
Fulfills Several Goals
iii. How Manufacturers Can Generate and Use NOX
Credits
iv. Manufacturers Can Earn and Bank Credits for Early
NOX Reductions
v. Tier 2 NOX Credits Will Have Unlimited Life
vi. NOX Credit Deficits Can Be Carried Forward
vii. Encouraging the Introduction of Ultra Clean Vehicles
e. Interim Standards
i. Interim Exhaust Emission Standards for LDV/LLDTs
ii. Interim Exhaust Emission Standards for HLDTs
f. Light-Duty Evaporative Emission Standards
g. Passenger Vehicles Above 8,500 Pounds GVWR
C. Our Program for Controlling Gasoline Sulfur
1. Gasoline Sulfur Standards for Refiners and Importers
a. Standards and Deadlines That Refiners/Importers Must Meet
i. What Are the Per-Gallon Caps on Gasoline Sulfur Levels in
2004 and Beyond?
ii. What Standards Must Refiners/Importers Meet on a Corporate
Average Basis?
iii. What Standards Must Be Met by Individual Refineries/
Importers?
b. Standards and Deadlines for Refiners/Importers Which Provide
Gasoline to the Geographic Phase-in Area (GPA)
i. Justification for Our Geographic Phase-in Approach
ii. What Is the Geographic Phase-in Area and How Was It
Established?
iii. Standards/Deadlines for Gasoline Sold in the Geographic
Phase-in Area
iv. What Are the Per-Gallon Caps on Gasoline Sulfur Levels in
the Phase-in Area?
v. How Do Refiners/Importers Account for GPA Fuel in Their
Corporate Average Calculations?
vi. How Do Refiners/Importers Apply for the Geographic Phase-in
Area Standards?
vii. How Will EPA Establish the GPA in Adjacent States?
c. How Does the Sulfur Averaging, Banking, and Trading Program
Work?
i. Generating Allotments Prior to 2004
ii. Generating Allotments in 2004 and 2005
iii. Using Allotments in 2004 and 2005
iv. How Long Do Allotments Last?
v. Establishing Individual Refinery Sulfur Baselines for Credit
Generation Purposes
vi. Generating Sulfur Credits Prior to 2004
vii. Generating Sulfur Credits in 2004 and Beyond
viii. Using Sulfur Credits
ix. How Long Do Credits Last?
x. Conversion of Allotments Into Credits
d. How are State Sulfur Programs Affected by EPA's Program?
2. Hardship Provision for Qualifying Refiners
a. Hardship Provision for Qualifying Small Refiners
i. How Are Small Refiners Defined?
ii. Standards That Small Refiners Must Meet
iii. How Do Small Refiners Apply for Small Refiner Status?
iv. How Do Small Refineries Apply for a Sulfur Baseline?
v. Volume Limitation on Use of a Small Refinery Standard
vi. Extensions Beyond 2007 for Small Refiners
vii. Can Small Refiners Participate in the ABT Program?
b. Temporary Waivers From Low Sulfur Requirements in Extreme
Unforeseen Circumstances
c. Temporary Waivers Based on Extreme Hardship Circumstances
3. Streamlining of Refinery Air Pollution Permitting Process
a. Brief Summary of Proposal
b. Significant Comments Received
c. Today's Action
i. Major New Source Review
ii. Environmental Justice
D. What Are the Economic Impacts, Cost Effectiveness and
Monetized Benefits of the Tier 2 Program?
1. What Are the Estimated Costs of the Vehicle Standards?
2. Estimated Costs of the Gasoline Sulfur Standards
3. What Are the Aggregate Costs of the Tier 2/Gasoline Sulfur
Final Rule?
4. How Does the Cost-Effectiveness of This Program Compare to
Other Programs?
a. Cost Effectiveness of this Program
b. How Does the Cost Effectiveness of This Program Compare With
Other Means of Obtaining Mobile Source NOX+NMHC
Reductions?
c. How Does the Cost Effectiveness of This Program Compare With
Other Known Non-Mobile Source Technologies for Reducing
NOX+NMHC?
5. Does the Value of the Benefits Outweigh the Cost of the
Standards?
a. What Is the Purpose of This Benefit-Cost Comparison?
b. What Was Our Overall Approach to the Benefit-Cost Analysis?
c. What Are the Significant Limitations of the Benefit-Cost
Analysis?
d. How Was the Benefit-Cost Analysis Changed From Proposal?
e. How Did We Perform the Benefit-Cost Analysis?
f. What Were the Results of the Benefit-Cost Analysis?
V. Other Vehicle-Related Provisions
A. Final Tier 2 CO, HCHO and PM Standards
1. Carbon Monoxide (CO) Standards
2. Formaldehyde (HCHO) Standards
3. Use of NMHC Data To Show Compliance With NMOG Standards;
Alternate Compliance With Formaldehyde Standards.
4. Particulate Matter (PM) Standards
B. Useful Life
1. Mandatory 120,000 Mile Useful Life
2. 150,000 Mile Useful Life Certification Option
C. Supplemental Federal Test Procedure (SFTP) Standards
1. Background
2. SFTP Under the NLEV Program
3. SFTP Standards for the Interim and Tier 2 LDVs and LDTs: As
Proposed
4. Final SFTP Standards for Interim and Tier 2 LDVs and LDTs
5. Adding a PM Standard to the SFTP Standards
6. Future Efforts Relevant to SFTP Standards
D. LDT Test Weight
E. Test Fuels
F. Changes to Evaporative Certification Procedures to Address
Impacts of Alcohol Fuels
G. Other Test Procedure Issues
H. Small Volume Manufacturers
1. Special Provisions for Independent Commercial Importers
(ICIs)
2. Hardship Provision for Small Volume Manufacturers
I. Compliance Monitoring and Enforcement
[[Page 6701]]
1. Application of EPA's Compliance Assurance Program, CAP2000
2. Compliance Monitoring
3. Relaxed In-Use Standards for Vehicles Produced During the
Phase-in Period
4. Enforcement of the Tier 2 and Interim Corporate Average
NOX Standards.
J. Addressing Environmentally Beneficial Technologies Not
Recognized by Test Procedures
K. Adverse Effects of System Leaks
L. The Future Development of Advanced Technology and the Role of
Fuels
M. Miscellaneous Provisions
VI. Gasoline Sulfur Program Compliance and Enforcement
Provisions
A. Overview
B. Requirements for Foreign Refiners and Importers
1. Requirements for Foreign Refiners With Individual Refinery
Sulfur Standards or Credit Generation Baselines
2. Requirements for Truck Importers
C. What Standards and Requirements Apply Downstream?
D. Testing and Sampling Methods and Requirements
1. Test Method for Sulfur in Gasoline
2. Test Method for Sulfur in Butane
3. Quality Assurance Testing
4. Requirement to Test Every Batch of Gasoline Produced or
Imported
5. Exceptions to the Every-Batch Testing Requirement
6. Sampling Methods
7. Gasoline Sample Retention Requirements
E. Federal Enforcement Provisions for California Gasoline and
for Use of California Test Methods to Determine Compliance
F. Recordkeeping and Reporting Requirements
1. Product Transfer Documents
2. Recordkeeping Requirements
3. Reporting Requirements
G. Exemptions for Research, Development, and Testing
H. Liability and Penalty Provisions for Noncompliance
I. How Will Compliance With the Sulfur Standards Be Determined?
VII. Public Participation
VIII. Administrative Requirements
A. Administrative Designation and Regulatory Analysis
B. Regulatory Flexibility
1. Potentially Affected Small Businesses
2. Small Business Advocacy Review Panel and the Evaluation of
Regulatory Alternatives
C. Paperwork Reduction Act
D. Intergovernmental Relations
1. Unfunded Mandates Reform Act
2. Executive Order 13084: Consultation and Coordination With
Indian Tribal Governments
3. Executive Order 13132 (Federalism)
E. National Technology Transfer and Advancement Act
F. Executive Order 13045: Children's Health Protection
G. Congressional Review Act
IX. Statutory Provisions and Legal Authority
I. Introduction
Since the passage of the 1990 Clean Air Act Amendments, the U.S.
has made significant progress in reducing emissions from passenger cars
and light trucks. The National Low-Emission Vehicle (NLEV) and
Reformulated Gasoline (RFG) programs are important examples of control
programs that are in place and will continue to help reduce car and
light-duty truck emissions into the near future.
Nonetheless, due to increasing vehicle population and vehicle miles
traveled, passenger cars and light trucks will continue to be
significant contributors to air pollution inventories well into the
future. In fact, the emission contribution of light trucks and sport
utility vehicles now matches that of passenger cars. (This is occurring
because of the combination of growth in miles traveled by light trucks
and the fact that their emission standards are currently less stringent
than those of passenger cars). The program we describe below builds on
the NLEV and RFG Phase II programs to develop a strong new national
program to protect public health and the environment well into the next
century. The program, while reducing VOC and other emissions, focuses
especially on NOX, because that is where the largest air
quality gains can be achieved.
We have followed several overarching principles in developing this
final rule:
Design a strong national program that will assist states
in every region of the country to meet their air quality objectives and
that will ensure that cars and trucks continue to contribute a fair
share to our nation's overall air quality solutions;
View vehicles and fuels as an integrated system,
recognizing that only by addressing both can the best overall emission
performance be achieved;
Establish a single set of emission standards that apply
regardless of the fuel used and whether the vehicle is a car, a light
truck, or a larger passenger vehicle;
Provide compliance flexibilities that allow vehicle
manufacturers and oil refiners to adjust to future market trends and
honor consumer preferences;
Not preclude the development of advanced low emission or
fuel efficient technologies such as lean-burn engines; and
Ensure sufficient leadtime for phase-in of the Tier 2 and
gasoline sulfur program.
With these principles as background, we turn now to an overview of
the vehicle and fuel aspects of the program. Sections I and II of this
preamble will give you a brief overview of our program and our
rationale for implementing it. Subsequent sections will expand on the
air quality need, technological feasibility, economic impacts, and
provide a detailed description of the specifics of the program. A
public participation section reviews the process we followed in
soliciting and responding to public comment. The final sections deal
with several administrative requirements. You may also want to review
our Final Regulatory Impact Analysis (RIA) and our Response to Comments
document, both of which are found in the docket and on the Internet.
They provide additional analyses and discussions of many topics raised
in this preamble.
A. What Are the Basic Components of the Program?
The nation's air quality, while certainly better than in the past,
will nevertheless continue to expose tens of millions of Americans to
unhealthy levels of air pollution well into the future in the absence
of significant new controls on emissions from motor vehicles. EPA is
therefore finalizing a major, comprehensive program designed to reduce
emission standards for passenger cars, light trucks, and large
passenger vehicles (including sport-utility vehicles, minivans, vans,
and pickup trucks) and to reduce the sulfur content of gasoline. Under
the program, automakers will produce vehicles designed to have very low
emissions when operated on low-sulfur gasoline, and oil refiners will
provide that much cleaner gasoline nationwide. In this preamble, we
refer to the comprehensive program as the ``Tier 2/Gasoline Sulfur
program.''
1. Vehicle Emission Standards
Today's action sets new federal emission standards (``Tier 2
standards'') for passenger cars, light trucks, and larger passenger
vehicles. The program is designed to focus on reducing the emissions
most responsible for the ozone and particulate matter (PM) impact from
these vehicles--nitrogen oxides (NOX) and non-methane
organic gases (NMOG), consisting primarily of hydrocarbons (HC) and
contributing to ambient volatile organic compounds (VOC). The program
will also, for the first time, apply the same set of federal standards
to all passenger cars, light trucks, and medium-duty passenger
vehicles. Light trucks include ``light light-duty trucks'' (or LLDTs),
rated at less than 6000 pounds gross vehicle weight and ``heavy light-
duty trucks'' (or HLDTs), rated at more than 6000
[[Page 6702]]
pounds gross vehicle weight).\1\ ``Medium-duty passenger vehicles'' (or
MDPVs) form a new class of vehicles introduced by this rule that
includes SUVs and passenger vans rated at between 8,500 and 10,000
GVWR. The program thus ensures that essentially all vehicles designed
for passenger use in the future will be very clean vehicles.
---------------------------------------------------------------------------
\1\ A vehicle's ``Gross Vehicle Weight Rating,'' or GVWR, is the
curb weight of the vehicle plus its maximum recommended load of
passengers and cargo.
---------------------------------------------------------------------------
The Tier 2 standards finalized today will reduce new vehicle
NOX levels to an average of 0.07 grams per mile (g/mi). For
new passenger cars and light LDTs, these standards will phase in
beginning in 2004, with the standards to be fully phased in by 2007.\2\
For heavy LDTs and MDPVs, the Tier 2 standards will be phased in
beginning in 2008, with full compliance in 2009.
---------------------------------------------------------------------------
\2\ By comparison, the NOX standards for the National
Low Emission Vehicle (NLEV) program, which will be in place
nationally in 2001, range from 0.30 g/mi for passenger cars to 0.50
g/mi for medium-sized light trucks (larger light trucks are not
covered). For further comparison, the standards met by today's Tier
1 vehicles range from 0.60 g/mi to 1.53 g/mi.
---------------------------------------------------------------------------
During the phase-in period from 2004-2007, all passenger cars and
light LDTs not certified to the primary Tier 2 standards will have to
meet an interim average standard of 0.30 g/mi NOX,
equivalent to the current NLEV standards for LDVs and more stringent
than NLEV for LDT2s (e.g., minivans).\3\ During the period 2004-2008,
heavy LDTs and MDPVs not certified to the final Tier 2 standards will
phase in to an interim program with an average standard of 0.20 g/mi
NOX, with those not covered by the phase-in meeting a per-
vehicle standard (i.e., an emissions ``cap'') of 0.6 g/mi
NOX (for HLDTs) and 0.9 g/mi NOX (for MDPVs). The
average standards for NOX will allow manufacturers to comply
with the very stringent new standards in a flexible way, assuring that
the average emissions of a company's production meet the target
emission levels while allowing the manufacturer to choose from several
more- and less-stringent emission categories for certification.
---------------------------------------------------------------------------
\3\ There are also NMOG standards associated with both the
interim and Tier 2 standards. The NMOG standards vary depending on
which of various individual sets of emission standards manufacturers
choose to use in complying with the average NOX standard.
This ``bin'' approach is described more fully in section IV.B. of
this preamble.
---------------------------------------------------------------------------
We are also setting stringent particulate matter standards that
will be especially important if there is substantial future growth in
the sales of diesel vehicles. Before 2004, we are establishing more
stringent interim PM standards for most light trucks than exist now
under NLEV. With higher sales of diesel cars and light trucks, they
could easily contribute between one-half and two percent of the PM10
concentration allowed by the NAAQS, with some possibility that the
contribution could be as high as 5 to 40 percent in some roadside
situations with heavy traffic. These increases would make attainment
even more difficult for 8 counties which we already predict to need
further emission reductions even without an increase in diesel sales,
and would put at risk another 18 counties which are now within 10
percent of a NAAQS violation. Thus, by including a more stringent PM
standard in the program finalized today, we help address environmental
concerns about the potential growth in the numbers of light-duty
diesels on the road--even if that growth is substantial. The new
requirements also include more stringent hydrocarbon controls (exhaust
NMOG and evaporative emissions standards). We will also monitor the
progress of the development of advanced technologies and the role of
fuels.
2. Gasoline Sulfur Standards
The other major part of today's action will significantly reduce
average gasoline sulfur levels nationwide. We expect these reductions
could begin to phase in as early as 2000, with full compliance for most
refiners occurring by 2006. Refiners will generally install advanced
refining equipment to remove sulfur during the production of gasoline.
Importers of gasoline will be required to import and market only
gasoline meeting the sulfur limits. Temporary, less stringent standards
will apply to a few small refiners through 2007. In addition,
temporary, less stringent standards will apply to a limited geographic
area in the western U.S. for the 2004-2006 period.
This significant new control of gasoline sulfur content will have
two important effects. The lower sulfur levels will enable the much-
improved emission control technology necessary to meet the stringent
vehicle standards of today's rule to operate effectively over the
useful life of the new vehicles. In addition, as soon as the lower
sulfur gasoline is available, all gasoline vehicles already on the road
will have reduced emissions--from less degradation of their catalytic
converters and from fewer sulfur compounds in the exhaust.
Today's action will encourage refiners to reduce sulfur in gasoline
as early as 2000. The program requires that most refiners and importers
meet a corporate average gasoline sulfur standard of 120 ppm and a cap
of 300 ppm beginning in 2004. By 2006, the cap will be reduced to 80
ppm and most refineries must produce gasoline averaging no more than 30
ppm sulfur. The program builds upon the existing regulations covering
gasoline composition as it relates to emissions performance. It
includes provisions for trading of sulfur credits, increasing the
flexibility available to refiners for complying with the new
requirements. We intend for the credit program to ease compliance
uncertainties by providing refiners the flexibility to phase in early
controls in 2000-2003 and use credits gained in these years to delay
some control until as late as 2006. As finalized today, the program
will achieve the needed environmental benefits while providing
substantial flexibility to refiners.
B. What Is Our Statutory Authority for Today's Action?
1. Light-Duty Vehicles and Trucks
We are setting motor vehicle emission standards under the authority
of section 202 of the Clean Air Act. Sections 202(a) and (b) of the Act
provide EPA with general authority to prescribe vehicle standards,
subject to any specific limitations otherwise included in the Act.
Sections 202(g) and (h) specify the current standards for LDVs and
LDTs, which became effective beginning in model year 1994 (``Tier 1
standards'').
Section 202(i) of the Act provides specific procedures that EPA
must follow to determine whether standards more stringent than Tier 1
standards for LDVs and certain LDTs \4\ are appropriate beginning
between the 2004 and 2006 model years.\5\ Specifically, we are required
to first issue a study regarding ``whether or not further reductions in
emissions from light-duty vehicles and light-duty trucks should be
required * * *'' (the ``Tier 2 Study''). This study ``shall examine the
need for further reductions in emissions in order to attain or maintain
the national ambient air quality standards.'' It is also to consider:
(1) The availability of technology to meet more stringent standards,
taking cost, lead time, safety, and energy impacts into consideration;
and (2) the need for, and cost effectiveness of, such standards,
including consideration of alternative methods of attaining or
maintaining the national ambient air quality standards. A certain set
of ``default'' emission
[[Page 6703]]
standards for these vehicle classes is among those options for new
standards that EPA is to consider.
---------------------------------------------------------------------------
\4\ LDTs with a loaded vehicle weight less than or equal to 3750
pounds, called LDT1s and LDT2s.
\5\ Section 202(b)(1)(C) forbids EPA from promulgating mandatory
standards more stringent than Tier 1 standards until the 2004 model
year.
---------------------------------------------------------------------------
After the study is completed and the results are reported to
Congress, EPA is required to determine by rulemaking whether: (1) There
is a need for further emission reductions; (2) the technology for more
stringent emission standards from the affected classes is available;
and (3) such standards are needed and cost-effective, taking into
account alternatives. If EPA answers ``yes'' to these questions, then
the Agency is to promulgate new, more stringent motor vehicle standards
(``Tier 2 standards'').
EPA submitted its report to Congress on July 31, 1998. Today's
final rule makes affirmative responses to the three questions above
(see Section II below) and sets new standards that are more stringent
than the default standards in the Act.
EPA is also setting standards for larger light-duty trucks and
MDPVs under the general authority of Section 202(a)(1) and 202(b) and
under Section 202(a)(3) of the Act, which requires that standards
applicable to emissions of hydrocarbons, NOX, CO and PM from
heavy-duty vehicles \6\ reflect the greatest degree of emission
reduction available for the model year to which such standards apply,
giving appropriate consideration to cost, energy, and safety. We are
also setting standards for formaldehyde under our authority in sections
202(a) and (l).
---------------------------------------------------------------------------
\6\ LDTs that have gross vehicle weight ratings above 6000
pounds are considered ``heavy-duty vehicles'' under the Act. See
section 202(b)(3). For regulatory purposes, we refer to these LDTs
as ``heavy light-duty trucks'' made up of LDT3s and LDT4s.
---------------------------------------------------------------------------
2. Gasoline Sulfur Controls
We are adopting gasoline sulfur controls pursuant to our authority
under Section 211(c)(1) of the Clean Air Act.\7\ Under Section
211(c)(1), EPA may adopt a fuel control if at least one of the
following two criteria is met: (1) The emission products of the fuel
cause or contribute to air pollution which may reasonably be
anticipated to endanger public health or welfare; or (2) the emission
products of the fuel will significantly impair emissions control
systems in general use or which will be in general use were the fuel
control to be adopted.
---------------------------------------------------------------------------
\7\ We currently have regulatory requirements for conventional
and reformulated gasoline adopted under Sections 211(c) and 211(k)
of the Act, in addition to the ``substantially similar''
requirements for fuel additives of Section 211(f). These
requirements have the effect of limiting sulfur levels in gasoline
to some extent. See the Final RIA for more details.
---------------------------------------------------------------------------
We are adopting gasoline sulfur controls based on both of these
criteria. Under the first criterion, we believe that sulfur in gasoline
used in Tier 1 and LEV technology vehicles contributes to ozone
pollution, air toxics, and PM. Under the second criterion, we believe
that gasoline sulfur in fuel will significantly impair the emissions
control systems expected to be used in Tier 2 technology vehicles, as
well as emissions control systems currently used in LEVs. Please refer
to Section IV.C. below and to the Final Regulatory Impact Analysis
(RIA) for more details of our analysis and findings. The RIA includes a
more detailed discussion of EPA's authority to set gasoline sulfur
standards, including a discussion of our conclusions relating to the
factors required to be considered under Section 211(c).
C. The Tier 2 Study and the Sulfur Staff Paper
On July 31, 1998, EPA submitted its report to Congress containing
the results of the Tier 2 study.\8\ The study indicated that in the
2004 and later time frame, there will be a need for emission reductions
to aid in meeting and maintaining the National Ambient Air Quality
Standards (NAAQS) for both ozone and PM. Air quality modeling showed
that in the 2007-2010 time frame, when Tier 2 standards will become
fully effective, a number of areas will still be in nonattainment for
ozone and PM even after the implementation of existing emission
controls. The study also noted the continued existence of carbon
monoxide (CO) nonattainment areas. It also found ample evidence that
technologies will be available to meet more stringent Tier 2 standards.
In addition, the study provided evidence that such standards could be
implemented at a similar cost per ton of reduced pollutants as other
programs aimed at similar air quality problems. Finally, the study
identified several additional issues in need of further examination,
including the relative stringency of car and light truck emission
standards, the appropriateness of identical versus separate standards
for gasoline and diesel vehicles, and the effects of sulfur in gasoline
on catalyst efficiency. Section IV of this preamble describes the steps
we have taken to follow up on the Tier 2 Study.
---------------------------------------------------------------------------
\8\ On April 28, 1998, EPA published a notice of availability
announcing the release of a draft of the Tier 2 study and requesting
comments on the draft. The final report to Congress included a
summary and analysis of the comments EPA received.
---------------------------------------------------------------------------
In addition, on May 1, 1998, EPA released a staff paper presenting
EPA's understanding of the impact of gasoline sulfur on emissions from
motor vehicles and exploring what gasoline producers and automobile
manufacturers could do to reduce sulfur's impact on emissions. The
staff paper noted that gasoline sulfur degrades the effectiveness of
catalytic converters and that high sulfur levels in commercial gasoline
could affect the ability of future automobiles--especially those
designed for very low emissions--to meet more stringent standards in
use. It also pointed out that sulfur control will provide additional
benefits by lowering emissions from the current fleet of vehicles.
D. Relationship of Diesel Fuel Sulfur Control to the Tier 2/Gasoline
Sulfur Program
In the NPRM, we raised the question of what if any changes to
diesel fuel may be needed to enable diesel vehicles to meet the Tier 2
standards or any future heavy-duty diesel engine standards.
Specifically, we raised the question of whether diesel sulfur levels
need to be controlled. Since diesel fuel controls of any kind would
have an impact on the refinery as a whole, and since in some cases
(including potential diesel sulfur limits) could have implications for
gasoline sulfur control, we requested comment on this issue in our
proposal. We also indicated that we planned to release an Advance
Notice of Proposed Rulemaking to solicit more information on this
subject.
We published the ANPRM on May 13, 1999 (64 FR 26142). We are in the
process of considering all of the comments received in response to the
ANPRM and plan to issue a Notice of Proposed Rulemaking (NPRM) in early
spring of 2000. We received many comments on the subject of diesel fuel
control along with the comments submitted on the proposed Tier 2/
Gasoline Sulfur regulations. We have prepared brief responses to some
of these comments in the Response to Comments document, and will deal
fully with these comments as part of the forthcoming NPRM on diesel
fuel. We are taking no action on diesel fuel as part of today's action.
II. Tier 2 Determination
Based on the statutory requirements described above and the
evidence provided in the Tier 2 Study and since its release, as
described elsewhere in this preamble, EPA has determined that new, more
stringent emission standards are indeed needed, technologically
feasible, and cost effective.
[[Page 6704]]
A. There Is a Substantial Need for Further Emission Reductions in Order
to Attain and Maintain National Ambient Air Quality Standards
EPA finds that there is a clear air quality need for new emission
standards, based on the continuing air quality problems predicted to
exist in future years. As the discussion in Section III.B. illustrates,
26 metropolitan areas are each certain or highly likely to need
additional reductions. These areas are distributed across most regions
of the U.S., and have a combined population of over 86 million. Section
III.B. also shows that an additional 12 areas each has a moderate to
significant probability of needing additional reductions, representing
another 25 million people. This provides ample evidence that further
emission reductions are needed to meet the 1-hour ozone NAAQS.
In addition to these ozone concerns, our analysis of
PM10 monitoring data and PM10 projections
indicates that 15 PM10 nonattainment counties violated the
PM10 NAAQS in recent years, and that 8 of them with a 1996
population of almost 8 million have a high risk of failing to attain
and maintain without more emission reductions. Eighteen other counties,
with a population of 23 million have a significant risk of failing or
are within 10 percent of violating the PM10 NAAQS. It is
also important to recognize that nonattainment areas remain for other
criteria pollutants (e.g., CO) and that non-criteria pollution (e.g.,
air toxics and regional haze) also contributes to environmental and
health concerns.
B. More Stringent Standards for Light-Duty Vehicles and Trucks Are
Technologically Feasible
We find that emission standards significantly more stringent than
current Tier 1 and National Low Emission Vehicle (NLEV) levels are
technologically feasible. This is true both for the LDVs and LDTs
specifically covered in section 202(i) and for the medium-duty
passenger vehicles also included in today's final rule. Manufacturers
are currently producing NLEV vehicles that meet more stringent
standards than similar Tier 1 models. Our analysis shows that mainly
through improvements in engine control software and catalytic converter
technology, manufacturers can build and are building durable vehicles
and trucks, including heavy light-duty trucks, which have very low
emission levels.\9\ Section IV.A. below discusses our feasibility
conclusions in more detail.
---------------------------------------------------------------------------
\9\ The Final RIA contains a more detailed analysis, and Section
IV.A. below has further discussion of the technological feasibility
of our standards including detailed discussions of the various
technology options that we believe manufacturers may use to meet
these standards.
---------------------------------------------------------------------------
Many current production vehicles are already certified at or near
the Tier 2 standards. For year 2000 certification (although not yet
complete), over 50 vehicle models have emissions at or below Tier 2
levels. In addition, we performed a demonstration program at our EPA
laboratory that showed that even large vehicles, which would be
expected to face the toughest challenges reaching Tier 2 emission
levels, can do so with conventional technology. Others, including the
Manufacturers of Emission Controls Association (MECA) and the State of
California, have also performed demonstration programs, with similar
results. Manufacturers have also certified LDVs and LDTs to NMOG and CO
levels as much as 80 percent below Tier 1 standards. Furthermore, for
passenger vehicles greater than 8500 lbs GVWR, we believe that by using
technologies and control strategies similar to what will be used on
lighter vehicles, manufacturers will be able to meet the Tier 2
emission standards.
Thus, we believe that, by the 2004-2009 time frame, manufacturers
will be fully able to comply with the new Tier 2 emission standard
levels. In addition, to facilitate manufacturers' efforts to meet these
new standards, the Tier 2 regulations include a phase-in over several
years and a corporate fleet average NOX standard, which will
allow manufacturers to optimize the deployment of technology across
their product lines with no loss of environmental benefit. Our analysis
of the available technology improvements and the very low emission
levels already being realized on these vehicles leads us to find that
the standards adopted today are fully feasible for LDVs and LDTs.
C. More Stringent Standards for Light-Duty Vehicles and Trucks Are
Needed and Cost Effective Compared to Available Alternatives
In this action, we also find that more stringent motor vehicle
standards are both necessary and cost effective. As discussed above,
substantial further reductions in emissions are needed to help reduce
the levels of unhealthy air pollution to which millions of people are
being exposed; in particular, we expect that a number of areas will not
attain or maintain compliance with the National Ambient Air Quality
Standards for ozone and PM10 without such reductions. (We
describe this further in Section III below and in the RIA.)
Furthermore, mobile sources are important contributors to the air
quality problem. As we will explain more fully later in this preamble,
in the year 2030, the cars and light trucks that are the subject of
today's final rule are projected to contribute as much as 40 percent of
the total NOX inventory in some cities, and almost 20
percent of nationwide NOX emissions. This situation would
have been considerably worse without the NLEV program created by
vehicle manufacturers, EPA, the Northeastern states, and others.
These emission reductions are clearly necessary to meet and
maintain the 1-hour ozone NAAQS. We project that while the emission
reductions of this program will lead to substantial progress in meeting
and maintaining the NAAQS, many areas will still not come into
attainment even with this magnitude of reductions.
We find that the Tier 2/Gasoline Sulfur program is a reasonable,
cost-effective method of providing substantial progress towards
attainment and maintenance of the NAAQS, costing about $2000 per ton of
NOX plus hydrocarbon emissions reduced. This program will
reduce annual NOX emissions by about 2.2 million tons per
year in 2020 and 2.8 million tons per year in 2030 after the program is
fully implemented. By way of comparison, when EPA established its 8-
hour NAAQS for ozone, we identified several types of emission control
programs that were reasonably cost effective. If all of the controls
identified in that analysis costing less than $10,000/ton were
implemented nationwide, they would produce NOX emission
reductions of about 2.9 million tons per year. (That is, to achieve
about the same emission reductions as the Tier 2/Gasoline Sulfur
program, other alternative measures would have a significantly higher
cost per ton). These emission reductions are clearly necessary to meet
and maintain the one-hour ozone NAAQS. We project that while the
emission reductions of this program will lead to substantial progress
in meeting and maintaining the NAAQS, many areas will still not come
into attainment even with this magnitude of reductions.
In addition, the magnitude of emission reductions that can be
achieved by a comprehensive national Tier 2/Gasoline Sulfur program
will be difficult to achieve from any other source category. Given the
large contribution that light-duty mobile source emissions make to the
national emissions inventory and the range of control programs ozone-
affected areas
[[Page 6705]]
already have in place or would be expected to implement, we believe it
will be very difficult, if not impossible, to meet (and maintain) the
ozone NAAQS in a cost-effective manner without large emission
reductions from LDVs and LDTs. We expect emissions from MDPVs to also
play an increasing role.
Furthermore, we project that the Tier 2/Gasoline Sulfur program
will significantly reduce direct and secondary particulate matter
coming from LDVs, LDTs, and MDPVs--by about 36,000 tons per year of
direct PM alone by 2030; large secondary PM reductions from
significantly lower NOX and SOX emissions will
add to the overall positive impact on airborne particles. These
reductions will be very cost-effective compared to other measures to
reduce PM pollution. Because direct PM emissions from gasoline vehicles
are related the presence of sulfur in gasoline, no new emission control
devices, beyond what manufacturers are expected to install to meet the
NOX and NMOG standards, will be necessary to provide the
reductions expected for these pollutants under the program. The
standards will provide valuable insurance against increases in PM
emissions from LDVs, LDTs, and MDPVs.
Finally, the Tier 2/Gasoline Sulfur program will significantly
reduce CO emissions from LDVs, LDTs, and MDPVs. (See Chapter III of the
RIA for an analysis of these reductions.) The technical changes needed
to meet the NMOG standards will also result in CO reductions sufficient
to meet the CO standards. Thus, these CO reductions will be very cost-
effective since they will not require any new emission control devices
beyond what manufacturers are expected to install to meet the
NOX and NMOG standards.
We conclude, then, that today's final rule is a major source of
ozone precursor, PM, and CO emission reductions when compared to other
available options. The discussions of cost and cost effectiveness later
in this preamble and in the RIA explain the derivation of cost
effectiveness estimates and compares them to the cost effectiveness of
other alternatives. That discussion indicates that this program will
have a cost effectiveness comparable to both the Tier 1 and NLEV
standards and will also be cost effective when compared to non-mobile
source programs.
III. Air Quality Need For and Impact Of Today's Action
In the absence of significant new controls on emission, tens of
millions of Americans would continue to be exposed to unhealthy levels
of air pollution. Emissions from passenger cars and light trucks are a
significant contributor to a number of air pollution problems. Today's
action will significantly reduce emissions from cars and light trucks
and hence will significantly reduce the health risks posed by air
pollution. This section summarizes the results of the analyses we
performed to arrive at our determination that continuing air quality
problems are likely to exist, that these air quality problems would be
in part due to emissions from cars and light trucks, and that the new
standards promulgated by today's final rule will improve air quality
and mitigate other environmental problems.
A. Americans Face Serious Air Quality Problems That Require Further
Emission Reductions
Air quality in the United States continues to improve. Nationally,
the 1997 air quality levels were the best on record for all six
criteria pollutants. \10\ In fact, the 1990s have shown a steady trend
of improvement, due to reductions in emissions from most sources of air
pollution, from factories to motor vehicles. Despite great progress in
air quality improvement, in 1997 there were still approximately 107
million people nationwide who lived in counties with monitored air
quality levels above the primary national air quality standards. \11\
There are also people living in counties outside of the air monitoring
network where violations of the NAAQS could have also occurred during
the year. Moreover, unless there are reductions in overall emissions
beyond those that are scheduled to be achieved by already committed
controls, many of these Americans will continue to be exposed to
unhealthy air.
---------------------------------------------------------------------------
\10\ National Air Quality and Emissions Trend Report, 1997, Air
Quality Trends Analysis Group, Office of Air Quality Planning and
Standards, U.S. Environmental Protection Agency, Research Triangle
Park, N.C., December 1998 (available on the World Wide Web at http:/
/www/epa.gov/oar/aqtrnd97/).
\11\ U.S. Environmental Protection Agency, Latest Findings on
National Air Quality: 1997 Status and Trends. December 1998.
---------------------------------------------------------------------------
Ambient ozone is formed in the lower atmosphere through a complex
interaction of VOC and NOX emissions. Cars and light trucks
emit a substantial fraction of these emissions. Ambient PM is emitted
directly from cars and light trucks; it also forms in the atmosphere
from NOX, sulfur oxides (SOX), and VOC, all of
which are emitted by motor vehicles. When ozone exceeds the air quality
standards, otherwise healthy people often have reduced lung function
and chest pain, and hospital admissions for people with respiratory
ailments like asthma increase; for longer exposures, permanent lung
damage can occur. Similarly, fine particles can penetrate deep into the
lungs. Results of studies suggest a likely causal role of ambient PM in
contributing to reported effects, such as: premature mortality,
increased hospital admissions, increased respiratory symptoms, and
changes in lung tissue. When either ozone or PM air quality problems
are present, those hardest hit tend to be children, the elderly, and
people who already have health problems.
The health effects of high ozone and PM levels are not the only
reason for concern about continuing air pollution. Ozone and PM also
harm plants and damage materials. PM reduces visibility and contributes
to significant visibility impairment in our national parks and
monuments and in many urban areas. In addition, air pollution from
motor vehicles contributes to cancer and other health risks,
acidification of lakes and streams, eutrophication of coastal and
inland waters, and elevated drinking water nitrate levels. These
problems impose a substantial burden on public health, our economy, and
our ecosystems.
In recognition of this burden, Congress has passed and subsequently
amended the Clean Air Act. The Clean Air Act requires each state to
have an approved State Implementation Plan (SIP) that shows how an area
plans to meet its air quality obligations, including achieving and then
maintaining attainment of all of the National Ambient Air Quality
Standards (NAAQS), such as those for ozone and PM. The Clean Air Act
also requires EPA to periodically re-evaluate the NAAQS in light of new
scientific information. Our most recent re-evaluation of the ozone and
PM NAAQS led us to revise both standards (62 FR 38856, July 18, 1997
and 62 FR 38652, July 18, 1997). These revised standards reflected
additional information that had become available since the previous
revision of the ozone and PM standards, respectively.
On May 14, 1999, a panel of the United States Court of Appeals for
the District of Columbia Circuit reviewed EPA's revisions to the ozone
and PM NAAQS and found, by a 2-1 vote, that sections 108 and 109 of the
Clean Air Act, as interpreted by EPA, represent unconstitutional
delegations of Congressional power. American Trucking Ass'n., Inc. et
al., v. Environmental Protection Agency, 175 F.3d 1027 (D.C. Cir.
1999). Among other things the Court remanded the record
[[Page 6706]]
for the 8-hour ozone NAAQS and the PM2.5 NAAQS to EPA. On
October 29, 1999, EPA's petition for rehearing by the three judge panel
was denied, with the exception that the panel modified its prior ruling
regarding EPA's authority to implement a revised ozone NAAQS under Part
D subpart 2 of Title I. EPA's petition for rehearing en banc by the
full Circuit was also denied, although five of the nine judges
considering the petition agreed to rehear the case.
As a result of the Court's decision, requirements on the States to
implement the new 8-hour ozone standard have been suspended although
the standard itself is still in force and the science behind it has
generally not been contradicted. The court also did not question EPA's
findings regarding the health effects of PM10 and
PM2.5. However, due to the uncertainty regarding the status
of the new NAAQS, we will rely on the preexisting NAAQS in determining
air quality need under section 202(i) of the Act.
Carbon monoxide (CO) can cause serious health effects for those who
suffer from cardiovascular disease, such as angina pectoris. There has
been considerable progress in attaining the longstanding NAAQS for
carbon monoxide, largely through more stringent standards for CO from
motor vehicles. This progress has been made despite large increases in
travel by vehicle. In 1997, there were about 9 million people living in
three counties with CO concentrations above the level of the CO NAAQS.
In the recent past, this figure has fluctuated up and down. At the
present time there are 15 counties classified as serious CO
nonattainment areas, all with a recent history of NAAQS violations. At
this time, prospects for these areas attaining by the serious CO area
attainment deadline of December 31, 2000 are uncertain. While
violations of the NAAQS have not occurred recently in most of the other
33 counties still classified as nonattainment, even these must
demonstrate that they will remain safely below the NAAQS for ten years
despite expected growth in vehicle travel and other sources of CO
emissions before they can be reclassified to attainment. Because of the
large role of motor vehicles in causing high ambient CO concentrations,
where there is reason to be concerned about CO attainment and
maintenance, local areas look to national emission standards for most
of the solution.
As discussed below, EPA has also finalized regulations that regions
and states implement plans for protecting and improving visibility in
the 156 mandatory Federal Class I areas as defined in Section 162(a) of
the Clean Air Act. These areas are primarily national parks and
wilderness areas.
To accomplish the goal of full attainment in all areas according to
the schedules for the various NAAQS, and to achieve the goals of the
visibility program, the federal government must assist the states by
reducing emissions from sources that are not as practical to control at
the state level as at the federal level. Vehicles and fuels move freely
among the states, and they are produced by national or global scale
industries. Most individual states are not in a position to regulate
these industries effectively and efficiently. The Clean Air Act
therefore gives EPA primary authority to regulate emissions from the
various types of highway vehicles and their fuels. Our actions to
reduce emissions from these and other national sources are a crucial
and essential complement to actions by states to reduce emissions from
more localized sources.
If we were not to adopt new standards to reduce emissions from cars
and light trucks, emissions from these vehicles would remain a large
portion of the emissions burden that causes elevated ozone and
continued nonattainment with the ozone NAAQS, which in turn would
affect tens of millions of Americans. Because the contribution of cars
and light trucks to both local emissions and transported pollution
would be so great, and the expected emission reduction shortfall in
many areas is so large, further reductions from cars and light trucks
will be an important element of many attainment strategies, especially
for ozone in the 2007 to 2010 time frame. The contribution of these
vehicles to PM exposure and PM nonattainment would also remain
significant, and would increase considerably if diesel engines are used
in more cars or light trucks. Furthermore, without new standards,
steady annual increases in fleet size and miles of travel would
outstrip the benefits of current emission controls, and would cause
ozone-forming emissions from cars and trucks to grow each year starting
about 2013.
The standards being promulgated by today's actions will reduce
emissions of ozone precursors and PM precursors from cars and light
trucks greatly. However, even with this decrease, many areas will
likely still find it necessary to obtain additional reductions from
other sources in order to fully attain the ozone and PM NAAQS. Their
task will be easier and the economic impact on their industries and
citizens will be lighter as a result of the standards promulgated by
today's actions. Following implementation of the Regional Ozone
Transport Rule, states will have already adopted emission reduction
requirements for nearly all large sources of VOC and NOX for
which cost-effective control technologies are known. Those that remain
in nonattainment therefore will have to consider their remaining
alternatives. Many of the state and local programs states may consider
as alternatives are very costly, and the emissions impact from each
additional emissions source subjected to new emissions controls would
be considerably smaller than the emissions impact of the standards
being promulgated today. Therefore, the emission reductions from these
standards for gasoline, cars, and light trucks will ease the need for
states to find first-time reductions from the mostly smaller sources
that have not yet been controlled, including area sources that are
closely connected with individual and small business activities. The
emission reductions from the standards being promulgated today will
also reduce the need for states to seek even deeper reductions from
large and small sources already subject to emission controls.
We project that today's actions will also have important benefits
for carbon monoxide, regional visibility, acid rain, and coastal water
quality.
For these and other reasons discussed in this document, we have
determined that significant emission reductions will still be needed by
the middle of the next decade and beyond to achieve and maintain
further improvements in air quality in many, geographically dispersed
areas. We also believe that a significant portion of these emission
reductions will be obtained by reducing emissions from cars and light
trucks as a result of today's actions. We believe that such reductions
are necessary (since cars and light trucks are such large contributors
to current and projected ozone problems) and reasonable (since these
reductions can be achieved at a reasonable cost compared to other
alternative reductions).
The remainder of this section describes the health and
environmental problems that today's actions will help mitigate and the
expected health and environmental benefits of these actions. Ozone is
discussed first, followed by PM, other criteria pollutants, visibility,
air toxics, and other environmental impacts. The emission inventories
and air quality analyses are explained more fully in the Regulatory
Impact Analysis for today's actions.
[[Page 6707]]
B. Ozone
1. Background on Ozone Air Quality
Ground-level ozone is the main harmful ingredient in smog.\12\
Ozone is produced by complex chemical reactions when its precursors,
VOC and NOX, react in the presence of sunlight.
---------------------------------------------------------------------------
\12\ Total column ozone, a large percentage of which occurs in
the stratosphere and a smaller percentage of which occurs in the
troposphere, helps to provide a protective layer against ultraviolet
radiation.
---------------------------------------------------------------------------
Short-term (1-3 hours) and prolonged (6-8 hours) exposures to
ambient ozone at levels common in many cities have been linked to a
number of health effects of concerns. For example, increased hospital
admissions and emergency room visits for respiratory causes have been
associated with ambient ozone exposures at such levels. Repeated
exposures to ozone can make people more susceptible to respiratory
infection, result in lung inflammation, and aggravate pre-existing
respiratory diseases such as asthma. Other health effects attributed to
ozone exposures include significant decreases in lung function and
increased respiratory symptoms such as chest pain and cough. These
effects generally occur while individuals are engaged in moderate or
heavy exertion.
Children active outdoors during the summer when ozone levels are at
their highest are most at risk of experiencing such effects. Other at-
risk groups include adults who are active outdoors (e.g., outdoor
workers), and individuals with pre-existing respiratory disease such as
asthma and chronic obstructive lung disease. In addition, longer-term
exposures to moderate levels of ozone present the possibility of
irreversible changes in the lungs which could lead to premature aging
of the lungs and/or chronic respiratory illnesses.
Ozone also affects vegetation and ecosystems, leading to reductions
in agricultural and commercial forest yields, reduced growth and
survivability of tree seedlings, and increased plant susceptibility to
disease, pests, and other environmental stresses (e.g., harsh weather).
In long-lived species, these effects may become evident only after
several years or even decades, thus having the potential for long-term
effects on forest ecosystems. Ground-level ozone damage to the foliage
of trees and other plants also can decrease the aesthetic value of
ornamental species as well as the natural beauty of our national parks
and recreation areas.
Many areas which were classified as nonattainment when
classifications were made under the 1990 Clean Air Act Amendments have
not experienced violations more recently. However, 50 metropolitan
areas had ozone design values above the NAAQS in either or both of the
1995-1997 and the 1996-1998 monitoring periods. In many urban areas,
the downward trend in ozone that prevailed earlier has become less
strong or stopped in the last few years, even when adjustments are made
for meteorological conditions. We believe that one factor that has
worked against ozone improvement in the last few years has been the
growing use of light trucks with higher emissions than the cars used
formerly. The predictions of future ozone concentrations used in
developing today's action take account of this growing use of light
trucks.
2. Additional Emission Reductions Are Needed To Attain and Maintain the
Ozone NAAQS
a. Summary
We have determined that additional emission reductions are needed
to attain and maintain the 1-hour ozone NAAQS. This overall conclusion
is based on our prediction that 26 metropolitan areas are each certain
or highly likely to need additional reductions, and that an additional
12 areas each have a moderate to significant probability of needing
them.
To determine whether additional reductions are needed in order to
attain and maintain the ozone NAAQS, we used ozone modeling to predict
what areas would not attain the NAAQS in the future. We accounted for
the emission reductions that have already been achieved, those that
will be achieved in the future by actions already underway, and
increases in emissions expected from increased use of sources of
pollution.
In our May 13, 1999 proposal, we presented information from
photochemical modeling we performed to predict what areas would meet
the ozone NAAQS in 2007. The year 2007 falls after the expected date of
most emission reductions which states are required to achieve or have
otherwise committed to achieve, and near the attainment deadline for
many ozone nonattainment areas. We presented additional information
from the same photochemical modeling work in two supplemental notices,
on June 30, 1999 (to better explain the basis for our proposal in light
of the Court's ruling on the 8-hour ozone NAAQS), and October 25, 1999
(to explain the implications for our Tier 2/Gasoline Sulfur proposal
from our more recent proposal, which we expect to make final shortly,
to re-instate the 1-hour ozone NAAQS in many areas). In Response to
Comments on these Federal Register notices, we made revisions to our
own ozone modeling. We also obtained ozone modeling results from a
number of state air planning agencies and from members of the
automobile manufacturing industry. We have considered all of this
information as part of our determination that the regulations
promulgated in this rule are needed and appropriate.
Based on the available ozone modeling and other information, we
project that there are 26 metropolitan areas which will be unable to
attain and maintain the NAAQS, in the absence of additional reductions.
These areas had a combined population of over 86 million in 1996, and
are distributed across most regions of the U.S. We have concluded that
each is certain or very likely to require additional reductions to
attain the NAAQS. Taken together and considering their number, size,
and geographic distribution, these areas establish the case that
additional reductions are needed in order to attain and maintain the 1-
hour standard.
In addition, our analysis suggests there will be other areas that
will have problems attaining and maintaining compliance with the one-
hour ozone standard in the future. There are 12 additional metropolitan
areas with a total 1996 population of over 25 million people in this
category. EPA's ozone modeling for 2007 predicts exceedances for each
of these areas. However, for six of them local recent monitoring
information is not indicating nonattainment. Given how close to
nonattainment these areas are, EPA believes it is likely that at least
a significant subset of this group of areas will face compliance
problems by 2007 or beyond if additional actions to lower air emissions
are not taken. This belief is based on historical experience with areas
that will undergo economic and population growth over time and that are
in larger regions that are also experiencing growth. The other six
areas in this group are nonattainment now, and local modeling shows
them reaching attainment by 2005 or 2007. Modeling uncertainties and
growth beyond the attainment date make it likely that at least some of
these areas will also face compliance problems if additional actions to
lower air emissions are not taken. This situation further supports our
determination that additional reductions in mobile source emissions are
needed for attainment and maintenance.
We would like to emphasize that the advantages of the Tier 2/
Gasoline Sulfur program will be enjoyed by the whole country. There are
important advantages for approximately 30 more metropolitan
[[Page 6708]]
areas, with close to 30 million people residing in them, whose ozone
levels are now within 10 percent of violating the 1-hour NAAQS.\13\
Most of these areas have been in nonattainment in the past. We believe
the emission reductions from the Tier 2/Gasoline Sulfur program are an
important component of an overall EPA-state approach to enable these
areas to continue to maintain clean air given expected growth. EPA
believes that the long term ability of the states to continue to meet
the NAAQS is extremely important. In the future, EPA will be
considering additional approaches for assisting in maintenance of the
NAAQS. Also, we believe that the Tier 2/Gasoline Sulfur program has
important benefits for other nonattainment areas which our modeling and
local modeling show to be on a path to come into attainment in the next
eight years. For these areas, the extra emission reductions from the
program will take some of the uncertainty out of their plan to attain
the standard and give them a head start on developing their plan to
stay in attainment.
---------------------------------------------------------------------------
\13\ As measured by ozone design value.
---------------------------------------------------------------------------
In every area of the country, the new standards will give
transportation planning bodies and industrial development leaders more
options within the area's overall emissions constraints. This will
allow local and state officials to better accommodate local needs and
growth opportunities. With these new standards for vehicles and
gasoline, unusually adverse weather or strong local economic growth
will be less likely to cause ozone levels high enough to trigger the
planning requirements of the Clean Air Act. In addition, by reducing
emissions and ozone levels across the nation as a whole, there will be
less transport of ozone between areas, reducing the amount of ozone
entering downwind areas. This will give the downwind areas a better
opportunity to maintain and attain the NAAQS through local efforts.
All of our determinations presented here about the need for the
Tier 2/Gasoline Sulfur program take into account the prior NOX
reductions we expect from the Regional Ozone Transport Rule. This rule
is now in litigation. If the outcome of that litigation reduces the
NOX reductions that will be achieved, the need for the Tier
2/Gasoline Sulfur program will be even greater.
b. Ozone Modeling Presented in Our Proposal and Supplemental Notices
The ozone modeling we presented in our proposal and the two
supplemental notices was originally conducted as part of our
development of the Regional Ozone Transport Rule. The ``revised
budget'' emission control scenario we modeled for the Regional Ozone
Transport Rule contained the right set of existing and committed
emission controls for it to serve as the starting point for making our
determination on the need for additional emission reductions. We added
a new ``control case'' to represent the effects of our proposed vehicle
and gasoline standards.
This ozone modeling provided predictions of ozone concentrations in
2007 across the eastern U.S., under certain meteorological conditions.
Predictions of attainment or nonattainment are based on these predicted
ozone concentrations. Two approaches to making attainment predictions
have been used or advocated in the past: a rollback approach and an
exceedance approach. In the NPRM of May 13, 1999, we presented
predictions of attainment and nonattainment using a rollback approach.
For the 1-hour standard, we reported that 8 metropolitan areas and two
rural counties were predicted to be in nonattainment in 2007 under the
rollback method. In the first supplemental notice of June 30, 1999 we
presented a prediction that 17 areas would be nonattainment based on
the exceedance method, and invited comment on all aspects of the
modeling and its interpretation. Our second and last notice on October
27, 1999, presented predictions of violations using the exceedance
method for additional areas which we had previously excluded because
the 1-hour standard did not apply to them. This was in anticipation of
the reinstatement of the 1-hour standard to these areas, which we
proposed on October 25, 1999 and expect to complete very soon. 64 FR
57524. We also announced that we were conducting another round of
modeling, described below. See the Response to Comments document for
more discussion of the rollback and exceedance approaches.
c. Updated and Additional Ozone Modeling
We have updated and expanded our ozone modeling. We updated the
ozone modeling so that it is now based on estimates of vehicle
emissions that reflect the most recent data and our best understanding
of several aspects of emissions estimation.\14\ We also changed most of
the episodes for which we modeled ozone concentrations, with all of our
final episode days coming from a single calendar year. By selecting
days from within a single year, we responded to a comment that the
original episode periods might together contain an atypically high
number of days favorable to ozone formation for some parts of the
country. The new episodes are also better at representing conditions
that lead to high ozone in areas along the Gulf Coast, whose ozone-
forming conditions were not well represented in the episodes used for
the original modeling.
---------------------------------------------------------------------------
\14\ While the use of these emissions estimates was new to our
baseline ozone modeling in the latest ozone modeling, they were not
new to this rulemaking, having already been used in calculations of
cost-effectiveness in the draft RIA. We therefore were able to
consider public comments on these estimates prior to using them in
the latest ozone modeling
---------------------------------------------------------------------------
While we considered these improvements necessary and appropriate in
light of comments and other information available to us, the actual
results of the two rounds of modeling with regard to the need for
additional reductions have turned out to be similar. The latest round
of modeling provided us ozone predictions for 2007 and 2030 in the
eastern U.S., and for 2030 in the western U.S. There are some
differences in specific results, where and when the two models can be
directly compared. However, the same conclusion would be reached from
either, namely that there is a broad set of areas with predicted ozone
concentrations in 2007 above 0.124 ppm, in the baseline scenario
without additional emission reductions.
We have compared and supplemented our own ozone modeling with other
modeling studies, either submitted to us as comments to this
rulemaking, as state implementation plan (SIP) revisions, or brought to
our attention through our consultations with states on SIP revisions
that are in development. The ozone modeling in the SIP revisions has
the advantage of using emission inventories that are more specific to
the area being modeled, and of using meteorological conditions selected
specifically for each area. Also, the SIP revisions included other
evidence and analysis, such as analysis of air quality and emissions
trends, observation based models that make use of data on
concentrations of ozone precursors, alternative rollback analyses, and
information on the responsiveness of the air quality model. For some
areas, we decided that the predictions of attainment or nonattainment
from our
[[Page 6709]]
modeling were less reliable than conclusions that could be drawn from
this additional evidence and analysis. For example, in some areas our
episodes did not capture the meteorological conditions that have caused
high ozone, while local modeling did so.
d. Results and Conclusions
As discussed in detail below, it is clear that the NOX
and VOC reductions to be achieved through the Tier 2/Gasoline Sulfur
program are needed to attain and maintain compliance with the 1 hour
ozone NAAQS. Although the general pattern observed in our modeling
indicates improvements in the near term, growth in overall emissions
will lead to worsening of air quality over the long term.
Based on our ozone modeling, we have analyzed ozone predictions for
52 metropolitan areas for 1996, 2007, and 2030. In addition, we
reviewed ozone attainment modeling and other evidence covering 15 of
these areas, from SIP submittals or from modeling underway to support
SIP revisions. This local modeling addressed only the current or
requested attainment date in each area. We then made attainment and
nonattainment predictions from this information.
The general pattern we observed with the baseline scenario, i.e.,
without new emission reductions, is a broad reduction between 1996 and
2007 in the geographic extent of ozone concentrations above the NAAQS,
and in the frequency and severity of exceedances. This is consistent
with the national emissions inventory trend between these two years. At
the same time, we also found that peak ozone concentrations and the
frequency of exceedances in 2030 were generally somewhat higher than in
2007 for most areas analyzed. This too is consistent with our analysis
of emission inventory trends, which shows that the total NOX
inventory from all sources will decline from 2007 to about 2015 and
then begin to increase due to growth in the activity of emission
sources. In 2030, our analysis predicts that NOX emissions
from all sources will be about one percent higher than in 2007. While
we did not model ozone concentrations for years between 2007 and 2030,
we expect that they would track the national emissions trend by showing
a period of improvement after 2007 and then deterioration, although
individual areas will vary due to local source mix and growth
rates.\15\
---------------------------------------------------------------------------
\15\ EPA's modeling presumed that cars and light trucks will
continue to meet the emission levels of the National Low Emissions
Vehicle (NLEV) program after model year 2003, even though the
program will end in model year 2003 or shortly thereafter. Had our
modeling not included such levels in its inventory assumptions,
trends for ozone concentrations would have shown earlier increases
in ozone concentrations.
---------------------------------------------------------------------------
Within this general pattern of ozone attainment changes between
1996 and 2030, we have determined that 26 metropolitan areas are
certain or highly likely to need additional reductions to attain and
maintain the 1-hour ozone NAAQS. These 26 areas are those that have
current violations of the 1-hour ozone NAAQS and are predicted by the
best ozone modeling we have available to still be in violation without
a new federal vehicle program in 2007.\16\ Based on the general trends
described above, without further emissions reductions many of these
areas may also have violations continuously throughout the period from
2007 to 2030, while others may briefly attain and then return to
nonattainment on or before 2030. These 26 metropolitan areas are listed
in Table III.B-1, along with their 1996 population which totals over 86
million. The sizes of these areas and their geographical distribution
strongly support an overall need for additional reductions in order to
attain and maintain under section 202(i). Because ozone concentration
patterns causing violations of the 1-hour NAAQS are well established to
endanger public health or welfare, this determination also supports our
actions today under the general authority of sections 202(a)(1),
202(a)(3), and 202(b).
---------------------------------------------------------------------------
\16\ The date of the predicted violation was 2007 for most
areas, 2010 in the case of Los Angeles, CA, and 2030 in the case of
Portland-Salem, OR.
---------------------------------------------------------------------------
As indicated above, in reaching this conclusion about these 26
areas, we examined local ozone modeling in SIP submittals. These local
analyses are considered to be more extensive than our own modeling for
estimating whether there would be NAAQS nonattainment without further
emission reductions, when interpreted by a weight of evidence method
which meets our guidance for such modeling. One of the areas which
submitted a SIP revision was a special case. We have recently proposed
to approve the 1-hour ozone attainment demonstration for the
nonattainment area of Washington, D.C. (but not Baltimore). We have
nevertheless included this area on the list of 26 that are certain or
highly likely to require further reductions to attain and maintain,
because its SIP attainment demonstration assumed emission reductions
from vehicles meeting the National Low Emissions Vehicle (NLEV)
standards.
However, by its own terms, the NLEV standards would not extend
beyond the 2003 model year if we did not promulgate Tier 2 vehicle
standards at least as stringent as the NLEV standards. See 40 CFR
86.1701-99(c). Thus, the emission reductions relied upon from 2004 and
later model year NLEV vehicles are themselves ``further reductions''
for the purposes of CAA section 202(i).\17\ The local modeling
indicating attainment with these reductions is therefore strong
evidence that further reductions are needed past 2003, beyond those
provided by the Tier 1 program. Based on this, and on the fact that our
own ozone modeling showed the Washington, DC area to violate the NAAQS
in 2007 even with full NLEV emission reductions, we have concluded that
it should be included with areas that do require further reductions to
attain and maintain the 1-hour ozone NAAQS.
---------------------------------------------------------------------------
\17\ With regard to eventual final action on the 1-hour
attainment demonstration for Washington, DC, the issue of the
continuation of the NLEV standards is mooted by the promulgation of
the Tier 2/Gasoline Sulfur program. A portion of the emission
reductions from this program will replace the post-2003 model year
NLEV reductions assumed in the SIP.
---------------------------------------------------------------------------
The 1-hour ozone NAAQS presently does not apply in 12 of the 26
areas listed in Table III.B-1, but we have proposed to re-instate it
and expect to complete that action shortly. These areas are indicated
in the table. Our decision to include these areas on this list is based
on the contingency that we will re-instate the 1-hour standard in these
areas. However, even if we considered only the 14 areas where the 1-
hour standard applies as of the signature date of this notice, we have
concluded that our determination would be the same.
Table III.B-1.--Twenty-Six Metropolitan Areas Which Are Certain or
Highly Likely To Require Additional Emission Reductions in Order To
Attain and Maintain the 1-Hour Ozone NAAQS
------------------------------------------------------------------------
1996
Metropolitan area Population
(millions)
------------------------------------------------------------------------
Atlanta, GA MSA............................................ 3.5
Barnstable-Yarmouth, MA MSA \a\............................ 0.2
Baton Rouge, LA MSA........................................ 0.6
Beaumont-Port Arthur, TX MSA............................... 0.4
Birmingham, AL MSA......................................... 0.9
Boston-Worcester-Lawrence, MA-NH-ME-CT CMSA \a\............ 5.6
Charlotte-Gastonia-Rock Hill, NC-SC MSA \a\................ 1.3
[[Page 6710]]
Cincinnati-Hamilton, OH-KY-IN CMSA......................... 1.9
Dallas-Fort Worth, TX CMSA................................. 4.6
Houma, LA MSA \a\.......................................... 0.2
Houston-Galveston-Brazoria, TX CMSA........................ 4.3
Huntington-Ashland, WV-KY-OH MSA \a\....................... 0.3
Indianapolis, IN MSA \a\................................... 1.5
Los Angeles-Riverside-San Bernardino CA CMSA............... 15.5
Louisville, KY-IN MSA...................................... 1.0
Macon, GA MSA \a\.......................................... 0.3
Memphis, TN-AR-MS MSA \a\.................................. 1.1
Nashville, TN MSA \a\...................................... 1.1
New York-Northern New Jersey-Long Island, NY-NJ-CT-PA CMSA. 19.9
Philadelphia-Wilmington-Atlantic City, PA-NJ-DE-MD CMSA.... 6.0
Pittsburgh, PA MSA......................................... 2.4
Portland-Salem, OR-WA CMSA \a\............................. 2.1
Providence-Fall River-Warwick, RI-MA MSA \a\............... 1.1
Richmond-Petersburg, VA MSA \a\............................ 0.9
St. Louis, MO-IL MSA....................................... 2.5
Washington-Baltimore, DC-MD-VA-WV CMSA..................... 7.2
Total Population..................................... 86.3
------------
------------------------------------------------------------------------
Notes:
\a\ The 1-hour ozone NAAQS does not currently apply, but we have
proposed and expect to re-instate it shortly.
There are 12 additional metropolitan areas, with another 25.3
million people in 1996, for which the available ozone modeling suggests
significant risk of failing to attain and maintain the 1-hour ozone
NAAQS without additional emission reductions. Table III.B-2 lists the
areas we put in this second category. Our own ozone modeling predicted
these 12 areas to need further reductions to avoid violations in 2007.
For six of these areas, recent air quality monitoring data indicate
violation, but we have reviewed local ozone modeling and other evidence
indicating attainment in 2007.\18\ Based on this evidence, we have kept
these areas separate from the previous set of 26 areas which we
consider certain or highly likely to need additional reductions.
However, we still consider there to be a significant risk of failure to
attain and maintain in these six areas because this local modeling has
inherent uncertainties, as all ozone modeling does. Moreover, the local
modeling did not examine the period after initial attainment.
---------------------------------------------------------------------------
\18\ The SIP revisions for Chicago and Milwaukee demonstrated
that these two areas as well as Benton Harbor and Grand Rapids areas
in Michigan (which are maintenance areas but have experienced ozone
NAAQS violations recently) would not experience NAAQS violations in
2007, with a strategy that relied only on Tier 1 vehicle emission
standards. We have also recently proposed to approve the 1-hour
attainment demonstration for Greater Connecticut, covering the
Hartford and New London areas, which assumed full NLEV emission
reductions. However, Connecticut is committed in its SIP to adopt
California vehicle standards if NLEV does end with the 2003 model
year if a more stringent federal program is not promulgated. The
California standards are more stringent than NLEV. The case of one
additional area whose attainment demonstration we recently proposed
to approve, Western Massachusetts (Springfield), should be explained
here to avoid possible confusion. Our own ozone modeling predicted
that Springfield would attain the NAAQS in 2007. Massachusetts has
adopted the California vehicle emission standards, so there is no
issue of the continuation of the NLEV standards.
---------------------------------------------------------------------------
For the other six of the 12 areas, the air quality monitoring data
shows current attainment but with less than a 10 percent margin below
the NAAQS. This suggests these areas may remain without violations for
some time, but we believe there is still a moderate risk of future
violation of the NAAQS because meteorological conditions may be more
severe in the future.
It is highly likely that at least some of these 12 areas will
violate the NAAQS without additional reductions, and it is a distinct
possibility that many of them will do so. We consider the situation in
these areas to support our determination that, overall, additional
reductions are needed for attainment and maintenance. However, we
reiterate that our predictions for the 26 areas listed in Table III.B-
1, and even our predictions for only the 14 of those 26 for which the
1-hour standard now applies, are a sufficient basis for our
determination of an overall need for additional reductions and for our
actions today.
Table III.B-2.--Twelve Metropolitan Areas With Moderate to Significant
Risk of Failing To Attain and Maintain the 1-Hour Ozone NAAQS Without
Additional Emission Reductions
------------------------------------------------------------------------
1996
Metropolitan area Population
(millions)
------------------------------------------------------------------------
Benton Harbor, MI MSA \a\.................................. 0.2
Biloxi-Gulfport-Pascagoula, MS MSA \a\..................... 0.3
Chicago-Gary-Kenosha, IL-IN-WI CMSA........................ 8.6
Cleveland-Akron, OH CMSA \a\............................... 2.9
Detroit-Ann Arbor-Flint, MI CMSA \a\....................... 5.3
Grand Rapids-Muskegon-Holland, MI MSA \a\.................. 1.0
Hartford, CT MSA........................................... 1.1
Milwaukee-Racine, WI CMSA.................................. 1.6
New London-Norwich, CT-RI MSA \a\.......................... 1.3
New Orleans, LA MSA \a\.................................... 0.3
Pensacola, FL MSA \a\...................................... 0.4
Tampa, FL MSA \a\.......................................... 2.2
------------
Total Population..................................... 25.3
------------------------------------------------------------------------
Notes:
\a\ The 1-hour ozone NAAQS does not currently apply, but we have
proposed and expect to re-instate it shortly.
e. Issues and Comments Addressed
We received detailed comments from the automobile industry related
to ozone modeling and the need for additional emission reductions in
order to attain and maintain. These were of three types.
Accuracy of modeling ozone concentrations.--The automobile industry
commenters pointed out that in the modeling presented with our
proposal, the ozone model and exceedance predicted violations of the
NAAQS in 1995 in areas where monitoring data indicated no violations.
They cited these cases as examples of model inaccuracy. We have made
improvements to our emissions estimates, our episodes, and other
aspects of the modeling system. These changes have improved the
accuracy of the predicted ozone concentrations. Also, as stated above,
our list of 26 areas that support our finding that additional
reductions are needed does not include any areas where recent
monitoring data shows no violations. The final RIA addresses issues of
model accuracy in more depth.
As explained in the final RIA, our very latest estimates of car and
light truck emissions without the benefits of our new standards are
actually somewhat higher than the estimates used in the final round of
ozone modeling, because the most recent data indicate even more serious
adverse emissions effects from sulfur in
[[Page 6711]]
gasoline. Thus, we think our predictions of ozone nonattainment using
emission estimates prepared before this most recent data on sulfur was
considered, may be conservative. This topic is discussed in more detail
in section III.B.3.
Prediction of attainment/nonattainment.--For most areas, we
predicted 2007 or 2030 attainment or nonattainment based on the
exceedance method. The exceedance method predicts an area to be in
attainment only if there are no predicted exceedances of the NAAQS
during any episode day. However, for the areas for which we have
received 1-hour attainment demonstrations in SIP revisions, our
predictions were based on a larger and more robust set of data. When a
state's modeling shows an exceedance that would otherwise indicate
nonattainment, we allow the state to submit a variety of other evidence
and analysis, such as locality specific meteorological conditions,
analysis of air quality and emissions trends, observational based
models that make use of data on concentrations of ozone precursors, a
rollback analysis, and information on the responsiveness of the air
quality model. We then make a weight-of-evidence determination of
attainment or nonattainment based on consideration of all this local
evidence. We did this in forming the set of 26 areas we consider
certain or highly likely to need additional reductions to attain or
maintain, in some cases concluding that attainment was demonstrated and
in others that it was not.
The auto industry commenters recommended the use of rollback as the
single method for making attainment and nonattainment predictions from
predicted ozone concentrations. They stated that the rollback method
would be more consistent than the exceedance method with the NAAQS's
allowance of three exceedances in a three year period. They also
believed that the rollback method would compensate for what they
considered to be model over predictions of ozone concentrations. We
believe that the rollback method is not appropriate for use as the
sole, or even a primary, test of 1-hour ozone attainment or
nonattainment. A rollback analysis may overlook violations that occur
away from ozone monitors, and it may inappropriately project the effect
of a recent period of favorable weather into the prediction of future
attainment. In determining the attainment and maintenance prospects of
numerous areas, as here, it is not possible to assemble and consider
the full set of local evidence that should accompany any consideration
of a rollback analysis. In such a situation, we believe that the
exceedance method is the appropriate choice. A fuller explanation of
our reasons for considering the exceedance method more appropriate than
rollback is given in our Response to Comments document.
We have not completely excluded the rollback approach from the
determinations in this rulemaking. We have considered it for those
areas for which we had enough information to allow us to consider it in
its proper context, i.e., for those areas covered by recent 1-hour SIP
submissions. Of these areas, we concluded that some will not attain
without additional reductions and some will.
While we disagree with the use of the rollback method, we have
conducted a hypothetical analysis of 2007 attainment in all areas based
only on our own ozone modeling, applying the rollback method
recommended by the commenters. We calculated in this analysis that 15
metropolitan areas and three other counties with nearly 56 million in
population in 1996 would violate the NAAQS in 2007. Moreover, these 15
metro areas are geographically spread out \19\. We believe that this
result using the rollback method does not fully capture the likely
nonattainment that would exist in 2007 in the absence of additional
emission reductions. However, even if we were to consider the use of
rollback valid, we consider this set of areas to also be an adequate
basis for making the same determinations we have made based on the more
appropriate exceedance-based analysis. The details of our hypothetical
analysis using the rollback method are given in the final RIA and the
technical support document for our ozone modeling analyses.
---------------------------------------------------------------------------
\19\ We did not include the Los Angeles-Riverside-San Bernardino
area in this analysis, since it was not covered by our 2007
modeling, but we do believe it is rightly part of the basis for a
determination on the need for additional reductions.
---------------------------------------------------------------------------
Ozone modeling and predictions.--Members of the automobile
manufacturing industry submitted two modeling studies: (1) a repetition
of our first round of modeling of the 37-state eastern U.S. domain but
with their recommendations regarding estimates of motor vehicle
emissions in 2007 and with the rollback method used to predict 2007
nonattainment, and (2) finer grid modeling for three smaller domains,
also with their recommended estimates of emissions and with
nonattainment predicted using a rollback method. Both modeling efforts
showed less widespread nonattainment than we have determined and
described here. Taken together, these studies predicted 2007 violations
by the rollback method in or downwind of New York City, Chicago,
Milwaukee, western Michigan, Baton-Rouge, and Houston.
The main difference between the automobile industry's ozone
modeling and ours is in the emission estimates. We have reviewed the
emissions estimates used in the industry studies. We concluded that the
industry's emissions estimates employ inappropriate analytical steps in
the calculation. Among the problems are that the adjustments for the
benefits of inspection and maintenance programs were not consistent
with the base estimate of in-use emissions, and the sales trend towards
light trucks and SUVs was not properly captured. Also, as stated, we
disagree with the use of the rollback approach as the sole test of
attainment. As a consequence, we conclude that the industry's ozone
modeling is not an appropriate basis for making predictions of future
attainment or nonattainment. The final RIA explains in detail how we
have addressed these and other emissions modeling issues in a manner
which is more technically consistent and correct,\20\ and how we have
considered the results from rollback analyses but only as part of broad
weight-of-evidence determinations for areas for which this was possible
at this time. Our point-by-point review is given in our Response to
Comments document.
---------------------------------------------------------------------------
\20\ As explained in the final RIA, our very lastest estimates
of car and light truck emissions without the benefits of our new
standards are actually somewhat higher than the estimates used in
the final round of ozone modeling, because more recent data indicate
even more serious adverse emissions effects from sulfur in gasoline.
Thus, we think our predictions of ozone nonattainment may be
conservative.
---------------------------------------------------------------------------
The material on ozone modeling submitted by the commenters, having
been prepared by the rollback method, was difficult to re-interpret
according to our preferred exceedance method. However, it appears that
if this modeling were interpreted by the exceedance method, it would
indicate 2007 nonattainment in Baltimore and Washington, D.C. in
addition to New York City, Chicago, Milwaukee, western Michigan, Baton-
Rouge, and Houston. Overall, we conclude that the material submitted by
the automobile industry does not contradict the facts we have used to
make our determinations or the actions we are taking today.
f. 8-Hour Ozone
The predictions of ozone concentrations from the ozone modeling
[[Page 6712]]
can be used to make predictions of attainment or nonattainment with the
8-hour ozone NAAQS. In our draft RIA, we estimated that 28 metropolitan
areas and 4 rural counties with a combined population of 80 million
people would violate the 8-hour ozone NAAQS in 2007 without additional
emission reductions. Commenters noted differences between exact
rollback procedure we had used in this projection and the steps
specified in recent draft guidance we have issued on 8-hour ozone
modeling. We agree with the commenters that the steps specified in our
guidance are the correct ones to use. However, since we are not basing
our promulgation of the Tier 2/Gasoline Sulfur Program on the 8-hour
ozone NAAQS, we have not made any new predictions of 8-hour ozone
nonattainment areas in 2007. Based on our findings in previous analyses
of this sort, however, we believe that in the absence of the Tier 2/
Gasoline Sulfur program there would be 8-hour nonattainment areas that
are not also areas which we have concluded are certain or highly likely
to violate the 1-hour NAAQS. If we considered it appropriate to proceed
with implementation of the 8-hour standard, these areas would support
our determination on the need for emission reductions, and the
appropriateness and necessity of the vehicle and gasoline standards we
are establishing.
3. Cars and Light-duty Trucks Are a Big Part of the NOX and
VOC Emissions, and Today's Action Will Reduce This Contribution
Substantially
Emissions of VOCs and NOX come from a variety of
sources, both natural and man-made. Natural sources, including
emissions that have been traced to vegetation, account for a
substantial portion of total VOC emissions in rural areas. The
remainder of this section focuses on the contribution of motor vehicles
to emissions from human sources. Man-made VOCs are released as
byproducts of incomplete combustion as well as evaporation of solvents
and fuels. For gasoline-fueled cars and light trucks, approximately
half of the VOC emissions come from the vehicle exhaust and half come
from the evaporation of gasoline from the fuel system. NOX
emissions are dominated by man-made sources, most notably high-
temperature combustion processes such as those occurring in automobiles
and power plants. Emissions from cars and light trucks are currently,
and will remain, a major part of nationwide VOC and NOX
emissions. In 1996, cars and light trucks comprised 25 percent of the
VOC emissions and 21 percent of the NOX emissions from human
sources in the U.S.\21\ The contribution in metropolitan areas was
generally larger.
---------------------------------------------------------------------------
\21\ Emission Trend Report, 1997.
---------------------------------------------------------------------------
We have made significant improvements in the analysis used to
estimate the emission inventory impacts of this action, including
improving the emission factor modeling, using more detailed local
modeling input, and using a more conservative (lower) estimate of VMT
growth. These changes are detailed in the Regulatory Impact Analysis
for this rule. The following discussion is based on this improved
analysis.
In addition to the improvements which are incorporated in this
analysis, we also made further improvements in the emission factor
modeling after analyzing comments which we did not have time to
incorporate into the detailed inventory analysis described here. The
most notable change is related to data which indicates that
NOX and NMOG emissions are even more sensitive to gasoline
sulfur than previously thought. This change and others are described in
detail in the Response to Comments. Our early analysis of these changes
indicates that incorporating them into this analysis would provide
further support for this action because these changes result in both
increases in the baseline emissions without Tier 2 and in the
reductions that would result from Tier 2. For example, in the detailed
inventory analysis we report below, we project nationwide Tier 2/
Gasoline Sulfur control NOX reductions from cars and light
trucks of 856,471 tons per year in 2007. Using the version of the
emission factor model that incorporates these additional changes
increases the estimated Tier 2 reductions to approximately 1.0 million
tons per year in 2007 (estimated baseline emissions without Tier 2
increase from 3.1 million tons per year in 2007 to approximately 3.7
million tons per year using the version of the emission factor model
that incorporates these additional changes). Therefore, the estimates
of the inventory reductions given here (and used as the basis for the
ozone air quality analysis) are clearly conservative.
Motor vehicle emission controls have led to significant
improvements in emissions released to the air (the ``emission
inventory'') and will continue to do so in the near term \22\. In the
current analysis, we continue to find that total emissions from the car
and light truck fleet would continue to decline for a period, even if
we were not establishing the Tier 2/Gasoline Sulfur program. This
decline would result from the introduction of cleaner reformulated
gasoline in 2000, the introduction of National Low Emission Vehicles
(NLEVs) and vehicles complying with the Enhanced Evaporative Test
Procedure and Supplemental Federal Test Procedures, and the continuing
removal of older, higher-emitting vehicles from the in-use vehicle
fleet. On a per mile basis, VOC and NOX emissions from cars
and light trucks combined would have continued to decline well beyond
2015, reflecting the continuing effect of fleet turnover under existing
emission control programs. However, projected increases in vehicle
miles traveled (VMT) will cause total emissions from these vehicles to
increase. With this increase in travel and without additional controls,
we project that combined NOX and VOC emissions for cars and
light trucks without the Tier 2/Gasoline Sulfur program would increase
starting in 2013 and 2016, respectively, so that by 2030 they would
return to levels above or nearly the same as they will be in 2000. In
cities experiencing rapid growth, such as Charlotte, North Carolina,
the near-term trend towards lower emissions tends to reverse
sooner.\23\ With additional improvements in the modeling done in
Response to Comments, we now estimate that without the Tier 2/Gasoline
Sulfur program, there will be a constant increase in these emission
over time.
---------------------------------------------------------------------------
\22\ The auto manufacturer and northeastern state commitments to
the NLEV program are scheduled to end in 2004 without further EPA
action on Tier 2 standards, although continued voluntary compliance
by automobile manufacturers and the affected states is a
possibility. Our analysis of emission trends and the emission
benefits expected from today's action assumes for the base scenario
a continuation of the NLEV program past 2004. If the NLEV program
does not continue beyond 2004, the reductions resulting from Tier 2
would be larger than what is shown here. It also includes all other
control measures assumed to be implemented in local areas, such as
reformulated gasoline in all required and opt-in areas and enhanced
I/M where required.
\23\ Also, if the NLEV program ends in model year 2004 or
shortly thereafter, as scheduled, this trend would reverse more
quickly in all areas.
---------------------------------------------------------------------------
Figure III-1 illustrates this expected trend in car and light truck
NOX emissions in the absence of today's action. The figure
also allows the contribution of cars to be distinguished from that of
light trucks. The figure clearly shows the impact of steady growth in
light truck sales and travel on overall light-duty NOX
emissions; the decrease in overall light-duty emission levels is due
solely to reductions in LDV emissions. In 2000, we project that
[[Page 6713]]
trucks will produce about 50 percent of combined car and light truck
NOX emissions. We project that truck emissions would
actually increase after 2000, and over the next 30 years, trucks would
grow to dominate light-duty NOX emissions. By 2010, we
project trucks would make up two-thirds of light-duty NOX
emissions; by 2020, nearly three-quarters of all light-duty
---------------------------------------------------------------------------
NOX emissions would be produced by trucks.
BILLING CODE 6560-50-P
[GRAPHIC] [TIFF OMITTED] TR10FE00.000
BILLING CODE 6560-50-C
Today's action will significantly decrease NOX and VOC
emissions from cars and light trucks, and will delay the date by which
NOX and VOC emissions will begin to increase due to
continued VMT growth. With Tier 2/Gasoline Sulfur control, light-duty
vehicle NOX and VOC emissions are projected to continue
their downward trend past 2020. Table III.B-3 shows the annual tons of
NOX that we project will be reduced by today's action.\24\
These projections include the benefits of low sulfur fuel and the
introduction of Tier 2 car and light truck standards.
---------------------------------------------------------------------------
\24\ Today's action for both vehicles and fuels will apply in 49
states and the U.S. territories, excluding only California. There
will also be emissions reductions in California from vehicles that
relocate or visit from other states. However, much of the emissions
inventory analysis for this action was made for a 47-state region
which excludes California, Alasks, and Hawaii. The latter two states
were not included in the scope of ozone, PM and economic benefits
modeling.
Table III.B-3.--NOX Emissions From Cars and Light Trucks as Percent of Total Emissions, and Reductions Due to
Tier 2/Gasoline Sulfur Control (tons per year) \a\
----------------------------------------------------------------------------------------------------------------
Light-duty
Light-duty percent of Light-duty
Year tons-- without total without tons reduced
tier 2 tier 2 by tier 2 b, c
----------------------------------------------------------------------------------------------------------------
2007............................................................ 3,095,698 16 856,471
2010............................................................ 2,962,093 16 1,235,882
2015............................................................ 2,968,707 17 1,816,767
2020............................................................ 3,160,155 17 2,220,210
[[Page 6714]]
2030............................................................ 3,704,747 19 2,795,551
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Estimates exclude California, Alaska, and Hawaii, although reductions will occur in all three.
\b\ Does not include emission reductions from heavy-duty gasoline vehicles.
\c\ These numbers represent a conservative estimate of the benefits of the Tier 2/Sulfur program. Based on the
updated emission factor model developed in response to comments, the program will result in significantly
larger benefits. For example, our new model projects NOX reductions of 1,100,000 tons in 2007.
The lower sulfur levels in today's action will produce large
emission reductions on pre-Tier 2 vehicles as soon as low-sulfur
gasoline is introduced, in addition to enabling Tier 2 vehicles to
achieve lower emission levels. Among the pre-Tier 2 vehicles, the
largest per vehicle emission reductions from lower sulfur in gasoline
will be achieved from vehicles which automobile manufacturers will have
sold under the voluntary National Low Emission Vehicle program. These
vehicles are capable of substantially lower emissions when operated on
low sulfur fuel. Older technology vehicles experience a smaller but
significant effect.
In 2007, when all gasoline will meet the new sulfur limit and when
large numbers of 2004 and newer vehicles meeting these standards will
be in use, the combined NOX emission reduction from vehicles
and fuels will be over 850,000 tons per year. After 2007, emissions
will be reduced further as the fleet turns over to Tier 2 vehicles
operating on low sulfur fuel. By 2020, NOX emissions will be
reduced by 70% from the levels that would occur without today's action.
This reduction equals the NOX emissions from over 164
million pre-Tier 2 cars and light trucks. This reduction represents a
12 percent reduction in NOX emissions from all manmade
sources.
VOC emissions will also be reduced by today's action, with
reductions increasing as the fleet turns over. We estimate that the
reductions as a percent of emissions from cars and light trucks will be
7 percent in 2007 and grow to 17 percent in 2020.
As discussed earlier, in California, smaller but still substantial
reductions in both NOX and VOC will be achieved because
vehicles visiting and relocating to California will be designed to meet
these standards. Also, vehicles from California visiting other states
will not be exposed to high sulfur fuel. California Air Resources Board
staff have estimated that Tier 2/Sulfur will reduce NOX
emissions in the South Coast Air Quality Management District by
approximately 4 tons per day in 2007.\25\ CARB staff plan to
incorporate these reductions in their revised attainment plan for this
district, which includes most of the Los Angeles-Long Beach region.
---------------------------------------------------------------------------
\25\ California Air Resources Board, Executive Order G-99-037,
May 20, 1999, Attachment A, 6-7, 10. These NOX reductions
represent a small fraction of the emission reductions needed in the
South Coast to attain the NAAQS.
---------------------------------------------------------------------------
These estimates of emission reductions reflect a mixture of urban,
suburban, and rural areas. However, cars and light trucks generally
make up a larger fraction of the emission inventory for urban and
suburban areas, where human population and personal vehicle travel is
more concentrated than emissions from other sources such as heavy-duty
highway vehicles, power plants, and industrial boilers. We have
estimated emission inventories for three cities using the same methods
as were used to project the nationwide inventories, and we present the
results for 2007 below in Table III.B-4.
These results confirm that light-duty vehicles make up a greater
share of the NOX emission inventories in urban areas than
they do in the nationwide inventory. While these vehicles' share of
national NOX emissions in 2007 is about 16 percent, it is
estimated to be about 34 percent in the Atlanta area. There is also a
range in VOC contributions, with Atlanta again being the area with the
largest car and light truck contribution at 17 percent. In metropolitan
areas with high car and light truck contributions, today's action will
represent a larger step towards attainment since it will have a larger
effect on total emissions.
Table III.B-4--Proportion of the Total Urban Area NOX and VOC Inventory
in 2007 Attributable to Light-Duty Vehiclesa
------------------------------------------------------------------------
NOX VOC
Region (percent) (percent)
------------------------------------------------------------------------
Nationwide.................................... 16 13
New York urban area........................... 18 6
Atlanta urban area............................ 34 17
Charlotte urban area.......................... 24 15
------------------------------------------------------------------------
Notes:
a The estimates reflect continuation of NLEV beyond 2004.
Another useful perspective from which to view the magnitude of the
emission reductions from today's proposal is in terms of the additional
emission reductions from all human sources that areas will need to
attain the 1-hour ozone standard. For this analysis, we reviewed our
proposals for action on the 1-hour attainment demonstrations submitted
by the states. With these proposals, EPA identified estimates of
additional emission reductions (measures in addition to those submitted
by the state in their plans) necessary for attainment for some
[[Page 6715]]
of the areas. These estimates of additional emission reductions are
documented in the individual Federal Register Notices. Using these
estimates and the estimates of Tier 2 reductions developed for today's
action, we have determined what portion of these additional emission
reductions would be accounted for by today's action. These estimates
are reported in Table III.B-5, which shows the contribution of Tier 2/
Sulfur NOX reductions to the additional emission reduction
necessary for attainment for three metropolitan areas. For example, for
the New York nonattainment area, 89% of the additional NOX
emission reductions needed for attainment are provided for with today's
action. This leaves 11% of the additional NOX emission
reductions to be addressed by the State through other local sources.
EPA and the States already have significant efforts underway to
lower ozone precursor emissions through national regulations and State
Implementation Plans. Table III.B-5 shows the contribution of Tier 2 to
the substantial State-led efforts to provide attainment with the ozone
NAAQS. Since the Tier 2 program has evolved in the past year after much
of the States' efforts were completed, many of the States were unable
to estimate the benefits of Tier 2 in their areas. EPA's proposal
actions on these SIPs for the ozone NAAQS addresses the need for Tier 2
in many areas. More specifically, Tier 2 is being used to help States
identify additional measures, in addition to those in their plans,
necessary for attainment.
These estimates are subject to change as the states review and
comment on our proposed action on the SIPs. These figures show that
today's proposal would make a very substantial contribution to these
cities' attainment programs, but that there will still be a need for
additional reductions from other sources. The emission reductions from
today's proposal would clearly not exceed the reductions needed from an
air quality perspective for these areas.
Table III.B-5.--Contribution of Tier 2/Sulfur NOX Reductions to Ozone
Attainment Efforts of Selected Nonattainment Areas
------------------------------------------------------------------------
Percent of additional
NOX reductions necessary
for attainment
Nonattainment area (attainment date) -------------------------
Needed
From tier 2 after tier
2
------------------------------------------------------------------------
Baltimore (2005).............................. 100 0
New York (2007)............................... 89 11
Philadelphia (2005)........................... 87 13
------------------------------------------------------------------------
4. Ozone Reductions Expected From This Rule
The large reductions in emissions of ozone precursors from today's
standards will be very beneficial to federal and state efforts to lower
ozone levels and bring about attainment with the current one-hour ozone
standard. The air quality modeling for the final rule shows that
improvements in ozone levels are expected to occur throughout the
country because of the Tier 2/Gasoline Sulfur program.\26\ EPA found
that the program significantly lowers model-predicted exceedances of
the ozone standard. In 2007 the number of exceedances in CMSA/MSAs is
forecasted to decline by nearly one-tenth and in 2030, when full
turnover of the vehicle fleet has occurred, the program lowers such
exceedances by almost one-third. In these same areas, the total amount
of ozone above the NAAQS is forecasted to decline by about 15 percent
in 2007 and by more than one-third in 2030. In the vast majority of
areas, the air quality modeling predicts that the program will lower
peak summer ozone concentrations for both 2007 and 2030. The reduction
in daily maximum ozone is nearly 2 ppb on average in 2007 and over 5
ppb on average in 2030. These reductions contribute to EPA's assessment
that the program will provide the large set of public health and
environmental benefits summarized in Section IV.D of the Preamble. The
forecasted impacts of the program on ozone in 2007 and 2030 are further
described in the Tier 2 Air Quality Modeling Technical Support
Document.
---------------------------------------------------------------------------
\26\ EPA assessment of air quality changes for 2007 and 2030
focused on 37 states in the East because these states cover most of
the areas with 1-hour nonattainment problems.
---------------------------------------------------------------------------
During the public comment period on the proposed rule, EPA received
several comments that expressed concern about potential increases in
ozone that might occur as a result of this rule. As indicated above,
the air quality modeling results indicate an overall reduction in ozone
levels in 2007 and 2030 during the various episodes modeled. In
addition to ozone reductions, a few areas had predicted ozone increases
in portions of the area during parts of the episodes modeled. In most
of these cases, we observed a net reduction in ozone levels in these
areas due to the program. In the very small number of exceptions to
this, the Agency did find benefit from reduction of peak ozone levels.
Based upon a careful examination of this issue, including EPA's
modeling results as well as consideration of the modeling and analyses
submitted by commenters, it is clear that the significant ozone
reductions from this rule outweigh the limited ozone increases that may
occur. Additional details on this issue are provided in the Response to
Comments document and in the Tier 2 Air Quality Modeling Technical
Support Document.
Taken together, EPA believes these results indicate that it will be
much easier for States to develop State Implementation Plans which will
attain and maintain compliance with the one-hour ozone standard. EPA
will work with States conducting more detailed local modeling of their
specific ozone situation, to ensure that their SIPs will provide
attainment. Notably, there are also other upcoming federal measures to
lower ozone precursors that will aid these efforts. If the State
modeling of local programs shows a need, the Agency will work with
states to plan further actions to produce attainment with the NAAQS in
order to protect the public's health and the environment. Further
details on EPA's modeling results can be found in the Agency's Response
to Comments and technical support documents.
C. Particulate Matter
The need to control the contribution of cars and light trucks to
ambient concentrations of particulate matter (PM) is the basis for our
adoption of the new PM emission standards for vehicles. PM is also a
supplemental consideration in our promulgation of
[[Page 6716]]
the vehicle emission standards for NOX and VOC, and for the
limits on sulfur in gasoline, because SOx, NOX, and VOC are
PM precursors.
For cars and for light trucks under 3750 pounds loaded vehicle
weight, we are establishing new emission standards under the provisions
of CAA section 202(i), which ties our action to the need for additional
emission reductions in order to attain and maintain the NAAQS. The
NAAQS relevant to the PM emission standards is the PM10
NAAQS. The PM10 NAAQS also provides additional but not
essential support to our promulgation of the NOX and VOC
standards, since these standards are fully supportable on the basis of
the 1-hour ozone NAAQS.
For the vehicles not subject to CAA 202(i), and for the gasoline
sulfur limits, our actions are tied to determinations regarding public
health and welfare risks more broadly, under CAA sections 202(a),
202(b), and 211(c). The role of NOX, VOC, and PM emissions
in contributing to atmospheric concentrations of PM10 is an
important element of the risk that these emissions pose to public
health and welfare.
PM also poses risks to public health not fully reflected in the
PM10 NAAQS. Though EPA has not relied on the adverse health
impacts of fine PM to promulgate this rule, it is well established that
such impacts exist. A summary of these effects is given in the next
section. In addition, based on the available science, EPA's Office of
Research and Development has recently submitted to a committee of our
Science Advisory Board a draft assessment document which contains a
proposed conclusion that diesel exhaust is a likely human cancer hazard
and is a potential cause of other nonmalignant respiratory effects. The
scientific advisory committee has met to discuss this document, and we
are awaiting written review comments from the committee. We expect to
submit a further revision of the document to the advisory committee
before we make the document final.
1. Background on PM
Particulate matter (PM) represents a broad class of chemically and
physically diverse substances that exist as discrete particles (liquid
droplets or solids) over a wide range of sizes. The NAAQS that
regulates PM addresses only PM with a diameter less than or equal to 10
microns, or PM10. The coarse fraction of PM10
consists of those particles which have a diameter in the range between
2.5 and 10 microns, and the fine fraction consists of those particles
which have a diameter less than or equal to 2.5 microns, or
PM2.5. These particles and droplets are produced as a direct
result of human activity and natural processes, and they are also
formed as secondary particles from the atmospheric transformation of
emissions of SOX, NOX, ammonia, and VOCs.
Natural sources of particles in the coarse fraction of
PM10 include windblown dust, salt from dried sea spray,
fires, biogenic emanation (e.g., pollen from plants, fungal spores),
and volcanoes. Fugitive dust and crustal material (geogenic materials)
comprise approximately 80% of the coarse fraction of the
PM10 inventory as estimated by methods in use today.\27\
Manmade sources of these coarser particles arise predominantly from
combustion of fossil fuel by large and small industrial sources
(including power generating plants, manufacturing plants, quarries, and
kilns), wind erosion from crop land, roads, and construction, dust from
industrial and agricultural grinding and handling operations, metals
processing, and burning of firewood and solid waste. Coarse-fraction
PM10 remains suspended in the atmosphere a relatively short
period of time.
---------------------------------------------------------------------------
\27\ U.S. EPA (1998) National Air Pollutant Emission Trends
Update, 1970-1997. EPA-454/E-98-007. There is evidence from ambient
studies that emissions of these materials may be overestimated and/
or that once emitted they have less of an influence on monitored PM
concentrations (of both PM10 and PM2.5) than
this inventory share would suggest.
---------------------------------------------------------------------------
Most of the emission sources listed for coarse particles also have
a substantial fine particle fraction. Their share of the
PM2.5 inventory is somewhat smaller, however, because of the
role of other sources that give rise primarily to PM2.5. The
other sources of PM2.5 include carbon-based particles
emitted directly from gasoline and diesel internal combustion engines,
sulfate-based particles formed from SOX and ammonia,
nitrate-based particles formed from NOX and ammonia, and
carbonaceous particles formed through transformation of VOC emissions.
PM2.5 particles from fugitive dust and crustal sources
comprise substantially less than their share of coarse PM emissions,
approximately one-half of the directly emitted PM2.5
inventory as estimated by methods in use today. The presence and
magnitude of crustal PM2.5 in the ambient air is much lower
even than suggested by this smaller inventory share, due to the
additional presence of secondary PM from non-crustal sources and the
removal of a large portion of crustal emissions close to their source.
This near-source removal results from crustal PM's lack of inherent
thermal buoyancy, low release height, and interaction with surrounding
vegetation (which acts to filter out some of these particles).
Secondary PM is dominated by sulfate particles in the eastern U.S.
and parts of the western U.S., with nitrate particles and carbonaceous
particles dominant in some western areas. Mobile sources can reasonably
be estimated to contribute to ambient secondary nitrate and sulfate PM
in proportion to their contribution to total NOX and
SOX emissions.
The sources, ambient concentration, and chemical and physical
properties of PM10 vary greatly with time, region,
meteorology, and source category. A first step in developing a plan to
attain the PM10 NAAQS is to disaggregate ambient
PM10 into the basic categories of sulfate, nitrate,
carbonaceous, and crustal PM, and then determine the major contributors
to each category based on knowledge of local and upwind emission
sources. Following this approach, SIP strategies to reduce ambient PM
concentrations have generally focused on controlling fugitive dust from
natural soil and soil disturbed by human activity, paving dirt roads
and controlling soil on paved roads, reducing emissions from
residential wood combustion, and controlling major stationary sources
of PM10 where applicable. The control programs to reduce
stationary, area, and mobile source emissions of sulfur dioxide, oxides
of nitrogen, and volatile organic compounds in order to achieve
attainment with the sulfur dioxide and ozone NAAQS also have
contributed to reductions in the fine fraction of PM10
concentrations. In addition, the EPA standards for PM emissions from
highway and nonroad engines are contributing to reducing
PM10 concentrations. As a result of all these efforts, in
the last ten years, there has been a downward trend in PM10
concentrations, with a leveling off in the later years.
Particulate matter, like ozone, has been linked to a range of
serious respiratory health problems. Scientific studies suggest a
likely causal role of ambient particulate matter in contributing to a
series of health effects. The key health effects categories associated
with particulate matter include premature mortality, aggravation of
respiratory and cardiovascular disease (as indicated by increased
hospital admissions and emergency room visits, school absences, work
loss days, and restricted activity days), changes in lung function and
increased respiratory symptoms, changes to lung tissues and structure,
and altered respiratory defense
[[Page 6717]]
mechanisms. PM also causes damage to materials and soiling. It is a
major cause of substantial visibility impairment in many parts of the
U.S.
Motor vehicle particle emissions and the particles formed by the
transformation of motor vehicle gaseous emissions tend to be in the
fine particle range. Fine particles are a special health concern
because they easily reach the deepest recesses of the lungs. Scientific
studies have linked fine particles (alone or in combination with other
air pollutants), with a series of significant health problems,
including premature death; respiratory related hospital admissions and
emergency room visits; aggravated asthma; acute respiratory symptoms,
including aggravated coughing and difficult or painful breathing;
chronic bronchitis; and decreased lung function that can be experienced
as shortness of breath.
These effects are discussed further in EPA's ``Staff Paper'' and
``Air Quality Criteria Document'' for particulate matter.\28\
---------------------------------------------------------------------------
\28\ U.S. EPA, 1996, Air Quality Criteria for Particulate
Matter, EPA/600/P-95/001aF. Review of the National Ambient Air
Quality Standards for Particulate Matter: Policy Assessment of
Scientific and Technical Information, OAQPS Staff Paper, EPA-452 R-
96-013, July 1996.
---------------------------------------------------------------------------
EPA first established primary (health-based) and secondary
(welfare-based) National Ambient Air Quality Standards for
PM10 in 1987. The annual and 24-hour primary PM10
standards were set at 50 g/m\33\, and 150 g/m\3\,
respectively.\29\ In July 1997, the primary standards were revised to
add two new PM2.5 standards. At the same time, we changed
the statistical form of the primary PM10 standard and set
all the secondary standards to be the same as the primary.
---------------------------------------------------------------------------
\29\ The annual average PM10 NAAQS is based on a three-year
average, and the 24-hour NAAQS is based on expected exceedances over
a three-year period.
---------------------------------------------------------------------------
On May 14, 1999, a panel of the U.S. Court of Appeals for the
District of Columbia Circuit reviewed EPA's revisions to the ozone and
PM NAAQS and found, by a 2-1 vote, that sections 108 and 109 of the
Clean Air Act, as interpreted by EPA, represent unconstitutional
delegations of Congressional power. American Trucking Ass'ns, Inc., et
al., v. Environmental Protection Agency, 175 F.3d 1027 (D.C. Cir.
1999). Among other things the Court remanded the record for the 8-hour
ozone NAAQS and the PM2.5 NAAQS to EPA. On October 29, 1999,
EPA's petition for rehearing by the three judge panel was denied, with
an exception regarding the revised ozone NAAQS. EPA's petition for
rehearing en banc by the full Circuit was also denied, although five of
the nine judges considering the petition agreed to rehear the case.
The pre-existing PM10 NAAQS remains in effect (except
for one area--Boise, ID--where prior to the court's decision we had
determined it no longer to apply). We believe that given the uncertain
status of the new PM2.5 NAAQS, it is most appropriate to
rely primarily on the pre-existing PM10 NAAQS in
establishing the Tier 2/Gasoline Sulfur program's vehicle emission
standards and limits on sulfur in gasoline. However, because we
believe, and the Court did not dispute, that there are very substantial
public health risks from PM2.5 and substantial health and
economic benefits from reducing PM2.5 concentrations, we
have conducted analyses of the PM2.5 changes likely to occur
from the Tier 2/Gasoline Sulfur program. These analyses are summarized
in the section of this preamble dealing with the economic benefits of
the new standards, section IV.D.5, and corresponding sections of the
final RIA.
There is additional concern regarding the health effects of PM from
diesel vehicles, apart from the health effects which were considered in
setting the NAAQS for PM10 and PM2.5. Diesel PM
contains small quantities of chemical species that are known
carcinogens, and diesel PM as a whole has been implicated in
occupational epidemiology studies. EPA's Office of Research and
Development has considered these studies, and has recently submitted to
a committee of our Science Advisory Board a draft conclusion that
diesel exhaust is a ``highly likely'' human cancer hazard.\30\ Because
we are awaiting a formal response from our advisory committee before
revising and finalizing our assessment document, we are not relying on
the conclusions in this document as formal support for our action
today. More information about this aspect of PM air quality is given in
section III.F of this preamble.
---------------------------------------------------------------------------
\30\ Health Assessment Document for Diesel Emissions, SAB Review
Draft EPA/600/8-90/057D. November 1999. The document is available
electronically at http://www.epa.gov/ncea/diesel.htm.
---------------------------------------------------------------------------
2. Need for Additional Reductions to Attain and Maintain the
PM10 NAAQS
The most recent PM10 monitoring data indicates that 15
designated PM10 nonattainment counties, with a population of
almost 9 million in 1996, violated the PM10 NAAQS in the
period 1996-1998. The areas that are violating do so because of
exceedances of the 24-hour PM10 NAAQS. No areas had
monitored violations of the annual standard in this period. Table
III.C-1 lists the 15 counties. The table also indicates the
classification for each area and the status of our review of the State
Implementation Plan.
Table III.C-1.--Fifteen PM10 Nonattainment Areas Violating the PM10 NAAQS in 1996-1998 a
----------------------------------------------------------------------------------------------------------------
1996
Area Classification SIP approved? Population
(millions)
----------------------------------------------------------------------------------------------------------------
Clark Co., NV................................. Serious.............. No....................... 0.93
El Paso, TX................................... Moderate............. Yes...................... 0.67
Gila, AZ...................................... Moderate............. No....................... 0.05
Imperial Co., CA.............................. Moderate............. No....................... 0.14
Inyo Co., CA.................................. Moderate............. No....................... 0.02
Kern Co., CA.................................. Serious.............. No....................... 0.62
Mono Co., CA.................................. Moderate............. No....................... 0.01
Kings Co., CA................................. Serious.............. No....................... 0.11
Maricopa Co., AZ.............................. Serious.............. No....................... 2.61
Power Co., ID................................. Moderate............. No....................... 0.01
Riverside Co., CA............................. Serious.............. No....................... 1.41
San Bernardino Co., CA........................ Serious.............. No....................... 1.59
Santa Cruz Co., AZ............................ Moderate............. No....................... 0.04
Tulare Co., CA................................ Serious.............. No....................... 0.35
[[Page 6718]]
Walla Walla Co., WA........................... Moderate............. Yes...................... 0.05
Total Population........................ ................... ....................... 8.61
------------------------
----------------------------------------------------------------------------------------------------------------
\a\ Although we do not believe that we are limited to considering only designated nonattainment areas in
implementing CAA section 202(i), we have focused on the designated areas in the case of PM10. An official
designation of PM10 nonattainment indicates the existence of a confirmed PM10 problem that is more than a
result of a one-time monitoring upset or a results of PM10 exceedances attributable to natural events. In
addition to these designated nonattainment areas, there are 15 unclassified counties in 12 geographically
spread out states, with a 1996 population of over 4 million, for which the state has reported PM10 monitoring
data for this period indicating a PM10 NAAQS violation. We have not yet excluded the possibility that a one-
time monitoring upset or a natural event(s) is responsible for the monitored violations in 1996-1998 in the 15
unclassified counties. We adopted a policy in 1996 that allows areas whose PM10 exceedances are attributable
to natural events to remain unclassified if the state is taking all reasonable measures to safeguard public
health regardless of the source of PM10 emissions. Areas that remain unclassified areas are not required to
submit attainment plans, but we work with each of these areas to understand the nature of the PM10 problem and
to determine what best can be done to reduce it. The Tier 2/Gasoline Sulfur program will reduce PM10
concentrations in these 15 unclassified counties, because all have car and light truck travel that contributes
to PM10 and precursor emissions loadings. This reduction will assist these areas in reducing their PM10
nonattainment problem, if a problem is confirmed upon closer examination of each local situation. Boise, ID,
had also been classified as a PM10 nonattainment area at one time and was monitored to have a PM10 NAAQS
violation in 1996-1998. However, the pre-existing PM10 NAAQS does not presently apply in Boise, ID, because in
the period between our revision of the old PM10 NAAQS and the Court's decision to vacate the revised PM10
NAAQS, we determined that Boise was in attainment with the old PM10 NAAQS and that it therefore no longer
applied in that area.
Because the types and sources of PM10 are complex and
vary from area to area, the best projections of future PM10
concentrations are the local emission inventory and air quality
modeling analyses that states have developed or are still in the
process of developing for their PM10 attainment plans. We do
employ a modeling approach, known as the source-receptor matrix
approach, for relating emission reductions to PM10
reductions on a national scale. This approach is one of our established
air quality models for purposes of quantifying the health and welfare
related economic benefits of PM reductions from major regulatory
actions. One application of this modeling approach was for the
Regulatory Impact Analysis for the establishment of the new PM NAAQS
\31\. This model is also the basis for the estimates of PM10
(and PM2.5) concentrations reductions we have used to
estimate the economic benefits of the Tier 2/Gasoline Sulfur program in
2030. Its use for this purpose is described in the final RIA. In both
applications, we modeled an emissions scenario corresponding to
controls currently in place or committed to by states. As such, this
scenario is an appropriate baseline for determining if further
reductions in emissions are needed in order to attain and maintain the
PM10 NAAQS.
---------------------------------------------------------------------------
\31\ Regulatory Impact Analyses for the Particulate Matter and
Ozone National Ambient Air Quality Standards and Proposed Regional
Haze Rule, Innovative Strategies and Economics Group, Office of Air
Quality Planning and Standards, U.S. Environmental Protection
Agency, Research Triangle Park, N.C., July 16, 1997.
---------------------------------------------------------------------------
In the RIA for the establishment of the PM NAAQS, we projected that
in 2010 there will be 45 counties not in attainment with the original
PM10 NAAQS . We cited these modeling results in our proposal
for the Tier 2/Gasoline Sulfur program and in our first supplemental
notice. After reviewing public comments on our presentation of these
modeling results, we have concluded that while the source-receptor
matrix approach is a suitable model for estimating PM concentration
reductions for economic benefits estimation, it is not a tool we can
use with high confidence for predicting that individual areas that are
now in attainment will become nonattainment in the future. However, we
believe the source-receptor matrix approach is appropriate for, and is
a suitable tool for, determining that a current designated
nonattainment area has a high risk of remaining in PM10
nonattainment at a future date. Therefore, we have cross-matched the
results for 2030 from our final RIA for Tier 2 and the list of current
PM10 nonattainment areas with monitored violations in 1996
to 1998 shown in Table III.C-1.\32\ Based on this, we conclude that the
8 areas shown in Table III.C-2 have a high risk of failing to attain
and maintain without further emission reductions. These areas have a
population of nearly 8 million. Included in the group are the counties
that are part of the Los Angeles, Phoenix, and Las Vegas metropolitan
areas, where traffic from cars and light trucks is substantial.
California areas will benefit from the Tier 2/Gasoline Sulfur program
because of travel within California by vehicles originally sold outside
the state, and by reduced poisoning of catalysts from fuel purchased
outside of California.
---------------------------------------------------------------------------
\32\ We used the more recent modeling for 2030 rather than the
earlier modeling for 2010, because the modeling the 2030
incorporates more recent estimates of emissions inventories. Our
emission estimates in our final RIA indicate that PM10
emissions under the basline scenario increase steadily between 1996
and 2030, for 47 states combined and for four specific cities,
suggesting that areas in nonattainment in both 1996-1998 and 2030
will be in nonatainment in the intermediate years as well assuming
no further emission reductions. A factor tending to make Table
III.C-2 shorter is that we have not relied on the source-receptor
matrix model's prediction of 24-hour nonattainment, as those
predictions on an individual areas basis are less reliable than the
predictions of annual average nonattainment.
Table III.C-2.--Eight Areas With a High Risk of Failing To Attain and
Maintain the PM10 NAAQS Without Further Reductions in Emissions
------------------------------------------------------------------------
1996
Area population
(millions)
------------------------------------------------------------------------
Clark Co., NV.............................................. 0.93
Imperial Co., CA........................................... 0.14
Kern Co., CA............................................... 0.62
Kings Co., CA.............................................. 0.11
Maricopa Co., AZ........................................... 2.61
Riverside Co., CA.......................................... 1.41
San Bernardino Co., CA..................................... 1.59
Tulare Co., CA............................................. 0.35
------------
Total population..................................... 7.76
------------------------------------------------------------------------
Table III.C-2 is limited to designated PM10
nonattainment areas which both had monitored violations of the
PM10 NAAQs in 1996-1998 and are predicted to be in
nonattainment in 2030 in our PM10 air quality modeling. This
gives us high confidence that these areas require further emission
reductions to attain and maintain, but does not fully
[[Page 6719]]
consider the possibility that there are other areas which are now
meeting the PM10 NAAQS which have at least a significant
probability of requiring further reductions to continue to maintain it.
Our air quality modeling predicted 2030 violations of the annual
average PM10 NAAQS in five additional counties that in
either 1997 or 1998 had single-year annual average monitored
PM10 levels of at least 90 percent of the NAAQS, but did not
exceed the formal definition of the NAAQS over the three-year period
ending in 1998 \33\. These areas are shown in Table III.C-3. They have
a combined population of almost 17 million, and a broad geographic
spread. Unlike the situation for ozone, for which precursor emissions
are generally declining over the next 10 years or so before beginning
to increase, we estimate that emissions of PM10 will rise
steadily unless new controls are implemented. The small margin of
attainment which these areas currently enjoy will likely erode; the PM
air quality modeling suggests that it will be reversed. We therefore
consider these areas to each individually have a significant risk of
failing to maintain the NAAQS without further emission reductions.
There is a substantial risk that at least some of them would fail to
maintain without further emission reductions. The emission reductions
from the Tier 2/Gasoline Sulfur program will help to keep them in
attainment.
---------------------------------------------------------------------------
\33\ In fact, in two of these areas, New York Co., NY and Harris
Co., TX, the average PM10 level in 1998 was above the 50
g/m3 value of the NAAQS. These two areas are not
included in the Table III.C-2 list of areas with a high risk of
failing to attain and maintain because lower PM10 levels
in 1996 and 1997 caused their three-year average PM10
level to be lower than the NAAQS. Official nonattainment
determinations for the annual PM10 NAAQS are made based
on the average of 12 quarterly PM10 averages.
Table III.C-3.--Five Areas With a Significant Risk of Failing to Attain
and Maintain the PM10 NAAQS Without Further Reductions in Emissions
------------------------------------------------------------------------
1996
Area population
(millions)
------------------------------------------------------------------------
New York Co., NY........................................... 1.33
Cuyahoga Co., OH........................................... 1.39
Harris, Co., TX............................................ 3.10
San Diego Co., CA.......................................... 2.67
Los Angeles Co., CA........................................ 8.11
------------
Total population..................................... 16.6
------------------------------------------------------------------------
Taken together and considering their number, size, and geographic
distribution, these 13 areas are sufficient to establish the case that
additional reductions are needed in order to attain and maintain the
PM10 NAAQS. This determination provides additional support
for the NOx and VOC standards and for the limits on gasoline sulfur,
which are also fully supported on ozone attainment and health effects
considerations. The sulfate particulate, sulfur dioxide,
NOX, and VOC emission reductions from the Tier 2/Gasoline
Sulfur program will help the 8 areas in Table III.C-2 and the 5 areas
in Table III.C.-3 to attain and maintain the PM10 NAAQS. The
new PM standards for gasoline and diesel vehicles are also supported by
this PM10 determination.
We are also establishing the new PM emissions standard today to
avoid the possibility that PM10 concentrations in these and
other areas do get even worse due to an increase in sales of diesel
vehicles, which could create a need for further reductions which would
be larger and would affect more areas of the country. At the present
time, virtually all cars and light trucks being sold are gasoline
fueled. The ambient PM10 air quality data for 1996 to 1998
reflects that current situation, and this data was an important factor
in what areas are listed in Tables III.C-2 and III.C-3. Also, the
predictions of future PM10 air quality, used to develop the
Tables III.C-2 and III.C-3 lists of areas with high or significant risk
of being unable to attain and maintain, are based on an assumption that
this will continue to be true. However, we are concerned over the
possibility that diesels will become more prevalent in the car and
light-duty truck fleet, since automotive companies have announced their
desire to increase their sales of diesel cars and light trucks. Because
current diesel vehicles emit higher levels of PM10 than
gasoline vehicles, a larger number of diesel vehicles could
dramatically increase levels of exhaust PM10, especially if
more stringent PM emissions standards are not in place. The new PM
emissions standards will ensure that an increase in the sales of diesel
cars and light trucks will not increase PM emissions from cars and
light trucks so substantially as to endanger PM10 attainment
and maintenance on a more widespread basis. Given this potential, it is
appropriate to establish the new PM emissions standards now on the
basis of the increase in sales of diesel vehicles being a reasonable
possibility without such standards. Establishing the new PM emissions
standards now avoids the public health impact and industry disruption
that could result if we waited until an increase in sales of diesels
with high PM emissions had already occurred.
In order to assess the potential impact of increased diesel sales
penetration on PM emissions, we analyzed the increase in
PM10 emissions from cars and trucks under a scenario in
which the use of diesel engines in cars and light trucks increases. We
used projections developed by A.D. Little, Inc. as part of a study
conducted for the American Petroleum Institute. The ``Most Likely''
case projected by A.D. Little forecasts that diesel engines'' share of
the light truck market will grow to 24 percent by the 2015 model year.
Diesel engines' share of the car market would grow somewhat more
slowly, reaching 9 percent by 2015. The A.D. Little forecasts did not
address the period after 2015; we have assumed that diesel sales
stabilize at the level reached in 2015, with the fraction of in-use
vehicles with diesel engines continuing to increase through turnover.
We believe these projections are more realistic than the scenario of
even higher sales of diesels described in the notice for the proposed
Tier 2/Gasoline Sulfur program, though the A.D. Little forecasts still
show much higher percentages of diesel vehicles in the light-duty fleet
than have ever existed historically in the U.S.
The A.D. Little scenario of increased diesels, and even more so the
scenario described in our proposal, would result in dramatic increases
in direct PM10 emissions from cars and light trucks, if
there were no change in these vehicles' PM standards. The increase in
diesel exhaust PM10 emissions would more than overcome the
reduction in direct PM10 attributable to the sulfur
reduction in gasoline. With no change in the existing PM standards for
cars and light trucks, our analysis of this scenario shows that direct
PM10 emissions in 2020 would be approximately 98,000 tons
per year, which is nearly two times the 50,000 tons projected if diesel
sales do not increase. The portion of ambient PM10
concentrations attributable to cars and light trucks would climb
steadily. The final RIA presents alternative estimates of the amount by
which future PM10 concentrations could increase due to such
an emissions increase, based on extrapolations from several studies'
estimates of the contribution that heavy-duty diesel vehicles have made
to recent or PM10 concentrations. The increase is estimated
to range from 0.6 to 20 g/m3.
The added PM10 emissions from cars and trucks due to an
increase in diesel sales without action to reduce PM10 from
new diesel vehicles would exacerbate the PM10 nonattainment
problems of the areas listed in Tables
[[Page 6720]]
III.C-2 and III.C-3, for which our air quality modeling predicted
future nonattainment even without an increase in diesel sales.
Moreover, it might cause PM10 nonattainment in additional
areas. In addition to the counties already listed in Tables III.C-2 and
III.C-3, there are other areas for which 1997 and 1998 data indicate
that maintenance of the PM10 NAAQS is at risk if diesel
sales of cars and light truck increase. Table III.C-4 lists additional
counties for which either 1997 or 1998 monitoring data, or both,
indicated a second-high PM10 concentration for the single
year within 10 percent of the PM10 24-hour NAAQS or an
annual average PM10 concentration within 10 percent of the
annual average PM10 NAAQS. Only counties which are part of
metropolitan statistical areas are listed in Table III.C-4, in order to
focus on those in which traffic densities are high. Considering both
the annual and 24-hour NAAQS, there were 13 areas within 10 percent of
the standard. Increases in PM10 emissions from more diesel
vehicles would put these areas in greater risk of violating the
PM10 NAAQS, especially if growth in other sources is high or
meteorological conditions are more adverse than in the 1996 to 1998
period.
Table III.C-4.--Thirteen Metropolitan Statistical Area Counties With
1997 and/or 1998 Ambient PM 10 Concentrations Within 10 Percent of the
Annual or 24-Hour the PM 10 NAAQS a
------------------------------------------------------------------------
1996
population
(millions)
------------------------------------------------------------------------
Areas within 10 percent of the annual PM10 NAAQS:
------------------------------------------------------------------------
Lexington Co., SC....................................... 0.20
Union Co., TN........................................... 0.02
Washoe Co., NV.......................................... 0.30
Madison Co., IL......................................... 0.26
Dona Ana Co., NM........................................ 0.16
El Paso Co., TX......................................... 0.68
Ellis Co., TX........................................... 0.97
Fresno Co., CA.......................................... 0.74
Philadelphia Co., PA.................................... 1.47
------------------------------------------------------------------------
Areas within 10 percent of the 24-hour PM10 NAAQS:
------------------------------------------------------------------------
Lexington Co., SC....................................... 0.20
El Paso Co., TX......................................... 0.68
Union Co., TN........................................... 0.02
Mobile Co., AL.......................................... 0.40
Dona Ana Co., NM........................................ 0.16
Lake Co., IN............................................ 0.48
Philadelphia Co., PA.................................... 1.47
Pennington Co., SD...................................... 0.09
Ventura Co., CA......................................... 0.71
Total Population of all 13 areas.................. 6.48
---------------
------------------------------------------------------------------------
Notes:
\a\ These areas are listed based on their second high 24-hour
concentration and annual average concentration in 1997, 1998, or both.
Official nonattainment determinations are made based on three years of
data, and on estimates of expected exceedances of the 24-hour
standard.
Fortunately, the standards included in today's actions will result
in a steady decrease in total direct PM10 from cars and
light trucks even if this increase in the use of diesel engines in
these vehicles were to occur. If the A.D. Little ``Most Likely''
scenario for increased diesel engines in light trucks were to occur,
today's actions would reduce diesel PM10 from cars and light
trucks by over 75 percent in 2020. Stated differently, by 2030 today's
actions would reduce 98,000 tons of the potential increase in
PM10 emissions from passenger cars and light trucks. The
result would be less direct PM10 than is emitted today,
because the increase in diesel PM10 would be more than
offset by the reduction in PM10 emissions from gasoline
vehicles resulting from lower gasoline sulfur levels.
We are establishing tighter PM standards for cars and light trucks
to help avoid the adverse impact of greater diesel PM emissions on
PM10 attainment and public health and welfare if diesel
sales increased in the future without the protection of the tighter
standards. Because diesel vehicles will essentially be performing the
same functions as the gasoline vehicles they will replace, it is
appropriate for the new PM standards to also apply equally to gasoline
and diesel vehicles. We expect that gasoline vehicles will need little
or no redesign to meet the new PM standards when free of defects and
properly operating. However, the new vehicle and gasoline sulfur
standards may achieve some reduction in real world PM emissions from
gasoline vehicles by encouraging more durable designs and by ensuring
that these vehicles are operated on lower-sulfur fuel. The new
standards for PM will also prevent any changes in gasoline engine
design which would increase PM emissions. These changes would otherwise
be possible because the current PM standard is so much higher than the
current performance on the gasoline vehicles.
3. PM2.5 Discussion
We are not basing our promulgation of the Tier 2 vehicle standards
on a finding on the need for additional emission reductions in order to
attain and maintain the NAAQS for PM2.5. We are providing
this information to explain that this program will result in
substantial benefit in reduction of PM2.5 concentrations, to
an even broader set of geographic areas than will benefit in terms of
PM10 attainment.
The annual and 24-hour PM2.5 NAAQS set in 1997 are
numerically much lower than the corresponding PM10
standards: 15 versus 50 g/m3 for the annual average
standards and 65 versus 150 g/m3 for the 24-hour
average standards. While geographically broad PM2.5
monitoring is just now reaching the end of the first of three years of
operation needed to determine compliance, our best analysis from the
more limited PM2.5 conducted in some areas indicates that
many areas that are in compliance with the PM10 standards
will be found to be in violation of the annual average PM2.5
standard. Violations of the 24-hour PM2.5 standard appear to
be infrequent.
Therefore, if we considered it appropriate to proceed with
implementing the PM2.5 NAAQS, we are confident that there
would be a larger set of areas for which we would determine that
further reductions in emissions are needed in order to attain and
maintain the NAAQS.
Moreover, gasoline and diesel cars and light trucks have a more
important contributing role for ambient PM2.5
concentrations, and other emission sources that play a major role in
ambient PM10 concentrations will be relatively less
important. Cars and light trucks contribute essentially the same
absolute amount to ambient concentrations of PM10 and of
PM2.5. However, most other sources contribute much more to
PM10 than to PM2.5, so the relative contribution
from cars and light trucks is larger. In addition, the absolute
contribution from cars and light trucks is larger in relationship to
the numerically lower PM2.5 standard, making them more
important to attainment and maintenance. This is also true for the
potential contribution that more diesel cars and light trucks would
make to ambient PM2.5 concentrations.
4. Emission Reductions and Ambient PM Reductions
The NOX and VOC emission reductions from the Tier 2/
Gasoline Sulfur program are presented in the ozone section above. The
SOX and PM reductions are presented in our final RIA, and
are essentially unchanged from those presented in our proposal, except
for the revision of the diesel sales scenario discussed above.
Because virtually all of the PM reduction from the Tier 2/Gasoline
[[Page 6721]]
Sulfur program is in the fine fraction of PM10, our
estimates of the PM2.5 and PM10 reductions are
essentially the same. Estimates of the ambient PM reductions in 2030 in
different parts of the nation, after full phase in of the vehicle
standards, are presented in the final RIA. The reductions in ambient PM
are largest in the parts of the country with more vehicle travel, i.e,
larger in the east than in the west and larger in urban areas than in
rural areas. In the eastern half of the nation, the reductions in
annual average PM concentrations range from 0.2 to over 1.2 micrograms
per cubic meter.
D. Other Criteria Pollutants: Carbon Monoxide, Nitrogen Dioxide, Sulfur
Dioxide
The standards being promulgated today will help reduce levels of
three other pollutants for which NAAQSs have been established: carbon
monoxide (CO), nitrogen dioxide (NO2), and sulfur dioxide
(SO2). As of 1998, every area in the United States has been
designated to be in attainment with the NO2 NAAQS. As of
1997, one area (Buchanan County, Missouri) did not meet the primary
SO2 short-term standard, due to emissions from the local
power plant. There are currently 20 designated CO nonattainment areas,
with a combined population of 33 million. There are also 24 designated
maintenance areas with a combined population of 22 million. However,
the broad trends indicate that ambient levels of CO are declining. In
1997, 6 of 537 monitoring sites reported ambient CO levels in excess of
the CO NAAQS.
The reductions in SO2 precursor emissions from today's
actions are essentially equal to the SOX reductions
described in Section III.B. and III.C., respectively. The impact of
today's actions on NO2 emissions depends on the specific
emission control technologies used to meet the Tier 2 vehicle emission
standards. However, essentially all of the NOX emitted by
cars and light trucks converts to NO2 in the atmosphere;
therefore, it is reasonable to assume that today's actions will
substantially reduce ambient NO2 levels by the same
proportion. Today's rule also will require light trucks to meet more
stringent CO standards. These more stringent standards will help extend
the trend towards lower CO emissions from motor vehicles and thereby
help the remaining CO nonattainment areas reach attainment while
helping other areas remain in attainment with the CO NAAQS. Our
analysis of CO reductions from today's program is found in Chapter III
of the RIA. The analysis of economic benefits and costs found in
Section IV.D.-5. does not account for the economic benefits of the CO
reductions expected to result from today's proposal.
E. Visibility
Visibility impairment occurs as a result of the scattering and
absorption of light by particles and gases in the atmosphere. It is
most simply described as the haze that obscures the clarity, color,
texture, and form of what we see. The principal cause of visibility
reduction is fine particles between 0.1 and 1 m in size. Of
the pollutant gases, only NO2 absorbs significant amounts of
light; it is partly responsible for the brownish cast of polluted
skies. While the contribution of NO2 to visibility
impairment varies from area to area, it is generally responsible for
less than ten percent of visibility reduction.
The CAA requires EPA to protect visibility, or visual air quality,
through a number of programs. These programs include the national
visibility program under Sections 169a and 169b of the Act, the
Prevention of Significant Deterioration program for the review of
potential impacts from new and modified sources, and the secondary
NAAQS for PM10 and PM2.5. The national visibility
program established in 1980 requires the protection of visibility in
156 mandatory federal Class I areas across the country (primarily
national parks and wilderness areas). More than 65 million visitors
travel each year to these parks and wilderness areas. The CAA
established as a national visibility goal, ``the prevention of any
future, and the remedying of any existing, impairment of visibility in
mandatory federal Class I areas in which impairment results from
manmade air pollution.'' The Act also calls for state programs to make
``reasonable progress'' toward the national goal. In addition, a recent
national opinion poll on the state of the national parks found that
more than 80 percent of Americans believe air pollution affecting these
parks should be cleaned up for the benefit of future generations.\34\
---------------------------------------------------------------------------
\34\ ``National Parks and the American Public: A National Public
Opinion Survey on the National Park System,'' Summary Report,
National Parks and Conservation Association, June 1998.
---------------------------------------------------------------------------
There has been improvement in visibility in the western part of the
country over the last ten years. However, visibility impairment remains
a serious problem in Class I areas. Visibility in the East does not
seem to have improved. As one part of addressing this national problem,
EPA has required states to adopt and implement effective plans for
protecting and improving visibility in Class I federal areas (64 FR
35714, July 1, 1999).
Today's actions will result in visibility improvements due to the
reduction in local and upwind PM and PM precursor emissions. Since
mobile source emissions contribute to the formation of visibility-
reducing PM, control programs that reduce the mobile source emissions
of direct and secondary PM would have the effect of improving
visibility. The Grand Canyon Visibility Transport Commission's final
recommendations report \35\ found that reducing total mobile source
emissions is an essential part of any program to protect visibility in
the Western U.S. The Commission found that motor vehicle exhaust is
responsible for about 14 percent of human-caused visibility reduction
(excluding road dust). A substantial portion of motor vehicle exhaust
comes from cars and light trucks. In light of that impact, the
Commission's recommendations in 1996 supported federal Tier 2/Gasoline
Sulfur standards, as EPA is proposing today. More recently, a number of
Western Governors noted the importance of controlling mobile sources as
part of efforts to improve visibility in their comments on the Regional
Haze Rule and on the need to protect the 16 Class I areas on the
Colorado Plateau. In their joint letter dated June 29, 1998, they
stated that, ``* * * the federal government must do its part in
regulating emissions from mobile sources that contribute to regional
haze in these areas. * * *'' and called on EPA to make a ``binding
commitment * * * to fully consider the Commission's recommendations
related to the * * * federal national mobile source emission control
strategies.'' These recommendations included Tier 2 vehicle standards
and reductions in gasoline sulfur levels.
---------------------------------------------------------------------------
\35\ ``Recommendations for Improving Western Vistas,'' Report of
the Grand Canyon Visibility Transport Commission to the United
States Environmental Protection Agency, June 10, 1996.
---------------------------------------------------------------------------
The recent Northern Front Range Air Quality Study provides another
indication of how important car and light truck emissions can be to
fine PM and visibility. This study reported findings that indicate that
cars and light trucks are responsible for 39 percent of fine PM at a
site within the metropolitan Denver area, and for 40 percent at a
downwind rural site. This contribution includes both direct PM and
indirect PM formed from sulfur dioxide and NOX from these
vehicles.
[[Page 6722]]
The analysis of economic benefits and costs found in Section
IV.D.5. accounts for the economic benefits of the visibility
improvements expected to result from today's actions.
F. Air Toxics
Section 202(a) provides that EPA may promulgate standards
regulating any air pollutants that in the Administrator's judgment,
cause or contribute to air pollution which may reasonably be
anticipated to endanger public health or welfare. Section 202(l)
provides specific provisions for regulation of hazardous air pollutants
from motor vehicles and fuels, and states that at a minimum such
regulations should apply to emissions of benzene and formaldehyde.
Emissions from cars and light trucks include a number of air
pollutants that are known or suspected human or animal carcinogens or
that are known or suspected to have other, non-cancer health impacts.
These pollutants include benzene, formaldehyde, acetaldehyde, 1,3-
butadiene, and diesel particulate matter. For several of these
pollutants, motor vehicle emissions are believed to account for a
significant proportion of total nation-wide emissions. All of these
compounds are present in exhaust emissions; benzene is also found in
evaporative emissions from gasoline-fueled vehicles.
The health effects of diesel particulate matter are of particular
relevance to today's actions, because of the possibility for increased
diesel-powered truck sales and the more stringent PM standard that will
apply to these trucks as a result of today's actions. While we have not
finalized our decision about the carcinogenicity of diesel exhaust, we
are in the process of addressing this question. The Agency's recently
released draft assessment \36\ concludes that diesel exhaust is a
highly likely human lung cancer hazard, but that the data are currently
unsuitable to make a confident quantitative statement of risk. The
draft report concludes, however, that this risk is applicable to
ambient exposures and that the risk may be in the range of regulatory
interest (greater than one in a million over a lifetime). Several other
agencies and governing bodies have designated diesel exhaust or diesel
PM as a ``potential'' or ``probable'' human carcinogen.\37\ The
California Air Resources Board (ARB), for example, found that diesel
particulate matter constituted a toxic air contaminant and estimated a
potency range of 1.3 x 10-4 to 2.4 x 10-3 per
g/m\3\.\38\ The ARB's findings suggest that 130 to 2400
persons in one million exposed to 1 g/m\3\ of diesel exhaust
particulate continuously for their lifetime (70 years) would develop
cancer as a result of their exposure.
---------------------------------------------------------------------------
\36\ EPA's diesel health assessment (Health Assessment Document
for Diesel Emissions, SAB Review Draft, U.S. Environmental
Protection Agency, Washington, DC. EPA/600/8-90/057D, November 1999)
can be found at the following EPA website: http://www.epa.gov/ncea/diesel.htm.
\37\ National Institute for Occupational Safety and Health
(1988) Carcinogenic effects of exposure to diesel exhaust. NIOSH
Current Intelligence Bulletin 50. DHHS (NIOSH) Publication No. 88-
116. Centers for Disease Control, Atlanta, GA.
International Agency for Research on Cancer (1989) Diesel and
gasoline engine exhausts and some nitroarenes, Vol. 46. Monographs
on the evaluation of carcinogenic risks to humans. World Health
Organization, International Agency for Research on Cancer, Lyon,
France.
World Health Organization (1996) Diesel fuel and exhaust
emissions: International program on chemical safety. World Health
Organization, Geneva, Switzerland.
California Environmental Protection Agency, Office of
Environmental Health Hazard Assessment: Proposed Identification of
Diesel Exhaust as a Toxic Air Contaminant, Part B Health Risk
Assessment for Diesel Exhaust. April 22, 1998.
\38\ California Environmental Protection Agency, Office of
Environmental Health Hazard Assessment: Proposed Identification of
Diesel Exhaust as a Toxic Air Contaminant, Part B Health Risk
Assessment for Diesel Exhaust. April 22, 1998.
---------------------------------------------------------------------------
Because our assessment for diesel exhaust is not complete, we are
not presenting absolute estimates of how potential cancer risks from
diesel particulate matter could be affected by today's rule. However,
we can offer a qualitative or relative discussion of these risks.
Diesel engines used in nonroad equipment and heavy-duty highway
vehicles currently constitute a far larger source of diesel PM than
cars and light-duty trucks, since diesel engines are used in a very
small portion of the cars and light-duty trucks in service today.
However, engine and vehicle manufacturers have projected that diesel
engines are likely to be used in an increasing share of cars and light
trucks, and some manufacturers have announced capital investments to
build such engines.
If these projections are valid, then the proportion of cars and
light trucks powered by diesel engines, and the associated potential
health risks from diesel PM, could increase substantially. We modeled
the most likely level of increase in light duty diesel engine sales
developed for the American Petroleum Institute.\39\ We found that the
greater diesel engine usage in cars and light trucks resulted in an 80
percent increase in emissions from all diesel-powered highway vehicles
by 2020--emissions that have been implicated in potential cancer
risks--assuming no change in the current light-duty diesel PM
standards.
---------------------------------------------------------------------------
\39\ ``U.S. Light-Duty Dieselization Scenarios--Preliminary
Study'', report to the American Petroleum Institute, July 2, 1999.
Prepared by Arthur D. Little, Inc.
---------------------------------------------------------------------------
Today's rule would limit the increase in the potential cancer risks
from cars and light trucks associated with any potential increase in
light-duty diesel engines. Using the same sales projections discussed
above, we have estimated that today's rule would limit the increase in
total highway diesel PM emissions in 2020 due to growth in light duty
diesels to under 10 percent, in contrast to the 80 percent increase
projected to occur without the Tier 2 PM standards. An analogous
analysis that accounted for exposure patterns, but that assumed even
more widespread use of diesels in the car and light truck fleet, found
that today's rule would limit the increase in total highway diesel PM
exposure to about 8 percent. This analysis is discussed more fully in
Chapter III.F.2 of the Regulatory Impact Analysis. In addition, the VOC
emission reductions resulting from today's rule would reduce the
potential cancer risk posed by air pollutants other than diesel PM
emitted by cars and light trucks, since many of these pollutants are
themselves VOCs. Furthermore, the rule would align the formaldehyde
standards for all Tier 2 LDVs and LDTs with the formaldehyde standards
for LDVs and LDT1s from the NLEV program, thereby helping to harmonize
the Federal and California formaldehyde standards.
The analysis of economic benefits and costs found in Section
IV.D.5. does not account for the economic benefits of the reduction in
cancer risk from air toxics that could result from today's rule.
Although we have completed a peer reviewed assessment of the impact of
today's rule on exposure to toxic emissions, we have not engaged in a
peer-reviewed assessment of the baseline air toxics risks (including a
final quantitative risk assessment of the diesel particulate risks) or
of the reductions that would be achieved by today's rule.
We plan to complete our analysis of air toxics risks as part of our
responsibilities under section 202(l)(2) of the Clean Air Act, which
requires EPA to establish regulations for the control of hazardous air
pollutants from motor vehicles. The regulations may address vehicle
emissions or fuel properties that influence emissions, or both. We plan
to issue a proposal to address this requirement in April 2000, and a
final rule in December 2000.
[[Page 6723]]
G. Acid Deposition \40\
---------------------------------------------------------------------------
\40\ Much of the information in this section was excerpted from
the EPA document, Human Health Benefits from Sulfate Reduction,
written under Title IV of the 1990 Clean Air Act. Amendments, U.S.
EPA, Office of Air and Radiation, Acid Rain Division, Washington,
DC, November 1995.
---------------------------------------------------------------------------
Acid deposition, or acid rain as it is commonly known, occurs when
SO2 and NOX react in the atmosphere with water,
oxygen, and oxidants to form various acidic compounds that later fall
to earth in the form of precipitation or dry deposition of acidic
particles. It contributes to damage of trees at high elevations and in
extreme cases may cause lakes and streams to become so acidic that they
cannot support aquatic life. In addition, acid deposition accelerates
the decay of building materials and paints, including irreplaceable
buildings, statues, and sculptures that are part of our nation's
cultural heritage. To reduce damage to automotive paint caused by acid
rain and acidic dry deposition, some manufacturers use acid-resistant
paints, at an average cost of $5 per vehicle--a total of $61 million
per year if applied to all new cars and trucks sold in the U.S. The
general economic and environmental effects of acid rain are discussed
at length in the RIA.
Acid deposition primarily affects bodies of water that rest atop
soil with a limited ability to neutralize acidic compounds. The
National Surface Water Survey (NSWS) investigated the effects of acidic
deposition in over 1,000 lakes larger than 10 acres and in thousands of
miles of streams. It found that acid deposition was the primary cause
of acidity in 75 percent of the acidic lakes and about 50 percent of
the acidic streams, and that the areas most sensitive to acid rain were
the Adirondacks, the mid-Appalachian highlands, the upper Midwest and
the high elevation West. The NSWS found that approximately 580 streams
in the Mid-Atlantic Coastal Plain are acidic primarily due to acidic
deposition. Hundreds of the lakes in the Adirondacks surveyed in the
NSWS have acidity levels incompatible with the survival of sensitive
fish species. Many of the over 1,350 acidic streams in the Mid-Atlantic
Highlands (mid-Appalachia) region have already experienced trout losses
due to increased stream acidity. Emissions from U.S. sources contribute
to acidic deposition in eastern Canada, where the Canadian government
has estimated that 14,000 lakes are acidic. Acid deposition also has
been implicated in contributing to degradation of high-elevation spruce
forests that populate the ridges of the Appalachian Mountains from
Maine to Georgia. This area includes national parks such as the
Shenandoah and Great Smoky Mountain National Parks.
The SOX and NOX reductions from today's
actions will help reduce acid rain and acid deposition, thereby helping
to reduce acidity levels in lakes and streams throughout the U.S. These
reductions will help accelerate the recovery of acidified lakes and
streams and the revival of ecosystems adversely affected by acid
deposition. Reduced acid deposition levels will also help reduce stress
on forests, thereby accelerating reforestation efforts and improving
timber production. Deterioration of our historic buildings and
monuments, and of buildings, vehicles, and other structures exposed to
acid rain and dry acid deposition, also will be reduced, and the costs
borne to prevent acid-related damage may also decline.
While the reduction in sulfur and nitrogen acid deposition will be
roughly proportional to the reduction in SOX and
NOX emissions, respectively, the precise impact of today's
vehicle and fuel standards will differ across different areas. Each
area is affected by emissions from different source regions, and the
mobile source contribution to the total SOX and
NOX emission inventory will differ across different source
regions. Nonetheless, the projected impact of today's actions on
SOX and NOX emission inventories provides a rough
indicator of the likely effect of the Tier 2/Gasoline Sulfur standards
on acid deposition. Our analysis indicates that today's actions will
reduce SOX emissions by 1.8 percent and NOX
emissions by 14.5 percent in 2030.
The analysis of economic benefits and costs found in Section
IV.D.5. did not account for the economic benefits of the reduction in
acid deposition expected to result from today's actions.
H. Eutrophication/Nitrification
Nitrogen deposition into bodies of water can cause problems beyond
those associated with acid rain. The Ecological Society of America has
included discussion of the contribution of air emissions to increasing
nitrogen levels in surface waters in a recent major review of causes
and consequences of human alteration of the global nitrogen cycle in
its Issues in Ecology series \41\. Long-term monitoring in the United
States, Europe, and other developed regions of the world shows a
substantial rise of nitrogen levels in surface waters, which are highly
correlated with human-generated inputs of nitrogen to their watersheds.
These nitrogen inputs are dominated by fertilizers and atmospheric
deposition.
---------------------------------------------------------------------------
\41\ Vitousek, Peter M., John Aber, Robert W. Howarth, Gene E.
Likens, et al. 1997. Human Alteration of the Global Nitrogen Cycle:
Causes and Consequences. Issues in Ecology. Published by Ecological
Society of America, Number 1, Spring 1997.
---------------------------------------------------------------------------
Human activity can increase the flow of nutrients into those waters
and result in excess algae and plant growth. This increased growth can
cause numerous adverse ecological effects and economic impacts,
including nuisance algal blooms, dieback of underwater plants due to
reduced light penetration, and toxic plankton blooms. Algal and
plankton blooms can also reduce the level of dissolved oxygen, which
can also adversely affect fish and shellfish populations. This problem
is of particular concern in coastal areas with poor or stratified
circulation patterns, such as the Chesapeake Bay, Long Island Sound, or
the Gulf of Mexico. In such areas, the ``overproduced'' algae tends to
sink to the bottom and decay, using all or most of the available oxygen
and thereby reducing or eliminating populations of bottom-feeder fish
and shellfish, distorting the normal population balance between
different aquatic organisms, and in extreme cases causing dramatic fish
kills.
Collectively, these effects are referred to as eutrophication,
which the National Research Council recently identified as the most
serious pollution problem facing the estuarine waters of the United
States (NRC, 1993). Nitrogen is the primary cause of eutrophication in
most coastal waters and estuaries \42\. On the New England coast, for
example, the number of red and brown tides and shellfish problems from
nuisance and toxic plankton blooms have increased over the past two
decades, a development thought to be linked to increased nitrogen
loadings in coastal waters. Airborne NOX contributes from 12
to 44 percent of the total nitrogen loadings to United States coastal
water bodies. For example, approximately one-quarter of the nitrogen in
the Chesapeake Bay comes from atmospheric deposition.
---------------------------------------------------------------------------
\42\ Much of this information was taken from the following EPA
documenta: Deposition of Air Pollutants to the Great Waters-Second
Report to Congress, Office of Air Quality Planning and Standards,
June 1997, EPA-453/R-97-011.
---------------------------------------------------------------------------
Excessive fertilization with nitrogen-containing compounds can also
affect terrestrial ecosystems \43\. Research suggests that nitrogen
fertilization can alter growth patterns and change the
[[Page 6724]]
balance of species in an ecosystem. In extreme cases, this process can
result in nitrogen saturation when additions of nitrogen to soil over
time exceed the capacity of the plants and microorganisms to utilize
and retain the nitrogen. This phenomenon has already occurred in some
areas of the U.S.
---------------------------------------------------------------------------
\43\ Terrestrial nitrogen deposition can act as a fertilizer. In
some agricultural areas, this effect can be beneficial.
---------------------------------------------------------------------------
Deposition of nitrogen from cars and light trucks contributes to
these problems. As discussed in Section III.B. above, today's actions
will reduce total NOX emissions by 4.5 percent in 2007 and
by 14.5 percent in 2030. The NOX reductions should reduce
the eutrophication problems associated with atmospheric deposition of
nitrogen into watersheds and onto bodies of water, particularly in
aquatic systems where atmospheric deposition of nitrogen represents a
significant portion of total nitrogen loadings. Since air deposition
accounts for 12-44 percent of total nitrogen loadings in coastal
waters, the reduction in NOX from today's actions is
projected to reduce nitrogen loadings by 0.5-2.0 percent in 2007 and
1.7-6.4 percent in 2030. To put these reductions in perspective, the
reductions expected in the Chesapeake Bay area would amount to about 9
percent of the total reduction in nitrogen loading needed to maintain
the reduction in nutrient loads agreed to by the signatory states in
the Chesapeake Bay Agreement (40 percent of ``controllable nutrient
loads'' by the year 2000).
The analysis of economic benefits and costs found in Section
IV.D.5. does not account for the economic benefits of reduced
eutrophication or reduced terrestrial nitrogen deposition expected to
result from today's actions.
I. Cleaner Cars and Light Trucks Are Critically Important to Improving
Air Quality
Despite continued progress in reducing ozone and PM levels, tens of
millions of Americans are still exposed to levels of these pollutants
that exceed the National Ambient Air Quality Standards. Our projections
show that without further action to reduce these pollutants, tens of
millions of Americans will continue to breathe unhealthy air for
decades to come. Our projections also show that emissions from cars and
light trucks will continue to contribute a substantial share of the
ozone and PM precursors in current and projected nonattainment areas,
and in upwind areas whose emissions contribute to downwind
nonattainment, unless additional measures are taken to reduce their
emissions. Cars and light trucks also contribute substantially to
ambient concentrations of CO. These vehicles will also continue to
contribute to the ambient PM that affects visibility in Class I federal
areas and some urban areas. Emissions from cars and light trucks also
play a significant role in a wide range of health and environmental
problems, including known and potential cancer risks from inhalation of
air pollutants (a problem that could become more significant if sales
of diesel-powered cars and light trucks were to increase), health risks
from elevated drinking water nitrate levels, acidification of lakes and
streams, and eutrophication of inland and coastal waters.
Today's actions will reduce NOX, VOC, CO, PM, and
SOX emissions from these vehicles substantially. These
reductions will help reduce ozone levels nationwide and reduce the
extent and severity of violations of the 1-hour ozone standard. These
reductions will also help reduce PM levels, both by reducing direct PM
emissions and by reducing emissions that give rise to secondary PM. The
CO reductions will help extend the downward trend in carbon monoxide
levels, thereby helping the remaining CO nonattainment areas attain the
CO standard and helping other areas stay in attainment with the CO
standard despite continued increases in vehicle miles traveled. The
NOX and SOX reductions will help reduce
acidification problems, and the NOX reductions will help
reduce eutrophication problems and drinking water nitrate levels. The
PM standards included in today's actions will help improve visibility
and would help mitigate adverse health effects in the event of
increases in light-duty diesel engine sales.
IV. What Are the New Requirements for Vehicles and Gasoline?
A. Why Are We Proposing Vehicle and Fuel Standards Together?
1. Feasibility of Stringent Standards for Light-Duty Vehicles and
Light-Duty Trucks.
a. Gasoline Fueled Vehicles
We believe that the standards being promulgated today for gasoline-
fueled vehicles are well within the reach of existing control
technology. Our determination of feasibility is based on the use of
catalyst-based strategies that are already in use and are well proven
on the existing fleet of vehicles. In fact, as you will see below, many
current engine families are already certified to levels at or below the
new final Tier 2 requirements. All of the certification and research
testing discussed below was performed on low-sulfur test fuel
(nominally 30 ppm).
i. LDVs and LDT1s-LDT4s
Certainly, larger vehicles and trucks, which are heavier and have
larger frontal areas, will face the biggest challenges in meeting the
final Tier 2 standards. However, conventional technology will be
sufficient for even these vehicles, especially in light of the extra
leadtime we have provided before LDT3s and LDT4s have to meet Tier 2
levels. We are also changing the test conditions for these trucks from
``adjusted loaded vehicle weight'' to ``loaded vehicle weight.''
Adjusted loaded vehicle weight, suitable for commercial truck
operation, loads the truck to half of its full payload. Loaded vehicle
weight, on the other hand, represents curb weight plus 300 pounds. This
change more accurately reflects how these vehicles are used and makes
heavy LDT testing consistent with passenger car and light LDT testing.
This change is consistent with treating these vehicles as they were
designed, i.e., for light-load use.
Emission control technology has evolved rapidly in recent years.
Emission standards applicable to 1990 model year vehicles required
roughly 90 percent reductions in exhaust HC and CO emissions and a 75
percent reduction in NOX emissions compared to uncontrolled
emissions. Today, some vehicles currently in production are well below
these levels, showing even greater overall emissions reductions of all
three of these pollutants. These vehicles' emissions are well below
those necessary to meet the current federal Tier 1 and even California
Low-Emission Vehicle (LEV-I) standards. The reductions have been
brought about by ongoing improvements in engine air-fuel management
hardware and software plus improvements in catalyst designs, all of
which are described fully in the RIA.
The types of changes being seen on current vehicles have not yet
reached their technological limits, and continuing improvement will
allow both LDVs and LDTs to meet the final standards. The RIA describes
a range of specific techniques that we believe could be used. These
range from improved computer software and engine air-fuel controls to
increases in precious metal loading and other exhaust system/catalyst
system improvements. All of these technologies are currently used on
one or more production vehicle models. There is no need to invent new
approaches or technologies. The focus of the effort is primarily
development,
[[Page 6725]]
application, and optimization of these existing technologies.
We can gain significant insight into the difficulty of meeting the
final new standards by looking at current full-life certification data.
There are at least 48 engine family-control systems combinations, out
of approximately 400, certified in 1999 at levels below the Tier 2
NOX standard of 0.07 g/mi. Of these, 35 also have
hydrocarbon levels of 0.09 g/mi or below. Looking at a somewhat higher
threshold to identify vehicles certified near the final standard, there
are an additional 113 car and light truck families certified at levels
between 0.07 g/mi and 0.10 g/mi NOX. Although not yet
complete at this time, we also examined the 2000 model year
certification data and found that there are at least 60 engine family-
control systems combinations certified at levels below the Tier 2
NOX standard of 0.07 g/mi and of those, 52 also have
hydrocarbon levels of 0.09 g/mi or below.
All of the above vehicles are already able, or close to being able,
to certify to our final standards. The further reductions needed are
those to provide a compliance margin, or cushion, between the certified
level and the emission standard. The degree of compliance margin
required is a function of a variety of factors designed to provide the
manufacturer a high confidence that production vehicles will meet the
standards in-use over their useful life. Historically, these
determinations are manufacturer specific, with cushions generally
growing smaller as standards decline (reflecting more precision and
repeatability in vehicle performance as more sophisticated controls are
developed). The certification data reflects compliance cushions from as
little as 20 percent below the standard to as high as 80 percent below
the standard.
The manufacturers commented that the most difficult vehicles to
bring into compliance with the Tier 2 standards would be the larger
light-duty trucks, specifically those trucks currently certified under
the LDT3 and LDT4 weight categories. Because of this, we undertook a
technology demonstration program aimed at lowering the emissions of
several large 1999 light-duty trucks. Two LDT3 Chevrolet Silverado
pick-up trucks were tested, one internally and one under contract. Two
LDT4 Ford Expedition sport-utility vehicles were also tested, also with
one tested internally and one under contract. Both types of vehicles
were tested with optional high horsepower engines (270 hp for the
Silverado and 230 hp for the Expedition) and were equipped with four-
wheel drive. The vehicles had curb weights of 4,500 pounds (GVWR of
6,100 lbs) for the Silverados and 5,800 pounds (GVWR of 7,200 lbs) for
the Expeditions.
Figures IV.A.-1 and IV.A.-2 show the results to date of the
emissions tests performed during this demonstration program at our
National Vehicle and Fuel Emissions Laboratory (NVFEL) and also for
emissions tests conducted in parallel by and under contract at
Southwest Research Institute (SwRI) using similar Ford Expeditions and
GM Chevrolet Silverados. During the evaluation, the trucks were
equipped with a variety of catalysts that typically featured higher
volume, higher precious metal loading, and higher cell-densities than
the original hardware used by the vehicles to meet California LEV-I
standards. Details of the catalysts tested are included in the RIA.
Different exhaust manifolds featuring an insulating air-gap and low
thermal mass were also evaluated. Finally, calibration changes were
made to the powertrain control modules \44\ to better match engine
operating characteristics to the new catalyst systems, and to lower
engine-out NOx emissions. The Silverado and Expedition had very similar
results. Similar results were also achieved by us and SwRI, but by
fairly different methods. The SwRI work on both trucks relied primarily
on engine calibration changes and secondary air injection. The advanced
catalyst systems used by SwRI contained advanced washcoat formulations
with only minor changes to catalyst volume and precious metal content
compared to the manufacturer's original configuration. The work we
conducted on the Expedition also relied primarily on engine calibration
changes with no secondary air injection. The catalyst system also
contained advanced washcoat formulations with modest changes to
catalyst volume and precious metal content. The work we conducted on
the Silverado relied primarily on an advanced catalyst system with
volume and precious metal content changes, with only minor changes to
engine calibration.
---------------------------------------------------------------------------
\44\ Powertrain control modules are computers used to control
engine, transmission, and other vehicle functions on newer
automobiles and trucks. The changes involved software changes in the
case of the EPA-NVFEL work, or the use of alternate means of engine
control in the case of the SwRI work.
---------------------------------------------------------------------------
As can be seen in the charts, the emissions of the vehicles tested
clearly show the feasibility of the Tier 2 standards on the most
difficult to certify vehicle categories. All vehicles reached emission
levels well below the Tier 2 full-life NOx and NMOG standards. At the
same time, there were no significant impacts on either fuel economy or
performance of the vehicles.
Compared to the intermediate (50,000 mile) standards, the Ford
Expedition tested at NVFEL consistently emitted NOx at less than one-
third of the intermediate useful life standard.\45\ NMHC/NMOG emissions
were slightly below the intermediate standard level with no use of
secondary-air-injection for cold-start hydrocarbon control. The
Silverado tested at NVFEL met the intermediate standards with primarily
hardware (catalyst) changes and only very minor calibration changes.
The trucks tested at SwRI differed from those tested at NVFEL in their
combination of emissions control hardware and calibration strategies,
but achieved approximately the same emissions levels.
---------------------------------------------------------------------------
\45\ Although this testing was done on vehicles with catalysts
aged to 50,000, we belive the overall experiments also strongly
suggest that the Tier 2 full-life standards would be achieved by
high-mileage vehicles.
---------------------------------------------------------------------------
The above results point out that not only are the Tier 2 standards
feasible for larger trucks, but there are multiple means that can be
taken in order to achieve the necessary emissions levels. All of those
paths involve fairly simple enhancements to current technology systems.
Furthermore, the testing was conducted with a very limited budget over
a limited amount of time. With the interim program for heavy trucks
under Tier 2, the manufacturers will have 9 years from the publishing
of the Tier 2 rule to bring the largest trucks into compliance with the
Tier 2 standards. Manufacturers will also have considerably more
resources with respect to calibration changes and hardware design to
bring trucks of this type within compliance than were available within
this limited, but successful, demonstration.
BILLING CODE 6560-50-P
[[Page 6726]]
[GRAPHIC] [TIFF OMITTED] TR10FE00.001
[[Page 6727]]
[GRAPHIC] [TIFF OMITTED] TR10FE00.002
BILLING CODE 6560-50-C
The Manufacturers of Emission Controls Association (MECA) sponsored
a program that took two LDVs (a Crown Victoria and a Buick LeSabre) and
one LDT2 (a Toyota T100) certified to the federal Tier 1 standards and
replaced the original catalytic converter systems with more advanced
catalytic converters, thermally aged to approximately 50,000 miles.
With these systems and some related emission control modifications, the
LeSabre and T100 emissions were well below our intermediate (50,000
mile) useful life standards, and the Crown Victoria was well below the
NMOG standard and very close to the NOX standard.
Finally, the California Air Resources Board (ARB) tested five
different production LEV light-duty vehicle models. Three of the five
models met the Tier 2 standards for NMOG and NOX prior to
any modifications. After installing low mileage advanced catalytic
converters and making some minor adjustments to fuel bias, air
injection, and spark timing, all of the vehicles had emission levels
well below the Tier 2 intermediate useful life NMOG and NOX
standards. ARB also tested several Ford Expeditions (LDT4) equipped
with advanced catalytic converters. By adjusting several parameters,
they were able to reduce NOX emissions to 0.06 g/mi and NMOG
to 0.07 g/mi with a catalyst aged to 50,000 miles of use.
A more expanded analysis of the feasibility of the Tier 2 standards
for gasoline fueled vehicles can be found in the RIA, considering the
types of changes that will allow manufacturers to extend effective new
controls to the entire fleet of affected vehicles. That analysis
includes discussion of gasoline direct-injection engines, as well as
the feasibility of the CO, formaldehyde and evaporative emission
standards. The conclusion of all of our analyses is that the standards
are feasible for gasoline-fueled vehicles. As gasoline-fueled vehicles
represent the overwhelming majority of the LDV and LDT population
(i.e., over 99%), EPA concludes that the Tier 2 standards are feasible
overall for LDVs and LDTs under 8500 lbs GVWR.
ii. Medium-Duty Passenger Vehicles (MDPVs)
The technologies and emission control strategies that will be used
for LDT3 and LDT4 vehicles with a GVWR less than 8,500 pounds should
apply directly to MDPV vehicles that have a GVWR greater than 8,500
pounds. In our LDT technology demonstration program discussed above, we
found that a combination of calibration changes and improvements to the
catalyst system resulted in emission levels for NOX well
below and NMHC/NMOG approximately at the Tier 2 intermediate useful
life standards. The catalyst improvements consisted of increases in
volume and precious metal loading, and higher cell-densities than those
found in the original hardware. We are confident that the use of
secondary-air-injection will greatly help cold-start hydrocarbon
control, making the NMOG standards achievable.
The most significant difference between LDT4s less than 8,500
pounds GVWR and MDPVs greater than 8,500 pounds GVWR is that MDPVs have
a vehicle weight up to 800 pounds more than LDT4s. MDPVs will also be
typically equipped with larger displacement engines. The potential
impact of these differences is higher engine-out emissions than LDT4s
due to the larger engine displacement and
[[Page 6728]]
greater load that the engine will be operated under due to the extra
weight. However, neither of these preclude manufacturers from applying
the same basic emission control technologies and strategies as used by
LDVs and LDTs. The only difference will likely be the need for larger
catalysts with higher precious metal loading than found in LDT4s. We
are confident that MDPVs will be capable of meeting the final Tier 2
standards.
We are currently testing a Ford Excursion as part of our LDT
technology demonstration program. Preliminary baseline results with a
`green'' (i.e., nearly new) catalyst indicate that emission levels are
higher than baseline emissions for the Ford Expedition. These results,
although with a green catalyst, are well below our interim Tier 2 upper
bin standards. In fact, the majority of these vehicles certified on the
chassis dynamometer in California have certification levels well below
our interim upper bin standards. While this testing is ongoing, we feel
that the preliminary results are encouraging since they suggest that
the difference in emissions between the Excursion and Expedition
suggest that the strategies used on the Expedition can be successful
with the Excursion. Therefore, we believe that by using technologies
and control strategies similar to what will be used by LDVs and LDTs,
combined with larger catalysts, MDPVs will be able to meet our Tier 2
emission standards.
b. Diesel Vehicles
As discussed above, the Tier 2 standards are intended to be ``fuel
neutral.'' In today's document, we establish that the Tier 2 standards
are technologically feasible and cost-effective for LDVs and LDTs
overall, based on the discussion in Section IV.A.1.a. above. Under the
principle of fuel neutrality, all cars and light trucks, including
those using diesel engines, will be required to meet the Tier 2
standards. Contrary to some of the comments received on our proposal,
given that the overwhelming majority of vehicles in these classes are
gasoline-fueled, we do not believe it is appropriate to provide less
stringent standards for diesel-fueled vehicles. Manufacturers of LDVs
and LDTs today provide consumers with a wide choice of vehicles that
are overwhelmingly gasoline-fueled. Less stringent standards for
diesels would create provisions that could undermine the emission
reductions expected from this program, especially given the expectation
that some manufacturers may intend to greatly increase their diesel
sales.
As with gasoline engines, manufacturers of diesels have made
abundant progress over the past 10 years in reducing engine-out
emissions from diesel engines. In heavy trucks and buses, PM emission
standards, which were projected to require the use of exhaust
aftertreatment devices, were actually met with only engine
modifications. Indeed, emissions and performance of lighter diesel
engine are rapidly approaching the characteristics of gasoline engines,
while retaining the durability and fuel economy advantages that diesels
enjoy. Against this background of continuing progress, we believe that
the technological improvements that would be needed could be made in
the time that would be available before diesels would have to meet the
new Tier 2 standards.
Manufacturers may take advantage of the flexibilities in today's
rulemaking to delay the need for diesel LDVs and LDTs to meet the final
Tier 2 levels until late in the phase-in period (as late as 2007 for
LDVs/LLDTs and 2009 for HLDTs), giving manufacturers a relatively large
amount of leadtime. In a recent public statement, Cummins Engine
Company has indicated that the interim Tier 2 standards in effect for
vehicles and trucks in the early years of the Tier 2 program are
feasible for diesel equipped models through further development of
currently available engine and exhaust aftertreatment technology.\46\
---------------------------------------------------------------------------
\46\ ``Cummins Sees Diesel Feasible for Early Years of Tier 2''.
Hart Diesel Fuel News, Sept. 20, 1999, p.2.
---------------------------------------------------------------------------
While reductions in ``engine-out'' emissions, including
incorporation of EGR strategies, may continue to be made, increasing
emphasis is being placed on various aftertreatment devices for diesels.
We believe that the use of aftertreatment devices will allow diesels to
comply with the Tier 2 standards for NOX and PM.
For NOX emissions, potential aftertreatment technologies
include lean NOX catalysts, NOX adsorbers and
selective catalytic reduction (SCR). Lean NOX catalysts are
still under development, but generally appear capable of reducing
NOX emissions by about 15-30%. This efficiency is not likely
to be sufficient to enable compliance with the final Tier 2 standards,
but it could be used to meet the interim standards that would begin in
2004, with current diesel fuel.
NOX adsorbers appear capable of reaching efficiency
levels as high as 90%. Efficiency in this range is likely to be
sufficient to enable compliance with the proposed Tier 2 standards.
NOX adsorbers temporarily store the NOX and thus
the engine must be run periodically for a brief time with excess fuel,
so that the stored NOX can be released and converted to
nitrogen and oxygen using a conventional three-way catalyst, like that
used on current gasoline vehicles.
There is currently a substantial amount of development work being
directed at NOX adsorber technology. While there are
technical hurdles to be overcome, progress is continuing and it is our
judgement that the technology should be available by the time it would
be needed for the final Tier 2 standards.
One serious concern with current NOX adsorbers is that
they are quickly poisoned by sulfur in the fuel. Some manufacturers
have strongly emphasized their belief that, in order to meet the final
Tier 2 levels, low sulfur diesel fuel would also be required to
mitigate or prevent this poisoning problem. In its comments on the
NPRM, Navistar indicated that the Tier 2 standards may be achievable
given low sulfur fuel and other programmatic changes such as those
included in this Final Rule. Navistar has also been quoted publically
as describing the Tier 2 standards as ``challenging but achievable''
given appropriate low sulfur fuel.\47\ We intend to issue a Notice of
Proposed Rulemaking early in the year 2000 intended to reduce sulfur in
highway diesel fuel as a step to enable the technology most likely to
be used to meet the Tier 2 standards.
---------------------------------------------------------------------------
\47\ Harts Diesel Fuel News, August 9, 1999, p4.
---------------------------------------------------------------------------
SCR has been demonstrated commercially on stationary diesel engines
and can reduce NOX emissions by 80-90%. This efficiency
would be sufficient to enable compliance with the proposed Tier 2
standards. However, SCR requires that the chemical urea be injected
into the exhaust before the catalyst to assist in the destruction of
NOX. The urea must be injected at very precise rates, which
is difficult to achieve with an on-highway engine, because of widely
varying engine operating conditions. Otherwise, emissions of ammonia,
which have a very objectionable odor, can occur. Substantial amounts of
urea are required, meaning that vehicle owners would have to replenish
their vehicles' supply of urea frequently, possibly as often as every
fill-up of fuel. As the engine and vehicle would operate satisfactorily
without the urea (only NOX emissions would be affected),
some mechanism would be needed to ensure that vehicle owners maintained
their supply of urea. Otherwise, little NOX emission
reduction would be expected in-use.
[[Page 6729]]
Regarding PM, applicable aftertreatment devices tend to fall into
two categories: Oxidation catalysts and traps. Diesel oxidation
catalysts can reduce total PM emissions by roughly 15-30%. They would
need to be used in conjunction with further reductions in PM engine-out
emissions in order to meet the proposed Tier 2 standards. Diesel
particulate traps, on the other hand, can eliminate up to 90% of diesel
PM emissions. However, some of the means of accomplishing the
regeneration of particulate traps involve catalytic processes that also
convert sulfur dioxide in the exhaust to sulfate. These techniques, if
used, would also require a low sulfur fuel.
In summary, we believe that the structure of our final program,
including the available bins and phase-in periods, will allow the
orderly development of clean diesel engine technologies. We believe
that the interim standards are feasible for diesel LDV/LDTs, within the
bin structure of this rule and without further reductions in diesel
fuel sulfur levels. And, as indicated earlier, at least one major
diesel engine manufacturer (Cummins) has publicly agreed with this
assessment. We further believe that in the long-term, the final
standards will be within reach for diesel-fueled vehicles in
combination with appropriate changes to diesel fuel to facilitate
aftertreatment technologies. Manufacturers have argued that low sulfur
diesel fuel will be required to permit diesels to meet the final Tier 2
standards, and we agree. At least one major manufacturer (Navistar) has
indicated its belief that the final Tier 2 standards may be achievable
for diesel engines with low sulfur diesel fuel.
2. Gasoline Sulfur Control Is Needed to Support the Proposed Vehicle
Standards
As we discussed in the previous section, we believe that the
stringent standards in this final rule are needed to meet air quality
goals and are feasible for LDVs and LDTs. At the same time, we believe
that for these standards to be feasible for gasoline LDVs and LDTs, low
sulfur gasoline must be made available. The following paragraphs
explain why we think gasoline sulfur control must accompany Tier 2
vehicle standards.
Catalyst manufacturers generally use low sulfur gasoline in the
development of their catalyst designs. Vehicle manufacturers then equip
their vehicles with these catalysts and EPA certifies them to the
exhaust emission standards, usually based on testing the manufacturer
does using low sulfur gasoline. However, fundamental chemical and
physical characteristics of exhaust catalytic converter technology
generally result in a significant degradation of emission performance
when these vehicles use gasoline with sulfur levels common in most of
the country today. This sensitivity of catalytic converters to gasoline
sulfur varies somewhat depending on a number of factors, some better
understood than others. Clearly, however, as we discuss in the
following paragraphs, gasoline sulfur's impact is large, especially in
vehicles designed to meet very low emission standards.
This is the reason EPA has decided to adopt a comprehensive
approach to addressing emissions from cars and light trucks, including
provisions to get low sulfur gasoline into the field in the same time
frame needed for Tier 2 vehicles.
a. How Does Gasoline Sulfur Affect Vehicle Emission Performance?
We know that gasoline sulfur has a negative impact on vehicle
emission controls. Vehicles depend on the catalytic converter to reduce
emissions of HC, CO, and NOX. Sulfur and sulfur compounds
attach or ``adsorb'' to the precious metal catalysts that are required
to convert these emissions. Sulfur also blocks sites on the catalyst
designed to store oxygen that are necessary to optimize NOX
emissions conversions. While the amount of sulfur contamination can
vary depending on the metals used in the catalyst and other aspects of
the design and operation of the vehicle, some level of sulfur
contamination will occur in any catalyst.
Sulfur sensitivity is impacted not only by the catalyst formulation
(the types and amounts of precious metals used in the catalyst) but
also by factors including the following:
The materials used to provide oxygen storage capacity in
the catalyst, as well as the general design of the catalyst,
The location of the catalyst relative to the engine, which
impacts the temperatures inside the catalyst,
The mix of air and fuel entering the engine over the
course of operation, which is varied by the engine's computer in
response to the driving situation and affects the mix of gases entering
the catalyst from the engine, and
The speeds the car is driven at and the load the vehicle
is carrying, which also impact the temperatures experienced by the
catalyst.
Since these factors vary for every vehicle, the sulfur impact
varies for every vehicle to some degree. There is no single factor that
guarantees that a vehicle will be very sensitive or very insensitive to
sulfur. We now believe that there are not (and will not be in the
foreseeable future) emission control devices available for gasoline-
powered vehicles that can meet the proposed Tier 2 emission standards
that would not be significantly impaired by gasoline with sulfur levels
common today.
b. How Large Is Gasoline Sulfur's Effect on Emissions?
High sulfur levels have been shown to significantly impair the
emission control systems of cleaner, later technology vehicles. The
California LEV standards and Federal NLEV standards, as well as
California's new LEV-II standards and our Tier 2 standards, require
catalysts to be extremely efficient to adequately reduce emissions over
the full useful life of the vehicle. In the NPRM we estimated that,
based on data from test programs conducted by EPA and the automotive
and oil industries, LEV and ULEV vehicles could experience, on average,
a 40 percent increase in NMHC and 134 percent increase in
NOX emissions when operated on 330 ppm sulfur fuel (our
estimate in the NPRM of the current national average sulfur level)
compared to 30 ppm sulfur fuel. New data generated since the NPRM on
similar LEVs and ULEVs show that when these vehicles were driven on
high sulfur (330 ppm) fuel for a few thousand miles (as opposed to less
than 100 miles for the previous data), the NMHC and NOX
emission increase due to high sulfur fuel increased by 149 percent and
47 percent, respectively. In other words, instead of the previous
estimated 40 percent and 134 percent increases in NMHC and
NOX emissions, respectively, more realistic estimates would
be 100 percent and 197 percent, respectively.\48\ Also, new data
generated since the NPRM for late model LEV and ULEV vehicles that meet
the federal and California supplemental federal test procedure (SFTP)
standards and also have very low FTP emission levels, indicate that, on
average, a 51 percent increase in NMHC and a 242 percent increase in
NOX emissions when operated for a short period of time on
330 ppm compared to 30 ppm could be realized.
---------------------------------------------------------------------------
\48\ The air quality impacts discussed above under Section III
above do not reflect these new estimates.
---------------------------------------------------------------------------
This level of emissions increase is significant enough on its own
to cause a vehicle to exceed the full useful life emission standards
when operated on sulfur levels that are substantially higher than the
levels required by today's rule, even with the margin of
[[Page 6730]]
safety that auto manufacturers generally include. Average sulfur levels
in the U.S. are currently high enough to significantly impair the
emissions control systems in new technology vehicles, and to
potentially cause these vehicles to fail emission standards required
for vehicles up through 100,000 miles (or more) of operation.
For older vehicles designed to meet Tier 0 and Tier 1 emission
standards, the effect of sulfur contamination is somewhat less. Still,
testing shows that gasoline sulfur increases emissions of NMHC and
NOX by almost 17% when one of these vehicles is operated on
gasoline for less than 100 miles containing 330 ppm sulfur compared to
operation on gasoline with 30 ppm sulfur. Thus, Tier 0 and Tier 1
vehicles can also have higher emissions when they are exposed to sulfur
levels substantially higher than the proposed sulfur standard. This
increase is generally not enough to cause a vehicle to exceed the full
useful life emission standards in practice, but it can result in in-use
emissions increases since the vehicle could emit at levels higher than
it would if it operated consistently on 30 ppm sulfur gasoline.
As discussed in the RIA, NLEV and Tier 2 vehicles are significantly
more sensitive to sulfur poisoning than Tier 1 and Tier 0 vehicles.
Because of this, even in the absence of Tier 2 standards, gasoline
sulfur control to 30 ppm would achieve about 700,000 tons of
NOX reductions per year from LDVs and LDTs by 2020. This
represents about a third of the national NOX emission
reductions otherwise available from these vehicles. Without these
potential emission reductions, many states would face the potentially
unmeetable challenge of finding enough other cost-effective sources of
NOX emission reductions to address their ozone nonattainment
and maintenance problems.
Sulfur reductions will result in reductions of other pollutants as
well. For example, the increase in CO emissions at 330 ppm compared to
30 ppm were very similar to the results above for NMHC. Thus, sulfur
reductions would greatly reduce CO emissions. Another example is sulfur
reductions will help reduce emissions of particulate matter, providing
some benefit to PM nonattainment areas (which may or may not coincide
with ozone nonattainment areas) as well as with visibility problems.
Sulfur reductions will also have benefits for areas across the country
with acid deposition problems. Furthermore, sulfur reduction, by
enabling tighter Tier 2 standards and by improving emissions
performance of the vehicles already on the road, will lead to fewer
NMOG emissions, since, as explained in the RIA, NMOG emissions are also
impacted by gasoline sulfur (although to a lesser extent than
NOX emissions). Some of the NMOG emissions reduced are air
toxics. As described in Section III above, air toxics, also known as
hazardous air pollutants, or HAPs, contribute to a variety of human
health problems.
c. Sulfur's Negative Impact on Tier 2 Catalysts
As we discussed in the last section, sulfur contaminates the
catalyst. In addition, essentially all vehicles that have been tested
show that this effect is not reversible for one or more pollutants. The
ability to reverse sulfur's negative effect on catalyst performance is
dependent on a number of factors. The same factors that impact sulfur
sensitivity also impact the irreversibility of the sulfur effect. For
example, the location of the catalyst relative to the engine, the
materials used to provide oxygen storage capacity in the catalyst, and
the general design of the catalyst and the mix of air and fuel (A/F)
entering the engine over the course of operation affect
irreversibility, to name a few.
Perhaps the most significant factors for reversibility are the
mixture of air and fuel entering the engine and catalyst temperature.
The results of numerous studies and test programs show that rich
exhaust (absence of oxygen) mixtures in addition to high catalyst
temperatures (in excess of 700 deg.C) can remove sulfur from the
catalyst. Rich exhaust mixtures can occur intentionally and
unintentionally, depending on the level of sophistication of the fuel
control system. An intentional rich exhaust mixture is known as fuel
``enrichment.'' There are different types of enrichment. For example,
there is ``commanded'' enrichment, which is used to provide extra power
when the engine is under a load (e.g., accelerations), as well as a
means to cool the catalyst. Also, there is enrichment which results
from the normal fluctuations in A/F that occur during typical ``closed-
loop'' FTP operating conditions. The amount of enrichment necessary for
sulfur removal is a function of several factors: the ``magnitude'' of
the enrichment event, the duration of the enrichment event, and the
frequency of which the enrichment event occurs.
While the amount of fuel enrichment is critical in the removal of
sulfur from the catalyst, high catalyst temperature is equally as
important. In order to meet strict Tier 2 standards, manufacturers are
going to have to balance tight A/F control with improved catalyst
performance, with an eye towards better catalyst thermal management.
Many manufacturers are going to have to depend more on the precious
metal palladium for oxidation of NMOG and CO emissions, as well as the
reduction of NOX, because palladium is more tolerant to high
temperatures. Since the vast majority of emissions still occur
immediately following a cold start when the catalyst is still cool,
further reductions to cold start emissions can be achieved by locating
the catalysts very close to the engine. The closer proximity to the
engine helps to activate the catalyst sooner by taking advantage of the
additional heat supplied to the catalyst by the exhaust manifolds.
Palladium is very sensitive to sulfur and, consequentially, catalyst
systems that rely heavily on this metal tend to be more sensitive to
sulfur and less reversible. The precious metal platinum, although
usually a little more effective at oxidizing NMOG and CO and slightly
less sensitive to sulfur than palladium, is too sensitive to high
temperature to survive the close proximity to the engine and is not
anticipated to be used for close-coupled applications.
As discussed above, manufacturers will need to make modifications
to their emission system calibrations by optimizing fuel control, spark
timing, EGR and other parameters in conjunction with improvements to
catalyst systems, in order to meet Tier 2 emission standards. This
combination of emission control strategies can result in significant
trade-offs between NMOG and NOX control. There can be
considerable uncertainty associated with balancing these trade-offs at
very low emissions levels if the vehicle is periodically operated on
high sulfur fuels.
Our federal supplemental federal test procedure (SFTP) standards,
as well as California's SFTP standards, both of which take effect in
the 2001 model year, can further exacerbate this problem. The SFTP
standards are intended to better address and control emissions under
driving conditions not captured when compliance with our FTP-based
exhaust emissions standards is demonstrated, such as operation with the
air conditioning turned on or driving at very high rates of
acceleration and vehicle speeds (hereafter referred to simply as
aggressive driving). This is an important factor in assessing sulfur
irreversibility, because Tier 2 vehicles will have to meet more
stringent exhaust emission standards and will have to meet these
standards over the wider variety of operating conditions
[[Page 6731]]
included in the SFTP provisions. Hence, they will have to be designed
to meet the emission standards under all such operating conditions;
these design changes may influence how irreversible the sulfur effect
will be, as explained below.
Since wide variations in the A/F ratio help to remove sulfur from
the catalytic surface, there is concern that vehicles which meet the
SFTP standards, when driven aggressively, will experience insufficient
enrichment to purge sulfur from the catalyst. Currently, when driven
aggressively, the A/F ratio for most vehicles (those not certified to
SFTP standards) is quite variable. Meeting the SFTP standards will
ensure that manufacturers carefully control the A/F ratio over
essentially all in-use driving conditions. This absence of widely
varying A/F could therefore inhibit the removal of sulfur from the
catalyst once operation on high sulfur fuel ceased.
In order to quantify how irreversible the sulfur effect would be
when catalysts exposed to high sulfur fuel are then exposed to lower
sulfur fuel, several test programs were developed by EPA and industry.
The vehicles in these test programs consisted of LDVs and LDTs that met
either EPA Tier 1 or California LEV and ULEV emission standards. All of
the vehicles were first tested at a low sulfur level (e.g., 30 or 40
ppm) to establish a baseline. The vehicles were then re-tested with
high sulfur fuel (e.g., 350 to 540 ppm). After emission results had
stabilized, the vehicles were again re-tested with low sulfur fuel.
Prior to each of the second series of low sulfur tests, the vehicles
were operated over a short driving cycle to help purge (i.e., remove)
sulfur from the catalyst. Two different cycles were used to purge
sulfur, representing different types of driving: moderate urban
conditions and aggressive conditions. The FTP cycle, which represents
moderate urban driving, and the REP05 \49\ cycle, which represents very
aggressive driving (e.g., hard accelerations, high speed cruises), were
the two cycles used.
---------------------------------------------------------------------------
\49\ The FTP (Federal Test Procedure) is the basic driving cycle
used for federal emissions testing; the LA4 cycle is a component of
the FTP. The REP05 cycle developed by EPA is representative of all
driving that occurs outside the LA4 or FTP cycle. All but one of the
aggressive accelerations found in the US06 cycle were taken from the
REP05. While each segment of the US06 cycle was taken from actual
in-use driving, the timing and combination of these segments is not
representative of in-use driving in the way REP05 is representative.
---------------------------------------------------------------------------
The vehicles tested exhibited a wide range of irreversibility, for
reasons that are not fully understood. The data published in the NPRM,
showed that the effect of operation on high sulfur fuel was
irreversible on one or more pollutants after operation on low sulfur
fuel. NOX emissions were 15 percent irreversible. None of
the vehicles were designed or modified to meet either the California or
federal SFTP emissions standards. The only data used in an attempt to
quantify the effect of aggressive operation on sulfur reversibility was
from a catalyst manufacturer that performed some vehicle testing with
catalysts which were bench aged with low and high sulfur fuel that
appeared to closely approximate the impact aggressive operation would
have on sulfur irreversibility. It was this data on which we based our
projection of sulfur irreversibility for Tier 2 vehicles at 50 percent
for NMHC and NOX emissions. Subsequent comments on the
validity of these estimates after the publishing of the NPRM prompted
several additional test programs on sulfur irreversibility.
The sulfur irreversibility test programs that followed the NPRM
focused on vehicles that had emission levels that met or were close to
Tier 2 emission standards and also met the US06 or aggressive driving
portion of the SFTP emission standards. Although numerous vehicles were
tested, only four met both of the above criteria. (We had tried to
supplement the data base, but we were only able to add a limited number
of vehicles.) We also decided to quantify irreversibility for NMHC and
NOX emissions together instead of independently, because per
our discussion above, sensitivity and irreversibility of either
pollutant appears to be very dependent on the particular strategy
chosen to reduce these emissions (particularly engine calibration and
catalyst loading of precious metals and oxygen storage).
The new data exhibited a range of variability among vehicles and
pollutants, similar to the data presented in the NPRM. The most
important distinction between the new FRM data and the old NPRM data
was that the new data showed that, on average, NMHC+NOX
emissions in three out of four vehicles were not fully reversible after
aggressive driving. Based on this data, we project that
NMHC+NOX emissions will be 20 to 65 percent irreversible for
Tier 2 vehicles under typical in-use driving, including aggressive
driving.
As discussed above, the combination of calibration changes and
emission system hardware modifications needed to meet our stringent
Tier 2 emissions standards, can result in significant trade-offs
between NMHC/NMOG and NOX control. There can be considerable
uncertainty associated with balancing these trade-offs at very low
emissions levels if the vehicle is periodically operated on high sulfur
fuels, making the ability to remove sulfur from the catalyst highly
uncertain. For example, a given catalyst today may be fully reversible
for one pollutant and only partially reversible for another. However,
because of the trade-off in NMOG and NOX performance, the
modifications necessary to get that vehicle to meet both emission
standards may result in the opposite effect for reversibility; i.e.,
full reversibility for NMOG and partial reversibility for
NOX. There is no technical certainty that both the NMOG and
NOX emission standards can be met without compromising
reversibility performance. Therefore, we continue to believe that
sulfur's negative impact on Tier 2 catalysts is a substantial concern.
The preceding discussion focused on the irreversibility of the
sulfur impact on emissions from current gasoline engine technologies.
There are new technologies under development, which could be sold in
the U.S. in the middle of the next decade (the same time that Tier 2
vehicles are being introduced), which also appear to be very sensitive
to sulfur and largely unable to reverse this sulfur impact. One of
these technologies is the direct injection gasoline (GDI) engine. These
engines utilize much more air than is needed to burn the fuel, unlike
conventional gasoline engines that operate under conditions where only
just enough air to completely burn the fuel is introduced into the
engine. This GDI technology allows these engines to be up to 25% more
fuel efficient than current gasoline engines and to emit up to 20% less
carbon dioxide. GDI engines are currently being introduced in both
Japan and Europe (which have or will soon require low sulfur
gasolines). Because of the significant operating differences with GDI
engines, these vehicles will likely require emission control technology
substantially different from that used on conventional gasoline
engines. For example, a GDI engine may require a NOX
adsorber to meet the proposed Tier 2 NOX standard. High fuel
sulfur levels quickly and permanently degrade the performance of these
NOX adsorbers. Thus, to enable the sale of advanced, high
efficiency GDI engines in the U.S. under the Tier 2 standards, it
appears that low sulfur gasoline would have to be available nationwide
by the time this technology becomes available.
The fuel cell is another promising propulsion system that is being
developed for possible introduction to
[[Page 6732]]
consumers early in the next century. Fuel cells are being designed to
operate on a variety of fuels, including gasoline and diesel fuel. The
basic fuel cell technology is highly sensitive to sulfur. Almost any
level of sulfur in the fuel will disable the fuel cell. One possible
solution is to install a technology that essentially filters out the
sulfur before it enters the fuel cell. However, such sulfur ``guards''
are costly and could not practically be used like a disposable filter
(requiring the vehicle owner to change the sulfur guard frequently,
much like changing an oil filter) in situations where constant exposure
to high sulfur levels occurs. (Even exposure to relatively low sulfur
levels will likely require periodic replacement of the sulfur guard to
ensure adequate protection for the fuel cell.) Therefore, the amount of
sulfur in the fuel must be limited to that which can be removed by one
or at most two sulfur guards over the life of the vehicle. Thus, in
order for fuel cells operating on gasoline to be feasible in the U.S.,
low sulfur fuels would have to be available nationwide by the time this
technology becomes available.
d. Sulfur Has Negative Impacts on OBD Systems
As discussed in more detail in the RIA, EPA believes that sulfur in
gasoline can adversely impact the onboard diagnostic (OBD) systems of
current vehicles as well as vehicles meeting the Tier 2 standards. This
is an important factor supporting the need for a national sulfur
control program. EPA's onboard diagnostics (OBD) regulations require
that all vehicles be equipped with a system that monitors, among other
things, the performance of the catalyst and warns the owner if the
catalyst is not functioning properly. The OBD catalyst monitor is
designed to identify those catalysts with pollutant conversion
efficiencies that have been reduced to the extent that tailpipe
emissions would exceed a specified multiple of the applicable
hydrocarbon emissions standard. For California LEV and federal NLEV
vehicles, that multiple is 1.75 times the applicable hydrocarbon
emissions standard; for federal Tier 1 vehicles, that multiple is 1.5
times the applicable hydrocarbon standard added to the 4,000 mile
emission level.
We want to ensure that OBD systems operate correctly, and thus the
possibility that gasoline sulfur may interfere with these systems was
another consideration when evaluating the need for a national sulfur
program. Our evaluation of sulfur's effect on OBD systems was
summarized in a staff paper in 1997.\50\ We concluded that sulfur can
affect the decisions made by the OBD systems. Sulfur appears to affect
the oxygen sensor downstream of the catalyst, which is used in the OBD
systems, and it is not clear that the conditions that seem to reverse
sulfur's effect on the catalyst will also reverse any sulfur impact on
the downstream oxygen sensors. Indirectly, sulfur impacts OBD systems
because it can impair a catalyst that would otherwise be operating
satisfactorily, thereby triggering the OBD warning lights. While this
would indicate a properly operating OBD system, auto manufacturers have
expressed the concern that consumers using high sulfur fuel may
experience OBD warnings much more frequently than they would if
operating on low sulfur gasoline, and that this could lead to a loss of
consumer confidence in or support for OBD systems. Consumers may then
ignore the OBD warning system and drive a potentially high emitting
vehicle (which may have nothing to do with exposure to sulfur),
contributing even more to air quality problems. Another possible
scenario is that the OBD system may be impaired by sulfur in such a way
that it does not register an improperly functioning catalyst, even if
the catalyst is impaired for reasons unrelated to exposure to sulfur.
This would defeat the purpose of OBD systems.
---------------------------------------------------------------------------
\50\ U.S. EPA, ``OBD & Sulfur Status Report: Sulfur's Effect on
the OBD Catalyst Monitor on Low Emission Vehicles,'' March 1997,
updated September 1997.
---------------------------------------------------------------------------
The reduction of sulfur levels for gasoline should resolve any
concerns over the ability of the OBD system to make proper decisions.
The use of low sulfur fuel should ensure that the OBD warning light
goes on when it is supposed to and is not influenced by sulfur
contamination of the catalyst and/or OBD system.
B. Our Program for Vehicles
The program we are establishing today for cars, light trucks, and
large passenger vehicles will achieve the same large NOX
reductions that we projected for the proposed program. The program is
very similar to our proposed program in all major respects. We have
been able to retain the general structure, stringency, and emissions
benefits of the proposal in this final rule. Where we have made
adjustments to the proposed program, we have done so in ways that
improve the implementation of the program without changing the overall
environmental benefits that the program will achieve. And by creating a
new category of vehicles subject to the Tier 2 standards, medium-duty
passenger vehicles, the final rule will ensure that all passenger
vehicles expected to be on the road in the foreseeable future will be
very clean.
We have seriously considered the input of all stakeholders in
developing our final rule and believe the program finalized below
balances the concerns of all stakeholders while achieving the needed
air quality benefits. In general, the adjustments we have made are
aimed at improving the implementation efficiency of the program by
better aligning the federal Tier 2 program with the NLEV program and
with California's program especially during the interim program. \51\
Extensive comments from manufacturers led us to conclude that better
harmony between the two programs would reduce the engineering, testing
and certification workload related to our interim program. Where we
could make changes to increase the overlap of the two programs while
maintaining the NOX reductions of the proposal, we have done
so. These changes are discussed in detail in this section IV.B. and in
sections V.A. and V.B.
---------------------------------------------------------------------------
\51\ In this section and also in section V, we make various
references to the Tier 2 program, the interim program (or standards)
and the final Tier 2 standards. The Tier 2 program includes the
interim program (or standards) and the final Tier 2 standards. Some
discussion is applicable to the entire Tier 2 program, some to the
interim program (or standards) only and some is only applicable to
the final Tier 2 standards. As the program is complex, we advise you
to read carefully to discern the applicability of the text to the
proper model years and categories of vehicles.
---------------------------------------------------------------------------
Our final rule also includes provisions to regulate complete heavy-
duty passenger vehicles (primarily SUVs and passenger vans) of less
than 10,000 pounds GVWR within the Tier 2 program. Standards for these
vehicles were not included in the Tier 2 NPRM, but were proposed in a
subsequent NPRM on October 29, 1999 (64 FR 58472). The final provisions
for these vehicles are addressed in section IV.B.4.g. These heavier
vehicles have been recategorized as medium duty passenger vehicles
(MDPVs). They are included in the Tier 2 program starting with model
year 2004 and will be treated similarly to HLDTs, unless otherwise
noted.
The next sections of the preamble describe our final program in
detail and include changes and adjustments from the NPRM that we
believe address many concerns raised by the Alliance and others. While
these changes ease the burden on manufacturers, they have little or no
impact on the air quality benefits of the Tier 2 program.
[[Page 6733]]
In a number of places in the following text, we mention that
changes are being made ``in response to comments''. For a full summary
of the comments and for our responses to those comments, we refer you
to the Response to Comments document contained in the docket for this
rulemaking or available from the Office of Mobile Sources web site (see
web address at the beginning of this document).
1. Overview of the Vehicle Program
The vehicle-related part of today's final rule covers a wide range
of standards, concepts, and provisions that affect how vehicle
manufacturers will develop, certify, produce, and market Tier 2
vehicles. This Overview subsection provides readers with a broad
summary of the major vehicle-related aspects of the rule. Readers for
whom this Overview is sufficient may want to move on to the discussion
of the key gasoline sulfur control provisions (Section IV.C.). Readers
wishing a more detailed understanding of the vehicle provisions can
continue beyond the Overview to deeper discussions of key issues and
provisions (Sections IV.B.-2, 3, and 4) as well as discussions of
additional provisions (Section V.A.). Readers should refer to the
regulatory language found at the end of this preamble for a complete
compilation of the requirements.
To understand how the program will work, it is useful to review
EPA's classification system for light-duty vehicles and trucks. The
light-duty category of motor vehicles includes all vehicles and trucks
at or below 8500 pounds gross vehicle weight rating, or GVWR (i.e.,
vehicle weight plus rated cargo capacity). Table IV.B.-1 shows the
various light-duty categories and also shows our new medium-duty
passenger vehicle (MDPV) category, discussed in section IV.B.4.g.. In
the discussion below, we make frequent reference to two separate groups
of light vehicles: (1) LDV/LLDTs, which include all LDVs and all LDT1s
and LDT2s; and (2) HLDTs, which include LDT3s and LDT4s. We also make
mention of MDPVs although the details of our program for those vehicles
are deferred to IV.B.4.g. at the end of section IV.B.
Table IV.B.--1 Light-Duty Vehicles and Trucks and Medium-Duty Passenger
Vehicles; Category Characteristics
------------------------------------------------------------------------
Characteristics
------------------------------------------------------------------------
LDV....................................... A passenger car or passenger
car derivative seating 12
passengers or less.
Light LDT (LLDT).......................... Any LDT rated at up through
6,000 lbs GVWR. Includes
LDT1 and LDT2.
Heavy LDT (HLDT).......................... Any LDT rated at greater
than 6,000 lbs GVWR.
Includes LDT3 and LDT4s.
MDPV...................................... A heavy-duty passenger
vehicle rated at less than
10,000 lbs GVWR. (The
inclusion of MDPVs is
discussed primarily in
Section IV.B.4.g.)
------------------------------------------------------------------------
a. Introduction
Today's final rule incorporates concepts from the federal NLEV
program which began phase-in in the 1999 model year for LDV/LLDTs.\52\
The program in today's rule takes the corporate averaging concept and
other provisions from NLEV but changes the focus from NMOG to
NOX and applies them to all LDVs and LDTs. The final rule is
compatible with the California LEV II (CalLEV II) program scheduled to
take effect in 2004. The emission standard ``bins'' used for this
average calculation are different in several respects from those of the
CalLEV II program, yet still allow harmonization of federal and
California vehicle technology.
---------------------------------------------------------------------------
\52\ The NLEV program is a voluntary program, adopted by all
major LDV and LDT manufacturers. It applies only to LDVs, LDT1s and
LDT2s. It does not apply to HLDTs.
---------------------------------------------------------------------------
The Tier 2 corporate average NOX level to be met through
these requirements ultimately applies to all of a manufacturer's LDVs
and LDTs (subject to two different phase-in schedules) regardless of
the fuel used. Meanwhile, until the final Tier 2 standards are
completely phased in, separate interim standards apply to LDV/LLDTs and
HLDTs.
As proposed in the NPRM and finalized in today's document, the Tier
2 program will take effect in 2004, with full phase in occurring by
2007 for LDV/LLDTs and 2009 for HLDTs. During the phase-in years of
2004-2008, vehicles not certified to Tier 2 requirements will meet
interim requirements also using a bins system, but with less stringent
corporate average NOX standards.
In the discussions below, we set forth different Tier 2 phase-in
schedules for the two different groups of vehicles (LDV/LLDTs and
HLDTs) as well as two different interim fleet average NOX
standards for 2004 and later model year vehicles awaiting phase-in to
the Tier 2 standards.
In the NPRM, we set forth separate tables of full life standard
bins for the interim programs and the final Tier 2 program, but we
proposed that manufacturers could use all bins for interim or Tier 2
vehicles during the phase-in years.\53\ We also proposed similar sets
of tables for intermediate life standards. In this final rule, for
simplicity and to accommodate additional bins, including some suggested
by the Alliance, we have combined all of the full life bins into one
table and all of the intermediate life bins into one table. The bins
system and the choice of the individual bins is discussed in detail
below.
---------------------------------------------------------------------------
\53\ Throughout this text, the term ``full life'' is used in
reference to vehicle standards to mean ``full useful life'' which is
currently 10 years/100,000 miles for LDVs and LLDTs, but 11 years/
120,000 miles for HLDTs. Similarly, ``intermediate life'' refers to
intermediate useful life standards which apply for the period of 5
years/50,000 miles. In this rulemaking we are retaining the current
full useful life period for interim LDVs and LLDTs, but raising it
for Tier 2 vehicles to 10 years/120,000 miles.
---------------------------------------------------------------------------
References to California LEV II Program
Throughout this preamble, we make reference to California's LEV II
program and its requirements. The LEV II program was approved by the
California ARB at a hearing of November 5, 1998. Numerous draft
documents were prepared by ARB staff in advance of that hearing and
made available to the public. Those documents were referenced in our
NPRM and included in the docket. Some of those documents were modified
as a result of changes to the proposed program made at the hearing and
due to comments received after the hearing. ARB prepared final
documents without significant change. The final program was approved by
California's Office of Administrative Law on October 28, 1999 and filed
with the Secretary of State to become effective on November 27, 1999.
We have placed copies of the latest available documents, some of
which we used in the preparation of this final rule, in the docket. You
may also obtain these documents and other information about
California's LEV II program from ARB's web site: (www.arb.ca.gov/regact/levii/levii.htm).
In the regulatory text that follows this preamble, we incorporate
by reference a number of documents related to LEVII and California test
procedures under
[[Page 6734]]
LEVII. These documents are available in the docket for today's
rulemaking.
b. Corporate Average NOX Standard
The program we are finalizing today will ultimately require each
manufacturer's average full life NOX emissions over all of
its Tier 2 vehicles to meet a NOX standard of 0.07 g/mi each
model year. Manufacturers will have the flexibility to certify Tier 2
vehicles to different sets of exhaust standards that we refer to as
``bins,'' but will have to choose the bins so that their corporate
sales weighted average full life NOX level for their Tier 2
vehicles is no more than the 0.07 g/mi. (We discuss the bins in the
next subsection.)
A corporate average standard enables the program's air quality
goals to be met while allowing manufacturers the flexibility to certify
some models above and some models below the standard. Manufacturers can
apply technology to different vehicles in a more cost-effective manner
than under a single set of standards that all vehicles have to meet.
Each manufacturer will determine its year-end corporate average
NOX level by computing a sales-weighted average of the full
life NOX standards from the various bins to which it
certified any Tier 2 vehicles. The manufacturer will be in compliance
with the standard if its corporate average NOX emissions for
its Tier 2 vehicles meets or falls below 0.07 g/mi. In years when a
manufacturer's corporate average is below 0.07 g/mi, it can generate
credits. It can trade (sell) those credits to other manufacturers or
use them in years when its average exceeds the standard (i.e. when the
manufacturer runs a deficit). The averaging program is described in
detail in later text.
c. Tier 2 Exhaust Emission Standard ``Bins''
We are finalizing a Tier 2 bin structure having eight emission
standards bins (bins 1-8), each one a set of standards to which
manufacturers can certify their vehicles. Table IV.B.-2a shows the full
useful life standards that will apply for each bin in our final Tier 2
program, i.e. after full phase-in occurs for all LDVs and LDTs. Two
additional bins, bins 9 and 10, will be available only during the
interim program and will be deleted before final phase-in of the Tier 2
program. Table IV.B.-2b shows all the bins from Table IV.B.-2a and also
shows extra bins and higher available standards for certain pollutants
that are available prior to full Tier 2 phase-in. An eleventh bin, only
for MDPVs is discussed in section IV.B.4.g.
Many bins have the same values as bins in the California LEV II
program as a means to increase the economic efficiency of the
transition to as well as model availability. Further, we added bins
that are not a part of the California program to modestly increase the
flexibility of the program for manufacturers without compromising air
quality goals. As discussed in Section IV.B.4. below, we believe these
extra bins will help provide incentives for manufacturers to produce
vehicles with emissions below 0.07 g/mi NOX. The two highest
of the ten bins shown in Table IV.B.2b. are designed to provide
flexibility only during the phase-in years and will terminate after the
standards are fully phased in, leaving eight bins in place for the
duration of the Tier 2 program.
The NPRM full life standards contained seven Tier 2 bins as well as
two separate tables of bins for interim vehicles. We proposed that
manufacturers would be able to use all the bins during the phase in
years regardless of whether they were certifying Tier 2 vehicles or
interim vehicles.
The program we are finalizing today:
Combines the bins from the NPRM;
Omits two bins that were included in the NPRM for harmony
with California but which are unlikely to be used; \54\;
---------------------------------------------------------------------------
\54\ These bins are unlikely to be used in the Federal program
because they contain the same NOX standard as the Federal
bins, but contain more stringent NMOG standards than the Federal
bins. These bins, which provide extra opportunity for a manufacturer
to gain NMOG credits in California are not needed or useful in the
Federal program where there is no NMOG corporate average standard.
The two deleted bins are bin 4 from the proposed Tier 2 bins and bin
3 from the proposed interim bins for LDV/LLDTs. Dropping these bins
does not affect harmonization with California standards because the
federal program includes bins having the same NOX
standard with higher NMOG standards.
---------------------------------------------------------------------------
Adds 2 bins to increase compliance flexibility without
reducing environmental benefits;
Adds a temporary bin only for MDPVs that expires after
2008. This bin is in addition to the 10 bins shown in tables of bins in
this preamble;
Establishes a PM value for the highest bin available
during the interim program (bin 10) that is more stringent than the
corresponding standard in the NLEV program;
Provides temporary higher NMOG standards that expire after
2006 for certain interim LDT2s and LDT4s produced by qualifying
manufacturers.
Tables IV.B.-2a and 2b show the bins for full life standards. Table
IV.B.-2b is repeated later in the text where intermediate life
standards are also shown. These tables omit the temporary bin for
MDPVs. This bin is usable only by MDPVs and is addressed separately in
section IV.B.4.g.
Table IV.B.-2a.--Final Tier 2 Light-Duty Full Useful Life Exhaust Emission Standards
[Grams per mile]
----------------------------------------------------------------------------------------------------------------
Bin No. NOX NMOG CO HCHO PM
----------------------------------------------------------------------------------------------------------------
8.............................................. 0.20 0.125 4.2 0.018 0.02
7.............................................. 0.15 0.090 4.2 0.018 0.02
6.............................................. 0.10 0.090 4.2 0.018 0.01
5.............................................. 0.07 0.090 4.2 0.018 0.01
4.............................................. 0.04 0.070 2.1 0.011 0.01
3.............................................. 0.03 0.055 2.1 0.011 0.01
2.............................................. 0.02 0.010 2.1 0.004 0.01
1.............................................. 0.00 0.000 0.0 0.000 0.00
----------------------------------------------------------------------------------------------------------------
[[Page 6735]]
Table IV.B.-2b.--Tier 2 Light-Duty Full Useful Life Exhaust Emission Standards--Including Bins Applicable During Interim Program Only
[Grams per mile]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bin No. NOX NMOG CO HCHO PM Comments
--------------------------------------------------------------------------------------------------------------------------------------------------------
10................................ 0.6 0.156/0.230........... 4.2/6.4.............. 0.018/0.027.......... 0.08 a b c d
9................................. 0.3 0.090/0.180........... 4.2.................. 0.018................ 0.06 a b c
8................................. 0.20 0.125/0.156........... 4.2.................. 0.018................ 0.02 b f
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\a\ Bin deleted at end of 2006 model year (2008 for HLDTs).
\b\ The higher of the two temporary NMOG, CO and HCHO values apply only to HLDTs.
c An additional higher temporary bin restricted to MDPVs is discussed in section IV.B.4.g.
\d\ Optional temporary NMOG standard of 0.280 g/mi applies for qualifying LDT4s and MDPVs only, see text.
\e\ Optional temporary NMOG standard of 0.130 g/mi applies for qualifying LDT2s only, see text.
\f\Higher temporary NMOG value of 0.156g/mi deleted at end of 2008 model year.
The corporate average concept using bins will provide a program
that gets essentially the same emission reductions we would expect from
a straight 0.07 g/mi standard for all vehicles because all
NOX emissions from Tier 2 vehicles in bins above 0.07 g/mi
will need to be offset by NOX emissions from Tier 2 vehicles
in bins below 0.07 g/mile. This focus on NOX allows NMOG
\55\ emissions to ``float'' in that the fleet NMOG emission rate
depends on the mix of bins used to meet the NOX standard.
However, as you can see by examining the bins, any combination of
vehicles meeting the 0.07 g/mi average NOX standard will
have average NMOG levels below 0.09 g/mi. The actual value will vary by
manufacturer depending on the sales mix of the vehicles used to meet
the 0.07 g/mi average NOX standard. In addition, there will
be overall improvements in NMOG since Tier 2 incorporates HLDTs, which
are not covered by the NLEV program. Tier 2 also imposes tighter
standards on LDT2s than the NLEV program by making them average with
the LDVs and LDT1s. NLEV has separate, higher standards for LDT2s. We
did not adopt any bins for LDVs and LDTs with standards higher than we
proposed.
---------------------------------------------------------------------------
\55\ In the NPRM, we proposed that hydrocarbon standards would
be measured in terms of ``non-methane organic gases'' (NMOG)
regardless of fuel. For reasons explained elsewhere in this preamble
we will permit non-methane hydrocarbons (NMHC) as an option in the
final rule for all fuels except alcohol fuels and compressed natural
gas . NMHC and NMOG are very similar for gasoline and diesel fuel
emissions.
---------------------------------------------------------------------------
d. Schedules for Implementation
We recognize that the Tier 2 standards pose greater technological
challenges for larger light duty trucks ( HLDTs) than for LDVs and
smaller trucks (LDT1s and LDT2s). We believe that additional leadtime
is appropriate for HLDTs. HLDTs have historically been subject to less
stringent vehicle-based standards than lighter trucks and LDVs. Also,
HLDTs were not subject to the voluntary emission reductions implemented
for LDVs, LDT1s and LDT2s in the NLEV program. Consequently we are
finalizing as proposed, separate phase-in programs for HLDTs and LDV/
LLDTs . Our phase-in approach will provide HLDTs with extra time before
they need to begin phase-in to the final Tier 2 standards and will also
provide two additional years for them to fully comply. Table IV.B-3
provides a graphical representation of how the phase-in of the Tier 2
program will work for all vehicles. This table shows several aspects of
the program:
Phase-in of the Tier 2 standards;
Phase-in/phase-out requirements of the interim programs;
Phase-in requirements of new evaporative standards;
Years that can be included in alternative phase-in
schedules;
Years in which manufacturers can bank NOX
credits through ``early banking'' and
``Boundaries'' on averaging sets in the Tier 2 and interim
programs.
Averaging provisions for MDPVs (see section IV.B.4.g. for
discussion)
We discuss each of these topics in detail below and make numerous
references to Table IV.B-3.
BILLING CODE 6560-50-P
[[Page 6736]]
[GRAPHIC] [TIFF OMITTED] TR10FE00.003
BILLING CODE 6560-50-C
As described in detail in the Response to Comments document, the
Alliance proposal would have delayed final implementation of Tier 2
standards until 2011. We are not adopting the Alliance's time schedule,
because we believe the shorter schedule we proposed is feasible and
that there is no reason to delay the final benefits of the Tier 2
standards. In fact, numerous commenters representing state,
environmental and health groups argued that our original proposal gave
manufacturers too much time to bring the HLDTs into line with LDVs and
LLDTs. We believe the two extra years proposed in the NPRM remain
appropriate. HLDTs will face greater challenges than LDVs/LLDTs because
their emission control systems will need to be durable under
potentially heavier loads and tougher operating conditions than LDV/
LLDTs. Their sales are small relative to the rest of the light duty
fleet (they will comprise about 14% of the light duty fleet in 2004),
and they will benefit from industry experience with the lighter
vehicles. In addition, HLDTs will not remain at high Tier 1 levels
until they phase-in to Tier 2. Rather, they will have to meet interim
standards that impose a NOX cap of 0.60 g/mi and phase-in a
corporate average NOX standard of 0.20 g/mi. These standards
represent a significant reduction from
[[Page 6737]]
applicable Tier 1 standards.\56\ Interim standards are discussed in
detail later in this preamble.
---------------------------------------------------------------------------
\56\ Under Tier 1 standards, LDT3s are subject to a 0.98 g/mi
NOX standard while LDT4s are subject to an even higher
NOX standard of 1.53 g/mi.
---------------------------------------------------------------------------
i. Implementation Schedule for Tier 2 LDVs and LLDTs
We are finalizing the implementation schedule for the Tier 2
standards as proposed in the NPRM. Thus, the standards will take effect
beginning with the 2004 model year for light duty vehicles and trucks
at or below 6000 pounds GVWR (LDV/LLDTs). Manufacturers will phase
their vehicles into the Tier 2 standards beginning with 25 percent of
LDV/LLDT sales that year, 50 percent in 2005, 75 percent in 2006, and
100 percent in 2007. Manufacturers will be free to choose which
vehicles are phased-in each year. However, in each year during (and
after) the phase-in, the manufacturer's average NOX for its
Tier 2 vehicles must meet the 0.07 g/mi corporate average standard.
This phase-in schedule, which is consistent with that of the California
LEV II program, provides between four and seven years of leadtime for
the manufacturers to bring all of their LDV/LLDT production into
compliance. These vehicles constitute about 86 percent of the light
duty fleet.
To increase manufacturer flexibility and provide incentives for
early introduction of Tier 2 vehicles, we are also finalizing
provisions from the NPRM that permit manufacturers to use alternative
phase-in schedules that will still require 100 percent phase-in by
2007, but recognize the benefits of early introduction of Tier 2
vehicles, and allow manufacturers to adjust their phase-in to better
fit their own production plans. (See section IV.B.4.b.ii. below.)
ii. Implementation Schedule for Tier 2 HLDTs
The Tier 2 phase-in schedule for HLDTs is also being finalized as
proposed. The phase-in for final Tier 2 standards for HLDTs will start
later and end later than that for LDVs and LLDTs. Fifty percent of each
manufacturer's HLDTs must meet Tier 2 standards in 2008, and 100
percent must meet Tier 2 standards in 2009. As with the LDV/LLDTs, the
Tier 2 HLDTs must meet a corporate average NOX standard of
0.07 g/mi. This delayed phase-in schedule:
Provides significant interim emission reductions starting
in 2004 (discussed separately below);
Recognizes the relatively high emission standards that
currently apply to HLDTs;
Provides manufacturers with adequate lead time before they
must bring HLDTs into compliance with final Tier 2 standards;
Provides manufacturers the opportunity to apply and
evaluate Tier 2 technology on LDV/LLDTs before having to apply it to
HLDTs; and
Provides manufacturers the opportunity to apply and
evaluate Tier 2 technology on HLDTs on a relatively small scale to meet
California LEV II requirements before having to apply it to HLDTs
nationwide.
As with the LDV/LLDTs above, to encourage early introduction of
Tier 2 HLDTs and to provide manufacturers with greater flexibility, we
are finalizing provisions to permit manufacturers to generate early
Tier 2 NOX credits and to use alternative phase-in schedules
that still result in 100% phase-in by 2009. (See sections IV.B.4.d.iv.
and IV.B.4.b.ii, respectively, below.)
e. Interim Standards
The interim standards discussed below are a major source of
emission reductions in the early years of the vehicle control program.
The NOX emission standards for LDT2s and LDT4s, which
comprise about 40 percent of the fleet, are more stringent than the
corresponding standards in the NLEV and CAL LEV I programs. These
standards also are important because they set the stage for a smooth
transition to the final Tier 2 standards.
The two groups of vehicles (LDV/LLDTs and HLDTs) will be
approaching the Tier 2 standards from quite different emission
``backgrounds''. LDV/LLDTs will be at NLEV levels, which require
NOX emissions of either 0.3 or 0.5g/mi on average, \57\
while HLDTs will be at Tier 1 levels facing NOX standards of
either 0.98 or 1.53 g/mi, depending on truck size. These Tier 1
NOX levels for HLDTs are very high (by a factor of 14-22)
relative to our 0.07 g/mi Tier 2 NOX average. To address the
disparity in emission ``backgrounds'', while gaining air quality
benefits from vehicles during the phase-in period, we proposed and are
finalizing separate interim average NOX standards for the
two vehicle groups during the phase-in period. The provisions described
below will apply in 2004 for all LDVs and LDTs not certified to Tier 2
standards. The relationship of the interim programs to the final Tier 2
standards is shown in Table IV.B-3.
---------------------------------------------------------------------------
\57\ The NLEV program imposes NMOG average standards that
translate into full useful life NOX levels of about 0.3
g/mi for LDV/LDT1s and 0.5 g/mi for LDT2s.
---------------------------------------------------------------------------
Interim vehicles will certify to the same bins as Tier 2 vehicles.
As described earlier in this preamble, we have merged the tables of
bins from the NPRM for simplicity and added a few bins. Bins 9 and 10
were drawn from the tables of interim bins in the NPRM, and are
intended only for use during the phase-in years. Therefore, these two
bins will be discontinued after 2006 (2008 for HLDTs).
i. Interim Exhaust Emission Standards for LDV/LLDTs
Beginning with the 2004 model year, all new LDVs, LDT1s and LDT2s
not incorporated under the Tier 2 phase-in will be subject to an
interim corporate average NOX standard of 0.30 g/mi. This is
effectively the LEV NOX emission standard for LDVs and LDT1s
under the NLEV program.\58\ This interim program will hold LDVs and
LLDTs to NLEV levels if they are not yet subject to Tier 2 standards
during the phase-in. By implementing these interim standards for LDVs
and LLDTs we will ensure that the accomplishments of the NLEV program
continue. Additionally, this program will bring about substantial and
important NOX emission reductions from LDT2s in the early
years of the program. LDT2s will be held to a 0.3 g/mi NOX
average in contrast to a 0.5 g/mi average in the NLEV program.
---------------------------------------------------------------------------
\58\ The NLEV program does not impose average NOX
standards, but the NMOG average standards that it does impose will
lead to full useful life NOX levels of about 0.3 g/mi for
LDV/LDT1s.
---------------------------------------------------------------------------
Because the Tier 2 standards are phased-in beginning in the 2004
model year, the interim standards for LDVs and LLDTs apply to fewer
vehicles each year, i.e., they are ``phase-out'' standards. Table IV.B-
2 shows the maximum percentage of LDVs and LLDTs subject to the interim
standards each year-- 75% in 2004, 50% in 2005, 25% in 2006 and 0% in
2007.
As mentioned above, the interim program for LDV/LLDTs is designed
to hold these vehicles to the NLEV NOX level for LDVs and
LDT1s, and a few of our bins are derived from the NLEV program. Our
proposal to bring LDT2s into line with the LDVs and LDT1s during the
interim program by requiring all LDVs, LDT1s and LDT2s to meet the same
average NOX standard (0.30) g/mi was of concern to industry
commenters. In the final rule, we are retaining this requirement, but
we are providing an optional NMOG standard of 0.130 for LDT2s certified
to bin 9 when the manufacturers of those LDT2s elect to bring all of
their 2004 model year
[[Page 6738]]
HLDTs under our interim program and phase 25% of those HLDTs into the
0.20 g/mi average NOX standard. (See ii. below). These
provisions are discussed in detail below and also in the Response to
Comments document.
ii. Interim Exhaust Emission Standards for HLDTs
Our interim standards for HLDTs will begin in the 2004 model year
similar to our proposal in the NPRM. The Interim Program for HLDTs will
require compliance with a corporate average NOX standard of
0.20 g/mi that will be phased in between 2004 and 2007. The interim
HLDT standards, like those for LDV/LLDTs will make use of the bins in
Tables IV.B. -4 and -5. We believe that our interim standards, which
start in 2004, will produce significant emission reductions from HLDTs
produced during the interim period. For example, HLDTs will have to
reduce emissions in the interim program relative to the NLEV program.
These standards, by themselves, represent a major reduction in emission
standards and we believe it is likely that some manufacturers will
apply their Tier 2 technology to HLDTs in order to comply with the
interim standards.
As shown in Table IV.B.-3, the phase-in schedule for HLDTs to the
0.20 g/mi corporate average NOX standard will be 25 percent
in the 2004 model year (except as noted below), 50 percent in 2005, 75
percent in 2006, and 100 percent in 2007. As for the Tier 2 standards,
alternative phase-in schedules (see Section IV.B.4.b.ii.) will be
available. The interim program will remain in effect through 2008 to
cover those HLDTs not yet phased into the Tier 2 standards (a maximum
of 50%). Interim HLDTs not subject to the interim corporate average
NOX standard during the applicable phase-in years (2004-2006
or 2005-2006) will be subject to the least stringent bins so their
NOX emissions will be effectively capped at 0.60 g/mi. These
vehicles will be excluded from the calculation to determine compliance
with the interim 0.20 g/mi average NOX standard.
This approach will allow more time for manufacturers to bring the
more difficult HLDTs to Tier 2 levels while achieving real reductions
from those HLDTs that may present less of a challenge.
Due to statutory leadtime considerations, we were not able to
finalize the HLDT standards to be in effect by the time the 2004 model
year begins. For this reason, we are providing incentives for HLDTs to
comply with the Tier 2 standards for all 2004 model year HLDTs. This
change and the leadtime issue are discussed further under section
IV.B.4.e. below and also in the Response to Comments document.
iii. Interim Programs Will Provide Reductions Over Previous Standards
As is the case with the primary Tier 2 standard structure, the
interim programs will focus on NOX but will also provide
reductions in NMOG beyond the NLEV program. This is because the interim
programs will reduce emissions from LDT2s and HLDTs compared to their
previous standards. Without the interim standards, HLDTs could be
certified to the Tier 1 NMHC levels (0.46 g/mi or 0.56 g/mi). With the
interim standards, however, exhaust NMOG \59\ should average
approximately 0.09 g/mi for all non-Tier 2 LDV/LLDTs and 0.24 g/mi or
less for HLDTs. CO under Tier 1 could be as high as 7.3 g/mi for LDT4s.
Under the interim program, CO standards for most bins will be well
below 7.3 g/mi.
---------------------------------------------------------------------------
\59\ In the Tier 1 program, exhaust hydrocarbon standards are in
terms of NMHC, not NMOG. However, as we have explained elsewhere in
this preamble, NMHC and NMOG results are very similar for gasoline
and diesel-fueled vehicles.
---------------------------------------------------------------------------
f. Generating, Banking, and Trading NOX Credits
As proposed in the NPRM and finalized in this notice, manufacturers
will be permitted to average the NOX emissions of their Tier
2 vehicles and comply with a corporate average NOX standard.
In addition, when a manufacturer's average NOX emissions
fall below the corporate average NOX standard, it can
generate NOX credits for later use (banking) or to sell to
another manufacturer (trading). NOX credits will be
available under the Tier 2 standards, the interim standards for LDVs
and LLDTs, and the interim standards for HLDTs. These NOX
credit provisions will facilitate compliance with the fleet average
NOX standards and be very similar to those currently in
place for NMOG emissions under California and federal NLEV regulations.
A manufacturer with an average NOX level for its Tier 2
vehicles in a given model year below the 0.07 gram per mile corporate
average standard can generate Tier 2 NOX credits that it can
use in a future model year when its average NOX might exceed
the 0.07 standard. Manufacturers must calculate their corporate average
NOX emissions at year end and then compute credits generated
based on how far below 0.07 g/mi the corporate average falls.
Manufacturers will be free to retain any credits they generate for
future use or to trade (sell) those credits to other manufacturers.
Credits retained or purchased can be used by manufacturers with
corporate average Tier 2 NOX levels above 0.07 g/mi. Under
provisions described in Section IV.B.4.d.iv., manufacturers can
implement NOX emission reductions as early as the 2001 model
year and earn early Tier 2 NOX credits to help LDVs and
LLDTs meet Tier 2 standards. Similarly, manufacturers can earn early
credits for HLDTs as early as the 2001 model year. In model years up
through 2005, manufacturers can earn extra credits when they certify
vehicles to bins 1 or 2.
Banking and trading of NOX credits under the interim
non-Tier 2 standards will be similar to that under the Tier 2
standards, except that a manufacturer must determine its credits based
upon the 0.30 or 0.20 gram per mile corporate average NOX
standard applicable to vehicles in the interim programs. As we proposed
in the NPRM, interim credits from LDVs/LLDTs and interim credits from
HLDTs will not be permitted to be used interchangeably due to the
differences in the interim corporate average NOX standards.
As proposed in the NPRM, there will be no provisions for early banking
under the interim standards and manufacturers will not be allowed to
use interim credits to address the Tier 2 NOX average
standard. This is because we remain concerned that credits can be
generated relatively easily under less stringent standards (the Tier 1
or interim standards) and then used in such a way to delay
implementation of the Tier 2 standards.
Banking and trading of NOX credits and related issues
are discussed in greater detail in Section IV.B.4.d. below.
2. Why Are We Finalizing the Same Set of Standards for Tier 2 LDVs and
LDTs?
Before we provide a more detailed description of the vehicle
program, we want to review two overarching principles of today's rule.
The first is our goal to bring all LDVs and LDTs under the same set of
emission standards. Historically, LDTs--and especially the heavier
trucks in the LDT3 and LDT4 categories--have been subject to less
stringent emission standards than LDVs (passenger cars). In recent
years the proportion of light truck sales has grown to approximately 50
percent. Many of these LDTs are minivans, passenger vans, sport utility
vehicles and pick-up trucks that are used primarily or solely for
personal transportation; i.e., they are used like passenger cars.
As vehicle preferences have increasingly shifted from passenger
cars to light trucks there has been an
[[Page 6739]]
accompanying increase in emissions over what otherwise would have
occurred because of the increase in miles traveled by LDTs and the less
stringent standards for LDTs as compared to LDVs. As Section III. above
makes clear, reductions in these excess emissions (and in other mobile
and stationary source emissions) are seriously needed. Since both LDVs
and LDTs are within technological reach of the standards in the Tier 2
bin structure, and since none of the comments have been persuasive that
manufacturers can not meet the standards, we are finalizing our
proposal to equalize the regulatory useful life mileage for LDVs and
LDTs and apply the same Tier 2 exhaust emission standard bins to all of
them. This program will ensure that substantial reductions occur in all
portions of the light-duty fleet and that the movement from LDVs to
LDTs will not counteract these reductions.
Once the phase in periods end for all vehicles in 2009,
manufacturers will include all LDVs and LDTs together in calculating
their corporate average NOX levels.\60\ As mentioned above
and described in more detail in Section IV.B.-4. below, manufacturers
can choose the emission bin for any test group of vehicles provided
that, on a sales weighted average basis, the manufacturer meets the
average NOX standard of 0.07 g/mi for its Tier 2 vehicles
that year.
---------------------------------------------------------------------------
\60\ Because of the different phase-in percentages and phase-in
schedules for the two groups, during the duration of the phase-in
(through 2008), manufacturers will average Tier 2 LDV/LLDTs
separately from HLDTs.
---------------------------------------------------------------------------
Some manufacturers have suggested that a program with different
requirements is needed for heavy LDTs. Recognizing that compliance will
be most challenging for HLDTs, the delay in the start of the phase-in
and the additional phase-in years for those vehicles will allow
manufacturers to delay the initial impact of the Tier 2 standards until
the 2008 model year. This represents four additional model years of
leadtime beyond the time when passenger cars and LDT1s and LDT2s will
achieve Tier 2 standards in substantial numbers. We believe this phase-
in and other provisions of this rule respond to these concerns. Note
that in the NPRM, we requested comments on the need for different
hydrocarbon standards for these vehicles recognizing that a tradeoff
often exists between HC and NOX emissions. We also proposed
that several bins have higher hydrocarbon standards for HLDTs during
the interim program. We are finalizing these bins as proposed. Also, as
an option, we are permitting the use of NMOG values similar to those in
the NLEV program for bins 9 and 10 only for certain LDT2s and LDT4s
during the interim program (see section IV.B.1.e.ii. above for
details).
We are not adopting the Alliance's proposed phase-in schedule which
would have provided a phase-in lasting until 2011. At the end of the
Alliance's proposed phase-in, all vehicles would comply with an average
NOX standard of 0.07 g/mi. A fixed 0.09 NMHC standard would
apply to LDVs and LLDTs while a fixed 0.156 NMHC standard would apply
to HLDTs.\61\ Our final program provides HLDTs until 2008 before any
have to meet 0.07 g/mi on average and permits them to be averaged with
LDV/LLDTs beginning in 2009, when all must meet 0.07 g/mi
NOX on average. We believe that eight years is a significant
amount of leadtime to apply Tier 2 technology. We heard clearly from
the public hearings and written comments that the public sees no
justification for and does not want even more time provided for HLDTs.
Furthermore, we see no technological need for more time than we
proposed. Indeed, many believe that HLDTs should meet the Tier 2
standards in step with the LDV/LLDTs.
---------------------------------------------------------------------------
\61\ The Alliance proposed NMHC standards in lieu of the NMOG
standards we proposed and are finalizing today. We are including a
provision in the final rule to accept NMHC results, subject to an
adjustment factor, to demonstrate compliance with NMOG standards,
although we are not adopting the fixed standards proposed by the
Alliance.
---------------------------------------------------------------------------
We are not promulgating the fixed NMHC standards suggested by the
Alliance, but are sticking with the concept of bins containing lower
NMOG standards connected to lower NOX (and other) standards.
We believe that providing final exhaust emission standards for HLDTs
that deviate from those for LDV/LLDTs would violate one of the
overarching principles of the Tier 2 program, i.e. that all LDVs and
LDTs should be subject to the same exhaust emission standards. Further,
the idea of NMOG values that differ from California's runs counter to
other arguments raised by the Alliance that EPA should align bins with
California's to promote 50 state certification of test groups.
3. Why Are We Finalizing the Same Standards for Both Gasoline and
Diesel Vehicles?
The second overarching principle of our vehicle program is the use
of the same Tier 2 standards for all LDVs and LDTs, regardless of the
fuel they are designed to use. The same exhaust emission standards and
useful life periods we are finalizing today will apply whether the
vehicle is built to operate on gasoline or diesel fuel or on an
alternative fuel such as methanol or natural gas. Diesel powered LDVs
and LDTs tend to be used in the same applications as their gasoline
counterparts, and thus we believe they should meet the same standards.
Less stringent standards for diesels could create incentives for
manufacturers to build more diesel vehicles, thus endangering the
emission reductions expected by this program.
Manufacturers have expressed concerns that diesel-fueled vehicles
would have difficulty meeting NOX and particulate matter
levels like those contained in today's rule. Clearly, these standards
will be challenging. As discussed in Section IV.A.-1. above, we expect
that the Tier 2 NOX and NMOG standards will be challenging
for gasoline vehicles, but that major technological innovations will
not be required. For diesels, however, the final Tier 2 NOX
and PM standards will likely require applications of aftertreatment,
most likely accompanied by changes in diesel fuel as such devices are
sensitive to diesel fuel quality, particularly sulfur content. We do
not believe such devices will be necessary to meet the top bin for our
interim standards.\62\ Given the small percentage of diesel vehicles
and the phase-in of the standards, that bin should be sufficient for
any manufacturer to market diesels and still comply with the interim
program. We anticipate that manufacturers that choose to build diesel
vehicles for the final Tier 2 standards will adopt aftertreatment
technologies such as NOX adsorber catalysts and continuously
regenerating particulate traps to meet Tier 2 requirements. We issued
an Advanced Notice of Proposed Rulemaking to seek input on potential
diesel fuel quality changes on May 13, 1999 (64 FR 26142). We
anticipate issuing a Notice of Proposed Rulemaking to reduce the sulfur
limit on diesel fuel in the spring of 2000 followed by a final rule in
late 2000. Our goal in that rulemaking is to have low sulfur diesel
fuel available which will allow diesel vehicles to meet the Tier 2
standards, within the bin structure, by the time the Tier 2 standards
are required for the entire fleet.
---------------------------------------------------------------------------
\62\ The interim PM standard in this new bin, which represents a
reduction from the NLEV PM standards, should be feasible without
aftertreatment. The technologies needed to meet the PM standard we
proposed for this bin would likely have required low sulfur diesel
fuel, which may not be widely available during the interim program.
This change is also discussed in section V.A.
---------------------------------------------------------------------------
[[Page 6740]]
Today, diesels comprise less than one-half of one percent of all
LDV/LDT sales. While this is a small fraction, the potential exists for
diesels to gain a considerable market share in the future. All one need
do is review the dramatic increase in recent years of diesel engine use
in the lightest category of heavy duty vehicles (8500-10,000 pounds
GVWR) to see the potential for significant diesel engine use in LDTs,
and perhaps LDVs, in the future. Just ten years ago, diesels made up
less than 10 percent of this class of vehicles. In 1998, this fraction
approached 50 percent.
The potential impact of large-scale diesel use in the light-duty
fleet underscores the need for the same standards to apply to diesels
as other vehicles. Given the health concerns associated with diesel PM
emissions (see Section III. above), we believe that it is prudent to
address PM emissions from diesel LDVs and LDTs while their numbers are
relatively small. In this way the program can minimize the PM impact
that would accompany significant growth in this market segment while
allowing manufacturers to incorporate low-emission technology into new
light-duty diesel engine designs.
4. Key Elements of the Vehicle Program
The previous subsections IV.B.-1.2. and 3. provide an overview of
the Tier 2 vehicle program and the two key principles it is built on.
This subsection elaborates on the major vehicle-related elements of
today's rule. Later in this preamble, Section V.A. discusses the rest
of the vehicle provisions.
a. Basic Exhaust Emission Standards and ``Bin'' Structure
Our final Tier 2 program contains a basic requirement that each
manufacturer meet, on average, a full useful life NOX
standard of 0.07 g/mi for all its Tier 2 LDVs and LDTs. Manufacturers
will have the flexibility to choose the set of standards that a
particular test group \63\ of vehicles must meet. For a given test
group of LDVs or LDTs, manufacturers will select a set of full useful
life \64\ standards from the same row (``emission bin'' or simply
``bin'') in Table IV.B.-4. below. Each bin contains a set of individual
NMOG, CO, HCHO, NOX, and PM standards. For technology
harmonization purposes, our proposed emission bins include or otherwise
cover all of those adopted in California's LEV II program.\65,\\66\
---------------------------------------------------------------------------
\63\ A ``test group'' is the basic classification unit for
certification of light-duty vehicles and trucks under EPA
certification procedures for the CAP2000 program. ``Test group'' is
a broader classification unit than ``engine family'' used prior to
the implementation of the CAP2000 program. We discuss the CAP2000
program in more detail in section V.A.9. of this preamble.
\64\ The regulatory ``useful life'' value for Tier 2 vehicles is
specifically addressed in Section V.A.2. of this preamble. Full
useful life will be 10 years or 120,000 miles for all vehicles
except LDT3s and LDT4s, for which it is 11 years or 120,000 miles.
Intermediate useful life, where standards are applicable, is 5 years
or 50,000 miles.
\65\ EPA's current standards for Clean Fuel Vehicles are less
stringent than the Tier 2 standards. See 40 CFR 88.104-94. The Tier
2 standards will supercede the current CFV standards, and the Agency
intends to undertake a rulemaking to revise the CFV standards
accordingly.
\66\ In some cases our bins do not match California's exactly,
because they have higher NMOG standards. These bins ``cover'' the
California bin in that a vehicle certified to the California
standards will comply with the standards in these bins.
---------------------------------------------------------------------------
In the NPRM, we proposed that interim vehicles and Tier 2 vehicles
(except for those Tier 2 vehicles in the lowest bins) would also have
to meet intermediate useful life standards, i.e., standards that apply
for 5 years or 50,000 miles. We are finalizing these intermediate
useful life standards as proposed. Where we have added new full life
bins, we have included corresponding intermediate life bins as
appropriate. Our intermediate life standards are generally aligned with
California's, they only impact the higher bins, and we do not believe
they add substantial burden to the program. Further, they provide a
check on the allowed emission deterioration during the life of the
vehicle. For the final rule, we have made two changes involving
intermediate life standards. First, we are providing that diesel
vehicles, which will likely certify to bin 10 during the interim
program, may opt not to meet the intermediate life standards associated
with this bin. Low sulfur diesel fuel may be needed for diesels to meet
our interim intermediate life standards and it is not likely to be
widely available during the time frame of the interim program.
Secondly, for all vehicles, we are finalizing a provision that will
make intermediate life standards optional for any test group that is
certified to a full useful life of 150,000 miles. This provision is
described in more detail with other useful life issues in section V.B.
Table IV.B-4.--Tier 2 Light-Duty Full Useful Life Exhaust Emission Standards
[Grams per mile]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bin No. NOX NMOG CO HCHO PM Comments
--------------------------------------------------------------------------------------------------------------------------------------------------------
10................................ 0.6 0.156/0.230.......... 4.2/6.4.............. 0.018/0.027.......... 0.08 (a,b,c,d)
9................................. 0.3 0.090/0.180.......... 4.2.................. 0.018................ 0.06 (a,b,e)
--------------------------------------------------------------------------------------------------------------------------------------------------------
The above temporary bins expire in 2006 (for LDVs and LLDTs) and 2008 (for HLDTs)
--------------------------------------------------------------------------------------------------------------------------------------------------------
8................................. 0.20 0.125/0.156.......... 4.2.................. 0.018................ 0.02 (b,f)
7................................. 0.15 0.090................ 4.2.................. 0.018................ 0.02
6................................. 0.10 0.090................ 4.2.................. 0.018................ 0.01
5................................. 0.07 0.090................ 4.2.................. 0.018................ 0.01
4................................. 0.04 0.070................ 2.1.................. 0.011................ 0.01
3................................. 0.03 0.055................ 2.1.................. 0.011................ 0.01
2................................. 0.02 0.010................ 2.1.................. 0.004................ 0.01
1................................. 0.00 0.000................ 0.0.................. 0.000................ 0.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\a\ Bin deleted at end of 2006 model year (2008 for HLDTs).
\b\ The higher temporary NMOG, CO and HCHO values apply only to HLDTs and expire after 2008.
\c\ An additional temporary higher bin restricted to MDPVs is discussed in section IV.B.4.g.
\d\ Optional temporary NMOG standard of 0.280 g/mi applies for qualifying LDT4s and MDPVs only.
\e\ Optional temporary NMOG standard of 0.130 g/mi applies for qualifying LDT2s only, see text.
\f\ Higher temporary NMOG standard is deleted at end of 2008 model year.
[[Page 6741]]
Table IV.B.-5.--Light-Duty Intermediate Useful Life (50,000 Mile) Exhaust Emission Standards
[Grams per mile]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bin No. NOX NMOG CO HCHO PM Comments
--------------------------------------------------------------------------------------------------------------------------------------------------------
10................................ 0.4 0.125/0.160.......... 3.4/4.4.............. 0.015/0.018.......... (\a,b,c,d,f,h\)
9................................. 0.2 0.075/0.140.......... 3.4.................. 0.015................ (\a,b,e,h\)
--------------------------------------------------------------------------------------------------------------------------------------------------------
The above temporary bins expire in 2006 (for LDVs and LLDTs) and 2008 (for HLDTs)
--------------------------------------------------------------------------------------------------------------------------------------------------------
8................................. 0.14 0.100/0.125.......... 3.4.................. 0.015................ (\b,g,h\)
7................................. 0.11 0.075................ 3.4.................. 0.015................ (\h\)
6................................. 0.08 0.075................ 3.4.................. 0.015................ (\h\)
5................................. 0.05 0.075................ 3.4.................. 0.015................ (\h\)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\a\ Bin deleted at end of 2006 model year (2008 for HLDTs).
\b\ The higher temporary NMOG, CO and HCHO values apply only to HLDTs and expire in 2008.
\c\ An additional higher temporary bin restricted to MDPVs is discussed in section IV.B.4.g.
\d\ Optional temporary NMOG standard of 0.195 g/mi applies for qualifying LDT4s and MDPVs only.
\e\ Optional temporary NMOG standard of 0.100 g/mi applies for qualifying LDT2s only, see text.
\f\ Intermediate life standards are optional for diesels certified to bin 10.
\g\ Higher temporary NMOG value deleted at end of 2008 model year.
\h.\ Intermediate life standards are optional for any test group certified to a 150,000 mile useful life (if credits are not claimed).
Under a ``bins'' approach, a manufacturer may select a set of
emission standards (a bin) to comply with, and a test group must meet
all standards within that bin. Ultimately, the manufacturer must also
ensure that the emissions of a targeted pollutant--NOX in
this case--from all of its vehicles taken together meet a ``corporate
average'' emission standard. This corporate average emission standard
ensures that a manufacturer's production yields the required overall
emission reductions. (See Section IV.B.-4.c. below for more discussion
of the corporate average NOX standard.)
In addition to the Tier 2 standards described above, we are also
finalizing an interim average NOX standard derived from the
LDV/LDT1 NLEV program to cover all non-Tier 2 LDVs and LLDTs during the
Tier 2 phase-in. We are finalizing a separate interim average
NOX standard for HLDTs. As in the Tier 2 program,
manufacturers will select bins from Table IV.B.-4 to use to comply with
the interim standards. Bins with NOX values at or above 0.07
g/mi also have associated intermediate life standards which are shown
in Table IV.B.-5. (We describe the interim standards in detail in
Section IV.B.4.e. below.)
i. Why Are We Including Extra Bins?
Compared to the CalLEV II program, our Tier 2 proposal included
additional bins. The California program contains no bins that will
allow NOX levels above the 0.07 g/mi level. Therefore, under
the California program, no engine family can be certified above 0.07 g/
mi, even with the application of offsetting credits. We proposed to add
two bins (with NOX values of 0.15 and 0.20) above the 0.07
bin and another below (with a NOX value of 0.04) to provide
manufacturers with additional flexibility. Based upon comments received
from the Alliance and others that additional bins provide important
added flexibility, we are finalizing a total of three bins above the
LEV level (the additional bin has a NOX value of 0.10 g/mi)
and are adding one more below the LEV level (this additional bin has a
NOX value of 0.03 g/mi). Due to the NOX averaging
requirement of this rule, these bins will not result in any increase in
NOX emissions. Further, these bins will address concerns
raised by some that a wider variety of bins, and bins with higher
NOX values, are needed to avoid a situation where the Tier 2
program discourages the development of advanced technology high fuel
economy vehicles, which may, at least in their earliest years, have
NOX emissions higher than more conventional vehicles.
In our NPRM we proposed that during the Tier 2 phase-in years
(through 2006 for LDV/LLDTs and 2008 for HLDTs), bins from the
applicable interim program would be available to enhance the
flexibility of the program by providing manufacturers with additional
bins having NOX standards above 0.07 g/mi. In the NPRM, we
showed the interim bins in separate tables for LDV/LLDTs and HLDTs.
There was considerable overlap across the two tables and with the Tier
2 bins. In this final rule, we have consolidated the interim bins and
the Tier 2 bins into one table for simplicity and ease of reference.
The interim programs for non-Tier 2 vehicles are described in detail in
section IV.B.4.e.
While some commenters were concerned about the existence of bins
above NOX = 0.07 g/mi, we believe that the additional higher
bins actually provide incentive for manufacturers to produce vehicles
below 0.07 g/mi of NOX. We believe this incentive exists
because manufacturers will have some vehicles (especially larger LDTs)
that they might find more cost effective to certify to levels above the
0.07 g/mi average standard. However, to do this they will have to
offset those vehicles in our NOX averaging system with
vehicles certified below 0.07 g/mi. The bins at NOX = 0.04
g/mi and NOX = 0.03 g/mi will provide greater opportunity to
do this. Thus, the extra bins serve two purposes; they provide
additional flexibility to manufacturers to address technological
differences and costs, and they provide those manufacturers with
incentives to produce cleaner vehicles and thus advance emission
control technology.
We are finalizing a bins approach with the bins shown in Tables
IV.B.4 and 5 to provide adequate and appropriate emission reductions
and manufacturer flexibility. This structure will help to accelerate
technological innovation. We requested comment on whether we should
include up to two additional bins between NOX = 0.07 and
NOX = 0.15. Based upon manufacturer comment, we have added
an additional bin (bin 6 ) with NOX = 0.10. This bin will
provide greater flexibility for manufacturers who may find it more
cost-effective to produce some vehicles slightly above 0.07 but have
difficulties meeting a 0.07 g/mi average NOX standard if
they must certify them to a NOX level of 0.15 g/mi.
We requested comment on whether our Tier 2 bin in the NPRM with
NOX = 0.20 (our final bin 8) should be eliminated when the
Tier 2 phase-in is completed (after 2007 for LDV/LLDTs
[[Page 6742]]
and after 2009 for HLDTs). Numerous commenters argued that our highest
bins were too lenient. Comments from manufacturers were opposed to
eliminating bin 8 and we see little downside to having bins higher than
the 0.07 NOX standard, given that, for all of the vehicles
that will use this bin, manufacturers will have to offset the excess
emissions by selling vehicles certified below 0.07 g/mi NOX
under the averaging requirement. Thus, we are retaining bin 8.
b. The Program Will Phase in the Tier 2 Vehicle Standards Over Several
Years
i. Primary Phase-In Schedule
We are finalizing as proposed our plan to phase in the Tier 2
standards for LDV/LLDTs over a four year period beginning in 2004 and
we are also finalizing as proposed a delayed two year phase-in
beginning in 2008 for HLDTs. These phase-in schedules are shown in
Table IV.B.-2 and are also shown separately in Tables IV.B.-6 and 7. We
believe the flexibility of this dual phase-in approach is appropriate
because the Tier 2 program will encompass all light-duty vehicles and
trucks and will result in widespread applications of upgraded and
improved technology across the fleet. The program will require
research, development, proveout, and certification of all light-duty
models, and manufacturers may need longer lead time for some vehicles,
especially HLDTs. Also, manufacturers may wish to time compliance with
the Tier 2 standards to coincide with other changes such as the roll
out of new engines or new models. In order to begin the introduction of
very clean vehicles as soon as possible while avoiding imposing
unnecessary inefficiencies on vehicle manufacturers, we believe this
practical but aggressive phase-in schedule effectively balances air
quality, technology, and cost considerations.
In each year, manufacturers will have to ensure that the specified
fraction of their U.S. sales: \67\
---------------------------------------------------------------------------
\67\ For Tier 2 vehicles (and for interim vehicles), the term
``U.S. sales'' means, for a given model year, those sales in states
other than California and any states that have adopted the
California program.
---------------------------------------------------------------------------
Meets Tier 2 standards for exhaust emissions, including
Supplemental Federal Test Procedure (SFTP) standards (discussed in
Section V.A.-3. below);
Meets Tier 2 standards for evaporative emissions
(discussed in Section IV.B.-4.f. below); and
Meets the corporate average Tier 2 NOX
standard.
Manufacturers will have to meet the Tier 2 exhaust requirements
(i.e., all the standards of a particular bin plus the SFTP standards)
using the same vehicles. Vehicles not covered by the Tier 2 standards
during the phase-in years (2004-2008) will have to meet interim
standards described in Section IV.B.4.e. below and the existing
evaporative emission as well as the applicable SFTP standards.
Manufacturers can elect to meet the percentage phase-in
requirements for evaporative and exhaust emissions using two different
sets of vehicles. We believe that because of interactions between
evaporative and exhaust control strategies, manufacturers will
generally address the Tier 2 evaporative phase-in with the same
vehicles that they use to meet the exhaust phase-in. However, the
primary focus of today's proposal is on exhaust emissions, and the
flexibility for manufacturers to use different sets of vehicles in
complying with the phase-in schedule for evaporative standards and for
the exhaust standards will have no environmental down side that we are
aware of. It is possible that some exhaust emission improvements might
even occur sooner than they otherwise would if a manufacturer is able
to move ahead with the roll-out of a model with cleaner exhaust
emissions without having to wait for the development of suitable
evaporative controls to be completed for that model.
Table IV.B.-6.--Primary Phase-In Schedule for Sales of Tier 2 LDVs and
LLDTs
------------------------------------------------------------------------
Required
percentage of
light-duty
Model year vehicles and
light light-
duty trucks
(percent)
------------------------------------------------------------------------
2004.................................................... 25
2005.................................................... 50
2006.................................................... 75
2007.................................................... 100
------------------------------------------------------------------------
Table IV.B.-7.--Primary Phase-In Schedule for Sales of Tier 2 HLDTs
------------------------------------------------------------------------
Required
percentage of
Model year heavy light-
duty trucks
(percent)
------------------------------------------------------------------------
2008.................................................... 50
2009.................................................... 100
------------------------------------------------------------------------
We are finalizing our proposed phase-in approach, in which vehicle
sales will be determined according to the ``point of first sale''
method outlined in the NLEV rule. Vehicles with points of first sale in
California or a state that has adopted the California LEV II program
(if any) will be excluded from the calculation. The ``point of first
sale'' method recognizes that most vehicle sales will be to dealers and
that the dealers' sales will generally be to customers in the same
geographic area. While some sales to California residents (or residents
of states that adopt California standards) may occur from other states
and vice-versa, we believe these sales will be far too small to have
any significant impact on the air quality benefits of the Tier 2
program or the manufacturers' ability to demonstrate compliance.
ii. Alternative Phase-In Schedule
We are finalizing, as proposed, that manufacturers may introduce
vehicles earlier than required to earn the flexibility to make
offsetting adjustments, on a one-for one basis, to the phase-in
percentages in later years. However, they will still need to reach 100%
of sales in the 2007 model year (2009 for HLDTs). Manufacturers will
have the option to use this alternative to meet phase-in requirements
for LDV/LLDTs and/or HLDTs. They can use separate alternative phase-in
schedules for exhaust and evaporative emissions, or an alternative
phase-in schedule for one set of standards and the primary (25/50/75/
100% or 50%/100%) schedule for the other.
Under these alternative schedules, manufacturers will have to
introduce vehicles that meet or surpass the 0.07 g/mi Tier 2
NOX average standard before they are required to do so, or
else introduce vehicles that meet or surpass the 0.07 standard in
greater quantities than required. Alternative phase-in schedules
essentially credit the manufacturer for its early or accelerated
efforts and allow the manufacturer greater flexibility in subsequent
years during the phase-in. Thus, the alternative phase-in schedule
provisions provide incentive and flexibility to manufacturers to
introduce Tier 2 vehicles before 2004 (or 2008 for HLDTs).
As outlined in the NPRM, an alternative phase-in schedule will be
acceptable if it passes a specific mathematical test. We have designed
the test to provide manufacturers benefit from certifying to the Tier 2
standards early while ensuring that significant numbers of Tier 2
vehicles are introduced during each year of the alternative phase-in
schedule. To test an alternative schedule, a manufacturer
[[Page 6743]]
must sum its yearly percentages of Tier 2 vehicles beginning with model
year 2001 and compare the result to the sum that results from the
primary phase-in schedule. If an alternative schedule scores as high or
higher than the base option, then the alternative schedule is
acceptable. The mathematical technique to evaluate alternative phase-in
schemes is somewhat similar to that used in our NLEV rule and in
California rules.
For LDV/LLDTs, the final sum of percentages must equal or exceed
250--the sum that results from a 25/50/75/100 percent phase-in. For
example, a 10/25/50/65/100 percent phase-in that begins in 2003 will
have a sum of 250 percent and is acceptable. In this example, assuming
constant levels of production, each Tier 2 vehicle sold early (i.e. in
2003) will permit the manufacturer to sell one less Tier 2 vehicle in
the last phase-in year (2006). A 10/20/40/70/100 percent phase-in that
begins the same year has a sum of 240 percent and is not acceptable.
For HLDTs, the sum must equal or exceed 150 percent.
To ensure that significant numbers of Tier 2 vehicles are
introduced in the 2004 time frame, manufacturers will not be permitted
to use alternative phase-in schedules that delay the implementation of
the Tier 2 LDV/LLDT requirements, even if the sum of the phase-in
percentages meets or exceeds 250. Such a situation could occur if a
manufacturer delayed implementation of its Tier 2 production until 2005
and began a 75/85/100 percent phase-in that year. To protect against
this possibility, we are finalizing the proposed requirement that for
any alternative phase-in schedule, a manufacturer's phase-in
percentages from the 2004 and earlier model years sum to at least 25%.
In the final rule we are including an additional measure of flexibility
to the requirements for alternative phase-in schedules. We will permit
manufacturers to achieve a 2004 phase-in of less than 25%, but no less
than 20%, provided that in 2005 they make up the shortfall in a two-
for-one manner. So, as an example, a manufacturer that phased in 5% in
2003 and 15% in 2004 would achieve a total of 20% through the 2004
model year and would need to comply with Tier 2 requirements for at
least 60% of its LDV/LLDTs in 2005. We believe that this flexibility is
appropriate because the required response for 2005 model year vehicles
more than makes up for the environmental loss from the 2004 model year
vehicles.
We requested comment on whether alternative phase-in schedules
should be structured to permit manufacturers to extend phase in past
the final year of the primary phase-in schedule (2007 or 2009). While
the Alliance proposal and comments clearly support phase-ins that run
past 2007 and 2009, other commenters were opposed to any extensions of
the phase-in period. In fact most commenters who addressed the length
of the phase-in indicated, as previously discussed, that the phase-in
for HLDTs should be moved ahead to 2007 to coincide with LDV/LLDTs. We
are not finalizing any provisions that will permit alternative phase-in
schedules to provide additional time for manufacturers to meet any
final 100% compliance year.
In the NPRM, we pointed out that phase-in schedules, in general,
add little flexibility for manufacturers with limited product offerings
because a manufacturer with only one or two test groups can not take
full advantage of a 25/50/75/100 percent or similar phase-in. For
manufacturers meeting EPA's definition of ``small volume
manufacturer,'' we proposed to exempt those manufacturers from the
phase-in schedules and require them to simply comply with the final
100% compliance requirement. We are finalizing this provision for small
volume manufacturers. This provision is only intended to apply to small
volume manufacturers and not to small test groups of larger
manufacturers.
For larger manufacturers having a limited product line, we
recognize that our phase-in schedule may lack flexibility, however, we
are not including any provisions to address this issue as we are for
small volume manufacturers because we do not believe these
manufacturers need the relief and we do not want to sacrifice any air
quality benefits of the program.
c. Manufacturers Will Meet a ``Corporate Average'' NOX
Standard
While the manufacturer will be free to certify a test group to any
applicable bin of standards in Table IV.B.-2, it will have to ensure
that the sales-weighted average of NOX standards from all of
its test groups of Tier 2 vehicles meet a full useful life standard of
0.07 g/mi.\68\ Using a calculation similar to that for the NMOG
corporate average standard in the California and NLEV programs,
manufacturers must determine their compliance with the corporate
average NOX standard at the end of the model year by
computing a sales weighted average of the full useful life
NOX standards from each bin. Manufacturers must use the
following formula:
---------------------------------------------------------------------------
\68\ For interim vehicles, this average NOX standard
will be 0.20 for HLDTs and 0.30 for LDV/LLDTs. Compliance with these
interim average standards will be calculated in the same manner as
compliance with the 0.07 standard.
[GRAPHIC] [TIFF OMITTED] TR10FE00.004
Manufacturers must exclude vehicles sold in California or states
adopting California LEV II standards from the calculation. As indicated
above, manufacturers must compute separate NOX averages for
LDV/LLDTs and HLDTs through model year 2008.
The corporate average NOX standards of the primary Tier
2 program and the interim programs for LDV/LLDTs and HLDTs will ensure
that expected fleet-wide emission reductions are achieved. At the same
time, the corporate average standards allow us to permit the sale of
some vehicles above the levels of the average standards to address the
greater technological challenges some vehicles face and to reduce the
overall costs of the program. We discuss how manufacturers can
generate, use, buy and sell NOX credits under the interim
and Tier 2 programs in the next subsection.
Given the corporate average NOX standards, we do not
believe a corporate average NMOG standard as used by California is
essential because meeting the corporate average NOX standard
will automatically bring the NMOG fleet average to approximately 0.09
g/mi or below.
d. Manufacturers Can Generate, Bank, and Trade NOX Credits
i. General Provisions
As mentioned in the Overview above, we are finalizing our proposal
that manufacturers with year-end corporate average NOX
emissions for their Tier 2 vehicles below 0.07 g/mi can generate Tier 2
NOX credits. Credits can be saved (banked) for use in a
future model year
[[Page 6744]]
or for trading (sale) to another manufacturer. Manufacturers can use
credits if their corporate average NOX emissions are above
0.07 g/mi.
As proposed, the Tier 2 standards will apply regardless of the fuel
the vehicle is designed for, and there will be no restrictions on
averaging, banking or trading of credits across vehicles of different
fuel types. Consequently, a gasoline fueled LDV might help a
manufacturer generate NOx credits in one year that could be banked for
the next year when they could be used to average against NOX
emissions of a diesel fueled LDT within the appropriate averaging
structure.
Because of the split phase-in and the different interim programs we
are finalizing for the two different groups of vehicles (LDV/LLDTs and
HLDTs), we are also finalizing the proposed requirement that
manufacturers compute their corporate Tier 2 NOX averages
separately for LDV/LLDTs and HLDTs through 2008. As we proposed, credit
exchanges between LDVs/LLDTs and HLDTs will not be allowed nor will
credit exchanges across the interim programs or between the interim
programs and the final Tier 2 program be allowed. These restrictions
will end with the 2009 model year at which time both phase-ins and all
interim standards will have ended and the program will permit free
averaging across all Tier 2 vehicles. As noted in the NPRM, we are
concerned that allowing cross-trading between interim and Tier 2
vehicles will reduce the expected benefits of the program and delay
fleet turnover to Tier 2 emission levels. For this reason we did not
propose and are not finalizing to permit such exchanges.
ii. Averaging, Banking, and Trading of NOX Credits Fulfills
Several Goals
We explained in the NPRM why we believe the provisions for
averaging, banking, and trading of NOX credits (ABT) will be
valuable. In short:
An ABT program is an important factor that EPA takes into
consideration in setting emission standards that are appropriate under
section 202 of the Clean Air Act. ABT allows us to consider a more
stringent emission standard than might otherwise be appropriate under
the CAA, since ABT reduces the cost and improves the technological
feasibility of achieving the standard;
ABT enhances the technological feasibility and cost
effectiveness of the proposed standard and allows the standard to be
attainable earlier than might otherwise be possible;
ABT provides manufacturers with additional product
planning flexibility and the opportunity for a more cost effective
introduction of product lines;
ABT creates incentive for early introduction of new
technology, allowing certain engine families to act as trail blazers
for new technology;
We view the ABT provisions in today's rule as environmentally
neutral because the use of credits by some vehicles is offset by
credits generated by other vehicles. However, when coupled with the new
standards, ABT will have environmental benefits because it allows the
new standards to be implemented earlier than would otherwise be
appropriate.
iii. How Manufacturers Can Generate and Use NOX Credits
Manufacturers will determine their year-end corporate average
NOX emission level by computing a sales-weighted average of
the NOX standard from each bin to which the manufacturer
certifies any LDVs or LDTs. Tier 2 NOX credits will be
generated when a manufacturer's average is below the 0.07 gram per mile
corporate average NOX standard, according to this formula:
NOX Credits=(0.07 g/mi-Corporate Average
NOX) x Sales
The manufacturer can use these NOX credits in future
years if its corporate NOX average is above 0.07, or it can
trade (sell) the credits to other manufacturers. Tier 2 credits can be
generated via this mechanism beginning in the first phase-in year,
i.e., 2004 for LDV/LLDTs and 2008 for HLDTs. The use of NOX
credits will not be permitted to address Selective Enforcement Auditing
or in-use testing failures.
The enforcement of the NOX averaging standard will occur
through the vehicle's certificate of conformity. A manufacturer's
certificate of conformity will be conditioned upon compliance with the
averaging provisions. The certificate will be void ab initio if a
manufacturer fails to meet the corporate average NOX
standard and does not obtain appropriate credits to cover its shortfall
in that model year or in the next three model years (see deficit
carryforward provision below). Manufacturers will need to track their
certification levels and sales unless they produce only vehicles
certified to bins containing NOX levels of 0.07 g/mi or
below and do not plan to bank NOX credits.
iv. Manufacturers Can Earn and Bank Credits for Early NOX
Reductions
In the NPRM, we proposed that to the extent a manufacturer's
corporate average NOX level of its ``early Tier 2'' vehicles
was below 0.07 g/mi, the manufacturer could bank NOX credits
for later use. We recognize (and the comments assert) that this
provision may be lightly used, because it requires a large reduction
from prior standards to produce any credits. However, our goal is to
bring vehicles to Tier 2 levels as quickly as possible and we are
concerned that any other approach could provide credits for reductions
manufacturers would make relatively easily from previous, higher
standards. Such credits would then be used to delay the impact of the
0.07 g/mi NOX standard. Further, we believe that our
provision for alternative phase-in schedules provides what is
essentially a supplemental, or perhaps even primary, early banking
program, in that it permits manufacturers to trade-off earlier phase-in
percentages for later phase-in percentages. To provide manufacturers
with greater flexibility and with incentives to certify, produce and
sell Tier 2 vehicles as early as possible, we are finalizing the
alternative phase-in provisions. (See IV.B.4.b.ii above.) Under such
schedules, a manufacturer can certify vehicles to an average
NOX level of 0.07 g/mi or below in years prior to the first
required phase-in year and then phase its remaining vehicles in over a
more gradual phase-in schedule that will still lead to 100% compliance
by 2007 (2009 for HLDTs).
Thus, we are finalizing our provision for early NOX
credits essentially as proposed. To the extent that a manufacturer's
corporate average NOX level of its ``early Tier 2'' vehicles
is below 0.07 g/mi, the manufacturer can bank NOX credits
for later use. Manufacturers will compute these early credits by
calculating a sales-weighted corporate average NOX emission
level of their Tier 2 vehicles, as in the basic Tier 2 program
described above. In section IV.B.4.d.vii. below, we describe provisions
we are adding to the final rule that will enable manufacturers to
generate extra credits from vehicles certified to very low levels. In
addition to encouraging production of very clean vehicles, these
provisions, which apply beginning in 2001, will enhance the abilities
of manufacturers to generate early credits.
Early Tier 2 credits will have all the same properties as credits
generated by vehicles subject to the primary phase-in schedule. We
proposed that these credits could not be used in the NLEV, Tier 1 or
interim program for non-Tier 2 vehicles in any way. We are finalizing
this restriction as proposed. We are also finalizing as proposed that
the NMOG emissions of these vehicles (LDVs and LLDTs only) can be used
in the
[[Page 6745]]
calculation of the manufacturer's corporate average NMOG emissions
under NLEV through 2003.
To provide manufacturers with maximum flexibility in the period
prior to 2004, when LDV/LLDT useful lives will still be at 100,000
miles, we proposed and are finalizing that manufacturers may choose
between the Tier 2 120,000 mile useful life or the current 100,000 mile
useful life requirement for early Tier 2 LDV/LLDTs. (HLDTs already have
a 120,000 mile useful life.) Early LDV/LLDT NOX credits for
100,000 mile useful life vehicles will have to be prorated by 100,000/
120,000 (5/6) so that they can be properly applied to 120,000 mile Tier
2 vehicles in 2004 or later.
We proposed to restrict early banking of HLDT Tier 2 NOX
credits to the four year period from 2004-2007. This restriction was
due to a concern about excessive credits generation if a longer credit
generation period was available. Based on our review of the comments
and from reconsideration of the restrictive nature of our approach for
early credits, we are much less concerned that allowing generation of
early HLDT Tier 2 credits in years prior to 2004 will result in
excessive credits. Prior to 2004, manufacturers will only be required
to meet the Tier 1 standards which are much higher than the final Tier
2 standards. Manufacturers will have to make large cuts in emissions to
bank the small amount of credits offered by our early banking
provision. Further, we recognize that vehicles that meet the Tier 2
standards early provide an environmental benefit, and the earlier that
benefit occurs, the earlier that areas can use such benefits to reach
or come close to attainment. Lastly, we believe it is appropriate to
match the period of early credit generation with the years in which we
will permit alternative phase-in schedules. Consequently, we are
finalizing our provisions for early banking such that manufacturers may
bank early Tier 2 NOX credits in model years 2001-2007.
We recognize that vehicles generating early Tier 2 NOX
credits may be doing so without the emissions benefit of low sulfur
fuel, and thus these vehicles may not achieve the full in-use emission
reduction for which they received credit. When these credits are used
to permit the sale of higher-emitting vehicles, there may be a net
increase in emissions. For the most part, this is a problem anyway,
since NLEV vehicles are also sensitive to gasoline sulfur. We believe
that the benefits of early introduction of Tier 2 technology described
above are significant enough that they are worth the risk of some
emission losses that might occur if and when the early credits are
used. Also, we believe that some fuel sulfur reductions will occur
prior to 2004 as refiners upgrade their refineries or bring new
refining capacity on stream in anticipation of the 2004 requirements
and take advantage of the phase-in proposed in the gasoline sulfur ABT
program (described in Section IV.C. below).
v. Tier 2 NOX Credits Will Have Unlimited Life
We discussed in the preamble to the NPRM why we did not propose to
apply the California schedule of discounting unused credits adopted for
NMOG credits in the NLEV program. This schedule serves to limit credit
life throughout the program by reducing unused credits to 50, 25 and 0
percent of their original number at the end of the second, third and
fourth year, respectively, following the year in which they were
generated. We agree that such a scheme may be appropriate in the
California program with its declining NMOG average standard, but in the
federal program, once the phase-in period ends in model year 2009, all
LDVs and LDTs will comply on average with a fixed Tier 2 NOX
standard.
Credits allow manufacturers flexibility to meet standards cost
effectively and to address unexpected shifts in sales mix. When matched
with a NOX average standard, credits provide flexibility
constrained by the requirement that all vehicles, on average, must
comply with a fixed standard. Defined bins of standards prevent any one
vehicle from having extremely high emissions, while the need to offset
higher vehicles with lower vehicles to meet an average NOX
standard prevents large numbers of vehicles from utilizing the higher
bins.
We requested comment in the NPRM on the need for discounting of
credits or limits on credit life and what those discount rates or
limits, if any, should be. The 0.07 NOX emission standard in
the Tier 2 program is quite stringent and does not present easy
opportunities to generate credits. The degree to which manufacturers
invest the resources to achieve extra NOX reductions
provides environmental benefit for years to come and it is appropriate
that the manufacturer get credits. We do not want to take measures to
reduce the incentive for manufacturers to bank credits nor do we want
to take measures to encourage unnecessary credit use. Consequently we
are finalizing our proposal that Tier 2 NOX credits,
including early credits, have unlimited lives.
vi. NOX Credit Deficits Can Be Carried Forward
When a manufacturer has a NOX deficit at the end of a
model year--that is, its corporate average NOX level is
above the required corporate average NOX standard--we
proposed that the manufacturer could carry that deficit forward into
the next model year. Such a carry-forward could only occur after the
manufacturer used any banked credits. If the deficit still existed and
the manufacturer chose not to or was unable to purchase credits, the
deficit could be carried over. At the end of that next model year,
according to our proposal, the deficit would need to be covered with an
appropriate number of NOX credits that the manufacturer
generated or purchased. Any remaining deficit would be subject to an
enforcement action. To prevent deficits from being carried forward
indefinitely, the manufacturer would not be permitted to run a deficit
for two years in a row.\69\
---------------------------------------------------------------------------
\69\ Because of the limited duration of the interim programs, we
proposed that a manufacturer could carry a credit deficit in the
interim program forward until the 2006 model year (2008 for HLDTs).
The interim program, in its entirety, lasts only five years and
therefore we saw little risk of prolonged deficits.
---------------------------------------------------------------------------
Manufacturers made the persuasive case that by the time they can
tabulate their average NOX emissions for a particular model
year, the next model year is likely well underway and it is too late to
make calibration, marketing or sales mix changes to adjust that year's
credit generation. Therefore, based upon comments, we are finalizing a
modified approach to credit deficits such that a manufacturer having a
credit deficit in the interim or Tier 2 program can carry that deficit
forward for a total of three years, but the manufacturer must apply all
its available credits to that deficit on a one-for-one basis in each of
the first two succeeding model years. If the deficit is not covered by
the third model year, the manufacturer must apply credits at a rate of
1.2:1. No deficit may be carried into the fourth year. In order to
accommodate this modification to our proposal, we must also modify our
proposed provision that would have prevented manufacturers from running
a deficit in two consecutive model years so that deficits can not be
shifted from one year to the next and thus carried forward
indefinitely. Because we are permitting, in this final rule, deficits
to be carried forward for as long as three years we are finalizing that
manufacturers can not run a deficit in any year in which it is paying
off a deficit from a previous year. The effect of this provision is the
same as that in
[[Page 6746]]
the NPRM-- to keep manufacturers from shifting deficits forward
indefinitely.
We note that under our modified final approach, manufacturers will
have the flexibility to carry deficits from the interim program forward
into the final Tier 2 program. This feature is likely to be used only
in an extreme situation since the Tier 2 credits needed to offset the
interim credit deficit will be more difficult to generate.
Consequently, we do not believe this provision is inconsistent with our
approach of segregating interim and Tier 2 credits. In fact,
manufacturers electing to cover an interim credit deficit with Tier 2
credits will likely have to accelerate the introduction of Tier 2
vehicles to get the necessary credits to cover the deficit.
We are finalizing that small volume manufacturers may not use the
credit deficit carryforward provision until they have been in
compliance with the relevant average NOX standard for one
model year. In section V of this preamble we explain that we are not
requiring small volume manufacturers to comply with intermediate phase-
in requirements under our interim or Tier 2 phase-ins. Rather, they
will just have to comply for all of their vehicles in the last phase-in
year. Because they do not have to comply with intermediate phase-in
requirements, small volume manufacturers effectively get more time to
comply (as much as three years). We do not want to create a situation
where they could get even more time to comply by using the credit
deficit carryforward provision.
vii. Encouraging the Introduction of Ultra-Clean Vehicles
We requested comment in the NPRM as to whether we should provide
additional NOX credits for vehicles that certify to very low
levels. We stated in the NPRM that we believe it is appropriate to
provide inducements to manufacturers to certify vehicles to very low
levels and that these inducements may help pave the way for greater
and/or more cost effective emission reductions from future vehicles. We
believe it is important in a rule of this nature to provide extra
incentive to encourage manufacturers to produce and market very clean
vehicles. We believe this is especially important in the earliest years
of the program when manufacturers must make resource commitments to
technologies and vehicle designs that will have multi-year life spans.
We believe this program provides a strong incentive for manufacturers
to maximize their development and introduction of the best available
vehicle/engine emission control technology, and this in turn provides a
stepping stone to the broader introduction of this technology soon
thereafter. Early production of cleaner vehicles enhances the early
benefits of our program and vehicles certified to these lowest bins
produce not just lower NOX but also lower NMOG, CO and HCHO
emissions. If a manufacturer can be induced to certify to a lower bin
by the promise of reasonable extra credits, the benefits of that
decision to the program may last for many years.
We are finalizing provisions to permit manufacturers, at the
beginning of the program, to weight LDV/Ts certified to the lowest two
bins more heavily when calculating their fleet average NOX
emissions. Under this provision, which applies through the 2005 model
year, manufacturers may apply a multiplier to the number of LDV/Ts sold
that are certified to bins 1 and 2 (ZEVs and SULEVs in California
terms). This adjusted number will be used in the calculation of fleet
average NOX emissions for a given model year and will allow
manufacturers having vehicles certified to these bins to generate
additional credits (or use fewer credits) that year.
The multipliers that manufacturers may use are found in Table
IV.B.-8 below:
Table IV.B.-8.--Multipliers for Additional Credits for Bin 1 and 2 LDV/T
------------------------------------------------------------------------
Bin Model year Multiplier
------------------------------------------------------------------------
2................................. 2001, 2002, 2003, 1.5
2004, 2005.
1................................. 2001, 2002, 2003, 2.0
2004, 2005.
------------------------------------------------------------------------
e. Interim Standards
i. Interim Exhaust Emission Standards for LDV/LLDTs
The NLEV program referenced throughout this discussion is a
voluntary program in which all major manufacturers have opted to
produce LDVs and LLDTs to tighter standards than those required by
EPA's Tier 1 regulations. Under the NLEV program, manufacturers must
meet an NMOG average outside of California that is equivalent to
California's current intermediate-life LEV requirement--0.075 g/mi for
LDVs and LDT1s (0.10 g/mi for LDT2s). NLEV requirements apply only to
LDVs and LLDTs, not to HLDTs.
The NLEV program is effective beginning in the northeastern states
in 1999 and in the remaining states in 2001, except that the program
does not apply to vehicles sold in California or in states that adopted
California's LEV program. The program runs at least through model year
2003 and can run through model year 2005.
Under the Tier 2 phase-in we are finalizing today, not all LDV/
LLDTs covered under NLEV will be subject to Tier 2 standards in the
2004 to 2006 period. Without a program for full Tier 2 compliance in
2004 (i.e., because of the phase-in), these vehicles could revert to
Tier 1 standards. The NLEV program, moreover, is a voluntary program
that contains several provisions that restrict EPA's flexibility and
that could lead to a manufacturer or a covered Northeastern state
leaving the program in or prior to 2004. To resolve these concerns we
are finalizing the proposed interim program for all non-Tier 2 LDV/
LLDTs for the 2004-2006 model years. Our interim program will replace
the NLEV program, which will terminate at the end of 2003. The
transition from NLEV to the interim program should be smooth because
the interim program will employ several bins derived from the NLEV
standards for LDVs, LDT1s and LDT2s. The interim program will ensure
that all LDVs, LDT1s and LDT2s that are not certified to Tier 2 levels
during the 2004-2006 phase-in period remain at levels at least as
stringent, on average, as NLEV levels. The interim program will also
bring the emission standards for LDT2s more into line with those for
the LDVs and LDT1s by requiring that they be averaged under the same
NOX standard rather than under separate standards as is the
case in the NLEV program.
In the NPRM, we included separate sets of bins for the interim
program and Tier 2 program. However, we indicated that manufacturers
could use either set for interim vehicles. In today's final rule we
have combined all bins into one table for simplicity. We have also
added two new bins having NOX values of 0.03 g/mi and 0.10
g/mi.
[[Page 6747]]
In the NPRM, we proposed that, for LDV/LLDTs, all bins with
NOX values over 0.20 g/mi would expire at the end of the
2006 model year when there are no longer any interim LDV/LLDTs. Table
IV-B.-4 shows that the two highest bins, bins 9 and 10, which were
derived from NLEV and included to smooth the transition from NLEV to
the interim program will be unuseable for LDV/LLDTs after 2006--the
last year of the LDV/LLDT phase-in. Otherwise all bins will remain
viable for the duration of the Tier 2 program unless altered by another
rulemaking.
We proposed to align the useful life periods for interim standards
with those of the Tier 2 standards (full useful life of 120,000 miles),
as discussed in Section V.B. below. The end result of this proposal
would have been that all LDV/LLDTs--whether in the Tier 2 program or
interim program--would go from 100,000 mile useful lives to 120,000
mile useful lives in 2004. However, manufacturers were extremely
concerned about the certification workload burden for 2004. They
commented that they would be unable to carry any of their LDV/LLDTs
over from 2003 and that they would have to recertify all of their
vehicles in 2004 and then likely recertify them again as they were
phased into the Tier 2 standards. Therefore, based upon comments, we
are finalizing that useful lives of the interim LDV/LLDTs may remain at
100,000 miles. Our reasons for this change are discussed in greater
detail in Section V.B.
We are finalizing as proposed a corporate average full useful life
NOX standard of 0.30 g/mi for this interim program. This
standard is derived from the NLEV program and represents the full
useful life NOX standard in NLEV that is associated with LEV
LDVs and LDT1s. LDVs and LDT1s will already be at this level, on
average, under the NLEV program. LDT2s are subject to standards that
effectively impose a NOX average standard of 0.5 g/mi under
NLEV, but we believe they should readily be able to meet the 0.30 g/mi
average especially since they can be averaged with the LDVs and LDT1s.
To aid LDV/LLDTs in meeting the 0.30 g/mi corporate average
NOX standard in the interim program, we are providing an
optional NMOG value for LDT2s certifying to bin 9 (where the
NOX standard=0.3 g/mi). This option is only for LDT2s, and
only for those produced by manufacturers that elect to comply with the
interim requirements for all of their HLDTs for the 2004 model year
(see next section). The optional NMOG values for qualifying LDT2s are
0.130 g/mi at full useful life and 0.100 at intermediate useful life.
The 0.30 g/mi corporate average NOX standard will apply
only to non-Tier 2 (interim) LDV/LLDTs and only for the 2004-2006 model
years. Manufacturers will compute, bank, average, trade, account for,
and report interim NOX credits via the same processes and
equations described in this preamble for Tier 2 vehicles, substituting
the 0.30 g/mi corporate average standard for the 0.07 g/mi corporate
average standard in the basic program. Also, EPA will condition the
certificates of conformity on compliance with the corporate average
standard, as described for Tier 2 vehicles. These NOX
credits will be good only for the 2004-2006 model years and will only
apply to the interim non-Tier 2 LDV/LLDTs. Credits will not be subject
to any discounts, and credit deficits can be carried forward as
described under Section IV.B.4.d.vi. above.
NMOG credits from the NLEV program can not be used in this interim
program in any way. NOX credits generated under this interim
program will not be applicable to the Tier 2 NOX average
standard of 0.07 g/mi because of our concern that a windfall credit
situation could occur. This could happen because credits are relatively
easy to generate under a 0.30 g/mi standard compared to generating
credits under a 0.07 g/mi standard. As we indicated in the preamble to
the NPRM we believe the application of credits earned under the interim
standard to the Tier 2 standards could significantly delay the fleet
turnover to Tier 2 vehicles. We do not believe there is a need or that
it would be appropriate to allow such a delay. The requirements of the
interim program will be monitored and enforced in the same fashion as
for Tier 2 vehicles.
For the reasons cited above, we believe it is appropriate to extend
interim, NLEV-like standards beyond 2003 as a mandatory program and to
bring all LDVs and LLDTs within its scope. Manufacturers have already
demonstrated their ability to make LDVs and LLDTs that comply at levels
well below these standards. As the interim standards for LDV/LLDTs are
essentially `phase-out'' standards, we did not propose and are not
finalizing early banking provisions for the interim LDV/LLDTs.
ii. Interim Exhaust Emission Standards for HLDTs
We believe these interim standards are necessary and reasonable for
HLDTs. While these trucks make up a fairly small portion of the light-
duty fleet (about 14%), their current standards under Tier 1 are far
less stringent than the NLEV standards that apply to current model year
LDVs and LLDTs. Given the delayed phase-in we are finalizing for HLDTs,
we believe it is appropriate to require some interim reductions from
these vehicles. Further, manufacturers have already demonstrated their
ability to meet these interim standards with HLDTs. These standards are
a reasonable first step toward the Tier 2 program and will provide
meaningful reductions in the near term relative to current
certification levels under the Tier 1 emission standards.
We also proposed interim standards to begin in 2004 for HLDTs.
These vehicles are not included in the NLEV program and will be subject
only to the Tier 1 standards prior to today's rule taking effect. Tier
1 standards permit NOX emissions of 0.98 g/mi for LDT3s and
1.53 g/mi for LDT4s. We are finalizing these standards generally as
proposed; to address statutory lead time requirements, we are offering
two options for the phase-in of HLDTs to the interim standards.
Manufacturers can choose between either of these two options:
(Option 1) Like we proposed in the NPRM, manufacturers must bring
their entire production of 2004 model year HLDTs under the interim
requirements and phase 25% of them into the 0.20 g/mi fleet average
NOX requirement, followed by 50% in 2005, 75% in 2006, and
then 100% in 2007; or
(Option 2) We are including this option to address statutory lead
time requirements for HLDTs. In the case of 2004 model year test groups
whose model years commence before the fourth anniversary of the
signature date of today's rule, the manufacturer may exclude those test
groups from the interim HLDT provisions of the rule. In the case of
2004 model year test groups whose model years commence on or after the
fourth anniversary of this rule's signature, the manufacturer must
bring all such HLDTs under the requirements of our interim program, and
all such vehicles or 25% of the manufacturer's sales of 2004 model year
HLDTs, whichever is less, must comply with the corporate average
NOX standard of 0.20 g/mi. The manufacturer must then bring
all of its HLDTs into the interim requirements beginning with the 2005
model year including a 50%, 75%, 100% phase-in to the 0.20 g/mi fleet
average NOX standard beginning that year. The beginning of a
test group's model year is determined under section 202(b)(3) of the
Act and 40 CFR Part 85 Subpart X.
[[Page 6748]]
Our final rule is consistent with the requirements of the Act
because manufacturers won't have to phase-in HLDTs until the model year
that commences four years from the signature of this rule if they don't
want to. However, to provide incentive for manufacturers to comply with
the interim requirements for all of their HLDTs beginning with the 2004
model year, i.e. to elect Option 1, we are finalizing a provision to
permit those manufacturers to use higher NMOG values in two situations.
Manufacturers electing to meet the interim requirements for all of
their 2004 model year HLDTs including the 25% phase-in number must so
declare in their 2004 model year HLDT certification applications. They
may then:
Use a full useful life NMOG value, through the 2008 model
year, of 0.280 g/mi for LDT4s certified to bin 10 (0.195 g/mi at
intermediate life); and
Use a full useful life NMOG value, through the 2006 model
year, of 0.130 g/mi for LDT2s certified to bin 9 (0.100 g/mi at
intermediate life). \70\
---------------------------------------------------------------------------
\70\ Manufacturers must cite this declaration in their LDT2
certification applications for the 2004-2006 model years and in
their LDT4 applications for the 2004-2008 model years. If
manufacturers employ alternate phase-in schedules that begin prior
to 2004, they must also make the declaration in each applicable year
before 2004.
---------------------------------------------------------------------------
In the case of the LDT4s, the optional NMOG standard will enable
manufacturers to more easily meet our interim HLDT NOX
standards, the highest of which (0.6 g/mi) is one-third tighter than
what will be required in California under Cal LEV I through 2006. For
the LDT2s, the optional NMOG standard will help manufacturers certify
more LDT2s to bin 9 (0.3 g/mi) than they likely would otherwise (they
would probably certify some LDT2s to bin 10 where NOX=0.6 g/
mi). Therefore, both of these optional standards are consistent with
our goal to achieve important early NOX benefits from our
program.
Except for the application of the new option described above, the
interim standards for HLDTs will apply as proposed, and will phase-in
through the 2007 model year, as shown in Table IV.B.-2. We are
finalizing the proposed corporate average full-life NOX
standard of 0.20 g/mi for interim HLDTs. Manufacturers will comply with
the corporate average HLDT NOX standard by certifying their
interim HLDTs to any of the full useful life bins shown in Table IV-B.-
4. Where applicable, manufacturers will also comply with the
intermediate useful life standards shown in Table IV.B.-5. Interim
HLDTs not needed to meet the phase-in percentages during model years
2004-2006 will have to be certified to the standards of one of the bins
in Table IV.B.-4 (and -5), and NOX will thus be capped at
0.60 g/mi. These trucks will not be included in the calculation to
demonstrate compliance with the 0.20 g/mi average.
At the end of each model year, manufacturers will determine their
compliance with the 0.20 NOX standard by calculating a sales
weighted average of all the bins to which they certified any interim
HLDTs, excluding those not needed to meet the applicable phase-in
requirements during 2004-2006. The excluded trucks must comply with the
standards from one of the bins in Table IV-B-4 (and -5) which
effectively caps their emissions at 0.60 g/mi.
For HLDT test groups that are not subject to the phase-in in model
year 2004 under Option 2 above, the same requirements as described
above apply except that there are no new standards for these vehicles
in the 2004 model year. Also, the optional higher NMOG values for LDT2s
and LDT4s do not apply for any manufacturer that uses Option 2.
Given that the interim HLDT standards are ``phase-in'' standards
through 2007 (as opposed to the interim LDV/LLDT standards, which are
``phase-out'' standards), we are including provisions that
manufacturers may employ alternative phase-in schedules as proposed for
the Tier 2 standards and described in detail in section IV.B.4.b.ii. of
this preamble. These schedules provide manufacturers with greater
flexibility and we believe they also provide incentive for
manufacturers to introduce advanced emission control technology at an
earlier date. Alternative phase-in schedules will have to provide 100%
phase-in by the same year as the primary phase-in schedule (2007).
Manufacturers will be eligible for alternate phase-in schedules to the
extent that they produce HLDTs that meet or surpass the NOX
average standard for interim HLDTs of 0.20 g/mi in 2001-2003 or to the
extent that they produce more HLDTs than required that meet the 0.20
average standard in 2004 or later.
Where manufacturers elect not to meet the phase-in requirements for
all of their 2004 model year HLDTs, as discussed above under Option 2,
they may still employ alternate phase-in schedules, but the sum of 225
percent is required rather than the 250 percent required for alternate
phase-ins described in section IV.B.4.b.ii. In this case, the sum of
phase-in percentages up through the 2005 model year must total to at
least 50%. Also, manufacturers must raise the 225% value to the extent
that any of their 2004 HLDTs' model years commence on or after the
fourth anniversary of the signature date of this rule and are brought
into compliance with the 0.20 g/mi average NOX standard.
Lastly, note that for bin 10, which is only usable during the
interim program, we have established a PM standard of 0.08 g/mi, which
is more stringent than the Tier 1 standard previously in effect for
these vehicles. We do not expect low sulfur diesel fuel to be widely
available during the time frame of the interim program but we expect
that bin 10 levels can be reached by diesel technology on current
diesel fuel. As a part of this overall approach, we are making the
intermediate life standards optional for diesels for this bin.
f. Light-Duty Evaporative Emission Standards
We are finalizing as proposed a set of more stringent evaporative
emission standards for all Tier 2 light-duty vehicles and light-duty
trucks. The standards we are finalizing are shown in Table IV.B.-9 and
represent, for most vehicles, more than a 50% reduction in diurnal plus
hot soak standards from those that will be in effect in the years
immediately preceding Tier 2 implementation. The higher standards for
HLDTs provide allowance for greater non-fuel emissions related to
larger vehicle size.
[[Page 6749]]
Table IV.B.-9.--Final Evaporative Emission Standards
[Grams per test]
------------------------------------------------------------------------
Supplemental 2
Vehicle class 3 day diurnal day diurnal
+hot soak +hot soak
------------------------------------------------------------------------
LDVs and LLDTs.......................... 0.95 1.2
HLDTs................................... 1.2 1.5
------------------------------------------------------------------------
Evaporative emissions from LDVs and LDTs represent nearly half of
the light duty VOC inventory projected for the 2007-2010 time frame,
according to MOBILE5 projections. Manufacturers are currently
certifying to levels that are, on average, about half of the current
standards, and in many cases, much less than half the standards. Thus,
meeting these standards appears readily feasible. Even though
manufacturers are already certifying at levels much below the current
standard, we believe that reducing the standards will result in
emission reductions as all manufacturers seek to certify with adequate
margins to allow for in-use deterioration. Further, we believe that
tighter standards will prevent ``backsliding'' toward the current
standards as manufacturers pursue cost reductions.
As mentioned in section IV.B.-4.b above, we will phase in the Tier
2 evaporative standards by the same mechanism as the Tier 2 exhaust
standards; e.g., 25/50/75/100 percent beginning in 2004 for LDV/LLDTs
and 50/100 percent beginning in 2008 for HLDTs (as shown in Table
IV.B.-2). As for the exhaust standards, alternative phase-in plans will
also be available.
The evaporative emission standards we proposed and are finalizing
today are the same as those that manufacturers' associations proposed
during the development of California's LEV II proposal. California
ultimately opted for more stringent standards; we believe that our
standards are appropriate for federal vehicles certified on higher-
volatility federal test fuel.
g. Passenger Vehicles Above 8,500 Pounds GVWR
Historically, we have categorized all vehicles above 8,500 pounds
GVWR as heavy-duty vehicles regardless of their application and they
have been subject to standards and test procedures designed for
vehicles used in heavier work applications. \71\ In the Tier 2 NPRM, we
requested comment on whether some portion of vehicles above 8,500
pounds GVWR should be included in the Tier 2 program, based on vehicle
use or design characteristics. The Tier 2 proposals, however, applied
to light-duty vehicles and light-duty trucks and did not cover any
vehicles above 8,500 pounds GVWR.
---------------------------------------------------------------------------
\71\ The heavy-duty definition also includes vehicles that weigh
over 6000 lbs curb weight regardless of their GVWR. We are not aware
that any vehicles currently produced have curb weights above 6,000
lbs, but GVWRs of 8,500 lbs or less. Nevertheless, this discussion
and our requirements includes such vehicles.
---------------------------------------------------------------------------
On October 29, 1999, after carefully considering all of the
comments on this issue, we proposed to include all personal use
passenger vehicles (both gasoline and diesel fueled) between 8,500 and
10,000 pounds GVWR in the Tier 2 program. This group of vehicles would
include large SUVs and passenger vans and may include other types of
``crossover'' multipurpose vehicles in the future, depending on new
vehicle designs. We proposed this Tier 2 program change in our NPRM
concerning emissions standards for 2004 and later heavy-duty vehicles
and engines, (64 FR 58472).
Specifically, we proposed to revise the definition of light-duty
truck to include any complete vehicle between 8,500 and 10,000 pounds
GVWR that is designed primarily for the transportation of persons and
has a capacity of not more than 12 persons. We expected that this
definition would exclude vehicles that have been designed for a
legitimate work function as their primary use, such as the largest
pick-up trucks, the largest passenger vans, and cargo vans; these
vehicles would continue to be categorized as heavy-duty and would be
subject to applicable heavy-duty standards. We requested comment on
whether the proposed definition would adequately exclude these
vehicles, or whether additional criteria may be needed and how that
criteria might be used.
Today, we are finalizing Tier 2 standards for passenger vehicles
above 8,500 pounds GVWR. These vehicles are included in the Tier 2
program beginning in 2004 and are required to meet the final Tier 2
standards in 2009 and later. As we intended in the proposal, these
vehicles will generally be subject to the same requirements as HLDTs.
We have made modifications to the program, primarily in response to
comments we received in two areas: (1) Changing the definition of
light-duty truck and (2) the interim program requirements.
New Vehicle Category: Medium-Duty Passenger Vehicles (MDPVs)
The mechanism we proposed to bring the passenger vehicles over
8,500 pounds into the Tier 2 program, was to modify the definition of
light-duty truck to include those vehicles. The objective of this
proposal was to have these vehicles treated as HLDTs within Tier 2. We
are finalizing requirements which remain consistent with our objective
of including these vehicles in Tier 2 beginning in 2004. However, the
approach we are finalizing is somewhat different than that proposed.
Rather than finalizing the revised definitions for light-duty truck
as we proposed, we are creating a new category of heavy-duty vehicles
termed ``medium-duty passenger vehicles'' (MDPVs). These vehicles will
generally be grouped with and treated as HLDTs in the Tier 2 program.
The MDPV category is defined along the lines of the proposed definition
change for the LDT category, with some modification, as described
below. Our decision to create a new sub-category of heavy-duty vehicles
rather than modify the existing LDT definition does not, in and of
itself, change the way in which Tier 2 standards are applied to the
vehicles.
We decided upon the above approach because section 216 of the CAA
establishes the definition for LDT as having the meaning contained in
the CFR as of 1990. We received several comments that EPA may not
change the definition and must instead devise a way to categorize the
vehicles for purposes of Tier 2 which does not change the definition of
light-duty truck. Rather than adopt a change to the LDT definition that
would be questionable from a legal perspective, we are adopting an
approach that we believe is clearly legally acceptable. Under this
approach (as with the proposed approach), the standards for these
vehicles are promulgated under
[[Page 6750]]
section 202(a)(3), which applies to heavy-duty vehicles/engines.
We are defining medium-duty passenger vehicles as any complete
heavy duty vehicle less than10,000 pounds GVWR designed primarily for
the transportation of persons including conversion vans (i.e., vans
which are intended to be converted to vans primarily intended for the
transportation of persons. The conversion from cargo to passenger use
usually includes the installation of rear seating, windows, carpet, and
other amenities). We are not including any vehicle that (1) has a
capacity of more than 12 persons total or, (2) that is designed to
accommodate more than 9 persons in seating rearward of the driver's
seat or, (3) has a cargo box (e.g., a pick-up box or bed) of six feet
or more in interior length. We would consider vehicles designed
primarily for passenger use to be those that have seating available
behind the driver's seat. We have added the rear passenger seating
capacity criterion to exclude large passenger vehicles which are
primarily used in heavy-load passenger applications. We do not believe
vehicles designed primarily for personal use passenger transportation
would be equipped with rear seating for more than 9 passengers. \72\
---------------------------------------------------------------------------
\72\ Vehicles that are ``designed'' to accommodate more than
nine passengers in the rearward seating area in their standard
configuration but that have some of the standard rear seating
removed to accommodate two or more wheel chair tie downs would
usually not be considered MDPVs.
---------------------------------------------------------------------------
We have added the pick-up bed length criterion to the definition to
clearly distinguish standard pick-ups from other vehicles meeting the
GVWR and seating capacity criteria. We received several comments that
although the proposal clearly states our intention not to include
heavy-duty pick-up trucks in the Tier 2 program, the proposed
regulatory definition was unclear. Currently, heavy-duty pick-ups have
beds in excess of six feet. Any future offerings of vehicles that are
equipped with significantly shorter beds would be included in the MDPV
category, if the vehicle also met the weight and seating capacity
criteria. EPA is making a distinction based on bed length because a
vehicle introduced with a shorter bed would have reduced cargo capacity
and would likely have increased seating capacity relative to current
pick-ups, making it more likely to be used primarily as a passenger
vehicle.
Interim Standards
As noted above, the MDPVs and HLDTs must meet the final Tier 2
standards by 2009 at the latest. Prior to 2009, HLDTs and MDPVs are
required to meet interim standards. The interim standards, as described
earlier in section IV.B.4, are based on a corporate average full life
NOX standard of 0.20 g/mile which is phased in 25/50/75/100
percent in 2004-2007. MDPVs must be grouped with HLDTs for the interim
standards phase-in.
We received several comments from manufacturers that requiring
these larger vehicles to meet a new, unique standard prior to phase-in
to the interim program would worsen the workload burden created by the
Tier 2 program. Manufacturers do not currently have facilities
available for chassis-testing diesel vehicles and there is not enough
time to fold diesel vehicles into a chassis-based program by 2004.\73\
---------------------------------------------------------------------------
\73\ Currently, diesel heavy-duty engines are certified to
heavy-duty engine standards rather than vehicle standards.
---------------------------------------------------------------------------
To address this situation, we are providing the following temporary
additional flexibilities for MDPVs. We are finalizing an additional
upper bin for MDPVs for the interim program (effective in model years
2004 through 2008). This bin would only be available for MDPVs. The
bin, shown in Table IV.B-10, is equivalent to the California LEV I
standards that are applicable to these vehicles prior to 2004. Vehicles
certified to this bin must be tested at adjusted loaded vehicle weight
(ALVW), consistent with California program testing requirements.\74\
Including this upper bin provides manufacturers with the ability to
carry over their California vehicles to the federal program prior to
their phase-in to the interim and final Tier 2 standards. Once phased
in to the interim standards manufacturers may continue to use the upper
bin but the vehicles must be included in the 0.20 g/mi NOX
average. The upper bin is not available to manufacturers for the final
Tier 2 program.
---------------------------------------------------------------------------
\74\ ALVW is the average of curb weight and GVWR. The test
weight is sometimes refered to as ``half payload''.
Table IV.B.-10.--Temporary Interim Exhaust Emission Standards Bin for MDPVs a
----------------------------------------------------------------------------------------------------------------
NOX NMOG CO HCHO PM
----------------------------------------------------------------------------------------------------------------
Full Useful Life (120,000 mile)........... 0.9 0.280 7.3 0.032 0.12
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Bin expires after model year 2008.
We proposed that HLDTs not needed to meet the phase-in percentages
for the interim program during model years 2004--2006 would be required
to meet one of the interim bins. Such vehicles, however, would not be
included in the calculation to demonstrate compliance with the 0.20 g/
mile average. Thus, we proposed that the emissions of all interim HLDTs
would be capped at a NOX value of 0.6 g/mile. We are
retaining the bin structure and requirements which effectively cap
NOX emissions at 0.6 g/mile for all HLDTs below 8,500 pounds
GVWR, as described in section IV.B. Similarly, for MDPVs, the 0.9 g bin
described above is the highest bin available and acts as the cap for
vehicles not yet phased-in to the interim standards.
In addition, for diesel MDPVs prior to 2008, we are allowing
manufacturers the option of meeting the heavy-duty engine standards in
place for the coinciding model year. Diesels meeting the engine-based
standards would be excluded from the interim program averaging pool. In
2008, the manufacturers must chassis certify diesel vehicles and
include them either in the interim program or in the final Tier 2
program. In 2009 and later, all MDPVs, including diesels, must be
brought into the final Tier 2 program. As with the higher bin of
chassis-based standards, the purpose of this diesel provision is to
provide the option of carry-over of vehicles until they are brought
into the Tier 2 program. We believe these modifications to the program
will substantially ease the workload concerns of manufacturers in the
interim years by allowing them to carry-over vehicle models and engine
families. The provisions also remain consistent with EPA's goal of
including the vehicles in the overall Tier 2 program structure.
[[Page 6751]]
For diesel engines that are engine certified and used in MDPVs, as
allowed through model year 2007, we are requiring those engines to
comprise a separate averaging set under the averaging, banking and
trading requirements applicable to heavy-duty diesel engines. We are
permitting engine-based certification for these diesel vehicles to
provide time and flexibility for manufacturers who may have limited
experience with chassis certifying vehicles containing such engines.
However, we do not want to create a situation where engines above
applicable engine standards could be used in these vehicles, when other
MDPVs are being brought under stringent standards. Therefore we believe
it is appropriate to constrain the application of credits to these
engines. We note that we are not permitting credits from other programs
(like NLEV) to be applied in any way to Tier 2 or interim vehicles.
For LDT4s, we have finalized an optional higher NMOG level of 0.280
g/mile for bin 10 (0.6 g/mile NOX), as described in section
IV.B.4.a of the preamble. MDPVs placed in bin 10 may also certify to
the higher NMOG level of 0.280 g/mile. This provision provides
manufacturers with the incentive of selecting the lower NOX
bin for MDPVs, since the NMOG level is not an obstacle to compliance.
As described in section IV. B.4.e.ii., manufacturers have two
options for the start of the program requirements. In Option 1, the
program begins with the 2004 model year for 25 percent all vehicles. In
Option 2, manufacturers can exempt 2004 model year vehicle test groups
whose model years begin on or after the fourth anniversary of this
rule's signature. These options are also available for MDPVs for the
same reasons we are providing them for HLDTs. However, the additional
0.9 g bin contained in Table IV.B.-10, the optional higher NMOG
standard of 0.280 g/mile for bin 10, and the option of certifying to
the engine-based standards for diesels are available only with Option
1.
Other Emission Control Requirements
We are requiring all non-diesel MDPVs to be OBDII compliant
beginning in 2004. California requires OBDII for their LEV I program
and therefore, the new OBDII requirements are consistent with the
approach of allowing vehicles to be carried over from California. \75\
Diesel vehicles which are carried over from the California program are
required to be equipped with the OBD system as the system is certified
in California. Diesel vehicles not carried over from California are not
required as part of this rulemaking to be equipped with OBDII. However,
we have proposed OBDII requirements for heavy-duty diesel engines in
our heavy-duty engines NPRM (64 FR 58472). If OBDII requirements are
finalized for heavy-duty engines and vehicles as part of that
rulemaking the OBDII requirements would likewise apply to diesels in
the MDPV category.
---------------------------------------------------------------------------
\75\ As with HLDTs, the California OBDII compliance option is
available for MDPVs.
---------------------------------------------------------------------------
As proposed, we are applying Tier 2 evaporative emissions standards
and existing HLDT ORVR requirements to MDPVs. MDPVs must be grouped
with HLDTs for purposes of phasing in to the Tier 2 evaporative
emission standards contained in this rule. We have added somewhat
higher standards for the MDPVs to account for their larger fuel tanks
and vehicle sizes.\76\ However, the stringency of the standards remains
similar to that for HLDTs. These standards are described in section
IV.B.4.f of the preamble. ORVR requirements currently exist for HLDTs
and are to be phased-in through model years 2004-2006.\77\ We proposed
to apply the same standards and phase-in requirements to vehicles over
8,500 pounds GVWR. We are finalizing these ORVR requirements for MDPVs,
which must be grouped with HLDTs for purposes of phased-in to the ORVR
requirements.
---------------------------------------------------------------------------
\76\ For Tier 2 MDPVs, evaporative standards will be 1.4 g/test
for the 3 day diurnal+hot soak test and 1.75 g/test for the
supplemental 2 day diurnal+hot soak test.
\77\ ORVR requirements are phased in for HLDTs, at 40/80/100
percent in 2004-2006 (see 40 CFR 86.1810-01 (k)).
---------------------------------------------------------------------------
For those manufacturers electing option 2, OBD is required when the
vehicle family is covered under these new requirements (i.e., 2004 or
2005 depending on when certification occurs). For ORVR, the situation
is similar. The phase-in is 40 percent of any 2004 certifications which
occur four years after this rule is promulgated, 80 percent in 2005,
and 100 percent in 2006. As before, the vehicles covered by these
phase-ins must be combined with those in the LDT3/4 phase-in for
purposes of calculating compliance.
We are finalizing Cold CO and Certification Short Test requirements
for Tier 2 MDPVs. However, we are not finalizing SFTP standards for
MDPVs in today's rulemaking. Currently, SFTP standards do not apply to
any vehicles above 8,500 pounds GVWR, including those in the California
LEV I and LEV II programs. We are concerned, therefore, that finalizing
SFTP requirements in today's rulemaking would prevent manufacturers
from carrying over vehicle models during the phase-in years of the
program. We are currently contemplating a new SFTP rulemaking which
would consider ``Tier 2'' SFTP standards for all vehicles, including
MDPVs. California is also interested in developing more stringent SFTP
standards within the context of their LEV II program and we are
coordinating with California on these new SFTP standards.
Sustained Severe Use; In-Use Testing of MDPVs
While we are confident that MDPVs can comply in-use with the
standards we are finalizing, manufacturers are concerned about in-use
liability for MDPVs that are in sustained severe-use. In our in-use
emission testing program, we generally screen vehicles for proper
maintenance and use and delete vehicles that we believe may have been
misused or malmaintained. Also, in the regulations for manufacturer in-
use testing, we permit manufacturers to delete vehicles from samples if
they have been used for ``severe duty (trailer towing for passenger
cars, snow plowing, racing)'', and we provide that vehicles may be
deleted for other reasons upon EPA approval.
We recognize that MDPVs will be marketed and used for carrying many
passengers, carrying heavy loads and trailer towing. While it is not
our intention to exempt vehicles from in-use liability that have been
used for their intended purposes, we understand that some MDPVs may be
subject to sustained severe service applications, such as frequent
overloading or frequent towing beyond manufacturer's advertised
capacity and could not be considered to be representative of properly
maintained and used vehicles. Furthermore, we would not necessarily
consider to be representative MDPVs which are routinely or regularly
used in heavy-load hauling application or towing even within the
manufacturers limits. Thus, for example, an SUV MDPV used on a daily
basis to haul a work crew and tow equipment to a distant work site may
not be representative while the same SUV used to haul the family and
tow a boat to the lake on weekend excursions would be representative.
MDPVs in sustained severe operations should not be included in
manufacturer or EPA in-use test programs, while those that see less
frequent severe operation should be included.
[[Page 6752]]
C. Our Program for Controlling Gasoline Sulfur
As with our program for vehicles, the program we are establishing
today for reducing sulfur levels in commercial gasoline will achieve
the same large NOX reductions that we projected for the
proposed program. Here, too, the final program is very similar to our
proposed program. Adjustments we have made to the proposed program will
smooth the refining industry's transition to the low-sulfur
requirements and encourage earlier introduction of cleaner fuel.
With today's action, we are requiring substantial reductions in
gasoline sulfur levels nationwide. As we explained in Section IV.A,
because sulfur significantly inhibits the ability of automotive
catalysts to control emissions, we had to consider sulfur's impact in
setting the Tier 2 standards. We knew at the time of proposal that
newer catalysts were more sensitive to sulfur than older technologies,
and projected that Tier 2 catalysts would be as or even more sensitive
than those used in today's NLEV vehicles. Furthermore, we believed that
the sulfur build-up on Tier 2 catalysts may be irreversible. Since the
proposal, additional data we've collected have confirmed and
strengthened our concerns. It now appears that the catalysts expected
to be used in Tier 2 vehicles will be even more sensitive to sulfur
than we originally estimated, and that this sulfur impact will be
approximately 45 percent irreversible under typical driving conditions.
Thus, the gasoline sulfur standards we finalize today will enable the
stringent tailpipe emission standards we're implementing for Tier 2
vehicles and will help to ensure that these low emission levels will be
realized throughout the life of the vehicle. Furthermore, since
vehicles already on the road, including NLEV vehicles, are in many
cases quite sensitive to sulfur, gasoline sulfur control will also help
to reduce emissions of pollutants that endanger public health and
welfare from these vehicles.
In developing this gasoline sulfur control program, we gave
substantial consideration to the ability of the refining industry to
meet these requirements. We proposed a set of standards applying to
refiners and to individual refineries combined with a sulfur averaging,
banking, and trading (ABT) program intended to provide flexibility in
meeting the standards. We concluded that our proposal was reasonable
and cost-effective based on our projections regarding the number of
refineries that would (1) need to reduce sulfur levels each year as the
standards tightened, (2) need sulfur ABT credits to meet the 30 ppm
refinery average standard in 2004 and/or 2005 to defer installation of
desulfurization equipment, and (3) install desulfurization equipment
prior to 2004, generating the needed sulfur credits. This analysis
formed our picture of the industry's investment stream--a year-by-year
estimate of how many refineries would be constructing new equipment and
what technologies these refineries would choose. We assumed that any
investments would be in the new, lower cost technologies, and that
these technologies would be available and adequately demonstrated to
allow refiners to select them as early as the year 2000 to begin
operation (and thus, credit generation) as early as 2002. Based on
these assumptions, our analysis showed that sufficient credits would be
generated before 2004 to enable a number of refineries to delay
construction and use credits to meet the 30 ppm standard in 2004, and
in some cases, even in 2005. Overall, we believed our analysis
represented a reasonable and balanced rate of investment by the
industry over a several year time period.
In response to our proposal, we received many comments which raised
concerns about the feasibility of our program. Some comments suggested
that our proposed declining cap (300 ppm cap for 2004 and a reduced cap
of 180 ppm for 2005) could be an additional and burdensome expense for
most refiners to meet. Specifically, these commenters believed that the
declining cap would be more constraining than compliance with the
corporate average or even the refinery average standards (as long as
the ABT program produced sufficient credits). Because refiners probably
would not make multiple investments in such a short time, the 180 ppm
cap could force some refiners to install the equipment needed to get to
the 80 ppm cap earlier than otherwise needed. The commenters argued
that this would force all of the industry's investments into the first
years of the program rather than allowing for a smoother transition
over several years as we had originally envisioned. Many comments also
suggested that since there have not been long-term commercial
demonstrations of the newer gasoline desulfurization technologies,
refiners would not consider these technologies to be viable and, if
faced with our proposed 30 ppm standard in 2004, may select the more
traditional, higher cost sulfur reduction processes. Some of these
commenters suggested that we should delay the 30 ppm standard, and
recommended a range of suggested deadlines (2005-2007).
We also received many comments which suggested that the ABT program
restricted the generation of credits, and provided no certainty that
credits would be generated prior to 2004. Commenters stated that two
features in particular--the delay in establishing each refinery's
sulfur baseline due to 1997-98 data review and the strict 150 ppm
``trigger'' for generating credits--caused them to question whether
adequate sulfur credits would be available. If credits could not be
guaranteed early enough to forestall investment decisions, refiners
would be forced to begin construction earlier than we had projected.
Under such a scenario, the costs of the program would be substantially
greater, and many commenters suggested that, regardless of cost, it
would be impossible for the entire industry to meet the deadline (due
to limitations on engineering design and construction resources as well
as the time required to obtain permits).
Finally, we received many comments which argued that not all
refineries would be able to concurrently comply with the proposed
standards in the time period provided, given the competition for
engineering resources and the time needed for construction of
desulfurization equipment. These comments focused specifically on small
refineries (owned by both small and large corporations) and refineries
that were relatively isolated geographically (such as many refineries
in the Rocky Mountain region) which had little access to other sources
of gasoline should they have difficulty in complying with our
requirements. The commenters generally argued that these refiners
needed more time than the rest of the industry to meet our proposed
standards. Some of the commenters also argued that the standards
applicable to many of these refiners should be less stringent because
of their belief that the environmental needs of the states where these
refineries were located and/or marketed gasoline were small relative to
the needs of other states. Suggestions for temporary and permanent
regional programs which provided less stringent control in the Western
half of the country were included with many of these comments.
Based on what we've learned from the comments received and
additional information we've gathered, we have revised our analysis of
when refiners will invest in desulfurization equipment and how the
sulfur ABT program can
[[Page 6753]]
best help to distribute these investments over several years while
maintaining the original goals of the program. The following is a brief
summary of our new analysis; a more complete explanation of our
assumptions can be found in the RIA.
About 15 percent of current domestic gasoline production already
meets the gasoline sulfur standard, or can do so with very little
additional capital investment, and at most a small increase in
operating cost. The remainder of the industry--the majority of U.S.
refineries--will have to install at least one desulfurization
processing unit to lower gasoline sulfur to the required levels.
Furthermore, many of these refineries will need to make changes to
their operations in advance of 2004 simply to comply with the 300 ppm
cap standard, even if they can obtain sufficient ABT credits to delay
compliance with the 30 ppm refinery average standard. Refiners facing
this situation will need to make their decisions within a year or at
most two from today's action. From the comments we received and
discussions we've had with refiners and technology vendors, we
acknowledge that some of the newer, more promising processes may not be
in operation for sufficient time to gain valuable operating experience
(one to two years of operation) until 2002 or later. Hence, we now
believe that some refiners may choose from one of the traditional,
commercially-demonstrated desulfurization processes, even though these
technologies may be more costly, to meet our standards.
However, we continue to believe that the majority of refiners will
delay construction (taking advantage of the sulfur ABT program and
perhaps making modest operational changes in the interim) and will have
a wide range of technological options to choose from, at reduced
capital investment and operating costs compared to the more traditional
approaches. Examples of these technologies are CDHydro and CDHDS
(licensed by the company CDTECH), Octgain 125 and Octgain 220 (licensed
by Mobil Oil), S Zorb (licensed by Phillips), IRVAD (licensed by Black
& Veatch), and others. These technologies generally use conventional
refining processes combined in new ways, with improved catalysts and
other design changes that minimize the undesirable impacts (such as a
substantial loss in octane) and maximize the effectiveness of the
desulfurization approach. Since these processes provide less costly
ways to reduce gasoline sulfur, we have based our economic assessment
(summarized in Section IV.D. below) on the presumption that the
majority of refiners will elect to use one of these processes to meet
the 30 ppm standard, even if it requires delaying compliance (through
the purchase of ABT program credits) until 2006.
However, after considering the data available to us about current
refinery sulfur levels and the ability of refiners to reduce sulfur
levels to meet the standards, we have made several modest changes to
the program. These changes will not affect the environmental
performance of the proposed program. We agree that the declining cap
had the unintended consequence of forcing investments earlier than
desired for an orderly transition to the 80 ppm cap. Thus, we have
changed the program from the proposal, establishing a 300 ppm per-
gallon cap in 2004 and 2005. We do not expect this change to have an
impact on the environment (or on the Tier 2 vehicles that will be
introduced in this interim period) since average sulfur levels will be
required to decrease due to the declining corporate average, which
begins in 2004. We kept the corporate average standards proposed for
2004 and 2005, but are permitting inter-company trading around these
standards. We believe this change will provide further flexibility to
the industry in allowing some refineries to delay construction and
encourage others to move forward sooner. Having now concluded that many
refiners would benefit from an additional year to evaluate and consider
the technological options before having to install equipment to meet
the 30 ppm standard, we have delayed this standard for one year. In
acknowledgment that some areas of the country have less urgent
environmental needs for the emissions reductions that this program will
bring, and that many of the refiners that supply gasoline to these
areas are ones which will have the most difficulty in meeting the
standards, we have finalized a geographic phase-in of the standards to
complement the temporal phase-in applicable to the rest of the
industry. Thus, in certain states in the West, refiners have the option
of meeting interim standards while delaying compliance with the 30 ppm
average until 2007. Finally, we have made changes to the sulfur
baseline requirements and the credit trigger to help ensure that the
sulfur ABT program functions as we originally envisioned it would.
These changes will encourage reductions in gasoline sulfur levels
beginning as early as 2000, while providing enough flexibility to
require the majority of refineries to meet a 30 ppm average sulfur
standard by 2006. Overall, the industry will be able to spread the
needed investments over several years rather than having to comply as a
whole by 2004, and will be able to maximize the use of the most
efficient and lowest cost technologies. While we have provided
additional flexibility for the industry, we have done so without
compromising the environmental benefits of the program in 2004 and
beyond when compared to our proposal.
The following sections summarize the requirements for gasoline
refiners and importers, including our geographic phase-in requirements;
special provisions for small refiners, and our plans to facilitate the
construction permitting process to enable refiners to install gasoline
desulfurization technology in a timely manner. Section VI provides
additional information about the compliance and enforcement provisions
that will accompany these requirements. More detailed information in
support of the conclusions presented here is found in the RIA and in
our RTC document.
1. Gasoline Sulfur Standards for Refiners and Importers
This section explains who must comply with the gasoline sulfur
control requirements, the standards and deadlines for compliance, and
how refiners can use the ABT program to meet the standards. The last
section discusses how individual state gasoline sulfur programs are
affected by today's action. Standards specific to eligible small
refiners are presented in Section IV.C.2.
a. Standards and Deadlines that Refiners/Importers Must Meet
Anyone who produces gasoline for sale in the U.S. must comply with
these regulations. This includes anyone meeting our definition of a
refiner (including blenders, in most instances) and importers. Certain
refiners may qualify for temporarily less stringent standards and
deadlines because these companies either (1) market gasoline in the
temporary geographic phase-in area (explained in section b below), or
(2) they qualify under our definition of small refiner (explained in
section IV.C.2 below). Foreign refiners may also have separate
requirements, if they qualify as small refiners.
These requirements will apply to all gasoline sold in the U.S.,
including Alaska, Hawaii, Puerto Rico, American Samoa, the Virgin
Islands, Guam, and
[[Page 6754]]
the Northern Mariana Islands. \78\ This national approach is
appropriate, based on our conclusions that vehicle emissions must be
reduced nationwide to adequately protect public health and the
environment and Tier 2 vehicles require protection from the harmful
impacts of gasoline sulfur regardless of where they are operated.
---------------------------------------------------------------------------
\78\ Gasoline sold in California is exempt from meeting these
Federal standards, due to our belief that California gasoline
already meets or exceeds these requirements. See Section VI for more
discussion on this issue.
---------------------------------------------------------------------------
Table IV.C.-1. summarizes the standards for gasoline refiners and
importers. There are three standards which refiners and importers must
meet. In 2004 and beyond, every gallon of gasoline produced is limited
by a per-gallon maximum or ``cap.'' The cap standard becomes effective
January 1, 2004 (and January 1 of subsequent years as the cap standard
changes). Also, in 2004 and 2005, each refiner must meet an annual-
average standard for its entire corporate gasoline pool. Finally, each
individual refinery is subject to a refinery average standard,
beginning in 2005. Refineries that do not take advantage of the sulfur
ABT program will have actual sulfur levels averaging 30 ppm beginning
in 2005. Additional details about the requirements for meeting these
standards is found in the following sections.
Table IV.C.-1.--Gasoline Sulfur Standards for Refiners, Importers, and
Individual Refineries
[Excluding Small Refiners and GPA Gasoline]
------------------------------------------------------------------------
Compliance as of-- 2004 a 2005 2006+
------------------------------------------------------------------------
Refinery Average, ppm \b\........ ........... 30 30
Corporate Pool Average, ppm c.... 120 90 ...........
Per-Gallon Cap,\d\ ppm........... 300 300 80
------------------------------------------------------------------------
NOTES:
\a\ We project that the pool averages will actually be below 120 ppm in
2004. For a discussion of how the program gets early sulfur reductions
before 2004, see section IV.C.1.c.
\b\ The refinery average standard can be met through the use of sulfur
credits or allotments from the sulfur ABT program, as long as the
applicable corporate pool average and per-gallon caps are not
exceeded, as explained in Section IV.C.1.c.viii.
c. The corporate pool average standard can be met through the use of
corporate allotments obtained from other refiners, if necessary, as
explained in Section IV.C.1.c.iii.
\d\ In 2004, exceedances up to 50 ppm beyond the 300 ppm cap are
allowed. However, in 2005, the cap for all batches will be reduced by
the magnitude of the exceedance.
i. What Are the Per-Gallon Caps on Gasoline Sulfur Levels in 2004 and
Beyond?
To reduce the potential for permanent damage to the emission
controls of Tier 2 vehicles and later NLEV vehicles, we are
implementing caps on the sulfur content of every batch of gasoline
produced or imported into the country beginning in 2004. As shown in
Table IV.C.-1, a cap of 300 ppm is first implemented in 2004. This cap
remains in 2005. In 2006 and beyond, the cap is lowered to 80 ppm.
These caps apply at the refinery gate. Sulfur caps are also applied to
gasoline downstream of the refinery; see Section VI for additional
discussion of downstream cap standards. These downstream caps will
facilitate compliance and enforcement without changing the way the
distribution system currently functions.
Several commenters suggested the rule should also include a
provision to address the occasions when refiners must temporarily take
processing units out of operation so that planned, recurring
maintenance can be performed, commonly termed ``turnarounds,'' or if
processing units are unexpectedly taken out of operation due to
accident or malfunction, commonly termed ``upsets.'' These commenters
expressed particular concern that the gasoline produced at a refinery
may not meet the sulfur cap standards when a refinery's desulfurization
unit is not operating. These commenters contended that the regulations
should allow refiners to produce gasoline that exceeds the cap standard
for a limited time where the excess sulfur is due to a turnaround or
upset. However, they also suggested that the refiner should be required
to meet the refinery average standard with the high sulfur gasoline
included in its average calculation in order to create an incentive for
refiners to limit the volume and sulfur content of high sulfur
gasoline.
Today's rule does not grant relief to refiners because of
turnarounds or upsets. While the concern raised by the commenters is
reasonable, the solution they suggested would nevertheless result in
distribution of gasoline exceeding the cap standards. The cap standards
are necessary because gasoline with higher sulfur levels will
significantly harm or destroy the emission controls used in Tier 2
vehicles.
We believe there are strategies refiners can use to mitigate or
eliminate the difficulties associated with turnarounds and upsets. For
example, some refiners schedule turnarounds for a number of refinery
processing units at the same time when the refinery largely stops
producing gasoline, thereby avoiding the need to produce any high
sulfur gasoline. In other situations it may be possible for a refiner
to store high sulfur products until the desulfurization unit is
operating or to transfer high sulfur products to a neighboring refinery
for desulfurization.
We commit to continue evaluating the turnaround issue especially as
new technologies are introduced. Based on our evaluation, if a problem
is evident and if an appropriate solution can be devised, we will act
at that time.
In 2004, if any batch of gasoline \79\ exceeds the 300 ppm cap (up
to 350 ppm), then the cap for all batches produced by the refinery in
2005 will be reduced by the magnitude of the exceedance. For example,
if any given batch of gasoline has a cap of 325 ppm (a 25 ppm
exceedance) in 2004, then the cap becomes 275 ppm for all batches of
gasoline produced by that refinery in 2005. However, at no time in 2004
can a batch be higher than 350 ppm sulfur. We have made this adjustment
to accommodate those refiners who would have to invest in control
technologies to meet the 300 ppm cap in 2004 (perhaps at a higher cost
than they would incur if they could delay the investment a year) but
could otherwise meet a slightly higher cap through operational changes
which would not require new equipment.
---------------------------------------------------------------------------
\79\ Including gasoline produced for use in the geographic
phase-in area and small refiner gasoline.
---------------------------------------------------------------------------
[[Page 6755]]
ii. What Standards Must Refiners/Importers Meet on a Corporate Average
Basis?
Refiners and importers must meet annual-average, volume-weighted
sulfur standards for their entire corporate gasoline pool in 2004 and
2005. In 2004, this standard is 120 ppm; in 2005, it is reduced to 90
ppm. In 2006 and beyond, there will no longer be a corporate pool
average standard, since each refinery and importer will be held to its
own single refinery average standard, as discussed in the next section.
These standards represent the maximum allowable sulfur levels, on
an annual average basis, for each refiner/importer, volume-weighted
across all refineries owned and operated by that refiner (or all
gasoline imported by the importer in the calendar year), rather than at
each individual refinery or by each batch of gasoline. Thus, a
refiner's gasoline may exceed the average standard of 120 ppm at one
refinery, if sufficient gasoline below that standard is produced at its
other refinery(ies), such that its corporate, volume-weighted average
sulfur level does not exceed 120 ppm. Alternatively, allotments may be
used to meet this requirement. This requirement does not apply to small
entities or to corporations that do not have to meet the pool average
standard in the GPA program. For compliance with this corporate
averaging requirement, as well as with the other requirements of this
subpart, we consider a parent corporation owning wholly-owned
subsidiaries that also own refineries to be the refiner of these
facilities. Thus, the parent corporation must comply with refiner
corporate average requirements. In its compliance calculations, the
refiner must include the gasoline produced at the refineries it owns,
plus the gasoline produced at the refineries owned by its wholly-owned
subsidiaries.
For purposes of compliance, we proposed that a joint venture, in
which two or more refiners collectively own and operate one or more
refineries, be treated as a separate refining corporation under the
gasoline sulfur requirements. Hence, a refinery owned by a joint
venture would have been included in the corporate pool calculations of
the joint venture, and could not have been included in calculations
with other refineries solely owned by one of the parties to the joint
venture. Based on comments we received on this issue which argued that
a company with majority ownership in the joint venture should be
allowed to count the jointly held refinery in its corporate average, we
have revised our treatment of refineries owned by joint ventures. Each
joint venture must separately meet the corporate pool average standard,
whether the joint venture owns one or multiple refineries. If a joint
venture fails to meet the corporate pool average standard, then each
partner in the joint venture is jointly and severally liable for the
violation. However, if one partner to a joint venture refinery includes
the joint venture refinery in its corporate pool, and that corporate
pool meets the corporate pool average standard, then the joint venture
will be considered by EPA to be in compliance (if the joint venture
owns only the one refinery). If the joint venture owns multiple
refineries and only one or some of the refineries is included in the
corporate pool calculations of one partner, compliance by the joint
venture with the corporate pool average standard will be judged based
on the average sulfur levels of the remaining refinery(ies) owned by
the joint venture.
In meeting the corporate average stds in 2004 and 2005, refiners
and importers may use allotments as discussed in IV.C.1.c below.
iii. What Standards Must be Met by Individual Refineries/Importers?
Beginning in 2005, every refinery must meet an average standard of
30 ppm sulfur at the refinery gate on an annual, volume-weighted basis.
Similarly, every importer must meet the 30 ppm average standard
beginning in 2005. (These requirements do not apply to small entities
or to GPA gasoline). In meeting this standard, individual refineries
and importers may use credits generated or purchased under the
provisions of the sulfur ABT program discussed below in Section
IV.C.1.c, and/or, in 2005 (only), sulfur allotments (as described in
the previous section) obtained from a refiner who has excess allotments
to sell, if they are unable to comply based on their actual gasoline
sulfur levels. Hence, the actual average sulfur levels for gasoline
produced at some refineries can be higher than 30 ppm in 2005, but only
if refiners use (1) credits generated from cleaner gasoline produced
early and/or (2) allotments generated by a refiner which produces
gasoline averaging, on a corporate basis, lower than 90 ppm in 2005.
However, the corporate pool average standards and per-gallon caps will
limit the degree to which gasoline can exceed 30 ppm on average.
We allow refiners to use either sulfur allotments or ABT credits to
meet the 30 ppm standard in 2005 for several reasons. First, this is an
environmentally neutral approach because the national pool in 2005 will
still average no greater than 90 ppm, since every refiner must meet the
corporate average standard before applying allotments to the compliance
of any refineries with the 30 ppm standard. Second, it provides
refiners who have excess allotments in 2005 an additional market for
those allotments, thus giving refiners an incentive to exceed the 90
ppm corporate average standard in 2005. In either case, the reductions
will have occurred and thus the allotments and credits have very
similar purposes and thus should be interchangeable.
In 2006 and beyond, the 30 ppm refinery average standard continues
to be a requirement for every refinery or importer. The sulfur credits
generated in the ABT program may be used by refineries or importers to
comply with this requirement. However, because of the 80 ppm cap in
these years, we expect that the majority of refiners/importers will
average 30 ppm, although some individual refineries/importers could
average slightly more or less (if the refineries/importers bank, sell,
or purchase credits to meet this standard, as explained in the ABT
discussion below). Furthermore, the majority of credits will expire at
the end of 2006.
b. Standards and Deadlines for Refiners/Importers Which Provide
Gasoline to the Geographic Phase-In Area (GPA)
As indicated above, certain refiners may qualify for temporarily
less stringent standards and deadlines for some or all of their
gasoline because these companies either (1) produce gasoline to be sold
in the temporary geographic phase-in area (GPA) or (2) qualify under
our definition of small refiner. In this section, we explain the
geographic phase-in area of our program and the interim standards and
deadlines for compliance in that area. The provisions that apply to
qualifying small refiners are described in section IV.C.2., below.
i. Justification for Our Geographic Phase-In Approach
In addition to phasing in our national gasoline sulfur program
temporally from 2004-2006, we are phasing in our program
geographically. In response to our proposal, we received many comments
from the refining industry regarding timely implementation of our
proposed gasoline sulfur program. Commenters argued that not all
refineries would be able to concurrently comply with the proposed
standards in the time period provided, given the competition for
engineering resources and the time needed for construction of
[[Page 6756]]
desulfurization equipment. In consideration of these comments, we have
made some modifications to enhance the timing of our program without
compromising the environmental benefits we expected from our proposal.
As part of our assessment we also examined other phase-in
approaches which might enhance the orderly introduction of refining
technology without jeopardizing the environmental benefits of our
program. As a result of this assessment, we have concluded that many
states in the Great Plains and Rocky Mountain areas of the United
States have a somewhat less urgent environmental need for ozone
precursor reductions in the near term. Moreover, their gasoline supply
is dominated by that produced by small capacity, geographically-
isolated refineries located therein. As a general rule, refineries in
this area will have the most difficult time of all refineries
nationwide in competing for the vendor, supply, engineering, and
construction resources needed to modify their refineries to comply with
the standards. Based on 1998 Department of Energy data, over 80 percent
of the gasoline sold in this area is produced by the relatively small
refineries located within the region.\80\ Similarly, Alaska faces a
less urgent environmental need for reductions in ozone precursors and
has refineries which are challenged and geographically isolated.
---------------------------------------------------------------------------
\80\ Much of this gasoline is produced by small volume
refineries that are not owned by small businesses, and are therefore
not afforded the flexibility of the small refiner provisions
described in Section IV.C.2.
---------------------------------------------------------------------------
A more orderly and cost-efficient phase-in of the 30 ppm standard
could be achieved if all gasoline sold in this area was subject to
somewhat less stringent standards than those in the rest of the country
for a short time. This approach will allow the refineries producing
gasoline for use in this area more compliance flexibility, more time to
install and prove out the equipment needed for compliance, and thus a
greater opportunity to reduce their overall costs. As described below,
this approach results in only a minimal loss in emission reduction
benefits. By stretching out demand for design, engineering,
construction and other related services during the 2000-06 period,
these provisions should also help to reduce the overall costs of the
gasoline sulfur program.
The remainder of this section is divided into two parts. The first
describes the rationale for development of this approach and how we
identified the appropriate area, and the second provides a description
of the requirements for refiners and importers that produce fuel for
sale in the area.
ii. What Is the Geographic Phase-in Area (GPA) and How Was it
Established?
As we considered the geographic phase-in approach, we aimed to
minimize the environmental losses which could occur from exposing Tier
2, NLEV, (and other) vehicles to higher gasoline sulfur levels when the
gasoline sulfur standards are being phased in nationwide. We used two
criteria to develop and evaluate this approach: (1) relative
environmental need and (2) the ability of U.S. refiners and the
distribution system to provide compliant gasoline.
The states we have identified for the GPA are shown in Figure IV.C-
1.\81\
---------------------------------------------------------------------------
\81\ Alaska, Colorado, Idaho, Montana, New Mexico, North Dakota,
Utah, and Wyoming
BILLING CODE 6560-50-P
[GRAPHIC] [TIFF OMITTED] TR10FE00.005
BILLING CODE 6560-50-C
The first and primary criterion we considered in defining this area
was environmental need. In defining the GPA, we identified those states
that have somewhat less urgent environmental need in the near term for
reductions in ozone precursors and whose emissions are less important
in terms of ozone transport concerns. This area includes some states
that are located in the Great Plains and the Rocky Mountains, as well
as Alaska. Most states within the Rocky Mountains and Great Plains do
not have a compliance problem with the 1-hour ozone standard in the
near term, although they do have concerns in terms of maintaining
compliance with the particulate matter standard. However, there are two
states (Arizona and Nevada) in the Rocky Mountain vicinity that do have
ozone air quality concerns. These states have instituted local fuel
quality programs (in Phoenix, AZ and Las Vegas, NV) to reduce ozone
precursor emissions. In addition, as shown in Table III.C-2, Arizona
and Nevada are projected to have concerns with PM10 compliance in the
future. Given these factors, we excluded them
[[Page 6757]]
from the phase-in area and its temporarily less stringent standards
except as described below in Section IV.C.1.b.vii for counties and
tribal lands in adjacent states.
We also defined the phase-in area based on the relative difficulty
of producing or obtaining complying gasoline. The refining industry in
the GPA is dominated by relatively low capacity, geographically-
isolated refineries many of which are owned by independent companies.
Such refineries face special challenges in complying with the
requirements of the national program by 2004 because their crude
capacity, corporate size, and location make it difficult for them to
compete for the design, engineering, and construction resources needed
to comply by 2004.
Furthermore, an assessment of 1998 gasoline production and use data
and information on the products pipeline system shows that states in
the GPA and portions of several adjoining states are solely or
predominantly dependent on gasoline produced by these refineries and
have limited or no access to gasoline from other parts of the country.
Based on this analysis, we concluded that several states and portions
of other states meeting our first criterion (less urgent environmental
need for ozone precursor emission reductions) also face the likelihood
of a supply shortage of low sulfur gasoline. Providing low sulfur
gasoline to these states and adjoining areas is expected to be more
difficult and costly in the near term. Section IV.C.1.b.vii below,
discusses how the adjoining areas (counties/tribal lands) will be
identified.
Thus, we believe it is appropriate to phase in the 30 ppm average,
80 ppm cap standards in these areas by allowing an additional year
compared to the rest of the country, rather than delaying
implementation of the standards nationwide to accommodate these states.
Under this approach, the areas with the most urgent need for the ozone
reduction benefits associated with low sulfur gasoline will realize
them as soon as is feasible, and other areas will experience them
shortly thereafter.
On the other hand, much of the area in the adjoining states has
significant pipeline, rail, barge, and truck access to gasoline which
will be capable of meeting the standards in Table IV.C-1 beginning in
2004. Even if these states have less environmental need in the near
term, there are health benefits (particulate and air toxic emission
reductions) as well as performance benefits for vehicle emission
control systems (including avoidable irreversible sulfur effects) which
need not be foregone. Therefore, we concluded that since it will not be
more difficult to send gasoline to these adjoining areas through the
distribution system, the significant environmental benefits of
requiring low sulfur gasoline as early as is feasible justifies
excluding these states from the GPA.
Some might argue that there are other states which should be
considered under this program. However, based on our criteria of
environmental need (including ozone transport and irreversibility
concerns) challenged refineries, and limited access to complying
gasoline we could identify no other states or territories which to
include.
iii. Standards/Deadlines for Gasoline Sold in the Geographic Phase-in
Area
While the states in the GPA may have less of an environmental need
for ozone precursor reductions in the near term, there are significant
environmental reasons to make the program as stringent as possible,
still enabling a smooth transition to low sulfur gasoline nationwide.
Toward that end, we are establishing the following requirements for
gasoline sold in the GPA, which we view as the appropriate balance
between these two factors.
The GPA provision covers all gasoline produced or imported for use
in the GPA, whether refined there or brought in by pipeline, truck,
rail, etc.\82\ Foreign refiners are involved in this program through
the importers, who are, in fact, the regulated entities. Refineries and
importers must meet a 150 ppm average and a 300 ppm cap for all
gasoline produced or imported for the GPA under this program beginning
January 1, 2004. However, if a refinery's/importer's 1997-98 average
sulfur level is less than 150 ppm, then that refinery's/importers
gasoline has a standard of its baseline plus 30 ppm but in no case
greater than 150 ppm. For example, a refinery with a baseline of 100
ppm would have a sulfur standard of 130 ppm for its GPA gasoline, a
refinery with a baseline sulfur level of 140 ppm would have a standard
of 150 ppm for its GPA gasoline, and a refinery with a baseline of 200
ppm would have a standard of 150 ppm for its GPA gasoline. Furthermore,
if under the ABT provisions discussed below and in section IV.C.1.c, a
refinery/importer generates credits (in 2000-2003) and/or allotments
(in 2003) by dropping its refinery/imported gasoline average below 150
ppm then the baseline for that refinery is set at the new level and the
standard becomes baseline plus 30 ppm but not greater than 150 ppm.
This is to ensure that refineries and importers who already are lower
than the 150 ppm standard on average maintain current sulfur levels.
The 30 ppm factor is intended to allow some flexibility for refineries
and importers whose 1997 and 1998 levels are an aberration from normal
operations or who face changes in crude slates in future years.
---------------------------------------------------------------------------
\82\ As discussed below, refiners can supply gasoline not
designated as GPA gasoline to the GPA, provided it meets the
standards in Table IV.C.-2. Also, the GPA standards do not apply to
gasoline produced by small refiners that is used in the GPA.
---------------------------------------------------------------------------
Corporate pool average standards apply in the national gasoline
sulfur program for calendar years 2004 and 2005. Most refiners/
importers producing gasoline for use in the GPA market the majority of
their gasoline outside of the GPA where they compete with many other
refineries. Since the phase-in of the national program expects
compliance with the 120/90 ppm corporate pool average standards in 2004
and 2005, we are requiring that refiners/importers who market the
majority (greater than 50 percent of production volume) of their
gasoline outside of the GPA to account for the sulfur levels of their
GPA gasoline in their calculation for compliance with the corporate
pool average standards.
To provide additional flexibility during this phase-in, refiners
may use sulfur ABT credits and allotments (as explained in IV.C.1.c) to
meet these standards. Refineries producing GPA gasoline can generate
credits beginning in 2000 under the provisions of the national program
(described in section IV.C.1.c). Also, refineries/importers marketing
gasoline in the GPA may through extraordinary measures be able to
generate credits in 2004-2006. To qualify they must achieve levels
below 150 ppm or their more stringent baseline levels as discussed
above whichever is less. Under these circumstances, these refineries/
importers can earn credits for the GPA gasoline they produce during
2004-06. Credits generated under the GPA program are fully fungible
with national credits and are subject to the same regulatory
requirements.
The national program includes provisions which permit refiners/
importers to generate allotments for use in 2004 and 2005. Refiners and
importers marketing gasoline in the GPA may only generate sulfur
allotments in 2004 or 2005 if their corporate average sulfur level
meets the corporate pool average standards for each year (as indicated
in Table IV.C.1), including gasoline produced for the GPA, if
applicable. Refiners not compelled to meet the corporate pool
[[Page 6758]]
average standards under the GPA may not generate allotments.
The temporary provisions for the GPA apply for three years, 2004
through 2006. Since the low sulfur standards for the rest of the
country require compliance with a 30 ppm refinery average standard and
an 80 ppm gallon cap in 2006, the geographic phase-in provides an
additional year to reach those standards. This extra year and the
somewhat less stringent standards during the phase-in will provide the
refining industry the opportunity for more orderly transition to the
30/80 ppm standards by 2007.
Requirements for gasoline sold in the GPA are summarized in Table
IV.C.-2, below. Gasoline produced by refiners subject to the small
refiner standards described in Section IV.C.2. of this notice is not
subject to the provision of the geographic phase-in, since the small
refiner provisions apply to eligible refiners regardless of geographic
location. Gasoline produced by such refiners can be sold nationwide,
including in the GPA.
Table IV.C.-2.--Gasoline Sulfur Standards for the Geographic Phase-In Area
[Excludes Small Refiners]
----------------------------------------------------------------------------------------------------------------
Compliance as of-- 2004 2005 2006
----------------------------------------------------------------------------------------------------------------
Refinery GPA Gasoline Average \a\, ppm..... 150 150 150.
Corporate Pool Average \b\, ppm............ 120 90 Not Applicable.
Per-Gallon Cap \c\, ppm................... 300 300 300.
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ The refinery average standard for GPA gasoline is the more stringent of: 150 ppm; the refinery 1997-1998
baseline plus 30 ppm; or the sulfur level from which early credits were generated plus 30 ppm. Refiners can
use credits or allotments to meet the average.
\b\ Applies only to refiners/importers which sell >50% of their gasoline outside the GPA.
\c\ As discussed above, in 2004 both GPA and Non-GPA gasoline may have a sulfur content as high as 350 in which
case the refinery or importer becomes subject to a correspondingly more stringent cap standard in 2005.
iv. What Are the Per-Gallon Caps on Gasoline Sulfur Levels in the
Phase-in Area?
The sulfur level caps for gasoline sold in the phase-in area and
the rest of the nation are the same in 2004 and 2005, but in 2006 the
cap remains at 300 ppm in this area while it declines to 80 ppm for the
rest of the country. To assure that compliance at the refinery gate is
correct regardless of where the gasoline is ultimately sold, as
gasoline intended for the GPA moves in the distribution system to or
through the geographic area it must be identified as phase-in area
gasoline in product transfer documents and must remain segregated from
gasoline intended for use outside this area. In addition, use of phase-
in area gasoline is prohibited outside the GPA, but the converse is
allowed, i.e., gasoline designated for use outside the GPA can be used
in this area. For all three years, refiners and importers must meet the
requirements described in Tables IV-C.1 and IV-C.2, as applicable, and
therefore must maintain refinery or import records as applicable as to
where a gasoline batch is sold. \83\
---------------------------------------------------------------------------
\83\ These segregation and designation requirements do not apply
to gasoline produced by refiners subject to the small refiner
standards described in Section IV.C.2. This is because small refiner
gasoline can be sold anywhere in the country, and is not subject to
different standards depending on where it is sold.
---------------------------------------------------------------------------
We recognize that this higher standard/cap for one year could
create the incentive for those not marketing gasoline in the GPA today
to seek a market to sell higher sulfur gasoline and for others to seek
to increase market share. While this is indeed allowable under our
program and is perhaps to be anticipated in a free market system, in
all likelihood the incentives are small. Such refiners/importers would
still have to meet the 150 ppm average and would perhaps face increased
shipping and marketing costs. Nonetheless, we plan to monitor market
developments to assess whether such a provision creates significant
market shifts or the potential for increases in average sulfur levels
in the GPA gasoline.
v. How Do Refiners/Importers Account for GPA Fuel in Their Corporate
Average Calculations?
Those refiners or importers that sell all of their gasoline to the
GPA (i.e., they produce no fuel for use outside the GPA), regardless of
whether they are located within or outside of the area, have refinery/
importer standards that are equal to the least of 1) 150 ppm, 2) the
refinery's or importer's 1997-98 average sulfur level plus 30 ppm or 3)
the refinery's or importer's lowest actual annual sulfur level plus 30
ppm in any year 2000-2003 if credits are generated. Because the
refiners produce all of their fuel for use in the GPA, they are exempt
from the corporate average standards in Table IV.C-1.
Furthermore, any refiner/importer which certifies 50 percent or
more of its gasoline production volume for sale as GPA gasoline in 2004
and 2005 is not required to meet the corporate pool average for that
year for its entire gasoline pool. Not only would it be difficult to
comply on average (if it were assumed that the GPA gasoline was 150 ppm
and non-GPA gasoline was 30 ppm), but also it would undermine the
achievement of the basic goal of a more orderly and efficient phase-in
of low sulfur gasoline since the flexibility afforded by the GPA could
be diminished.
Otherwise, those who produce less than 50 percent of their gasoline
for the GPA (which is the majority of those refiners which market in
both locations), must meet the corporate pool average standards in 2004
and 2005 for their entire gasoline pool. Thus, such refiners must
compensate for the higher sulfur levels of their GPA gasoline by
producing non-GPA gasoline that averages sufficiently less than 120 ppm
in 2004 and 90 ppm in 2005 to ensure that their corporate average meets
the corporate pool average standard for each year. Importers who
provide less than 50 percent of their gasoline to the GPA must also
include their GPA gasoline in their overall corporate pool average
calculation. Alternatively, the refiner can use sulfur allotments to
meet the corporate pool average standard for its total gasoline
production, including gasoline sold inside and outside the phase-in
area. Since most refiners which sell gasoline both in and outside the
GPA sell the vast majority outside the GPA the additional flexibility
provided for gasoline sold in the phase-in area should not
significantly affect compliance with the corporate pool average
standard for a refiner's nationwide production.
vi. How Do Refiners/Importers Apply for the Geographic Phase-in Area
Standards?
As part of program administration, we are requiring that any
refiner/importer
[[Page 6759]]
expecting to sell gasoline in this area during the phase-in period
(2004-2006) make application to EPA in writing by December 31, 2000.
This application would provide the minimum information needed by EPA to
characterize a refiner's/importer's participation, establish the
applicable standards if the 1997-98 average is less than 150 ppm, and
establish our enforcement program for refiners/importers in this area
for gasoline entering or leaving the area. Participation on the part of
any refinery or importer is voluntary. At any time, a refiner/importer
who previously opted into the GPA program may produce gasoline meeting
the standards in Table IV.C-1 in the GPA, or may cease producing
gasoline for the GPA (and produce gasoline meeting the standards in
Table IV.C-1 solely outside of the GPA). Such a decision would affect
the averages/caps which apply to the gasoline sold in the GPA. Gasoline
sold in the GPA that is not designated as GPA gasoline is considered
Non-GPA gasoline for purposes of compliance with the corporate pool
average requirement and refinery average requirements.
vii. How Will EPA Establish the GPA in Adjacent States?
EPA is establishing a geographic phase-in area that encompasses
eight states (MT, ND, ID WY, CO, UT, NM, AK). In addition, counties and
tribal lands in states immediately adjacent to these which received a
majority of their gasoline in calendar year 1999 from a refinery(ies)
located within the GPA will be covered by the phase-in area provisions.
The criteria to identify these additional counties and tribal areas are
designed to identify areas whose gasoline distribution system is
closely tied to the eight states such that they share the same
characteristics of gasoline supply. Therefore, dispensing outlets
(retail and private) in such areas will continue to have access to that
gasoline in most cases. Distribution and production of gasoline in
these additional areas will be subject to the same standards and
requirements as gasoline in the eight states identified above.
At this time, EPA is not able to identify all the counties and
tribal lands that would be included in the phase in area. In light of
the air quality benefits of introducing low sulfur gasoline as quickly
as possible, we want to ensure that the phase-in area is accurately
identified and that including any areas outside these eight states will
not have a significant adverse air quality impact on any counties or
tribal lands that are included in the phase-in area. EPA will be
working with interested stakeholders will to conduct an assessment to
determine which counties/tribal lands within the immediately adjacent
states meet the criteria as described in the regulatory text. EPA
expects to complete action on this assessment by December 31, 2000. c.
How Does the Sulfur Averaging, Banking, and Trading Program Work?
The sulfur ABT program provides flexibility to refiners by giving
them more time to bring all of their refineries into compliance with
the corporate averages in 2004 and 2005 as well as the 30 ppm
individual refinery standard in 2005 and beyond. ABT will provide the
opportunity for reduced costs by allowing the industry the flexibility
to average sulfur levels among different refineries, between companies,
and across time. With ABT, some refineries will be able to delay
installation of desulfurization equipment, because other refineries
will generate sulfur allotments and credits through early sulfur
reductions. In this way, installation of desulfurization technology
will be spread out over a longer period of time than would be the case
without ABT. Since, with the banking provisions, reductions in annual
average sulfur levels which occur as early as 2000 have a value during
program implementation, the ABT program provides an incentive for
technological innovation and the early implementation of refining
technology.
The ABT program also provides the opportunity for meaningful
emissions reductions in 2004 because it allows the Tier 2 standards to
be implemented earlier than might otherwise have been possible (if the
Tier 2 standards were delayed to provide the refining industry more
time to comply), and because it provides direct environmental benefits
even in the years before Tier 2 vehicles are introduced. One benefit is
related to the effect of gasoline sulfur on exhaust emissions, as
discussed in the Regulatory Impact Analysis. This benefit will result
both from older vehicles on the road (Tier 0 and Tier 1 emission
control technologies, which have some degree of sulfur sensitivity and
will benefit from sulfur reductions which occur prior to implementation
of the refiner and refinery standards summarized in Table IV.C-1) and
from NLEV vehicles (which are more sensitive to sulfur than earlier
technologies) which will continue to be sold while Tier 2 vehicles are
phased-in. Another environmental benefit is the reduction in
atmospheric sulfur loads as a direct result of reduced gasoline sulfur
levels, leading to reduced emissions of sulfur-containing compounds
from motor vehicles.
The following sections explain the requirements for participation
in the sulfur ABT program for allotments and credits.
Sulfur Allotment Program
i. Generating Allotments Prior to 2004
To provide additional incentive for early sulfur reductions and to
enhance the overall feasibility and cost effectiveness of the gasoline
sulfur control program, we are implementing a sulfur allotment program.
While few commenters supported the sulfur allotment concept in the
NPRM, a number suggested that greater flexibility for compliance in the
early years would be helpful. The program described below is in
addition to the early sulfur credit program described elsewhere.
For 2003, refineries can generate sulfur allotments (in ppm-
gallons) by producing gasoline containing less than 60 ppm sulfur on an
annual-average basis. This 60 ppm ``trigger'' was chosen to reward
refineries who demonstrate compliance using technology designed to meet
the 30 ppm standard before 2005. Once this 60 ppm trigger is reached,
allotments will be calculated based on the amount of reduction from 120
ppm. \84\ However, these allotments may be discounted depending on the
actual sulfur level. If a refinery fully demonstrates compliance by
producing gasoline with an annual average sulfur level of 0 to 30 ppm,
the allotments retain their full value--they are not discounted at all.
For actual sulfur levels of 31-60 ppm, which are indicative of a
partial demonstration of compliance with the ultimate low sulfur
standard, the allotments are discounted 20 percent. For example,
consider a refinery that has an average sulfur level of 50 ppm at the
end of 2003. That refinery would have generated 56 sulfur allotments
[(120 ppm - 50 ppm) x 0.8 x Volume (in gallons)] to be used or sold
in 2004. If that same refinery instead produced fuel with an average
sulfur level of 20 ppm at the end of 2003, then it would have generated
100 sulfur allotments [(120 ppm - 20 ppm) x volume (in gallons)] to
be used or sold in 2004.
---------------------------------------------------------------------------
\84\ If a refinery has a baseline sulfur level higher than 120
ppm (as described below in IV.C.1.c.v.), then credits are generated
from the baseline to 120 ppm and allotments from 120 ppm to the new
sulfur level (and discounted 20 percent if applicable).
---------------------------------------------------------------------------
ii. Generating Allotments in 2004 and 2005
For 2004 and 2005, refiners or importers (but not individual
refineries)
[[Page 6760]]
can generate allotments by producing gasoline that has a sulfur level
below the annual corporate average standard (120 ppm and 90 ppm). The
number of allotments generated is equal to the difference between 120
ppm (or 90 ppm) and the corporate average sulfur level. Allotments
generated by refiners or importers in 2004 and 2005 are not discounted,
unlike some of those that are generated by refineries in 2003. Refiners
that sell fuel to the GPA may also generate allotments by producing
fuel that is cleaner than the corporate average standards, regardless
of the volume of fuel that is produced for use in the GPA. On the other
hand, as explained in Section IV.C.2., gasoline produced by small
refiners who are complying with the standards in Table IV.C.-3 cannot
be used to generate sulfur allotments since these producers are not
required to meet a corporate average standard.
iii. Using Allotments in 2004 and 2005
Refiners and importers can use sulfur allotments that they generate
or purchase from other refiners/importers to demonstrate compliance
with the 120 ppm corporate standard in 2004 and the 90 ppm corporate
standard in 2005. Each refiner's sulfur allotment for 2004 and 2005
will be calculated based on the total volume of gasoline imported and
produced at their refineries (or only imported gasoline in the case of
companies that only import gasoline) and the corporate pool average
standard for that year. In anticipation of exceeding or falling short
of the standard for any one year, companies may trade sulfur
allotments, either in the compliance year or earlier (as early as the
year 2000). For example, a refiner that expects to produce a total of
2.5 billion gallons of gasoline in 2004 has a sulfur allotment of 300
billion ppm-gallons (120 ppm x 2.5 billion gallons). If its corporate
pool average is actually 200 ppm in 2004, it will exceed its 2004
allotment by 200 billion ppm-gallons (since 200 ppm x 2.5 billion
gallons = 500 ppm-gallons), and must obtain sulfur allotments from
another refiner to offset this increase. Similarly, if this refiner
expects to average 80 ppm in 2004, it has an excess of 100 billion ppm-
gallons to trade to other refiners. However, if a refiner trades away
part of its allotment, the refiner must still comply with the corporate
standard, just as another refiner has to do if it does not trade
allotments.
In 2005, refiners must comply both with the corporate average
standard and the refinery average standard for each of their
refineries. Once a refiner has established compliance with the 90 ppm
corporate average standard (with or without the use of allotments),
each of its refineries can then establish compliance with the 30 ppm
refinery standard through actual production of 30 ppm gasoline or
through the use of excess allotments and/or sulfur credits. Once
compliance with the 90 ppm corporate pool average standard is
established, the refiner would use 90 ppm as each of its refineries
actual sulfur level, then apply an appropriate number of credits or
allotments to meet the 30 ppm refinery average standard for each
refinery. (See discussion below for an explanation of how a refiner can
use both sulfur ABT credits and allotments to comply with the refinery
average standard in 2005.)
iv. How Long Do Allotments Last?
We expect most refiners will trade sulfur allotments well before
the end of each compliance year so they will have the needed certainty
of compliance with the corporate average standard. Our program allows
such trades to occur at any time during the year, although the refiner
is liable for any shortfall in compliance resulting from having traded
away too many allotments. A refiner may also carry over excess 2004
allotments (those generated in 2003 or 2004) for compliance with the 90
ppm corporate standard for 2005. However, those allotments must be
discounted by 50 percent. This 50 percent discount factor is needed to
equalize the emission impact of sulfur control between 2004 and 2005.
In 2005, there is an extra model year of NLEV/Tier 2 vehicles relative
to 2004. In addition, the NLEV/Tier 2 fleet is one year older in 2005
than 2004. This increased age translates into higher vehicle emissions
due to general deterioration. Since sulfur acts on a percentage basis,
the absolute emission increase due to sulfur impacts on vehicle
emission control systems in 2005 is higher than in 2004.
As discussed below in section IV.C.1.c.x, a refiner or importer may
convert allotments into credits in 2004 and 2005 for compliance with
the refinery average standards in 2005 and beyond. All transactions
between refiners involving sulfur allotments must conclude by the last
day of February in the calendar year following the compliance year in
which the allotments are to be used.\85\
---------------------------------------------------------------------------
\85\ Allotments used for GPA gasoline compliance may be retained
until February 2007. Allotments used for small refiner gasoline
compliance may be retained until February 2008.
---------------------------------------------------------------------------
Sulfur Credit Program
v. Establishing Individual Refinery Sulfur Baselines for Credit
Generation Purposes
The purpose of establishing a sulfur baseline for each refinery is
to provide a starting point for determining sulfur credits for
reductions in gasoline sulfur levels. We proposed that refiners would
have to establish a sulfur baseline for each individual refinery, by
submitting to us data establishing their annual average gasoline sulfur
level based on the average of their 1997 and 1998 operations. We would
review the data and, barring any discrepancies, approve a sulfur
baseline for each refinery. We received comments supporting this option
as well as comments stating that the time involved for this application
and approval process would delay the refiner's ability to plan for and
begin construction of gasoline desulfurization technology. Refiners
would want the certainty of an approved sulfur baseline before making
investment decisions, and thus would wait to obtain EPA's approval
before proceeding. We also received comments about what year(s) would
be most appropriate to use to establish a sulfur baseline. Some of
these comments argued for the use of existing, approved 1990 baselines,
or some adjusted version of 1990 baselines, rather than new data, to
expedite the process of establishing sulfur baselines.
We also proposed a different sulfur baseline for reformulated
gasoline (RFG) produced in the summer for those refineries which
produce reformulated gasoline. While the conventional gasoline sulfur
baseline (and the baseline for winter RFG) was proposed to be tied to
current sulfur levels, the baseline for summer reformulated gasoline
was proposed to be 150 ppm, the approximate level we expect summer
reformulated gasoline to contain in 2000 and beyond because of the
Phase II reformulated gasoline requirements, which take effect in 2000.
We argued that winter RFG did not have any de facto sulfur
restrictions, and thus winter RFG should be counted with conventional
gasoline for the purpose of credit generation relative to the
refinery's conventional gasoline sulfur baseline.
Since the proposal, we have learned that overall gasoline sulfur
levels (conventional plus reformulated) are significantly lower than
they were in 1990. As explained in the Regulatory Impact Analysis,
national average sulfur levels when both conventional and reformulated
gasolines are considered dropped to 306 ppm in 1997 and 268 ppm in
1998, compared to the 1990
[[Page 6761]]
national gasoline sulfur average of 339 ppm, decreases of 10 and 21
percent, respectively. The substantial drop between 1997 and 1998 seems
to be related to the mandatory use of the Complex Model, which began in
1998 and had implications for both reformulated and conventional
gasoline compliance. Thus, we have become convinced that the most
appropriate sulfur baseline would be based on data which establish
current sulfur levels, not on data which are nearly ten years old. We
considered reducing all 1990 baselines by 21 percent to reflect the
national average decrease since 1990, but determined that this approach
would be inappropriate because some refiners have reduced levels
substantially more than 10-21 percent since 1990, and would thus be
eligible to generate a very large number of credits for reductions that
have already been made.
Furthermore, as we proposed, and some commenters argued, we have
concluded that averaging data from two years is the most appropriate
approach, because averaging over two years will help to account for any
unusual variations in operations that may have occurred at individual
refineries in either of these years. We concluded that averaging data
from 1998 and 1999 is not feasible, because the 1999 data will not be
fully available to EPA until after the reporting deadline of May 2000.
Hence, we believe it is preferable to use 1997 and 1998 data, rather
than delaying the time baselines are established. We do not expect
significant changes in 1999 sulfur levels relative to 1998 levels, so
we believe the use of the 1997-1998 data provides a reasonable
representation of current sulfur levels.
We have also learned that summer reformulated gasoline is already
averaging close to our expected sulfur level for the year 2000. Winter
RFG does not show this same decrease, presumably because refiners are
shifting high sulfur blendstocks out of RFG in the summer but back into
RFG in the winter to maintain compliance with the conventional gasoline
antidumping requirements. Thus, it appears that if we held summer RFG
to a lower baseline, as proposed, we would have to raise the winter RFG
baseline commensurately to reflect actual refinery operations. The net
environmental impact would be no different than if we had a single
sulfur baseline applying to all RFG, or to all gasoline produced at the
refinery, since the annual pool sulfur levels are constant even while
there may be seasonal variations. Therefore, we are not finalizing a
separate sulfur baseline for summer RFG, but rather combined
conventional and reformulated gasoline sulfur levels.
Having considered the comments we received and the new data
available to us, we have concluded that refiner sulfur baselines should
be established from 1997 and 1998 operating data. Hence, we are
requiring refiners which wish to generate sulfur credits prior to 2004
to establish a 1997-98 sulfur baseline for each refinery at which they
intend to generate credits. We believe the process we have defined will
minimize the burden to the industry and the time it will take for us to
review and approve the sulfur baselines. Specifically, refiners which
plan to generate sulfur credits must submit to us information which
establishes the batch report numbers, sulfur levels, and volumes of
each batch of gasoline produced in 1997 and 1998, as well as the annual
average sulfur level calculated from these data. Within 60 days, we
will review the application and notify the refiner of approval or of
any discrepancies we find in the data submitted. If we do not respond
within 60 days, the baseline should be considered to be approved.
While we expect most refiners will apply for a sulfur baseline in
the near future (to maximize the time that they can generate credits
before 2004), there is no cut-off date for applying for a sulfur
baseline. However, if the refiner wishes to generate credits for a
given calendar year, we must receive his baseline application no later
than September 30 of that year to provide us adequate time to review
the baseline prior to the end of the year (at which time any credits
generated in that year would be assessed and reported by the refiner).
We believe that this approach for establishing sulfur baselines meets
our goal of providing a workable ABT program that refiners can take
advantage beginning in the year 2000, without sacrificing the
environmental benefits of the sulfur standards.
Foreign refiners which have already established an individual
refinery baseline with us, and thus have submitted reports on all
batches of gasoline sent to the U.S. in 1997 and 1998, may follow this
same procedure if they wish to generate sulfur credits prior to 2004.
Foreign refiners which have not reported 1997-98 gasoline qualities to
us must follow an alternate approach. Specifically, they must follow
the general requirements of our protocol for establishing individual
refinery baselines (see Secs. 80.91-94 and also Sec. 80.410) by
providing sufficient data to establish the volume of gasoline imported
to the U.S. from each refinery in 1997-98 and the annual average sulfur
level of that gasoline. If the test method used to identify the sulfur
level differs from the one specified in today's action, the refiner
must provide sufficient information about the test method to allow us
to evaluate the appropriateness of the alternative. Because this
information will be new to us, we may require more time to review and
approve their 1997-98 sulfur baseline. But, consistent with our
previous handling of foreign refiner submissions, once we have
determined that the submission is complete and the protocol has been
followed, they may use the baseline while waiting for our formal
approval. However, the refiner will be held to the baseline that is
ultimately approved. A foreign refiner who is unable to generate
adequate data to establish a 1997-98 sulfur baseline will not be
permitted to generate sulfur credits in 2000-2003.
Small refiners that plan to request small refiner standards (as
provided in Section IV.C.2 below) which also want to generate early
sulfur ABT credits will use the same data required to define their
small refiner baseline to determine their baseline for the ABT program.
In other words, if a refiner becomes a small refiner under our
definition and procedures, credits generated by that refinery would be
calculated relative to the refinery's actual 1997-98 sulfur average.
The trigger for generating sulfur credits under the ABT program
(discussed in the next section) would still apply for small refiners
generating credits prior to 2004 relative to their 1997-98 sulfur
average. In addition, the applicable interim sulfur standard for small
refiners who generate credits through sulfur reductions prior to 2004
will be calculated based on the reduced sulfur level, rather than the
1997-98 baseline level, as explained below in Section IV.C.2.
Importers and gasoline blenders will not be assigned a sulfur
baseline because they are not eligible to generate early credits (prior
to 2004) under the ABT program. This includes gasoline refiners who are
also importers; such parties cannot generate sulfur credits prior to
2004 on the basis of their imported gasoline but may only generate
credits based on the gasoline produced by their refinery(ies). It also
includes oxygenate blenders, who, as discussed in Section VI below, are
not subject to the sulfur standards but are responsible for compliance
with the downstream provisions.\86\ For importers
[[Page 6762]]
and most gasoline blenders, this represents a change from our proposal,
but one we believe is appropriate and necessary to ensure that the
environmental benefits of the ABT program are maintained. The ABT
program allows the refining industry to trade off early sulfur
reductions (2000-2003) for slight delays in complying with the 30 ppm
refinery average standard in 2005-2006.\87\ We have designed the ABT
program to ensure that sufficient credits can be generated by refiners
(domestic or foreign) to enable a smooth transition to the 30 ppm
standard. Importers and blenders do not have the same need for the ABT
program that refiners have because they will not have to make the same
level of investment in desulfurization technology and thus do not need
credits generated before 2004 to help their transition to the 30 ppm
average standard after 2004. Furthermore, credits could be generated by
importers without the overall pool of imported gasoline becoming
incrementally cleaner. For example, say that Importer A had a 1997/98
sulfur baseline of 600 ppm and Importer B had a sulfur baseline of 100
ppm. In 2002, Importer B could transfer/sell its 100 ppm gasoline to
Importer A prior to unloading the fuel at the port of entry. Once the
import transaction was completed, Importer A will have generated 500
ppm (multiplied by the fuel volume) credits without any fuel becoming
incrementally cleaner. We are concerned that if importers and blenders
were allowed to generate early credits, they would generate far more
credits than needed to make the ABT program work, without necessarily
achieving early environmental benefits--credits which either importers
or refiners would be able to use to delay compliance with the 30 ppm
standard in 2005 and beyond. This would delay the environmental
benefits of our program by prolonging the industry's transition to the
30 ppm standard.
---------------------------------------------------------------------------
\86\ Refiners may, however, include oxygen added downstream of
the refinery when determining compliance with the sulfur standards
and the provisions of the ABT program. This is consistent with
existing provisions for reformulated and conventional gasolines.
\87\ As explained in Section IV.C.1.c.ix, credits generated
before 2004 expire in 2006, except for small refiners and credits
used for GPA gasoline compliance.
---------------------------------------------------------------------------
In the proposal, we also discussed the need for a baseline gasoline
volume as well as a baseline sulfur level. This stemmed from the design
of our current conventional gasoline anti-dumping program, which
requires a baseline volume so that we can confirm that conventional
gasoline is no dirtier now than it was in 1990. However, for the
gasoline sulfur ABT program, we have determined that there is no need
to restrict refineries' sulfur baselines (against which they can
generate sulfur credits) to a specific volume of gasoline. The purpose
of the ABT program is to encourage early sulfur reductions by some
refineries, and we see no need to limit the amount of credits such a
refinery can generate on the basis of a historic volume of gasoline
production. In fact, additional volumes of cleaner gasoline should
achieve additional early environmental benefits.
vi. Generating Sulfur Credits Prior to 2004
In our proposal, we discussed a credit generation trigger of 150
ppm for early credit generation (2000-2003), arguing that we wanted to
encourage investment in desulfurization technologies that refineries
ultimately need to get to a 30 ppm average. Many comments we received
argued that the 150 ppm trigger was too restrictive, requiring capital
investments that most refiners could not make earlier than 2004 (due to
construction limitations, among other reasons). Thus, few credits would
be generated, and without sufficient certainty that credits would be
generated, refiners would not be able to count on the flexibility that
the ABT program was intended to provide when planning their compliance
strategies for 2004 and beyond.
Having considered these comments and reanalyzed the ability of the
industry to comply with the standards in 2004 (as we discussed above at
the introduction to section IV.C.1), we have concluded that the
proposed 150 ppm trigger would inappropriately limit the credits
available. While we want to encourage refiners to make reductions
early, we do not want to preclude refiners from making less capital
intensive sulfur reductions in the short term while they prepare to
reach the 30 ppm average in the long term. At the same time, we believe
that a refinery should be required to demonstrate that the sulfur
reduction was real and not just a consequence of national variations
from year to year. Hence, we are establishing a trigger which we
believe represents a sulfur reduction that requires action above and
beyond simple annual or even seasonal fluctuations in crude oil sulfur
level or product slate variations that could have a very small impact
on annual sulfur average.
During the period 2000-2003, credits can be generated annually by
any refinery that produces gasoline averaging at least 10 percent lower
than that refinery's baseline sulfur level. In other words, to generate
credits, the refinery's annual average sulfur level for all of its
gasoline on average must be 0.9 x (baseline sulfur level). Once this
``trigger'' is reached, credits will be calculated based on the amount
of reduction from the refinery's sulfur baseline. For example, if in
2002 a refinery reduced its annual average sulfur level from a baseline
of 450 ppm to 150 ppm (well below the trigger of 0.9 x 450=405 ppm),
its sulfur credits will be determined based on the difference in annual
sulfur level (450-150=300 ppm) multiplied by the volume of gasoline
produced in 2002. Similarly, foreign refineries with an individual
sulfur baseline can generate credits in these years as long as the
annual average sulfur level of the gasoline imported to the U.S. from
that refinery is lower than 90 percent of the baseline sulfur level.
Although by adopting a more modest trigger for credit generation we
are enabling more credits to be generated, the environment will still
benefit from our program. Although the use of a more modest trigger
keyed to each refinery's sulfur baseline may allow more credits to be
generated, we believe this will only occur because the credit program
is providing incentives to refineries to reduce sulfur levels earlier
than they would have otherwise, particularly with a strict 150 ppm
trigger. Thus, more lower sulfur gasoline will be in the marketplace
prior to 2004 than would otherwise have occurred, given our
understanding of the state of desulfurization technologies and the
likely pattern of investments by the industry. With our corporate
average and cap standards, sulfur levels will continue to decrease
after 2004, even if individual refineries take an added year or two to
meet the 30 ppm standard.
We had also proposed that credit generation prior to 2004 would be
different for reformulated gasoline than for conventional gasoline,
because reformulated gasoline's assigned sulfur baseline was proposed
to be 150 ppm. Thus, we proposed that credits could only be generated
from reformulated gasoline if the sulfur level averaged below 150 ppm,
and that the credits would be calculated based on the difference
between 150 ppm and the new, lower average. Since we have not finalized
a separate baseline for reformulated gasolines, we are not adopting a
different process for generating credits from reformulated gasoline.
All gasoline produced at the refinery in 2000 (and beyond) is
considered in calculating the annual average sulfur level, compliance
with the 90 percent trigger, and the sulfur credits earned, if any.
[[Page 6763]]
Several states have adopted or are considering adopting gasoline
sulfur control programs (see discussion at section IV.C.1.d below on
state sulfur programs). While we had proposed to exclude this gasoline
from sulfur credit generation, we have reconsidered our position.
Gasoline produced in response to state \88\ requirements can be
included in the refinery's calculation of sulfur credits generated in a
given year. However, this gasoline will be included in the total volume
of gasoline produced by that refinery, requiring the annual average
sulfur level for total gasoline produced at that refinery to exceed the
trigger specified above to generate any credits at all.
---------------------------------------------------------------------------
\88\ Excluding California.
---------------------------------------------------------------------------
vii. Generating Sulfur Credits in 2004 and Beyond
In 2004 and beyond, refineries, blenders, and importers can
generate credits, but only if the actual annual sulfur level of all
gasoline produced or imported averages below 30 ppm, and only for the
difference between the standard and the actual annual sulfur average.
(For example, a refinery producing gasoline in 2005 that averages 25
ppm can generate 30-25=5 ppm sulfur credits on the total volume of
gasoline produced at that refinery.) However, since in 2004 and beyond
importers are the regulated party responsible for ensuring that
imported gasoline meets the sulfur standards, foreign gasoline would in
effect generate sulfur credits through the importer beginning in 2004.
Foreign refineries which want to send gasoline containing less than 30
ppm sulfur to the U.S. would still benefit from doing so by making
appropriate arrangements with importers, which are subject to all of
our standards.
viii. Using Sulfur Credits
Refineries, blenders, and importers can use sulfur credits to
demonstrate compliance with the 30 ppm annual average refinery standard
in 2005 and beyond, if they are unable to meet the standard with actual
gasoline production. During 2005 and 2006 only, refineries may use
credits banked by that refinery in 2000-2003 as a result of early
sulfur reductions, or credits purchased from other refineries which
have banked early sulfur credits. Blenders and importers can purchase
credits from refiners (including any foreign refiners which generated
early credits), or use credits they generated in 2004 and beyond. All
transactions will have to be concluded by the last day of February
after the close of the annual compliance period (2005, 2006, etc.).
As discussed above, 2005 is the only year when averaging and
trading against the corporate average and averaging, banking, and
trading against the refinery average are both allowed. In that year,
sulfur credits may only be used against the 30 ppm standard for each
refinery once the refiner has demonstrated compliance with the
corporate pool average standard. The refiner must meet his corporate
average based on actual sulfur levels or through a trade for sulfur
allotments if it falls short of the 90 ppm corporate average standard.
At that point, each of his refineries is evaluated for compliance with
the 30 ppm refinery average standard. Those refineries that are not
producing gasoline averaging 30 ppm sulfur must obtain sulfur credits
generated in 2005 or earlier and/or sulfur allotments to bring the
refinery's sulfur average from the actual level (a maximum of 90 ppm
for each refinery, since by meeting the corporate average, even if in
part through the use of allotments, each refinery in the company will
be considered to average no more than 90 ppm) down to 30 ppm.
Refineries or importers which sell some or all of their gasoline in
the GPA (and which have elected to participate in the phase-in) may
also use sulfur credits to meet their refinery averages in 2004-2006.
However, because this gasoline must be designated for sale in the GPA,
they must account separately for compliance with the 150 ppm refinery
average for gasoline sold in the phase-in area and with the 30 ppm
refinery average for gasoline sold outside of that area. Thus, in 2004,
such refiners/importers may use sulfur credits to establish compliance
with the 150 ppm standard for gasoline sold in the phase-in area, if
required. In 2005 and 2006, they may use credits to meet the 150 ppm
standard for gasoline sold in the area and/or use credits to meet the
30 ppm standard for gasoline sold outside of the area.
As explained in section IV.C.1.b., some of the refiners
participating in the GPA are exempt from the corporate average
standards, but may use either sulfur credits or sulfur allotments in
2004-2006 to establish compliance with the 150 ppm refinery average
standard. Those that are not exempt from the corporate average
standards may use sulfur allotments only to meet the corporate average
standards. For such refiners, compliance with the corporate average
standard will be measured first (using allotments if needed), then
compliance with the refinery average standard (using credits and/or
allotments as needed) in the same manner as described above for
refiners who sell all of their gasoline outside of the GPA.
Foreign refineries are not required to comply with the 30 ppm
refinery standard in 2005 and beyond; instead, compliance for foreign
gasoline is required by the importer. Sulfur credits generated by
foreign refineries prior to 2004 will still have value, since these
refineries can sell sulfur credits to U.S. refineries, blenders, or
importers who need credits to meet the standard in 2005 or beyond. In
fact, foreign refiner's credits could simply be transferred to the
importer which is importing that refinery's gasoline into the U.S. For
example, a foreign refiner could send gasoline exceeding 30 ppm on
average to an importer and transfer the appropriate amount of sulfur
credits it generated prior to 2004 to allow the importer to meet the 30
ppm standard. Similarly, after 2004 a foreign refiner may send gasoline
containing less than 30 ppm to the U.S. through an importer, and the
importer would benefit from generating credits (and presumably would
include the value of these credits in the financial transaction with
the foreign refinery).
As explained in Section IV.C.3.b. above, in 2005 no batch of
domestically produced or imported gasoline can exceed 300 ppm, and a
refiner's/importer's annual corporate pool average sulfur level cannot
exceed 90 ppm, except for gasoline sold in the GPA or by small refiners
complying with the standards in Table IV.C.-3. In 2006 and beyond,
sulfur is capped at 80 ppm and there is no longer a corporate pool
average standard. These standards (as well as the 300 ppm cap and
corporate pool averages) cannot be met through the use of credits
generated under the ABT program. As described above, credits may only
be applied to demonstrate compliance with the 30 ppm refinery standard,
not to the corporate pool average or the cap. Given the limitations
that the 80 ppm cap places on sulfur levels in 2006 and beyond, we do
not expect many sulfur credits to be used in future years of this
program (since, even with the use of credits, no gasoline may exceed 80
ppm in these years).
We allow an individual refinery that does not meet the 30 ppm
standard in a particular year to carry forward the credit debt one
year. Under this provision, the refinery will have to make up the
credit deficit and come into compliance with the 30 ppm standard the
next calendar year, or face penalties. This provision will in no way
absolve the refiner from having to meet the
[[Page 6764]]
applicable per-gallon cap standard or, when applicable, the corporate
average standard. This provision will provide some relief for refiners
faced with an unexpected shutdown or that otherwise were unable to
obtain sufficient credits to meet the 30 ppm standard. This provision
is only available through 2010. After that time, we expect many
refineries to be able to consistently operate below 30 ppm, generating
a pool of credits which other refineries could purchase in the event of
an unforeseen upset. However, in no circumstances after 2005 can the
refinery produce gasoline exceeding the 80 ppm per-gallon cap standard
(with the exception of small refiners, as discussed in Section IV.C.2
below). The carry-forward provision does not apply to compliance with
the 150 ppm refinery average standard applicable in the GPA.
We have some concern that the potential exists for credits to be
generated by one party and subsequently purchased or used in good faith
by another, and later found to have been calculated or created
improperly or otherwise determined to be invalid. For this reason, we
proposed that both the seller and purchaser would have to adjust their
sulfur calculations to reflect the proper credits and either party (or
both) could be deemed in violation of the standards and other
requirements if the adjusted calculations demonstrate noncompliance
with an applicable standard. One commenter, representing a number of
refiners, objected to this approach.
Nevertheless, our strong preference is to hold the credit or
allotment seller liable for the violation, as opposed to the credit or
allotment purchaser. As a general matter we would expect to enforce a
shortfall in compliance calculations (caused by the good faith purchase
of invalid credits) against a good faith purchaser only in cases where
we are unable to recover valid credits from the seller to cover the
compliance shortfall. Moreover, in settlement of such cases we would
strongly encourage the seller to purchase credits to cover the good
faith purchaser's credit shortfall. Under the deficit provisions of
section 80.205(e), for compliance periods through 2010, a credit
shortfall may be corrected if the conditions of that section are met.
EPA will consider covering a credit deficit through the purchase of
valid credits a very important factor in mitigation of any case against
a good faith purchaser, whether the purchase of valid credits is made
by the seller or by the purchaser.
Some commenters stated that sulfur credits should be transferred
directly from the refiner or importer that generated them to the party
that will use them, as we had proposed. We believe that this helps to
ensure that parties purchasing credits will be better able to assess
the likelihood that the credits will be valid, and aids compliance
monitoring. Therefore, the final rule adopts this provision, with the
exception that where a credit generator transfers credits to a refiner
or importer who cannot use all the credits, that transferee may
transfer the credits to another refiner or importer. That second
transferee cannot again transfer the credits; they must either be used
or terminated by the second transferee. Nevertheless, there is nothing
in the final rule that would prevent a person who is not a refiner or
importer from facilitating the transfer of credits from parties that
have generated them to parties who need them for compliance, e.g., a
broker who would act like a real estate broker. Therefore, under
today's rule, any person may act as a credit or allotment broker,
whether or not such person is a refiner or importer, so long as the
title to the credits or allotments are transferred directly from the
generator to the user. Furthermore, any party (e.g., refiner, importer,
or blender) who can generate and hold credits may also resell them.
ix. How Long Do Credits Last?
The ABT program is designed to encourage sulfur reductions earlier
than the standards require, by providing a market for credit
generation. The emissions benefits of these early reductions are most
valuable in the early years of the ABT program when national average
levels remain substantially higher than the final 30 ppm average
standard. At the same time, these emissions reductions are offset in
time by higher emissions incurred by later vehicles which use gasoline
with a higher sulfur level. Because the overall intention of the
gasoline sulfur program is to enable and protect Tier 2 vehicles and
provide time for refiners to select and construct desulfurization
equipment, sulfur credits should have a limited life to limit the
degree to which later Tier 2 vehicles are exposed to higher sulfur
levels.
The ABT program is also designed to ease implementation of the new
standards, particularly the refinery average standard, and the credits
will be of their greatest value to refineries during the first few
years of the program. ABT is not intended to permit a refinery to
operate substantially above the standard for a protracted time period.
While limiting credit life may reduce the incentive to generate credits
for some refineries, the credit program will be of relatively small
value to any refinery/importer that held credits for a protracted
period of time and did not need to use them. This is particularly true
in 2006 and beyond, when the 80 ppm cap limits the need for and value
of any credits the refinery may possess.
Hence, we are finalizing limitations on the life of credits which
differ somewhat from our proposal. Credits generated prior to 2004 must
be used for compliance purposes and calculations with respect to
gasoline produced on or before December 31, 2006. These credits can be
used to meet the 30 ppm standard in 2005 or 2006. This expiration date
applies to credits used by the refinery which generated the credits, as
well as credits transferred to another refinery. While the proposal
presented a life through 2007 for credits generated early, we have
shortened this life span one year to reflect the fact that early
credits are intended to enable and ease compliance with the 30 ppm
standard in the first years of the program, allowing refiners to spread
out investments without compromising the environmental benefits of the
program. At the beginning of 2006, all gasoline (except that produced
by small refiners and that marketed in the GPA) will be capped at 80
ppm, and by the end of 2006, every refinery should be capable of
producing gasoline that meets the 30 ppm standard. Hence, the value of
the early credits diminishes greatly. It should be noted that early
credits can be used for GPA certified gasoline through 2006 and for
small refiner gasoline through 2007.
Credits generated in 2004 and beyond will have to be used within
five years of the year in which they were generated. If these credits
are traded to another party during that five year period, they will
have to be used by the new owner within that same five years,
regardless of when the transfer occurs. This is a change from our
proposal, which provided for a potential maximum ten-year life for
credits that were generated and then traded in the fifth year to
another party. However, we believe this approach is more consistent
with our environmental goals of keeping sulfur levels averaging 30 ppm
in 2006 and beyond. With the 80 ppm cap, refiners will be able to use
only very few credits if they are unable to meet the 30 ppm average in
2006 or beyond. Therefore, limiting credit life to five years will
likely have minimal impact on the actual use of credits. A longer
credit life will make tracking and enforcement difficult, and could
have negative environmental consequences. Hence, we have limited credit
life to
[[Page 6765]]
five years. Consistent with our other recordkeeping and reporting
requirements, the five-year expiration date will be assessed as of the
last day of February after the five year deadline. Hence, for example,
credits generated in 2005 will expire as of the last day of February,
2011. Again, no third-party transfers are allowed.
x. Conversion of Allotments Into Credits
A refiner or importer may convert allotments into credits for
compliance with the refinery average standards in 2005 and beyond.
Allotments that are generated by reducing gasoline sulfur levels to 30
ppm or higher (defined as Type ``A'' allotments) are equivalent to
credits generated in 2000-2003. These allotments may be (1) used as
allotments by a refiner for compliance with the corporate average
standard in 2004 and 2005 or (2) converted into credits to be used by
the refiner's refineries for compliance with the refinery average
standard in 2005 and 2006.
Allotments that are generated by reducing gasoline sulfur levels to
lower than 30 ppm (defined as Type ``B'' allotments) are equivalent to
credits generated in 2004 and beyond (by producing gasoline with less
than 30 ppm sulfur). Similar to Type ``A'' allotments, these allotments
may be (1) used as allotments by a refiner for compliance with the
corporate average standard in 2004 and 2005 or (2) converted into
credits to be used by the refiner's refineries for compliance with the
refinery average standard in 2005 and beyond.
Allotments or credits that are used by refiners for compliance with
the GPA gasoline standards must be used by the last day of February
2007. Allotments or credits used by small refiners for compliance with
the small refiner standards must be used by the last day of February
2008. Any allotments, whether Type ``A'' or ``B'', that are carried
over for compliance with the corporate and refinery average standards
for 2005 must be discounted by 50 percent as discussed in above. Any
allotments that are converted to credits (e.g., in 2004) and then
carried over to 2005 are not discounted. However, once the conversion
and carry-over has taken place (such that the allotments have become
credits), the conversion cannot be reversed without applying the
discount factor. That is to say, once a 2003 or 2004 allotment is
converted to a credit and carried over to 2005, the credit can only be
re-converted into an allotment that is discounted 50 percent.
d. How Are State Sulfur Programs Affected by EPA's Program?
Section 211(c)(4)(A) of the CAA prohibits states \89\ from
prescribing or attempting to enforce controls or prohibitions
respecting any fuel characteristic or component if EPA has prescribed a
control or prohibition applicable to such fuel characteristic or
component under section 211(c)(1). This preemption applies to all
states except California, as explained in section 211(c)(4)(B). For
states other than California, the Act provides two mechanisms for
avoiding preemption. First, section 211(c)(4)(A)(ii) creates an
exception to preemption for state prohibitions or controls that are
identical \90\ to the prohibition or control adopted by EPA. Second,
states may seek EPA approval of SIP revisions containing fuel control
measures, as described in section 211(c)(4)(C). EPA may approve such
SIP revisions, and thereby ``waive'' preemption, only if it finds the
state control or prohibition ``is necessary to achieve the national
primary or secondary ambient air quality standard which the plan
implements.''
---------------------------------------------------------------------------
\89\ The term ``state'' or ``states'' includes political
subdivisions thereof.
\90\ In evaluating whether a state fuel prohibition or control
is ``identical'' to a prohibition or control adopted by EPA, EPA
might consider but is not limited to the following factors in
comparing the measures: (1) The level of an emission reduction or
pollution control standard; (2) the use of ``per gallon'' or
``averaged'' amounts in setting that level; (3) the effect on that
level (if averaged) of the use of different averaging pools; (4) the
lead time allowed to the affected industry for compliance; and (5)
the test method(s) and sampling requirements used in determining
compliance.
---------------------------------------------------------------------------
We are adopting the sulfur standards pursuant to our authority
under section 211(c)(1). Thus, we believe that today's action results
in the clear preemption of future state actions to prescribe or enforce
fuel sulfur controls. \91\ States with fuel sulfur control programs not
already approved into their SIPs will therefore need to obtain a waiver
from us under the provisions described in section 211(c)(4)(C) for all
state fuel sulfur control measures, unless the state standard is
identical to our sulfur standard.
---------------------------------------------------------------------------
\91\ In addition, EPA notes that there are existing federal
NOX performance standards which apply to RFG and
conventional gasoline and that state controls respecting
NOX performance are also preempted under 211(c)(4)(A).
---------------------------------------------------------------------------
Section 211(c)(4)(A) preempts state fuel controls if EPA has
``prescribed'' federal controls. We read this language to preempt non-
identical state standards on the date of promulgation of the standards,
as opposed to the date the standards become enforceable. Thus, today's
action preempts state actions as of December 21, 1999, even though the
standards will not require sulfur reductions until 2004. This
interpretation is consistent with EPA actions applying other federal
fuel measures. See 54 Fed. Reg. 19173 (May 4, 1989) (noting preemption
of Massachusetts state RVP measure before start of first control period
for federal RVP). We also believe this interpretation is consistent
with the intent behind section 211(c)(4)(A). Though the standards are
not immediately enforceable, they will have an immediate impact on
refiners' investment decisions. We believe, by adopting 211(c)(4)(A),
Congress intended to limit state fuel controls that differ from the
federal programs, for example, in the judgments as to level of the
standard or its stringency. The lead time to implement a standard
should be treated the same way.
Aside from the explicit preemption in Section 211(c)(4)(A), a court
could also consider whether a state sulfur control is implicitly
preempted under the Supremacy Clause of the U.S. Constitution. Courts
have determined that a state law is preempted by federal law where the
state requirement actually conflicts with federal law by preventing
compliance with both federal and state requirements, or by standing as
an obstacle to accomplishment of Congressional objectives. A court
could thus consider whether a given state sulfur control is preempted,
notwithstanding waiver of preemption under 211(c)(4)(C), if it places
such significant cost and investment burdens on refiners that refiners
cannot meet both state and federal requirements in time, or if the
state control would otherwise meet the criteria for conflict
preemption.
2. Hardship Provision for Qualifying Refiners
This section describes various provisions for certain qualifying
refiners who may face hardship circumstances.
a. Hardship Provision for Qualifying Small Refiners
In developing our gasoline sulfur program, we evaluated the need
and the ability of refiners to meet the 30/80 standards as
expeditiously as possible. This analysis is described in detail in the
RIA. As a part of this analysis, we found that while the majority of
refiners would be able to meet the needed air quality goals in the
2004-2006 time frame, there would be some refiners who would face
particularly difficult circumstances which would cause them to have
more difficulty, in comparison
[[Page 6766]]
to the industry as a whole, in meeting the standards.
In order to ensure that the vast majority of the program could be
implemented reasonably quickly in order to achieve the air quality
benefits sooner, rather than basing the time frame on the lowest common
denominator we have provided an extended phase-in for a small group of
refiners that represents less than four percent of the overall gasoline
volume, and a much smaller percentage in the areas of greatest
environmental need. As described in more detail below, and in Chapter
VIII of the RIA, we concluded that refineries owned by small businesses
face unique hardship circumstances, compared to larger companies.
The primary reason for this consideration is that small businesses
lack the resources available to large companies which enable the large
companies (including those large companies that own small volume
refineries) to raise capital for investing in desulfurization
equipment. The small businesses are also likely to have insufficient
time to secure loans, compete for engineering resources, and complete
construction of the needed desulfurization equipment in time to meet
the standards adopted today which begin in 2004.
The emissions benefits of low sulfur gasoline are needed as soon as
possible, for two primary reasons: (1) To reduce ozone and other
harmful air pollutants, and (2) to enable vehicle emissions control
technology for Tier 2 vehicles. Since our analysis showed that small
businesses in particular face hardship circumstances, we are adopting
temporary, interim standards that will provide refineries owned by
small businesses additional time to meet the ultimate 30 ppm refinery
average and 80 ppm per gallon cap standards. This approach allows us to
achieve the needed emission reductions in the 2004-2007 time frame
because hardship circumstances are expected to be faced by only a small
portion of the refining industry.
We believe that these temporary, interim standards are an effective
way to phase in the low sulfur standards as expeditiously as is
feasible thereby achieving significant air quality benefits in an
expeditious manner. This section describes the special provisions we
are offering small businesses to mitigate the impacts of our program on
them and generally explains the process we undertook to analyze those
impacts. Please refer to the RTC document for a detailed discussion of
comments received on these provisions, and to the RIA for a more
detailed discussion of our analysis of small refiner circumstances.
As explained in the regulatory flexibility analysis in Section
VIII.B. of this document and in Chapter 8 of the RIA, we considered the
impacts of our proposed regulations on small businesses. We have
historically, as a matter of practice, considered the potential impacts
of our regulations on small businesses, as discussed in more detail in
Section IV.C.2.a.ii., below. The analysis of small business impacts
conducted for this rulemaking was performed in conjunction with a Small
Business Advocacy Review (SBAR) Panel we convened, pursuant to the
Regulatory Flexibility Act as amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (SBREFA). We believe that the
temporary, interim standards we are adopting for small refiners
contributed to our development of a framework to achieve significant
environmental benefits from lower sulfur gasoline in the most
expeditious manner that is reasonably practicable. In the SBREFA
amendments, Congress stated that ``uniform Federal regulatory * * *
requirements have in numerous instances imposed unnecessary and
disproportionately burdensome demands including legal, accounting, and
consulting costs upon small businesses * * * with limited
resources[,]'' and directed agencies to consider the impacts of certain
actions on small entities. The final report of the Panel is available
in the docket. Through the SBREFA process, the Panel provided
information and recommendations regarding:
The significant economic impact of the proposed rule on
small entities;
Any significant alternatives to the proposed rule which
would ensure that the objectives of the proposal were accomplished
while minimizing the economic impact of the proposed rule on small
entities;
The projected reporting, recordkeeping, and other
compliance requirements of the proposed rule; and,
Other relevant federal rules that may duplicate, overlap,
or conflict with the proposed rule.
In addition to our participation in the SBREFA process, we
conducted our own outreach, fact-finding, and analysis of the potential
impacts of our regulations on small businesses. Many of the small
refiners with whom we and the Panel met indicated their belief that
their businesses may close due to the substantial costs, capital and
other, of meeting the 30/80 standard without additional time. Based on
these discussions and our data analysis, the Panel and we agree that
small refiners would likely experience a significant and
disproportionate economic hardship in reaching the objectives of our
gasoline sulfur reduction program. However, the Panel also noted that
the undue burden imposed upon the small refiners by our sulfur
requirements could be alleviated with additional time for compliance.
We agree with the Panel on both of these points.
For today's action, we have structured a temporary, interim
compliance flexibility for qualifying small refiners, both domestic and
foreign, based on the factors described below. Specifically, we
structured this provision to address small refiner hardship while
achieving air quality benefits expeditiously and ensuring that the
reductions needed in gasoline sulfur coincide with the introduction of
Tier 2 vehicles.
First, the compliance deadlines in the program, combined with
flexibility for small refiners, will achieve the air quality benefits
of the program quickly, while ensuring that small refiners will have
adequate time to raise capital for infrastructure changes. Many, if not
most, small refiners have limited, if any, additional sources of income
beyond their refinery for financing the equipment necessary to produce
low sulfur gasoline. Because these small refiners typically do not have
the financial backing that larger and generally more integrated
companies have, they need additional time to secure capital financing
from their lenders.
Second, we believe that allowing time for sulfur-reduction
technologies to be proven-out by larger refiners before small refiners
have to put them in place would reduce the risks incurred by small
refiners who utilize these technologies to meet the standards. The
added time would likely allow for costs of these desulfurization units
to decrease, thereby limiting the economic consequences for small
refiners. Small refiners are disadvantaged by the economies of scale
that exist for the larger refining companies--capital costs and per-
barrel fixed operating costs are generally higher for them.
Finally, providing small refiners more time to comply would ensure
that adequate engineering and construction resources would be
available. Since most large and small refiners will need to install
additional processing equipment to meet the sulfur requirements, there
will be a tremendous amount of competition for technology services,
engineering manpower, and construction management and labor. Our
analysis
[[Page 6767]]
shows that there are limitations to the elasticity of these resources.
In addition, vendors will be more likely to contract their services
with the major companies first, as their projects will offer larger
profits for the vendors.
Providing this flexibility to allow small refiners to deal with
hardship circumstances enables us to go forward with the phase-in of
the 30 ppm sulfur standard beginning in 2004. Without this flexibility,
it is possible that the benefits of the 30 ppm standard would not be
achieved as quickly. By providing temporary relief to those refiners
that need additional time, we are able to adopt a program that reduces
gasoline sulfur levels expeditiously and in a way that is feasible for
the industry as a whole.
In addition, we believe the volume of gasoline that will be
eligible for the interim standards is small. We estimate that small
refiners produce approximately four percent of all gasoline used in the
U.S., excluding California. In most cases, gasoline produced by
refiners is mixed with substantial amounts of other gasoline prior to
retail distribution (due to the nature of the gasoline distribution
system). This mixing generally results in only marginal increases in
overall sulfur levels. Thus, the sulfur level of gasoline actually used
by Tier 2 vehicles should generally be much lower than that produced by
individual small refineries under this provision.
i. How Are Small Refiners Defined?
How We Defined ``Small'' Refiner in the Proposal
In identifying the small refiners most susceptible to the economic
challenge of meeting the low-sulfur requirements, we closely examined
the Small Business Administration's (SBA) definition of small refiner
for the purposes of regulation. In that assessment we concluded that
the SBA definition provided a reasonable metric for identifying small
refiners that would be significantly impacted by the sulfur program
requirements. By adopting the SBA definition we could expeditiously
provide certainty of small refiner status to refiners who applied for
the temporary compliance flexibility. Specifically, we proposed a
definition where any petroleum refining company having no more than
1,500 employees throughout the corporation as of January 1, 1999 could
apply for the temporary compliance flexibilities. This proposed
employee limit included any subsidiaries, regardless of the number of
individual gasoline-producing refineries owned by the company or the
number of employees at any given refinery.
While we proposed a definition based on corporate employment, in
light of the SBA definition and the SBAR Panel's recommendations, we
also sought comment on alternative definitions of a small refiner. Such
alternatives included definitions based on volume of crude oil
processed (at a given refinery and/or corporate-wide) or volume of
gasoline produced, with the understanding that any relief offered to
refiners must not substantially reduce the program's environmental
benefits.
Our Revised Small Refiner Definition
Based on comments received on the proposal, we are making two
changes to our definition of a small refiner: we are (1) revising the
employee number criterion; and, (2) adopting a cap on the corporate
crude oil capacity for a refining company to qualify as a small
business under today's regulations.
In regard to the employee number criterion, we are modifying how
the employee number is determined, based on comments received from SBA.
As mentioned above, our proposed definition applied to any petroleum
refining company having no more than 1,500 employees throughout the
corporation as of January 1, 1999. We selected that date to prevent
companies from ``gaming'' the system. However, as SBA pointed out in
its comments, the Small Business Act regulations specify that, where
the number of employees is used as a size standard, as we proposed for
small refiners, size determination is based on the average number of
employees for all pay periods during the preceding 12 months.
Since we intended to use SBA's size standard in our proposal, we
are incorporating that definition correctly in today's action. It is
also worth mentioning that SBA shares our concerns about preventing
companies from gaming the system and that it solved this problem
specifically by using the average employment over 12 months. In effect,
this approach helps to prevent companies from applying for and
receiving small refiner status in bad faith. An example of an
inappropriate application for small refiner status would be a refiner
that temporarily reduced its workforce from 1600 employees to 1495
employees immediately before January 1, 1999 and then immediately
rehired those employees after that cutoff date. Furthermore, the
averaging concept was designed to properly address firms with seasonal
fluctuations, according to SBA.
Second, we're amending the small refiner definition to include a
corporate crude oil capacity cap. We believe such a corporate volume
limitation is necessary to ensure that only truly small businesses
benefit from the relaxed interim standards. Refineries that process
large amounts of crude are likely to be better able to install
desulfurization equipment to meet the national standards in 2004. In
addition to ensuring that the interim standards target the appropriate
group of refiners that need additional time, the volume limit also
serves to ensure that the volume of gasoline subject to such standards
is not significant. In addition, we received many comments that we
should adopt a threshold based on crude capacity as specified in the
Clean Air Act and used in past EPA fuel programs.
In the lead phase-down program for gasoline, we used a definition
of ``small refinery'' that Congress adopted in 1977 specifically for
the lead phase-down program. The definition was based on crude oil or
feedstock capacity at a particular refinery (less than or equal to
50,000 barrels per calendar day (bpcd)), combined with total crude oil
or feed stock capacity of the refiner that owned the refinery (less
than or equal to 137,500 bpcd). In 1990, the lead phase-down program
was complete and Congress removed this provision from the Act.
Shortly before the Act was amended in 1990, we set standards for
sulfur content in diesel fuel, including a two-year delay for small
refineries. We used the same definition of small refinery as we used in
the lead phase-down program. This two-year delay, like many of the
small business flexibilities in our gasoline sulfur proposal, was aimed
at problems that small refineries faced in raising capital and in
arranging for refinery construction.
In the 1990 amendments to the Clean Air Act, Congress rejected this
small refinery provision, and instead allocated allowances to small
diesel refineries under the Title IV Acid Rain program. (See CAA
Section 410(h).) This approach was also aimed at helping small
refineries solve the problem of raising the capital needed to make
investments to reduce diesel sulfur. Congress provided allowances to
small refineries that met criteria similar to that used in the lead
phase-down provision--based on the crude oil throughput at a particular
refinery, combined with the total crude oil throughput of the refiner
that owned the refinery.
As mentioned above, the CAA definition was based on crude oil or
feedstock capacity at a particular refinery, combined with total crude
oil
[[Page 6768]]
or feed stock capacity of the refiner that owned the refinery (less
than or equal to 137,500 bpcd). However, given the mergers,
acquisitions, and other changes that have transpired throughout the
refining industry in the past few years, we believe the appropriate
boundary today is a corresponding corporate crude capacity less than or
equal to 155,000 bpcd.
Therefore, in consideration of the above, a refiner must meet both
of the following criteria to qualify for the special small refiner
provisions described in the next section:
No more than 1500 employees corporate-wide, based on the
average number of employees for all pay periods from January 1, 1998 to
January 1, 1999; and
A corporate crude capacity less than or equal to 155,000
bpcd for 1998.
ii. Standards That Small Refiners Must Meet
Upon careful review of the comments received on the proposal as
well as the recommendations of the SBAR Panel, we have determined that
regulatory relief in the form of delayed compliance dates is
appropriate to allow small refiners, both foreign and domestic, to
comply with our regulations without disproportionate burdens. From 2004
to 2007, when U.S. refiners must meet the 30/80 standard or the
standards listed in Table IV.C-1 if they are participating in our ABT
program, refiners meeting the corporate employee and capacity limits
prescribed above are allowed to comply with somewhat less stringent
requirements. These interim annual-average standards for qualifying
small refiners are shown in Table IV.C-3 below.
Table IV.C-3.--Temporary Gasoline Sulfur Requirements for Small Refiners
in 2004-2007
------------------------------------------------------------------------
Temporary Sulfur Standards (ppm)
Refinery baseline sulfur -------------------------------------------
level (ppm) Average Cap
------------------------------------------------------------------------
0 to 30..................... 30 ppm.............. 300 ppm.
31 to 200................... Baseline Level...... 300 ppm.
201 to 400.................. 200 ppm............. 300 ppm.
401 to 600.................. 50% of baseline..... Factor of 1.5 times
the average
standard.
601 and above............... 300................. 450.
------------------------------------------------------------------------
The cap standards for the first two ``bins'' of refineries (that is
those with baseline sulfur levels from zero to 30 and 31 to 200) have
been relaxed somewhat from the proposal based on comments that the
proposed standards for these two bins were more stringent than the
options under discussion for all other refiners. We believe that these
small refiners should be able to meet the average standards without
much, if any, change to their operations but the more lenient cap will
give them some flexibility for turnarounds or unexpected equipment
``upsets''.
Compliance with the standards in Table IV.C-3 is based on a
refiner's demonstration that it meets our specific small refiner
criteria. Refiners who qualify as a small refiner under our definition
must establish a sulfur baseline for each of their participating
refineries. The following sections explain these requirements in more
detail to supplement the information presented above. We also explain
how small refiners can apply for an extension of up to two additional
years of the applicable small refiner standards, based on a variety of
factors such as technology availability or financial hardship.
iii. How Do Small Refiners Apply for Small Refiner Status?
Refiners seeking small refiner status under our gasoline sulfur
program must apply to us in writing no later than December 31, 2000,
requesting this status. This application for small refiner status must
contain the information described below.
Companies \92\ seeking small refiner status must provide us with
the following information:
---------------------------------------------------------------------------
\92\ Company means the business structure of the refinery
whether privately or publicly owned.
---------------------------------------------------------------------------
Employment Information
A listing of the name and address of each location where
any employee of the company worked during the 12 months preceding
January 1, 1999.
The average number of employees at each location based
upon the number of employees for each of the company's pay periods for
the 12 months preceding January 1, 1999.
The type of business activities carried out at each
location.
Crude Capacity Information
The total corporate crude oil capacity of the refiner as
reported to the Energy Information Administration (EIA) of the U.S.
Department of Energy (DOE).
For refineries owned by joint ventures, the total employment of
both (all) companies must be considered in determining whether the
1,500 employee limit is met. In addition, a refiner who reactivates a
refinery that was shut down or non-operational between January 1, 1998
and January 1, 1999, may apply for small refiner status no later than
June 1, 2002. In this case, we will consider the information provided
to determine the correct period for judging compliance with the 1500
threshold. Where appropriate we will look at the most recent 12 months
of employment information.
Refiners seeking small refiner status must also provide us with the
total crude capacity of their corporation (the sum of all individual
refinery capacities for multiple-refinery companies, including any and
all subsidiaries) as reported to EIA for 1998 (published by EIA in
1999). The information submitted to EIA is presumed to be correct.
However, in cases where a company disputes this information, we will
allow 60 days after the company submits its application for small
refiner status for that company to petition the Agency with the
appropriate data to correct the record. For reactivated refineries
owned by a small refiner, we will consider the information provided to
determine the correct period for judging compliance with the corporate
capacity threshold. Where appropriate, we will look at the most recent
year of crude capacity information.
If a refiner with approved small refiner status later exceeds the
1,500 employee threshold without merger or acquisition or the corporate
capacity of 155,000 bpcd, its refineries could keep their individual
refinery standards. This is to avoid stifling normal company growth and
is subject to our finding that the company did not apply for and
receive the small refiner status in bad faith.
[[Page 6769]]
iv. How Do Small Refineries Apply for a Sulfur Baseline?
A qualifying small refiner, domestic or foreign, may apply for an
individual sulfur baseline by December 31, 2000 for any refinery owned
by the company by providing the following information:
A calculation of the refinery's sulfur baseline using its
average gasoline sulfur level based on 1997 and 1998 production data,
\93\ and
---------------------------------------------------------------------------
\93\ Includes batch number, volume, and sulfur content for each
batch of gasoline produced in 1997 and 1998.
---------------------------------------------------------------------------
The average volume of gasoline (including conventional and
reformulated) produced in these two years.
As we proposed, baseline sulfur levels and gasoline volumes are
averaged over two years (1997 and 1998) to account for any production-
related anomalies that may have occurred in 1997 or 1998. For the
overall program, however, we are only using 1997 and 1998 data for the
reasons described in Section IV.C.1, above. For any refiner who
reactivates a refinery that was shut down or non-operational between
January 1, 1998 and January 1, 1999, we will use the most recent
information available for baseline establishment purposes.
The regulations specify the information to be submitted to support
the baseline application. The baseline calculations should include any
oxygen added to the gasoline at the refinery. This application would be
submitted at the same time the refiner applies for small business
status; confirmation of small business status would not be required to
apply for an individual sulfur baseline. Pending refinery baseline
approval, we will assign standards to each of the company's refineries
in accordance with Table IV.C.-3.
Oxygenate blenders, regardless of their size, are not eligible for
the small refiner individual baselines and standards because they would
not experience circumstances similar to those of small refining
companies. That is, oxygenate blenders do not have the burden of
capital costs to install desulfurization equipment, which is the
primary reason for allowing small refiners to have a relaxed compliance
schedule.
v. Volume Limitation on Use of a Small Refinery Standard
Except as noted below, the volume of gasoline subject to a small
refinery's individual standards is limited to the average volume of
gasoline the refinery produced from crude oil during the baseline years
(1997 and 1998), excluding the volume of gasoline produced using
blendstocks produced at another refinery and exports.\94\ Under this
approach, the baseline volume for a small refinery would reflect only
the volume of gasoline produced from crude oil during the 1997 and 1998
baseline years.
---------------------------------------------------------------------------
\94\ In addition to gasoline produced from crude oil, a small
refinery's baseline volume would include gasoline produced from
purchased blendstocks where the blendstocks are substantially
transformed using a refinery processing unit.
---------------------------------------------------------------------------
However, to ensure that the overall sulfur in gasoline from small
refiners does not greatly increase under the terms of the small refiner
extension and result in overall gasoline pool sulfur levels higher than
anticipated, the volume would be limited beginning in 2004 to the
volume of gasoline that is the lesser of: (1) 105 percent of the
baseline volume, or (2) the volume of gasoline produced during the year
from crude oil. Any volume of gasoline produced during an averaging
period in excess of this limitation is subject to the corporate average
standards that apply to all other refiners (i.e., the corporate average
standards listed in Table IV.C.-1).
In 2006 and 2007, the refinery averages of Table IV.C.-1 will
apply. In this case, the small refinery's annual average standard will
be adjusted based on the excess volume in a manner similar to the
compliance baseline equation for conventional gasoline under Section
80.101(f) of Part 40 of the Code of Federal Regulations. However, the
small refinery's per-gallon cap standard will not be adjusted.
This limitation assures that small refineries receive relief only
for gasoline produced from crude oil, that is the portion of the
refinery operation requiring capital investment to meet lower sulfur
standards.
vi. Extensions Beyond 2007 for Small Refiners
Beginning January 1, 2008, all small companies' refineries must
meet the national sulfur standard of 30 ppm on average and the 80 ppm
cap, except small refineries under IV.C.2.i. that apply for and receive
an extension of their small refiner status and unique standards. An
extension will provide a given small refinery up to an additional two
years to comply with the national standards. An extension must be
requested in writing and must specify the factors that demonstrate a
significant economic hardship to qualify the refinery for such an
extension. Factors considered for an extension could include, but are
not limited to, the refinery's financial position; its efforts to
procure necessary equipment and to obtain design and engineering
services and construction contractors; the availability of
desulfurization equipment, and any other relevant factors.
In order for us to consider an extension, a refiner must submit a
detailed request for an extension by January 1, 2007, demonstrating
that it has made best efforts to obtain necessary financing, and must
provide detailed information regarding any lack of success in obtaining
financing. This information shall include, but may not be limited to
copies of loan applications for the necessary financing for the
construction of appropriate sulfur reduction technology as well as the
application of financing for other equipment procurements or
improvements in this time frame. If financing has been disapproved or
is otherwise unsuccessful, the refiner shall provide documents
supporting the basis for that disapproval and evidence of efforts to
pursue other means of financing. If we determine that the refiner has
made the best efforts possible to achieve compliance with the national
standards by January 1, 2008, but has been unsuccessful for reasons
beyond its control, we will consider granting the hardship extension
initially for the 2008 averaging period. If further relief is
appropriate for good reasons, we will consider a further extension
through the 2009 averaging period but in no case will this relief be
provided unless the refiner can demonstrate conclusively that it has
financing in place and that it will be able to complete construction
and meet the national gasoline sulfur standards no later than December
31, 2009.
Compliance Plans for Demonstrating a Commitment To Produce Low Sulfur
Gasoline
This final rule includes a compliance plan provision for those
refiners who may seek a hardship extension of their approved interim
standards. This provision requires that those refiners with approved
interim standards who seek a hardship extension must submit a series of
reports to EPA discussing and describing their progress toward
producing gasoline that meets the 30/80 ppm standards by January 1,
2008. We expect that small refiners will need to begin preparations to
meet the national standards in 2008 by 2004. However, we understand
that the potential exists for some small refiners to face additional
hardship circumstances that will warrant more time to meet the
standards. For this reason, we have adopted provisions (see above)
allowing
[[Page 6770]]
refiners subject to the interim standards to petition us and make a
showing that additional time is needed to meet the national standards.
To properly evaluate these hardship applications, we are requiring
demonstrations of good faith efforts towards assessing the economic
feasibility, along with the business and technical practicality of
ultimately producing low sulfur gasoline. Such progress reports must be
submitted for a refiner to receive consideration in any future
determinations regarding hardship extensions. However, these reports
are not required from refiners who will not be seeking a hardship
extension.
By June 1, 2004, such refiners would need to submit preliminary
information in the form of a report outlining its time line for
compliance and a project plan discussing areas such as permits,
engineering plans (e.g., design and construction), and capital
commitments for making the necessary modifications to produce low
sulfur gasoline. Documents showing activities and progress in these
areas should be provided if available.
By no later than June 1, 2005, these small refiners would need to
submit a report to us stating in detail progress to date based on their
time line and project plan. This should include copies of approved
permits for construction of the equipment, contracts for design and
construction, and any available evidence of having secured the
necessary financing to complete the required construction. If any
difficulties in meeting this requirement are anticipated, the refiner
must submit a detailed report of all efforts to date and the factors
that may cause delay, including costs, specification of engineering or
other design work still needed and reasons for delay, specification of
equipment needed and any reasons for delay, potential equipment
suppliers and history of negotiations, and any other relevant
information. If unavailability of equipment is a factor, the report
must include a discussion of other options considered, and the reasons
these other options are not feasible.
In addition, the small refiner would need to provide evidence by
June 1, 2006, that on-site construction has begun at its refinery(s)
and that absent unforeseen circumstances or problems, they will be
producing complying gasoline (30/80 ppm) by January 1, 2008. While the
submission of these progress reports is evidence of a refiner's good
faith efforts to comply by 2008, it does not bind the refiner to make
gasoline in 2008. There are several reasons why a refiner may choose to
exit the gasoline-production business in 2008 that go beyond the low
sulfur gasoline requirement.
As a result of a refiner's efforts in moving toward compliance with
the 2008 standards, for market, economic, business, or technical
reasons, the company could choose not to make gasoline in 2008.
Although we do not believe this will be the likely outcome for small
refiners, we cannot preclude it. Any refiner that makes such a
determination in its progress reports will have until 2008 to
transition out of gasoline production, but will not be considered for a
extension of hardship relief.
vii. Can Small Refiners Participate in the ABT Program?
As described in IV.C.1.c.i above, any refinery (including those
owned by small refiners) can generate sulfur allotments (in ppm-
gallons) in 2003 by producing gasoline containing less than 60 ppm
sulfur on an annual-average basis. Once this 60 ppm trigger is reached,
allotments will be calculated based on the amount of reduction from 120
ppm \95\. However, these allotments may be discounted depending on the
actual sulfur level. If a refinery fully demonstrates compliance by
producing gasoline with an annual average sulfur level of 0 to 30 ppm,
the allotments retain their full value--they are not discounted at all.
For actual sulfur levels of 31-60 ppm, which are indicative of a
partial demonstration, the allotments are discounted 20 percent.
---------------------------------------------------------------------------
\95\ If a refinery has a baseline sulfur level higher than 120
ppm (as described below in IV.C.1.c.v.), then credits are generated
from the baseline to 120 ppm and allotments from 120 ppm to the new
sulfur level (and discounted 20 percent if applicable).
---------------------------------------------------------------------------
During the period 2000-2003, refineries owned by small refiners can
also generate credits by producing gasoline averaging at least 10
percent lower than that refinery's baseline sulfur level. In other
words, to generate credits, the refinery's annual average sulfur level
for all of its gasoline on average must be 0.9 x (baseline sulfur
level). Once this ``trigger'' is reached, credits will be calculated
based on the amount of reduction from the refinery's sulfur baseline.
For example, if in 2002 a refinery reduced its annual average sulfur
level from a baseline of 450 ppm to 150 ppm (well below the trigger of
0.9 x 450 = 405 ppm), its sulfur credits would be determined based on
the difference in annual sulfur level (450--150 = 300 ppm) multiplied
by the volume of gasoline produced in 2002. Similarly, small foreign
refiner-owned refineries with an individual sulfur baseline can
generate credits in these years as long as the annual average sulfur
level of the gasoline exported to the U.S. from that refinery is lower
than 90 percent of the baseline sulfur level.
During the period 2004-2007, refineries owned by small refiners
will be permitted to generate credits but only if their actual annual
sulfur level of all gasoline produced or imported averages below their
refinery standard, and only for the difference between the standard and
the actual annual sulfur average.
A refinery (owned by a small refiner) wishing to participate in the
ABT program can sell credits beginning as soon as January 1, 2000 but
may wait until December 31, 2000 to apply for small refiner status.
However, the standards assigned to that refinery (as presented in Table
IV.C-3 above) will be based on the sulfur level from which credits were
generated, not the baseline sulfur level, since the refiner would have
already demonstrated the ability to meet the lower sulfur level. For
compliance purposes and to give refineries certainty regarding the
gasoline sulfur standards to which they will be held during 2004-2007,
the standards for a small refiner refinery participating in ABT will be
set based on the refinery's lowest sulfur average for any year between
1999 and 2003.
Using the example above, a refinery (owned by a refiner with small
refiner status) with a 1997-98 baseline sulfur level of 450 ppm would
have an interim average standard of 450/2 = 225 ppm and a cap of 225
x 1.5 = 338 ppm. If that refinery generated 300 sulfur credits in 2002
by producing gasoline with 150 ppm sulfur, then that refinery's average
sulfur standard for 2004-2007 would be ratcheted down to 150 ppm with a
cap of 300 ppm. However, that refinery would still be able to use the
300 credits that it had generated and banked in 2002 for compliance
with its 150 ppm standard.
Based on the comments received on our proposal, we are allowing
small refineries to use credits and/or allotments that they generated
and/or to purchase credits and/or allotments from another refinery to
meet their average standard during 2004-2007. We solicited comment on
whether small refiners subject to the interim standards should be
permitted to use credits towards meeting those standards, and several
small refiners who already produce very clean gasoline commented that
the special small refiner standards do not benefit them in any way.
These refiners argued that if they could generate sufficient sulfur
credits in 2000-2003, or could obtain such credits
[[Page 6771]]
through purchases from other refiners, they would not participate in
the small refiner program but would instead participate in the sulfur
ABT program. But since they are not positioned to generate credits (due
to their already low sulfur levels), and have little certainty of being
able to purchase credits, they need the relief provided by the small
refiner provisions. We concur with these concerns and thus permit small
refiners to use ABT credits and allotments. Small refiners may only use
ABT credits and/or allotments to comply with their refinery average
standard, not the per-gallon caps applied to their gasoline.
At any time, a small refiner can choose to ``opt out'' of the small
refiner program and, beginning the next calendar year, comply with the
standards in Table IV.C-2. The refiner would have to notify us of this
change in its compliance program. Once a small refiner leaves the small
refiner program, however, it would not be eligible to re-enter the
small refiner program.
b. Temporary Waivers From Low Sulfur Requirements in Extreme Unforeseen
Circumstances
In the final rule, EPA is adopting a provision permitting refiners
to seek a temporary waiver from the sulfur standards in certain
circumstances. Such waivers will be granted at EPA's discretion. Under
this provision a refiner may seek permission to distribute gasoline
that does not meet the applicable low sulfur standards for a brief time
period, based on the refiner's inability to produce complying gasoline
because of extreme and unusual circumstances outside the refiner's
control that could not have been avoided through the exercise of due
diligence. This provision is similar to a provision in EPA's RFG
regulations, and is intended to provide refiners short-term relief in
unanticipated circumstances such as an accidental refinery fire or a
natural disaster. The short-term waiver provision is intended to
address unanticipated circumstances that cannot be reasonably foreseen
at this time or in the near future
The conditions for obtaining such a waiver that are similar to
those in the RFG regulations. These conditions are necessary and
appropriate to ensure that any waivers that are granted are limited in
scope, and that refiners do not gain economic benefits from a waiver.
Therefore, refiners seeking a waiver must show that the waiver is in
the public interest, that the refiner was not able to avoid the
nonconformity, that it will make up the air quality detriment
associated with the waiver, as well as any economic benefit from the
waiver, and that it will meet the applicable sulfur standards as
expeditiously as possible.
c. Temporary Waivers Based on Extreme Hardship Circumstances
In addition to the provision for short-term relief in unanticipated
circumstances, we are adopting a provision for relief based on extreme
hardship circumstances. In developing our sulfur program, we considered
whether any refiners would face particular difficulty in complying with
the standards in the lead time provided. As described in Section
IV.C.2.a., we concluded that refineries owned by small businesses would
experience more difficulty in complying with the standards on time
because, as a group, they have less ability to raise capital necessary
for refinery investments, face proportionately higher costs because of
economies of scale, and are less able to successfully compete for
limited engineering and construction resources. However, it is possible
that other refiners who do not meet our criteria for the interim
standards also face particular difficulty in complying with the sulfur
standards on time. Therefore, we are including in the final rule a
provision allowing us, at our discretion, to grant temporary waivers
from the sulfur standards based on a showing of extreme hardship
circumstances. We do not anticipate, nor do we expect there is a need
for, granting temporary waivers that apply to more than approximately
one percent of the national gasoline pool in any given year. This
provision would allow refiners (domestic and foreign) to request a
waiver from the sulfur standards based on a showing of unusual
circumstances that result in extreme hardship and significantly affect
the ability to comply by the applicable date. As with the small refiner
interim standards, this provision furthers our overall environmental
goals of achieving low sulfur gasoline nationwide as soon as possible.
By providing short-term relief to those refiners that need additional
time because they face hardship circumstances, we can adopt a program
that reduces gasoline sulfur beginning in 2004 for the majority of the
industry that can comply by then.
As described above, EPA understands that this program will require
significant economic investments by the refining industry. We have
adopted a program with sufficient flexibilities (including an ABT
program, allotment trading, a geographic phase-in, and interim
standards for qualifying small refiners) to make these investments
reasonable and feasible over the time frame in which the standards are
phased in. Because the refining industry encompasses a wide variety of
individual circumstances, and our program phases in based on the lead
time we believe is reasonable for the industry as a whole, there may be
unusual circumstances that impose extreme hardship and significantly
affect an individual refinery's ability to comply in the lead time
provided. However, we do not intend for this waiver provision to
encourage refiners to delay planning and investments they would
otherwise make in anticipation of receiving relief from the applicable
requirements. In addition, we want to limit the environmental impact of
any hardship waivers from compliance with the standards. Thus, we
anticipate that hardship waivers will only be granted in rare
circumstances.
Because of the significant environmental benefits of lowering
sulfur in gasoline, we will administer this provision in a manner
consistent with continuing to ensure the environmental objectives of
the regulation. In our analysis of the interim small refiner standards,
we concluded that only a minimal portion of the national gasoline pool
would potentially be impacted by the less stringent interim standards,
due to the relatively small production volume of these facilities. To
limit the potential environmental impact of this hardship provision, we
reserve the discretion to deny applications where we find that granting
a waiver would result in an unacceptable environmental impact. While
this determination will be made on a case-by-case basis, we do not
expect there is a need for, nor do we anticipate, granting waivers that
apply to more than approximately one percent of the total national pool
of gasoline in any given year, or to more than a minimal percentage of
the gasoline supply of an area known to have significant air quality
problems.
There are several factors we will consider in evaluating a petition
for additional time to comply. This could include refinery
configuration, severe economic limitations, and other factors that
prevent compliance in the lead time provided. Applications for a waiver
must include information that will allow us to evaluate all appropriate
factors. EPA will consider whether the refinery configuration or
operation is unique or atypical, how much of a refinery's gasoline is
produced using an FCC unit, its hydrotreating capacity relative to its
total crude capacity, total reformer unit throughput capacity relative
to total production, gasoline
[[Page 6772]]
production in proportion to other refinery products, and other relevant
factors. A refiner may also face severe economic limitations that
result in a demonstrated inability to raise capital to make necessary
investments to comply in time, which can be shown by an unfavorable
bond rating, inadequate resources of the refiner and its parent and/or
subsidiaries, or other relevant factors. In addition, we will look at
the total crude capacity of the refinery and its parent corporation.
Finally, we will consider where the gasoline will be sold in evaluating
the environmental impacts of granting a waiver.
This provision is intended to address unusual circumstances that we
expect will be foreseeable now or in the immediate future, such as
unique and atypical gasoline refinery operations or a demonstrated
inability to raise capital. These kinds of circumstances should be
apparent at this time or in the near future, so refiners seeking
additional time under this provision must apply for relief by September
1, 2000. A refiner seeking a waiver must show that unusual
circumstances exist that impose extreme hardship and significantly
affect its ability to meet the standards on time, and that it has made
best efforts to comply with the standards, including efforts to obtain
credits and/or allotments towards compliance. Applicants for a hardship
waiver must also submit a plan demonstrating how the standards will be
achieved as expeditiously as possible. In submitting the plan, it must
include a timetable for obtaining the necessary capital, contracting
for engineering and construction resources, and obtaining permits. EPA
will review and act on applications, and, if a waiver is granted, will
specify a time period, not to extend beyond January 1, 2008 (the date
by which all gasoline is expected to meet the 30 ppm refinery average
and 80 ppm per gallon cap standards), for the waiver.
If a waiver is granted, EPA will impose as a condition of the
waiver other reasonable requirements, including antibacksliding
requirements to ensure no deterioration in the sulfur level of gasoline
and interim sulfur standards that the refiner must meet. This is
appropriate since some refiners who may qualify for a waiver can
achieve some sulfur reductions, and even reductions to levels above 30
ppm will result in some environmental benefits. While this provision
allows EPA to waive the per gallon standards as well as the average
standards, EPA would not allow gasoline sulfur to exceed the highest
per gallon cap applicable to a refiner under the interim small refiner
standards described in Section IV.C.2. Once all applications have been
received, EPA will consider the appropriate process to follow in
reviewing and acting on applications, including whether to conduct a
notice and comment decision-making process.
3. Streamlining of Refinery Air Pollution Permitting Process
a. Brief Summary of Proposal
Industry commenters expressed concern over the ability to obtain
permits to construct and operate the facility modifications needed to
meet the Tier 2 rule requirements by the end of 2004. As part of the
preamble to the proposed rule, we outlined possible approaches to
provide greater certainty and to expedite potentially applicable permit
processes. In general, we solicited comments on whether and how policy
options might be designed so as to exempt Tier 2 projects from major
New Source Review (NSR) and/or to expedite the processing of permits
where such requirements would apply. In particular, we solicited
comment on whether the major NSR process could be expedited if: (1) EPA
provided guidance on Lowest Achievable Emission Rate (LAER)
requirements or Best Available Control Technology (BACT)
determinations; (2) emissions reductions could be made available or
designated for offsetting Tier 2 activities; (3) EPA developed model
permits, or (4) EPA assisted the States in resolving source-specific
permitting issues as they would arise. The Agency also solicited
comments on how the title V operating permit requirements, where
applicable, might need to be integrated with the relevant NSR process.
In proposing various mechanisms to expedite the permitting of Tier
2 projects, we recognized that a combination of measures might be
needed, since the situations could vary widely among individual
refineries due to differences in such factors as available equipment
capacity, amount of sulfur in the crude oil, and applicable State
regulations. Source-specific analyses are also necessary to establish
what sulfur reduction techniques can be applied, to determine the
applicable permitting requirements, and to evaluate what controls will
be necessary as a result of these requirements. We indicated our intent
to offer assistance where needed.
b. Significant Comments Received
The most significant comments received on the proposal concerning
the timing impacts due to air permit requirements are presented below.
These commenters focused exclusively on the requirements to obtain a
preconstruction permit under the NSR program. Generally, commenters
only concerns regarding the title V operating permit program were that
the States' ongoing efforts to issue these permits might create a
backlog which could delay the issuance of NSR permits for Tier 2
projects. A more detailed discussion of comments received on the
proposal and EPA's response are contained in the Response To Comments
document and is filed in the Docket for this action.
We received written and oral comments from refineries about the
permit requirements associated with Tier 2 projects. Refiners
emphasized the need for certainty. They pointed out the need to secure
preconstruction permits within 18 months (e.g., 6 months to prepare and
file NSR applications and another 12 months to issue the permit) and
the need for permitting authorities to commit appropriate resources to
meet this time frame. State and local air pollution control agencies
did not support providing exemptions from emissions control and
permitting requirements. Rather, agency commenters stated that they
could accomplish the permitting requirements in the necessary time
frames, provided that complete permit applications were received in a
timely manner and refiners conferred with their regulatory agencies
soon after the Tier 2 requirements are promulgated. They also indicated
that the major NSR process could be expedited and have more certainty
(i.e., permits could be processed in 6 to 9 months) if EPA would
provide guidance on emissions controls, emissions monitoring, and
offsets. In general, environmental and community groups pointed out
that the remedies under traditional permitting practices should be
exhausted before additional flexibility is granted for Tier 2 projects.
c. Today's Action
Based on the comments and other information received in response to
the proposal, EPA believes that it is not necessary or appropriate to
explore further the development of possible options which would exempt
Tier 2 projects from the normally applicable preconstruction review
process. This position is supported by: (1) The comments of States that
industry can, in general, apply and receive NSR permits in time to
comply with Tier 2; and (2) the recognition of industry's potential
ability to use emissions reductions to net Tier 2 projects out of major
NSR which would otherwise be applicable. Nonetheless, we believe that
actions
[[Page 6773]]
should be taken to facilitate early compliance, to add certainty to the
anticipated permitting actions and schedules, and to minimize the
possibility of delay. Accordingly, EPA is taking two types of actions
to promote these objectives.
First, as previously discussed, we have structured the final
gasoline sulfur program to allow additional lead time for many refiners
(i.e., certain refineries would be able to make desulfurization changes
later than the proposed 2004 compliance date to meet Tier 2
requirements). This approach will help address the concerns over the
availability of necessary new equipment and permitting backlogs caused
by many refineries acting to obtain permits and order equipment within
relatively the same time period.
Second, we intend to take several actions (described in more detail
below) to expedite and impart greater certainty in obtaining necessary
major NSR permits. As a result of comments received on the proposal,
and the lead time provided in the final gasoline sulfur program, we
believe that the vast majority of permits can be issued within the
necessary time frames, provided that refineries submit their
preconstruction applications in a timely manner and regulatory
authorities prioritize the issuance of these permits. We also intend to
assist States and refiners on a case-by-case basis in their efforts to
address any unique permitting problems that might arise and, thus,
remedy potential problems that could cause unanticipated delays. In the
unlikely event permitting delays occur, EPA will work with refiners and
the state/local permitting agencies on a case-by-case basis, where a
refinery has unique circumstances that necessitate unique treatment.
While today's strategy will help expedite the permitting process,
refineries that trigger major NSR as a result of producing low sulfur
gasoline will still have to install the stringent level of emissions
control technology required by the Act. However, we intend to issue
guidance to assist states in making decisions about the levels of
control technology, as described more below. In addition, the Agency
wishes to clarify that, in our efforts to provide greater certainty and
to facilitate more expeditious permitting, we are in no way
shortcutting existing opportunities for public participation. We
recognize the importance of public participation in making permitting
decisions and intend that the measures adopted to address permitting
concerns will not diminish the opportunities for public participation.
i. Major New Source Review
The major NSR program, as it applies to existing major stationary
sources of air pollution, requires that a preconstruction permit be
issued before a source makes a physical change or change in its method
of operation of any project that would result in a significant net
emissions increase. As described in the proposal, the steps taken by
certain refineries to implement gasoline sulfur reductions to meet
today's rule could result in emissions increases in one or more
pollutants which may trigger the requirements for this type of
preconstruction permit. A number of the refineries are located in areas
designated as nonattainment for at least one pollutant. The
nonattainment NSR requirements pursuant to part D of the Act would
apply to any such refinery undergoing a major modification. For those
refineries located in attainment or unclassifiable areas, permit
requirements for the prevention of significant deterioration (PSD) of
air quality must be met for major modifications.
The EPA recognizes the importance of timely major NSR (as
applicable) permit actions for refineries to proceed with necessary
changes to meet the new low sulfur gasoline standard. We encourage
refineries to begin discussions with permitting authorities and to
submit permit applications--as early as possible. In addition, based on
comments received, we believe that there are a few key areas in which
assistance would be useful toward helping States issue timely permits
to the applicable refineries:
Federal guidance on emissions control technology
requirements.
Refineries subject to major NSR review will be required to undergo
a source-specific evaluation to apply either BACT or LAER, depending
upon the applicable program requirements. For example, the evaluation
for BACT is case-by-case and takes into account the alternative
technologies available to control pollution from a particular emissions
unit or process, and considers the energy, environmental, economic and
other costs associated with each technology. We intend to issue
guidance setting out a level of emissions that, in our view, would be
expected to satisfy the requirements for BACT for certain emissions
units associated with refinery desulfurization projects. While States
would not be required to use the results to establish BACT for a
particular refinery subject to review and EPA's guidance on a control
technology may not be appropriate where there exists unusual site-
specific circumstances, such guidance would add the certainty of EPA's
expectations.
Since negotiation of an appropriate BACT level often is one of the
most time consuming aspects of permitting, we believe this EPA guidance
will significantly expedite the process. The federal guidance on BACT,
by including an evaluation of the most stringent control levels
currently being achieved or required, will also provide federal
guidance on LAER. The EPA plans to make a draft of this guidance
available for public review and comment in January 2000. Final guidance
would then be prepared, after relevant comments are considered, in time
for States, refiners, and the public to consider in preparing and
reviewing permit applications and proposed permits.
Availability of offsets.
Refineries located in nonattainment areas must offset any proposed
significant emissions increases with an equal or greater amount of
emissions reductions from other sources, usually coming from within the
same nonattainment area. We believe that vehicle emissions reductions
resulting from the use of low sulfur gasoline can be used as offsets
for the refineries, as long as the statutory and regulatory criteria
for creditable offsets are satisfied and States decide to provide for
this opportunity in their SIP attainment demonstration. We believe
generally that this option should be available to States since only a
small fraction of the total vehicle emissions reductions in any county
would be needed to offset refinery emissions increases resulting from
implementation of gasoline desulfurization projects. Generally, the
reductions must also occur in the same nonattainment area as the
location of the refinery for which the offsets are required. The EPA
plans to issue the appropriate guidance early in the year 2000 to help
a State to determine whether and to what extent it may wish to use
vehicle emissions reductions as offsets for Tier 2 projects.
EPA refinery permitting teams.
We intend to assemble special EPA teams, comprised of Headquarters
and Regional Office experts, that will track the overall progress in
permit issuance and will be available to assist State and local
permitting authorities, refineries, and the public upon request to
resolve site-specific permitting issues. These teams will be comprised
of persons who are knowledgeable about permitting programs and refinery
operations and can provide expert assistance to troubleshoot permitting
issues that may arise. As appropriate, the teams will work with
stakeholders on a case-by-
[[Page 6774]]
case basis to evaluate site-specific approaches to regulatory
compliance within existing policy and regulations.
ii. Environmental Justice
The Tier 2/gasoline sulfur rule will help achieve significant
nationwide reductions in the emissions of nitrogen oxides (NOx),
volatile organic compounds (VOC), particulate matter (PM), and sulfur
dioxide (SO2). These reductions will improve air quality
across the country and will provide increased protection to the public
against a wide range of health effects, including chronic bronchitis,
respiratory illnesses, and aggravation of asthma symptoms. Furthermore,
the Tier 2/gasoline sulfur rule will achieve environmental benefits in
the local areas where refineries are located, due to reductions in tail
pipe emissions from vehicles driven in those areas. Although we expect
residual emissions increases at some refineries even after installing
the stringent level of emissions controls required under the Act, for
the vast majority of areas, we believe that these potential refinery
emissions increases will be very small compared to the Tier 2 benefits
in those same local areas.
We believe it is important to understand and address concerns
relating to potential localized emissions increases from refineries
that make significant process changes to meet the requirements of the
Tier 2 rule. We believe that, among other things, the keys to
addressing any potential concerns are as follows:
Providing meaningful community involvement early and
throughout the process;
Determining what information and actions would eliminate
concerns; and
Determining what EPA, States, and industry can do to make
the permitting process smoother by ensuring ongoing community
involvement in the decision making process and by building trust among
stakeholders.
To this end, the Agency has already taken some actions to try to
mitigate potential environmental justice concerns. First, EPA's Office
of Air and Radiation and the Alternative Dispute Resolution Team within
EPA's Office of the Administrator implemented a national convening
process which was designed to bring together a broad spectrum of
stakeholders to explore with them their perceptions and views of issues
associated with Tier 2 permitting and to assess the potential for a
collaborative process to address specific implementation issues at some
time in the future. The convening was carried out by an outside neutral
party who conducted interviews with representatives from selected EPA
offices, States, industry, environmental groups, and environmental
justice organizations. Second, EPA held informational briefings and
provided background materials to the National Environmental Justice
Advisory Council's (NEJAC) \96\ Air and Water Subcommittee and
Enforcement Subcommittee to provide an opportunity for them to provide
feedback and recommendations to the Agency. Finally, in October 1999,
we met with both national environmental groups and environmental
justice advocacy representatives, to discuss their views on the
permitting aspects of the proposed rule.
---------------------------------------------------------------------------
\96\ The NEJAC was chartered in 1993 expressly to give the EPA
Administrator independent advice, consultation, and recommendations
on environmental justice matters. NEJAC members come from state,
tribal, and local governments; tribal and indigenous citizen's
organizations; business and industry; academia; and environmental
advocacy and grassroots community groups.
---------------------------------------------------------------------------
The EPA is committed to continue working with all stakeholders to
resolve specific Environmental Justice issues if and when they arise.
To fulfill this commitment, we plan to undertake additional actions in
the future, including providing education and outreach about the rule
and its impacts in local communities, developing permitting guidance
through a public process and addressing Title VI petitions if they
arise.
D. What Are the Economic Impacts, Cost Effectiveness and Monetized
Benefits of the Tier 2 Program?
Consideration of the economic impacts of new standards for vehicles
and fuels has been an important part of our decision making process for
this final rule. The following sections describe first the costs
associated with meeting the new vehicle standards and the new fuel
standards. This will be followed with a discussion of the cost
effectiveness of the rule. Lastly, we will discuss the results of a
benefit-cost assessment that we have prepared.
Full details of our cost analyses, including information not
presented here, can be found in the RIA associated with this rule.
Also, our response to comments on the cost, cost effectiveness, and
monetized benefits analyses are contained in the Response to Comments
document for this rule.
1. What Are the Estimated Costs of the Vehicle Standards?
To perform a cost analysis for the standards, we first determined a
package of likely technologies that manufacturers could use to meet the
standards and then determined the costs of those technologies. In
making our estimates we have relied on our own technology assessment
which included publicly available information, such as that developed
by California, as well as confidential information supplied by
individual manufacturers, and the results of our own in-house testing.
In general, we expect that the Tier 2 standards will be met through
refinements of current emissions control components and systems rather
than through the widespread use of new technology. Furthermore, smaller
lighter-weight vehicles and trucks will generally require less
extensive improvements than larger vehicles and trucks. More
specifically, we anticipate a combination of technology upgrades such
as the following:
Improvements to the catalyst system design, structure, and
formulation plus in some cases an increase in average catalyst size and
loading;
Air and fuel system modifications including changes such
as improved microprocessors, improved oxygen sensors, leak free exhaust
systems, air assisted fuel injection, and calibration changes including
improved precision fuel control and individual cylinder fuel control;
Engine modifications, possibly including an additional
spark plug per cylinder, an additional swirl control valve, or other
hardware changes needed to achieve cold combustion stability;
Increased use of fully electronic exhaust gas
recirculation (EGR); and
Increased use of secondary air injection for 6 cylinder
and larger engines.
The costs for MDPVs have been included here with the LDT4 cost
estimates. We expect that the technologies needed to meet the Tier 2
standards for the MDPVs will be very similar to those for LDT4s.
However, the MDPVs cost estimates are somewhat higher than for LDT4s.
Vehicles over 8,500 pounds GVWR are currently certified to heavy-duty
engine emissions standards using the heavy-duty test procedures. This,
at least in part, has led to differences in baseline technologies
compared to current LDT4s. Vehicles above 8,500 pounds, for example,
are currently equipped with technologies such as close coupled
catalysts and secondary air injection to a lesser extent. Therefore, we
expect higher incremental costs for the MDPVs compared to LDT4s. There
is further information on the costs for MDPVs in the RIA.
[[Page 6775]]
Using a typical mix of changes for each group, we projected costs
separately for LDVs, the different LDT classes, and for different
engine sizes (4, 6, 8, 10-cylinder) within each class. For each group
we developed estimates of both variable costs (for hardware and
assembly time) and fixed costs (for R&D, retooling, and certification).
Cost estimates based on the current projected costs for our
estimated technology packages represent an expected incremental cost of
vehicles in the near-term. For the longer term, we have identified
factors that would cause cost impacts to decrease over time. First,
since fixed costs are assumed to be recovered over a five-year period,
these costs disappear from the analysis after the fifth model year of
production. Second, the analysis incorporates the expectation that
manufacturers and suppliers will apply ongoing research and
manufacturing innovation to making emission controls more effective and
less costly over time. Research in the costs of manufacturing has
consistently shown that as manufacturers gain experience in production
and use, they are able to apply innovations to simplify machining and
assembly operations, use lower cost materials, and reduce the number or
complexity of component parts.\97\ These reductions in production costs
are typically associated with every doubling of production volume. Our
analysis incorporates the effects of this ``learning curve'' by
projecting that the variable costs of producing the Tier 2 vehicles
decreases by 20 percent starting with the third year of production. We
applied the learning curve reduction only once since, with existing
technologies, there would be less opportunity for lowering production
costs than would be the case with the adoption of new technology.
---------------------------------------------------------------------------
\97\ ``Learning Curves in Manufacturing,'' Linda Argote and
Dennis Epple, Science, February 23, 1990, Vol. 247, pp. 920-924.
---------------------------------------------------------------------------
We have prepared our cost estimates for meeting the Tier 2
standards using a baseline of NLEV technologies for LDVs, LDT1s, and
LDT2s, and Tier 1, or current technologies for LDT3s, LDT4s and MDPVs.
These are the standards that vehicles would be meeting in 2003.\98\ We
have not specifically analyzed smaller incremental changes to
technologies that might occur due to the interim standards between the
baseline and Tier 2. In most cases, we believe these changes will not
be significant based on current certification levels and manufacturers
will maximize carry-over. For others, manufacturers can use averaging
and other program flexibilities to avoid redesigning vehicles twice
within a relatively short period of time. We believe this is likely to
be an attractive approach for manufacturers due to the savings in R&D
and other resources.
---------------------------------------------------------------------------
\98\ Even though the NLEV program ends in the Tier 2 timeframe,
we have not included the NLEV program costs or benefits in our
analysis, since EPA analyzed and adopted NLEV previously.
---------------------------------------------------------------------------
For the total annual cost estimates, we projected that
manufacturers will start the phase-in of Tier 2 vehicles with LDVs in
2004 and progress to heavier vehicles until all LDT2s meet Tier 2
standards in 2007. For LDT3s and LDT4s, we projected some sales of Tier
2 LDT3s prior to 2008 for purposes of averaging in the interim program
and that the phase-in of Tier 2 vehicles would end with LDT4s and MDPVs
in 2009.
Finally, we have incorporated what we believe to be a
conservatively high level of R&D spending at $5,000,000 per vehicle
line (with annual sales of 100,000 units per line). We have included
this large R&D effort because calibration and system optimization is
likely to be a critical part of the effort to meet Tier 2 standards.
However, we believe that the R&D costs may be generous because the
projection ignores the carryover of knowledge from the first vehicle
lines designed to meet the standard to others phased-in later.
The evaporative emissions standards we are finalizing today for
LDVs, LDTs and MDPVs are feasible with relatively small cost impacts.
We estimate the cost of system improvements to be about $4 per vehicle,
for all vehicle classes. This incremental cost reflects the cost of
moving to low permeability materials, improved designs or low-loss
connectors. R&D for the evaporative emissions standard is included in
the R&D estimates given above for the tailpipe standards. We have
included no projections of learning curve reductions for the
evaporative standard.
Table IV.D.-1 provides our estimates of the per vehicle increase in
purchase price for LDVs, LDTs, and MDPVs. The near-term cost estimates
in Table IV.D.-1 are for the first years that vehicles meeting the
standards are sold, prior to cost reductions due to lower productions
costs and the retirement of fixed costs. The long-term projections take
these cost reductions into account. We have sales weighted the cost
differences for the various engine sizes (4-, 6-, 8-, 10-cylinder)
within each category.
Table IV.D.-1.--Estimated Purchase Price Increases Due to Tier 2 Tailpipe Standards
----------------------------------------------------------------------------------------------------------------
LDT4/MDPVs
LDV LDT1 LDT2 LDT3 \a\
----------------------------------------------------------------------------------------------------------------
Tailpipe standards:
Near-term (year 1)......................... $78 $70 $125 $245 $258
Long-term (year 6 and beyond).............. 49 45 97 199 208
Evaporative Standard........................... 4 4 4 4 4
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Weighted average.
We did not receive comments disagreeing with the technology
projections or technology cost estimates contained in the proposal. We
have, however, revised our cost estimates somewhat based on new
information available since the proposal. We moderately lowered our
cost estimates due to adjustments we have made in our technology
projections. Based on the results of our vehicle testing program
described above in section IV.A.1., we now believe that a few of the
hardware changes we had anticipated are not likely to be needed to meet
the standards. Albeit there is always fluctuation, the spot prices of
precious metals have increased somewhat since the proposal and we have
adjusted our analysis to reflect those changes.
Overall, the cost estimates are within 5 percent of those in the
proposal for LDVs and LLDTs. The changes noted above moderately lowered
the costs for HLDTs compared to the proposal. The cost increase due to
the inclusion of MDPVs offsets most of the lowered costs
[[Page 6776]]
for the LDT4 category. The resulting cost estimate for the LDT4/MDPVs
tailpipe standards is also within 5 percent of the cost estimates for
LDT4s contained in the proposal. The detailed technology and cost
analyses are available in the RIA.
We are also finalizing OBD II requirements and onboard vapor
recovery (ORVR) requirements for MDPVs. We have estimated that OBD II
will cost about $80, which includes the costs of additional sensors and
system improvements. We have estimated ORVR system costs to be about
$10. The $10 cost for ORVR does not include any fuel cost savings over
the life of the vehicles due the recover of fuel vapor during
refueling. ORVR provides a fuel cost savings because the vapors are
captured, and burned in the engine, rather than escaping to the
atmosphere. We estimate the savings over the life of the vehicle to be
about $6. These costs are not reflected in Table IV.D.-1.
2. Estimated Costs of the Gasoline Sulfur Standards
As we explained at the beginning of Section IV.C, we expect that
most refiners will have to install capital equipment to meet the
gasoline sulfur standard. Presuming that refiners will want to minimize
the cost involved, the majority of refiners are expected to desulfurize
the gasoline blendstock produced by the fluidized catalytic cracker
(FCC) unit, although a few may choose to desulfurize the feed to the
FCC unit. Recent advances have led to significant improvements in the
hydrotreating technologies used for FCC gasoline desulfurization. Since
these improved technologies represent the lowest cost options and are
expected to be used by most refiners needing to install desulfurization
equipment, we have based our cost estimates primarily on their use.
However, in acknowledgment that some refiners, particularly those which
make investment decisions in the near term, are likely to select more
traditional approaches using proven technologies, we have included the
costs for currently proven desulfurization technologies in our
analysis, as well. This is different from the analysis we did in
support of our proposal, where we assumed that all refiners would take
advantage of the most improved technologies we were aware of at that
time.
For our analysis of the costs of controlling gasoline sulfur, we
estimated the costs in five different regions of the country (Petroleum
Administration Districts for Defense, or PADDs) for reductions from the
current PADD average gasoline sulfur level down to a 30 ppm average. We
then combined the regional costs to develop an average national
individual refinery cost, and used this figure to calculate national
aggregate capital and operating costs. In our proposal we estimated a
single cost for desulfurizing gasoline, using as an assumption for the
purpose of analysis that all refiners would upgrade their refineries by
2004 and that all would choose one of two improved technologies we knew
of at the time. We then reduced this cost over time to reflect expected
cost reductions due to further technology advancements and reduced
operating costs due to improved understanding of the technologies and
refinery debottlenecking. Based on improved information about the
availability of technologies, we have now analyzed the costs of
controlling sulfur on a year-by-year basis beginning with 2004, to be
consistent with our analysis of the rate at which the industry would
invest in desulfurization technologies over the first years of the
program and the changing technology selections (and costs) that would
accompany this phase-in (discussed in Section IV.C.1 above). A detailed
description of our calculations can be found in the Regulatory Impact
Analysis; the reader can refer to the draft RIA released with the
proposed rule for more information on our prior analysis.
We estimate that, on average, refineries which install equipment to
meet the 30 ppm average standard will invest about $44 million for
capital equipment and spend about $16 million per year for each
refinery to cover the operating costs associated with these
desulfurization units. Since this average represents many refineries
diverse in size and gasoline sulfur level as well as a mix of
desulfurization technologies, some refineries will pay more and others
less than the average costs. When the average per-refinery cost is
aggregated for all the gasoline expected to be produced in this country
in 2008 (the first year that all refiners will be required to meet the
30 ppm standard, unless any small refiners are granted a extension of
hardship relief), the total investment for desulfurization processing
units (spread between 2003 and 2007) is estimated to be about $4.3
billion, and operating costs for these units is expected to be about
$1.3 billion per year.
Using our estimated capital and operating costs for domestic
refineries, we calculated the average per-gallon cost of reducing
gasoline sulfur down to 30 ppm for each year as the program is
implemented. Using a capital cost amortization factor (based on a seven
percent rate of return on investment) and including no taxes, we
estimated the average national cost for desulfurizing gasoline to be
about 1.7-1.9 cents per gallon as the program is phased in. This cost
is the cost to society of reducing gasoline sulfur down to 30 ppm that
we used for estimating cost effectiveness. Table IV.D.-2 below
summarizes our estimates of per-gallon gasoline cost increases for
select years.
Table IV.D.-2.--Estimated Per-Gallon Cost for Desulfurizing Gasoline in
Future Years
------------------------------------------------------------------------
Cost (cents/
Year gallon)
------------------------------------------------------------------------
2004....................................................... 1.9
2005....................................................... 1.9
2006....................................................... 1.7
2007....................................................... 1.7
2008-2018.................................................. 1.7
2019+...................................................... 1.3
------------------------------------------------------------------------
Although the costs shown here are slightly higher than we projected
in the proposal, overall, we believe our revised costs are consistent
with those in the proposal and that our improved methodology and
information are the source of the differences. As stated earlier in
this section, we believe this analysis more accurately reflects the
actual investment decisions of individual refiners over the years in
which the industry is phasing down sulfur levels. Furthermore, we have
also made a number of other adjustments to our analysis of capital and
operating costs for each individual technology based on new information
received from the technology vendors and information we obtained during
the comment period. For example, we now include eight different
technologies in our analysis, including some more traditional
approaches, whereas in the proposal we only considered two new
technologies. Hence, the range of costs is broader. In addition, as
explained in the RIA, we now believe we underestimated the capital
costs of desulfurization slightly in the proposal based on our
calculation of the costs of providing hydrogen to the processes. We
believe our analysis now reflects the most up-to-date information about
the costs of installing and operating the various desulfurization
technologies included in our analysis. These adjustments are explained
in detail in the Regulatory Impact Analysis.
We still believe that over time, particularly in 2006-8 when the
last refineries will be making investments, the costs of gasoline
desulfurization equipment will be significantly lower
[[Page 6777]]
than it is today. Some of the technologies expected to be selected in
this time frame (specifically, the new adsorption technologies which we
didn't know about when we proposed these requirements) are projected to
cost about half of what the older technologies cost. Furthermore, with
time refiners will have to replace existing desulfurization equipment
(as equipment ages), and by then they will have a number of low cost
alternatives to choose from. Thus, as Table IV.D.-2 shows, the long
term estimated costs for gasoline desulfurization are lower than those
we projected in our proposal.\99\
---------------------------------------------------------------------------
\99\ For a sensitivity analysis of our cost estimates using
alternative assumptions, please see Chapter V of the RIA.
---------------------------------------------------------------------------
3. What Are the Aggregate Costs of the Tier 2/Gasoline Sulfur Final
Rule?
Using current data for the size and characteristics of the vehicle
fleet and making projections for the future, the per-vehicle and per-
gallon fuel costs described above can be used to estimate the total
cost to the nation for the emission standards in any year. Figure
IV.D.-1 portrays the results of these projections.\100\
---------------------------------------------------------------------------
\100\ Figure IV.D.-1 is based on the amortized costs from Tables
IV.D.-1 and IV.D.-2. Actual capital investments, particularly
important for fuels, would occur prior to and during the initial
years of the program, as described above in section IV.D.2.
BILLING CODE 6560-50-P
[GRAPHIC] [TIFF OMITTED] TR10FE00.006
BILLING CODE 6560-50-C
As can be seen from the figure, the annual cost starts out at about
$1.9 billion per year and increases over the phase-in period to about
$4.1 billion in 2008. Total annualized costs are projected to remain at
about $4 billion through 2018. After 2018, annualized fuel costs are
projected to decrease somewhat due to the use of new technologies which
would enable refiners to produce low sulfur fuel at a lower cost. The
gradual rise in costs long term is due to the effects of projected
growth in vehicle sales and fuel consumption. The RIA provides further
detail regarding these cost projections.
4. How Does the Cost-effectiveness of This Program Compare to Other
Programs?
This section summarizes the cost-effectiveness analysis conducted
by EPA and its results. The purpose of this analysis is to show that
the reductions from the vehicle and fuel controls being finalized today
are cost-effective in comparison to alternative means of attaining or
maintaining the NAAQS. This analysis involves a comparison of our
program not only to past measures, but also to other potential future
measures that might be employed to attain and maintain the NAAQS. Both
EPA and states have already adopted numerous control measures, and
remaining measures tend to be more expensive than those previously
employed. As we employ the most cost-effective available measures
first, more expensive ones tend to become necessary over time.
The emission reductions used to calculate the cost-effectiveness
levels reported here are based on those reductions used for our air
quality analysis modeling and benefits analysis. This was done to
maintain consistency in the analyses. As noted in Section III.B. above,
we have updated our inventory model since the air quality modeling
inventories were calculated. In Chapter III of our RIA, Table III.A.-3
compares the updated Tier 2 model with the air quality analysis
modeling and shows that the emission reductions expected from Tier 2/
gasoline sulfur will be substantially greater than the amounts
originally calculated. If the
[[Page 6778]]
updated numbers were incorporated into our cost-effectiveness we would
expect the results to be improved over those shown in this section.
We received a number of comments on our cost-effectiveness analysis
in response to our NPRM. Our responses to these comments can be found
in the Response To Comments document.
a. Cost-Effectiveness of This Program
We have calculated the cost-effectiveness of the exhaust emission/
gasoline sulfur standards and the evaporative emission standards, based
on two different approaches. The first considers the net present value
of all costs incurred and emission reductions generated over the life
of an average Tier 2 vehicle. This per-vehicle approach focuses on the
cost-effectiveness of the program from the point of view of the Tier 2
vehicles which will be used to meet the new requirements, and is the
method used in our proposal. However, the per-vehicle approach does not
capture all of the costs or emission reductions from the Tier 2/
gasoline sulfur program since it does not account for the use of low
sulfur gasoline in pre-Tier 2 vehicles. Therefore, we have also
calculated an aggregate cost-effectiveness using the net present value
of costs and emission reductions for all in-use vehicles over a 30-year
time frame.
As described earlier in the discussion of the cost of this program,
the cost of complying with the new standards will decline over time as
manufacturing costs are reduced and amortized capital investments are
recovered. To show the effect of declining cost in the per-vehicle
cost-effectiveness analysis, we have developed both near term and long
term cost-effectiveness values. More specifically, these correspond to
vehicles sold in years one and six of the vehicle and fuel programs.
Vehicle cost is constant from year six onward. Fuel costs per gallon
continue to decline slowly in the years past year six; however, the
overall impact of this decline is small and we have decided to use year
six results for our long term cost-effectiveness. Chapter VI of the RIA
contains a full description of this analysis, and you should look in
that document for more details of the results summarized here.
The aggregate approach to calculating the cost-effectiveness of our
program involves the net present value of all nationwide emission
reductions and costs for a 30-year period beginning with the start of
the program in 2004. This timeframe captures both the early period of
the program when very few Tier 2 vehicles will be in the fleet, and the
later period when essentially all vehicles in the fleet will meet Tier
2 standards. We have calculated the aggregate cost-effectiveness using
the net present value of the nationwide emission reductions and costs
for each calendar year. These emission reductions and costs are
summarized in Sections III.B, III.C, and IV.D.3, and are given for
every calendar year in the RIA. For more information on how the
aggregate cost-effectiveness was calculated please refer to the RIA.
Our per-vehicle and aggregate cost-effectiveness values are given
in Tables IV.D.-3 and IV.D.-4. Table IV.D.-3 summarizes the per-
vehicle, net present value lifetime costs, NMHC+NOX emission
reductions, and resulting cost-effectiveness results for our Tier 2/
gasoline sulfur program using sales weighted averages of the costs
(both near term and long term) and emission reductions of the various
vehicle classes affected. Table IV.D.-4 provides the same information
from the program aggregate perspective. It includes the net present
value of the 30-year stream of vehicle and fuel costs,
NMHC+NOX emission reductions, and the resulting aggregate
cost-effectiveness. For simplicity, we have used the midpoint of our
estimated range of 20 to 65 percent for the irreversibility effect. The
full range of irreversibility would only cause the cost-effectiveness
values to differ from those in Table IV.D-3, for example, by $60/ton to
$100/ton. Note that, even though we are setting new standards for PM,
those standards are already being met, so there is no cost associated
with the new PM standard and therefore no separate cost-effectiveness
analysis for PM.
Tables IV.D.-3 and IV.D.-4 also display cost-effectiveness values
based on two approaches to account for the reductions in SO2
and tailpipe emitted sulfate particulate matter (PM) associated with
the reduction in gasoline sulfur. While these reductions are not
central to the program and are therefore not displayed with their own
cost-effectiveness, they do represent real emission reductions due to
our program. The first set of cost-effectiveness numbers in the tables
simply ignores these reductions and bases the cost-effectiveness on
only the NMHC+NOX reductions from Tier 2/gasoline sulfur.
The second set accounts for these ancillary reductions by crediting
some of the cost of the program to SO2 and PM reduction. The
amount of cost allocated to SO2 and PM is based on the cost-
effectiveness of SO2 and PM emission reductions that could
be obtained from alternative, potential future EPA programs.
Table IV.D-3.--Per-Vehicle Cost-Effectiveness of the Standards
----------------------------------------------------------------------------------------------------------------
Discounted
Discounted lifetime cost-
Discounted lifetime Discounted effectiveness
Cost basis lifetime NMHC + NOX lifetime cost- per ton with
vehicle & reduction effectiveness SO2 and
fuel costs (tons) per ton direct PM
credit a
----------------------------------------------------------------------------------------------------------------
Near term cost (production year 1)...................... $243 0.110 $2,211 $1,717
Long term cost (production year 6)...................... 205 0.110 1,863 1,368
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ $51 credited to SO2 ($4,800/ton), $4 to direct PM ($10,000/ton).
[[Page 6779]]
Table IV.D-4.--Aggregate Cost-Effectiveness of the Standards
------------------------------------------------------------------------
Discounted
Discounted Discounted Discounted aggregate cost-
aggregate aggregate NMHC + aggregate cost- effectiveness per
vehicle & fuel NOX reduction effectiveness per ton with SO2 and
costs (tons) ton direct PM credit
(millions) \a\
------------------------------------------------------------------------
$48.1 billion 23.5 $2,047 $1,311
------------------------------------------------------------------------
Notes:
\a\ $13.8 billion credited to SO2 ($4,800/ton), $3.5 billion to direct
PM ($10,000/ton).
b. How Does the Cost-Effectiveness of This Program Compare With Other
Means of Obtaining Mobile Source NOX + NMHC Reductions?
In comparison with other mobile source control programs, we believe
that our program represents the most cost-effective new mobile source
control strategy currently available that is capable of generating
substantial NOX + NMHC reductions. This can be seen by
comparing the cost-effectiveness of today's program with a number of
mobile source standards that EPA has adopted in recent years. Table
IV.D.-5 summarizes the cost-effectiveness of several recent EPA
actions.
Table IV.D.-5.--Cost-Effectiveness of Previously Implemented Mobile
Source Programs
------------------------------------------------------------------------
$/ton a
Program NOX+NMHC
------------------------------------------------------------------------
2004 Highway HD Diesel stds............................. 204-399
Nonroad Diesel engine stds.............................. 410-650
Tier 1 vehicle controls................................. 1,980-2,690
NLEV.................................................... 1,859
Marine SI engines....................................... 1,128-1,778
On-board diagnostics.................................... 2,228
------------------------------------------------------------------------
Notes: a Costs adjusted to 1997 dollars.
We can see from the table that the cost-effectiveness of the Tier
2/gasoline sulfur standards falls within the range of these other
programs. Engine-based standards (the 2004 highway heavy-duty diesel
standards, the nonroad diesel engine standards and the marine spark-
ignited engine standards) have generally been less costly than Tier 2/
gasoline sulfur. Vehicle standards, most similar to today's program,
have values comparable to or higher than Tier 2/gasoline sulfur.
The values in Table IV.D.-5 might imply that further reductions in
NOX and VOC from heavy-duty engines could be more cost-
effective than the reductions that will be produced from our Tier 2/
gasoline sulfur program. However, we do not believe that to be the
case. While we are indeed developing a proposal for further control
from heavy-duty engines, we expect that substantial further emission
reductions will require advanced after-treatment devices. These devices
will be more costly than methods used to meet our past standards, and
will have difficulty functioning properly without changes to diesel
fuel. We therefore expect that the cost effectiveness of future heavy-
duty standards is not likely to be significantly less than the cost
effectiveness of today's rule.
On the light-duty vehicle side, the last two sets of standards were
Tier 1 and NLEV, which had cost-effectiveness comparable to or higher
than Tier 2/gasoline sulfur. Compared to engines, these levels reflect
the advanced (and more expensive) state of vehicle control technology,
where standards have been in effect for a much longer period than for
engines. Considering the increased stringency of the Tier 2 standards,
it is noteworthy that the cost-effectiveness of Tier 2/gasoline sulfur
is in the same range as these actions. Based on these results, Tier 2/
gasoline sulfur is a logical and consistent next step in vehicle
control.
In conclusion, we believe that the Tier 2/Gasoline Sulfur program
is a cost-effective program for mobile source NOX + NMHC
control. We are unable to identify another mobile source control
program that would be more cost-effective than Tier 2/gasoline sulfur
while also producing equivalent reductions in NOX and NMHC
emissions in the same timeframe as our program.
c. How Does the Cost-Effectiveness of This Program Compare With Other
Known Non-Mobile Source Technologies for Reducing NOX +
NMHC?
In evaluating the cost-effectiveness of the Tier 2/Gasoline Sulfur
program, we also considered whether our program is cost-effective in
comparison with alternative means of attaining or maintaining the NAAQS
other than mobile source programs. As described below, we have
concluded that Tier 2/Gasoline Sulfur is cost-effective considering the
anticipated cost of other technologies that will be needed to help
attain and maintain the NAAQS.
In the context of the Agency's rulemaking to revise the ozone and
PM NAAQS, \101\ the Agency compiled a list of additional known
technologies that could be considered in devising new emission
reductions strategies.\102\ Through this broad review, over 50
technologies were identified that could reduce NOX or VOC.
The cost-effectiveness of these technologies averaged approximately
$5,000/ton for VOC and $13,000/ton for NOX. These values
clearly indicate that not only are future emission control strategies
likely to be more expensive (less cost-effective) than past strategies,
but the cost-effectiveness of our Tier 2/Gasoline Sulfur program falls
at the lower end of the range for potential future strategies.
---------------------------------------------------------------------------
\101\ This rulemaking was remanded by the D.C. Circuit Court on
May 14, 1999. However, the analyses completed in support of that
rulemaking are still relevant, since they were designed to
investigate the cost-effectiveness of a wide variety of potential
future emission control strategies.
\102\ ``Regulatory Impact Analyses for the Particulate Matter
and Ozone National Ambient Air Quality Standards and Proposed
Regional Haze Rule,'' Appendix B, ``Summary of control measures in
the PM, regional haze, and ozone partial attainment analyses,''
Innovative Strategies and Economics Group, Office of Air Quality
Planning and Standards, U.S. Environmental Protection Agency,
Research Triangle Park, NC, July 17, 1997.
---------------------------------------------------------------------------
In addition, our Tier 2/Gasoline Sulfur program will deliver
critical further reductions that are not readily obtainable by any
other means known to the Agency. If all of the technologies modeled in
the NAAQS analysis costing less than $10,000/ton were implemented
nationwide, they would produce NOX emission reductions of
about 2.9 million tons per year. The Tier 2/Gasoline Sulfur program by
itself will generate about 2.8 million tons per year once fully
implemented. Given the continuing need for further emission reductions,
we believe that Tier 2/Gasoline Sulfur control is clearly a cost-
effective approach for attaining and maintaining the NAAQS.
We recognize that the cost-effectiveness calculated for Tier 2/
Gasoline Sulfur is not strictly comparable to a figure for measures
targeted at nonattainment areas, since Tier 2/Gasoline Sulfur is a
nationwide program. However, there are several additional
considerations that have led us to conclude that Tier 2/Gasoline Sulfur
is cost-effective considering
[[Page 6780]]
alternative means of attaining and maintaining the NAAQS.
First of all is the fact that the cost effectiveness of Tier 2/
Gasoline Sulfur is so much better than the numbers developed for the
NAAQS analysis. It is only 20 percent as costly per ton as the $10,000
per ton upper limit employed in that analysis for selecting suitable
strategies even though, as noted above, Tier 2/Gasoline Sulfur will
produce almost the same level of emission reduction. Furthermore, as a
national program, Tier 2/Gasoline Sulfur can be implemented as a single
unified rule without the need for individual action by each of the
states.
In dealing with the question of comparing local and national
programs, it is also relevant to point out that, because of air
transport, the need for NOX control is a broad regional
issue not confined to non-attainment areas only. To reach attainment,
future controls will need to be applied over widespread areas of the
country. In the analyses supporting the recent NOX standards
for highway diesel engines,\103\ we looked at this question in some
detail and concluded that the regions expected to impact ozone levels
in ozone nonattainment areas accounted for over 85% of total
NOX emissions from a national heavy-duty engine control
program. Similarly, NOX emissions in attainment areas also
contribute to particulate matter nonattainment problems in downwind
areas. Thus, the distinction between local and national control
programs for NOX is less important than it might appear.
---------------------------------------------------------------------------
\103\ Final Regulatory Impact Analysis: Control of Emissions of
Air Pollution from Highway Heavy-Duty Engines, September 16, 1997.
---------------------------------------------------------------------------
Finally, the statute indicates that in considering the cost-
effectiveness of Tier 2/Gasoline Sulfur EPA should consider not only
attainment, but also maintenance of the standards. Tier 2/Gasoline
Sulfur--unlike nonattainment area measures--will achieve attainment
area reductions that, among other effects, will help to maintain air
quality that meets the NAAQS. These reductions relate not only to the
ozone and PM NAAQS, but also to SO2 and NO2, and
to CO.
In summary, given the array of controls that will have to be
implemented to make progress toward attaining and maintaining the
NAAQS, we believe that the weight of the evidence from alternative
means of providing substantial NOX + NMHC emission
reductions indicates that the Tier 2/Gasoline Sulfur program is cost-
effective. This is true from the perspective of other mobile source
control programs or from the perspective of other stationary source
technologies that might be considered.
5. Does the Value of the Benefits Outweigh the Cost of the Standards?
While relative cost-effectiveness is the principal economic policy
criterion established for these standards in the Clean Air Act (see CAA
Sec. 202(i)), further insight regarding the merits of the standards can
be provided by benefit-cost analysis. The purpose of this section is to
summarize the methods we used and results we obtained in conducting an
analysis of the economic benefits of the Tier 2 program, and to compare
these economic benefits with the estimated costs of the rule. In
summary, the results of our analysis using the EPAs preferred approach
to valuing premature mortality indicate that the economic benefits of
the Tier 2/gasoline sulfur standards will likely exceed the costs of
meeting the standards by about $20 billion (1997$).
a. What Is the Purpose of This Benefit-Cost Comparison?
Benefit-cost analysis (BCA) is a useful tool for evaluating the
economic merits of proposed changes in environmental programs and
policies. In its traditional application, BCA estimates the economic
``efficiency'' of proposed changes in public policy by organizing the
various expected consequences and representing those changes in terms
of dollars. Expressing the effects of these policy changes in dollar
terms provides a common basis for measuring and comparing these various
effects. Because improvement in economic efficiency is typically
defined to mean maximization of total wealth spread among all members
of society, traditional BCA must be supplemented with other analyses in
order to gain a full appreciation of the potential merits of new
policies and programs. These other analyses may include such things as
examinations of legal and institutional constraints and effects;
engineering analyses of technology feasibility, performance and cost;
or assessment of the air quality need.
In addition to the narrow, economic efficiency focus of most BCAs,
the technique is also limited in its ability to project future economic
consequences of alternative policies in a definitive way. Critical
limitations on the availability, validity, or reliability of data;
limitations in the scope and capabilities of environmental and economic
effect models; and controversies and uncertainties surrounding key
underlying scientific and economic literature all contribute to an
inability to estimate the economic effects of environmental policy
changes in exact and unambiguous terms. Under these circumstances, we
consider it most appropriate to view BCA as a tool to inform, but not
dictate, regulatory decisions such as the ones reflected in today's
rule.
Despite the limitations inherent in BCA of environmental programs,
we consider it useful to estimate the potential benefits of today's
action both in terms of physical changes in human health and welfare
and environmental change, and in terms of the estimated economic value
of those physical changes.
b. What Was Our Overall Approach to the Benefit-Cost Analysis?
The basic question we sought to answer in the BCA was: ``What are
the net yearly economic benefits to society of the reduction in mobile
source emissions likely to be achieved by the final Tier 2 program?''
In designing an analysis to answer this question, we selected a future
year for analysis (2030) that is representative of full-implementation
of the program (i.e., when the U.S. car and light truck population is
virtually only Tier 2 vehicles). We also adopted an analytical
structure and sequence similar to that used in the ``section 812
studies'' \104\ to estimate the total benefits and costs of the entire
Clean Air Act. Moreover, we used many of the same models, and
assumptions actually used in the section 812 studies, and other
Regulatory Impact Analyses (RIA's) prepared by the Office of Air and
Radiation. By adopting the major design elements, models, and
assumptions developed for the section 812 studies and other RIA's, we
have largely relied on methods which have already received extensive
review by the independent Science Advisory Board, by the public, and by
other federal agencies.
---------------------------------------------------------------------------
\104\ The ``section 812 studies'' refers to (1) US EPA, Report
to Congress: The Benefits and Costs of the Clean Air Act, 1970 to
1990, October 1997 (also known as the ``section 812 Retrospective);
and (2) the first in the ongoing series of prospective studies
estimating the total costs and benefits of the Clean Air Act (see
EPA report number: EPA-410-R-99-001, November 1999).
---------------------------------------------------------------------------
c. What Are the Significant Limitations of the Benefit-Cost Analysis?
Every BCA examining the potential effects of a change in
environmental protection requirements is limited to some extent by data
gaps, limitations in model capabilities (such as geographic coverage),
and uncertainties in the underlying scientific and economic
[[Page 6781]]
studies used to configure the benefit and cost models. Deficiencies in
the scientific literature often result in the inability to estimate
changes in health and environmental effects, such as potential
increases in premature mortality associated with increased exposure to
carbon monoxide. Deficiencies in the economics literature often result
in the inability to assign economic values even to those health and
environmental outcomes which can be quantified, such as changes in
visibility in residential areas. While these general uncertainties in
the underlying scientific and economics literatures are discussed in
detail in the RIA and its supporting documents and references, the key
uncertainties which have a bearing on the results of the BCA of today's
action are:
The exclusion of potentially significant benefit
categories (e.g., health and ecological benefits of incidentally
controlled hazardous air pollutants),
Errors in measurement and projection for variables such as
population growth,
Variability in the estimated relationships of health and
welfare effects to changes in pollutant concentrations.
In addition to these uncertainties and shortcomings which pervade
all analyses of criteria air pollutant control programs, a number of
limitations apply specifically to the BCA of today's action. Though we
used the best data and models currently available, we were required to
adopt a number of simplifying assumptions and to use data sets which,
while reasonably close, did not match precisely the conditions and
effects expected to result from implementation of the standards. For
example, to estimate the effects of the program at full implementation
we projected vehicle miles traveled and populations in the year 2030.
These assumptions may play a significant role in determining the
magnitude of the benefits estimate. In addition, although the emissions
data sets used for this analysis have been updated from those used in
the proposal, they may not anticipate the emissions reductions realized
by other future actions and by expected near-future control programs.
For example, it is possible that the Tier 2/gasoline sulfur standards
will not be the governing vehicle emissions standards in 2030. In the
years before 2030, the benefits from the Tier 2 program will be less
than those estimated here (significantly less in the early years),
because the Tier 2 fleet will not be fully phased in.
Finally, the implementation period for phasing-in the rule
requirements is a critical period that deserves careful evaluation. The
benefit-cost analysis for 2030 is not significantly affected by
alternative phase-in decisions, the primary impact of which will occur
in the 2005-2015 time frame. As a result, the analysis of phase-in
alternatives must rely on other types of analysis (e.g., cost-
effectiveness analysis).
The key limitations and uncertainties unique to the BCA of the
final rule, therefore, include:
Uncertainties in the estimation of future year emissions
inventories and air quality,
Uncertainties associated with the extrapolation of air
quality monitoring data to some unmonitored areas required to better
capture the effects of the standards on affected populations, and
Uncertainties associated with the effect of potential
future actions to limit emissions.
Despite these uncertainties, which are discussed in more detail or
referenced in the RIA, we believe the BCA provide a reasonable
indication of the expected economic benefits of the Tier 2 program in
2030 under one set of assumptions. This is because the analysis focuses
on estimating the economic effects of the changes in air quality
conditions expected to result from today's action, rather than focusing
on developing a precise prediction of the absolute levels of air
quality likely to prevail in 2030. An analysis focusing on the changes
in air quality can give useful insights into the likely economic
effects of emission reductions of the magnitude expected to result from
today's rule.
d. How Has the Benefit-Cost Analysis Changed From Proposal?
We significantly improved the analysis that was presented at
proposal. For the final rule, EPA updated the emissions inventory from
1990 to 1996 using updated models, refined the projections of the
effects of the rule when it is fully implemented, and updated our air
quality modeling to reflect new programs issued since 1990. In
addition, we also updated our assumptions for estimating physical
effects and monetary benefits based on recommendations from the EPA's
Science Advisory Board (SAB) during the summer of 1999. Details on
these recommendations can be found in the advisory statements published
by the SAB.\105\ All of the changes made since the analysis at proposal
serve to update and improve the analysis.
---------------------------------------------------------------------------
\105\ Full documentation of the SAB recommendations can be found
at their website (www.epa.gov/sab) under the following references:
EPA-SAB-COUNCIL-ADV-98-003, 1998; EPA-SAB-COUNCIL-ADV-99-05, 1999;
EPA-SAB-COUNCIL-ADV-99-012, 1999; EPA-SAB-COUNCIL-ADV-00-001, 1999;
and EPA-SAB-COUNCIL-ADV-00-002, 1999.
---------------------------------------------------------------------------
e. How Did We Perform the Benefit-Cost Analysis?
The analytical sequence begins with a projection of the mix of
technologies likely to be deployed to comply with the new standards,
and the costs incurred and emissions reductions achieved by these
changes in technology. The Tier 2 program has various cost and emission
related components, as described earlier in this section. These
components would begin at various times and in some cases would phase
in over time. This means that during the early years of the program
there would not be a consistent match between cost and benefits. This
is especially true for the vehicle control portions of the program,
where the full vehicle cost would be incurred at the time of vehicle
purchase, while the fuel cost along with the emission reductions and
benefits would occur throughout the lifetime of the vehicle.
To develop a benefit-cost number that is representative of a fleet
of Tier 2 vehicles, we need to have a stable set of cost and emission
reductions to use. This means using a future year where the fleet is
fully turned over and there is a consistent annual cost and annual
emission reduction. For the Tier 2 program, this stability would not
occur until well into the future. For this analysis, we selected the
year 2030. The resulting analysis represents a snapshot of benefits and
costs in a future year in which the light-duty fleet consists almost
entirely of Tier 2 vehicles. As such, it depicts the maximum emission
reductions (and resultant benefits) and among the lowest costs that
would be achieved in any one year by the program on a ``per mile''
basis. (Note, however, that net benefits would continue to grow over
time beyond those resulting from this analysis, because of growth in
population and vehicle miles traveled.) Thus, based on the long-term
costs for a fully turned over fleet, the resulting benefit-cost ratio
will be close to its maximum point (for those benefits which we have
been able to value).
To present a BCA, we designed the cost estimate to reflect
conditions in the same year as the benefit valuation. Costs are,
therefore, developed for the year 2030 fleet. For this purpose we used
the long term cost once the capital costs have been recovered and the
manufacturing learning curve
[[Page 6782]]
reductions have been realized, since this will be the case in 2030.
We also made adjustments in the costs to account for the fact that
there is a time difference between when some of the costs are expended
and when the benefits are realized. The vehicle costs are expended when
the vehicle is sold, while the fuel related costs and the benefits are
distributed over the life of the vehicle. We resolved this difference
by using costs distributed over time such that there is a constant cost
per ton of emissions reduction and such that the net present value of
these distributed costs corresponds to the net present value of the
actual costs.
The resulting adjusted costs are somewhat greater than the expected
actual annual cost of the program, reflecting the time value
adjustment. Thus, the costs presented in this section do not represent
expected actual annual costs for 2030. Rather, they represent an
approximation of the steady-state cost per ton that would likely
prevail in that time period. The benefit cost ratio for the earlier
years of the program would be expected to be lower than that based on
these costs, since the per-vehicle costs are larger in the early years
of the program while the benefits are smaller.
In order to estimate the changes in air quality conditions which
would result from these emissions reductions, we developed two
separate, year 2030 emissions inventories to be used as inputs to the
air quality models. The first, baseline inventory, reflects the best
available approximation of the county-by-county emissions for
NOX, VOC, and SO2 expected to prevail in the year
2030 in the absence of the standards. To generate the second, control
case inventory, we first estimated the change in vehicle emissions, by
pollutant and by county, expected to be achieved by the 2030 control
scenario described above. We then took the baseline emissions inventory
and subtracted the estimated reduction for each county-pollutant
combination to generate the second, control case emissions inventory.
Taken together, the two resulting emissions inventories reflect two
alternative states of the world and the differences between them
represent our best estimate of the reductions in emissions which would
result from our control scenario.
With these two emissions inventories in hand, the next step was to
``map'' the county-by-county and pollutant-by-pollutant emission
estimates to the input grid cells of two air quality models and one
deposition model. The first model, called the Urban Airshed Model
(UAM), is designed to estimate the tropospheric ozone concentrations
resulting from a specific inventory of emissions of ozone precursor
pollutants, particularly NOX and NMHC. The second model,
called the Climatological Regional Dispersion Model Source-Receptor
Matrix model (S-R Matrix), is designed to estimate the changes in
ambient particulate matter and visibility which would result from a
specific set of changes in emissions of primary particulate matter and
secondary particulate matter precursors, such as SO2,
NOX, and NMHC. Also, nitrogen loadings to watersheds were
estimated using factors derived from previous modeling from the
Regional Acid Deposition Model (RADM). By running both the baseline and
control case emissions inventories through these models, we were able
to estimate the expected 2030 air quality conditions and the changes in
air quality conditions which would result from the emissions reductions
expected to be achieved by the Tier 2 program.
After developing these two sets of year 2030 air quality profiles,
we used the same health and environmental effect models used in the
section 812 studies to calculate the differences in human health and
environmental outcomes projected to occur with and without the proposed
standards. Specifically, we used the Criteria Air Pollutant Modeling
System (CAPMS) to estimate changes in human health outcomes, and the
Agricultural Simulation Model (AGSIM) to estimate changes in yields of
a selected few agricultural crops. In addition, the impacts of reduced
visibility impairment and estimates of the effect of changes in
nitrogen deposition to a selection of sensitive estuaries were
estimated using slightly modified versions of the methods used in the
section 812 studies. Several air quality-related health and
environmental benefits, however, could not be calculated for the BCA of
today's proposed standards. Changes in human health and environmental
effects due to changes in ambient concentrations of carbon monoxide
(CO), gaseous sulfur dioxide (SO2), gaseous nitrogen dioxide
(NO2), and hazardous air pollutants could not be included.
In addition, some health and environmental benefits from changes in
ozone and PM could not be included in our analysis (i.e., commercial
forestry benefits).
To characterize the total economic value of the reductions in
adverse effects achieved across the lower 48 states,\106\ we used the
same set of economic valuation coefficients and models used in the
section 812 studies, as approved by the SAB. The net monetary benefits
of the Tier 2 program were then calculated by subtracting the estimated
costs of compliance from the estimated monetary benefits of the
reductions in adverse health and environmental effects.
---------------------------------------------------------------------------
\106\ Though California is included based on the expectation
that reductions in surrounding states will achieve some benefits in
California, this analysis does not assume additional reductions in
California emissions beyond those already achieved by prevailing
standards.
---------------------------------------------------------------------------
The last step of the analysis is to characterize the uncertainty
surrounding our estimate of benefits. Again, we follow the
recommendations of the SAB for the presentation of uncertainty. They
recommend that a primary estimate should be presented along with a
description of the uncertainty associated with each endpoint. At
proposal, our characterization of uncertainty was based on an estimated
range of benefits which might occur if important but uncertain
underlying factors were allowed to vary. This approach, however, is
criticized by the SAB because while the low- or high-end estimates
provided for individual endpoints was ``plausible,'' the probability of
all of the assumptions in these estimates occurring simultaneously was
likely to be small.
Therefore, for the final Tier 2/gasoline sulfur rule, the benefit
analysis adopts an approach similar to the section 812 study. Our
analysis first presents our estimate for a primary set of benefit
endpoints followed by a presentation of ``alternative calculations'' of
key health and welfare endpoints to characterize the uncertainty in
this primary set. However, the adoption of a value for the projected
reduction in the risk of premature mortality is the subject of
continuing discussion within the economic and public policy analysis
community within and outside the Administration. In response to the
sensitivity on this issue, we provide estimates reflecting two
alternative approaches for mortality benefits: the EPAs preferred
approach using the value of a statistical life, and an alternative
approach using the value of a statistical life years. These are
discussed further in section f. of this presentation. The presentation
of the alternative calculations for certain endpoints seeks to
demonstrate how much the overall benefit estimate might vary based on
the value EPA has given to a parameter (which has some uncertainty
associated with it) underlying the estimates for human health and
environmental effect incidence and the economic valuation
[[Page 6783]]
of those effects. These alternative calculations represent conditions
that are possible to occur, however, EPA has selected the best
supported values based on current scientific literature for use in the
primary estimate. The alternate calculations include:
Presentation of an estimated confidence interval around
the Primary estimate of benefits to characterize The standard error in
the C-R and valuation studies used in developing benefit estimates for
each endpoint;
Valuing PM-related premature mortality based on a
different C-R study;
Value of avoided premature mortality incidences based on
statistical life years;
Consideration of reversals in chronic bronchitis treated
as lowest severity cases;
Value of visibility changes in all Class I areas;
Value of visibility changes in Eastern U.S. residential
areas;
Value of visibility changes in Western U.S. residential
areas;
Value of reduced household soiling damage; and
Avoided costs of reducing nitrogen loadings in east coast
estuaries.
For instance, the study by Dockery, et al. estimates of the
relationship between PM exposure and premature mortality is a plausible
alternative to the Pope, et al. study used for the Primary estimate of
benefits. The SAB has noted that ``the study had better monitoring with
less measurement error than did most other studies'' (EPA-SAB-COUNCIL-
ADV-99-012, 1999). The Dockery study had a more limited geographic
scope (and a smaller study population) than the Pope, et al. study and
the Pope study appears more likely to mitigate a key source of
potential confounding. The Dockery study also covered a broader age
category (25 and older compared to 30 and older in the Pope study) and
followed the cohort for a longer period (15 years compared to 8 years
in the Pope study). For these reasons, the Dockery study is considered
to be a plausible alternative estimate of the avoided premature
mortality incidences associated with the final Tier 2/gasoline sulfur
rule. The alternative estimate for mortality can be substituted for the
valuation component in our primary estimate of mortality benefits to
observe how the net benefits of the program may be influenced by this
assumption. Unfortunately, it is not possible to combine all of the
assumptions used in the alternate calculations to arrive at different
total benefit estimates because, it is highly unlikely that the
selected combination of alternative values would all occur
simultaneously. Therefore, it is better to consider each alternative
calculation individually to assess the uncertainty in the estimate.
In addition to the estimate for the primary set of endpoints and
alternative calculations of benefits, our RIA also presents an appendix
with supplemental benefit estimates and sensitivity analyses of other
key parameters in the benefit analysis that have greater uncertainty
surrounding them due to limitations in the scientific literature.
Supplemental estimates are presented for premature mortality associated
with short-term exposures to PM and ozone, asthma attacks, occurrences
of moderate or worse asthma symptoms, and an estimate of the avoided
incidences of premature mortality in infants.
Even with our efforts to fully disclose the uncertainty in our
estimate, this uncertainty presentation method does not provide a
definitive or complete picture of the true range of monetized benefits
estimates. This approach, as implemented in this BCA, does not reflect
important uncertainties in earlier steps of the analysis, including
estimation of compliance technologies and strategies, emissions
reductions and costs associated with those technologies and strategies,
and air quality and deposition changes achieved by those emissions
reductions. Nor does this approach provide a full accounting of all
potential benefits associated with the Tier 2/gasoline sulfur
standards, due to data or methodological limitations. Therefore, the
uncertainty range is only representative of those benefits that we were
able to quantify and monetize.
f. What Were the Results of the Benefit-Cost Analysis?
The BCA for the Tier 2 program reflects a single year ``snapshot''
of the yearly benefits and costs expected to be realized once the
standards have been fully implemented and non-compliant vehicles have
all been retired. Near-term costs will be higher than long-run costs as
vehicle manufacturers and oil companies invest in new capital equipment
and develop and implement new technologies. In addition, near-term
benefits will be lower than long-run benefits because it will take a
number of years for Tier 2-compliant vehicles to fully displace older,
more polluting vehicles. However, as described earlier, we have
adjusted the cost estimates upward to compensate for some of this
discrepancy in the timing of benefits and costs and to ensure that the
long-term benefits and costs are calculated on a consistent basis. The
resulting adjusted long-term cost value is given in Table IV.D.-5a.
Because of the adjustment process, the cost estimates should not be
interpreted as reflecting the actual costs expected to be incurred in
the year 2030. Actual program costs can be found in Section IV.D.3.
Table IV.D.-5a.--Adjusted Cost of the Tier 2/Gasoline Sulfur Rule for
Comparison to Benefits
------------------------------------------------------------------------
Adjusted
cost
Cost basis (billions
of dollars)
------------------------------------------------------------------------
Long term a................................................ 5.3
------------------------------------------------------------------------
Notes:
a Note that this estimate of cost is only for purposes of comparing with
our 2030 benefits estimate. See Figure IV.D.-1 for our portrayal of
total annualized cost of the rule.
With respect to the benefits, several different measures of
benefits can be useful to compare and contrast to the estimated
compliance costs. These benefit measures include (a) the tons of
emissions reductions achieved, (b) the reductions in incidences of
adverse health and environmental effects, and (c) the estimated
economic value of those reduced adverse effects. Calculating the cost
per ton of pollutant reduced is particularly useful for comparing the
cost-effectiveness of the new standards or programs against existing
programs or alternative new programs achieving reductions in the same
pollutant or combination of pollutants. The cost-effectiveness analysis
presented earlier in this preamble provides such calculations on a per-
vehicle basis. Considering the absolute numbers of avoided adverse
health and environmental effects can also provide valuable insights
into the nature of the health and environmental problem being addressed
by the rule as well as the magnitude of the total public health and
environmental gains potentially achieved by the rule. Finally, when
considered along with other important economic dimensions --including
environmental justice, small business financial effects, and other
outcomes related to the distribution of benefits and costs among
particular groups-- the direct comparison of quantified economic
benefits and economic costs can provide useful insights into the
potential magnitude of the estimated net economic effect of the rule,
keeping in mind the limited set of effects we are able to monetize.
Table IV.D.-6 presents the EPAs preferred approach to estimate the
benefits of both the estimated reductions in adverse effect incidences
and the estimated economic value of
[[Page 6784]]
those incidence reductions. Specifically, the table lists the avoided
incidences of individual health and environmental effects, the
pollutant associated with each of these endpoints, and the estimated
economic value of those avoided incidences. For several effects,
particularly environmental effects, direct calculation of economic
value in response to air quality conditions is performed, eliminating
the intermediate step of calculating incidences. As the table
indicates, we estimate that the Tier 2 program will produce 2300 fewer
cases of chronic bronchitis, and we also see significant improvements
in minor restricted activity days (with an estimated 6,255,500 fewer
cases). Our estimate also incorporates significant reductions in
impacts on children's health, showing reductions of 7,900 cases of
acute bronchitis, 87,200 fewer cases of lower respiratory symptoms, and
86,600 fewer cases of upper respiratory symptoms in asthmatic children.
Total monetized benefits, however, are driven primarily by the
estimated 4300 fewer premature fatalities. The adoption of a value for
the projected reduction in the risk of premature mortality is the
subject of continuing discussion within the economic and public policy
analysis community within and outside the Administration. In response
to the sensitivity on this issue, we provide estimates reflecting two
alternative approaches. The first approach--supported by some in the
above community and preferred by EPA--uses a Value of a Statistical
Life (VSL) approach developed for the Clean Air Act Section 812
benefit-cost studies. This VSL estimate of $5.9 million (1997$) was
derived from a set of 26 studies identified by EPA using criteria
established in Viscusi (1992), as those most appropriate for
environmental policy analysis applications.
An alternative, age-adjusted approach is preferred by some others
in the above community both within and outside the Administration. This
approach was also developed for the Section 812 studies and addresses
concerns with applying the VSL estimate--reflecting a valuation derived
mostly from labor market studies involving healthy working-age manual
laborers--to PM-related mortality risks that are primarily associated
with older populations and those with impaired health status. This
alternative approach leads to an estimate of the value of a statistical
life year (VSLY), which is derived directly from the VSL estimate. It
differs only in incorporating an explicit assumption about the number
of life years saved and an implicit assumption that the valuation of
each life year is not affected by age.\107\ The mean VSLY is $360,000
(1997$); combining this number with a mean life expectancy of 14 years
yields an age-adjusted VSL of $3.6 million (1997$).
---------------------------------------------------------------------------
\107\ Specifically, the VSLY estimate is calculated by
amortizing the $5.9 million mean VSL estimate over the 35 years of
life expectancy associated with subjects in the labor market
studies. The resulting estimate, using a 5 percent discount rate, is
$360,000 per life-year saved in 1997 dollars. This annual average
value of a life-year is then multiplied times the number of years of
remaining life expectancy for the affected population (in the case
of PM-related premature mortality, the average number of $ life-
years saved is 14.
---------------------------------------------------------------------------
Both approaches are imperfect, and raise difficult methodological
issues which are discussed in depth in the recently published Section
812 Prospective Study, the draft EPA Economic Guidelines, and the peer-
review commentaries prepared in support of each of these documents. For
example, both methodologies embed assumptions (explicit or implicit)
about which there is little or no definitive scientific guidance. In
particular, both methods adopt the assumption that the risk versus
dollars trade-offs revealed by available labor market studies are
applicable to the risk versus dollar trade-offs in an air pollution
context.
EPA currently prefers the VSL approach because, essentially, the
method reflects the direct, application of what EPA considers to be the
most reliable estimates for valuation of premature mortality available
in the current economic literature. While there are several differences
between the labor market studies EPA uses to derive a VSL estimate and
the particulate matter air pollution context addressed here, those
differences in the affected populations and the nature of the risks
imply both upward and downward adjustments. For example, adjusting for
age differences may imply the need to adjust the $5.9 million VSL
downward as would adjusting for health differences, but the involuntary
nature of air pollution-related risks and the lower level of risk-
aversion of the manual laborers in the labor market studies may imply
the need for upward adjustments. In the absence of a comprehensive and
balanced set of adjustment factors, EPA believes it is reasonable to
continue to use the $5.9 million value while acknowledging the
significant limitations and uncertainties in the available literature.
Furthermore, EPA prefers not to draw distinctions in the monetary value
assigned to the lives saved even if they differ in age, health status,
socioeconomic status, gender or other characteristic of the adult
population.
Those who favor the alternative, age-adjusted approach (i.e. the
VSLY approach) emphasize that the value of a statistical life is not a
single number relevant for all situations. Indeed, the VSL estimate of
$5.9 million (1997 dollars) is itself the central tendency of a number
of estimates of the VSL for some rather narrowly defined populations.
When there are significant differences between the population affected
by a particular health risk and the populations used in the labor
market studies--as is the case here--they prefer to adjust the VSL
estimate to reflect those differences. While acknowledging that the
VSLY approach provides an admittedly crude adjustment (for age though
not for other possible differences between the populations), they point
out that it has the advantage of yielding an estimate that is not
presumptively biased. Proponents of adjusting for age differences using
the VSLY approach fully concur that enormous uncertainty remains on
both sides of this estimate--upwards as well as downwards--and that the
populations differ in ways other than age (and therefore life
expectancy). But rather than waiting for all relevant questions to be
answered, they prefer a process of refining estimates by incorporating
new information and evidence as it becomes available.
In addition to the presentation of mortality valuation, this table
also indicates with a ``B'' those additional health and environmental
benefits which could not be expressed in quantitative incidence and/or
economic value terms. A full listing of the benefit categories that
could not be quantified or monetized in our estimate are provided in
Table IV.D.-8. For instance, visibility is expected to improve in all
areas of the country, with the largest improvements occurring in
heavily populated residential areas (e.g., 21% of the metropolitan
areas show an improvement of 0.5 deciviews or more). However, due to
limitations on sources to value these effects, we include a ``B'' in
the primary estimate table for this category. Likewise, the Tier 2/
gasoline sulfur rule will also provide progress for some estuaries to
meet their goals for reducing nitrogen deposition (e.g., nitrogen
loadings for the Albemarle/Pamlico Sound are reduced by 27% of their
reductions goal), however, this endpoint is also displayed with a ``B''
in the table. A full appreciation of the overall economic consequences
of the Tier 2/gasoline sulfur standards requires consideration of all
benefits and costs expected to result from the new standards, not just
those benefits and
[[Page 6785]]
costs which could be expressed here in dollar terms.
In summary, the VSL approach--the approach EPA prefers--yields a
monetized benefit estimate of $25.2 billion in 2030. The alternative,
age-adjusted VSLY approach (presented in Table IV.D.7) yields monetary
benefits of approximately $13.8 billion in 2030.
Table IV.D.-6.--EPA Preferred Estimate of the Annual Quantified and Monetized Benefits Associated With Improved
Air Quality Resulting From the Tier 2/Gasoline Sulfur Rule in 2030
----------------------------------------------------------------------------------------------------------------
Avoided incidencec Monetary benefitsd
Endpoint Pollutant (cases/year) (millions 1997$)
----------------------------------------------------------------------------------------------------------------
Premature mortality a, b (adults, PM b................. 4,300.................... $23,380
30 and over).
Chronic asthma (adult males, 27 Ozone................ 400...................... 10
and over).
Chronic bronchitis................ PM................... 2,300.................... 730
Hospital Admissions from Ozone and PM......... 2,200.................... 20
Respiratory Causes.
Hospital Admissions from Ozone and PM......... 800...................... 10
Cardiovascular Causes.
Emergency Room Visits for Asthma.. Ozone and PM......... 1,200.................... 1
Acute bronchitis (children, 8-12). PM................... 7,900.................... 1
Lower respiratory symptoms (LRS) PM................... 87,100................... 5
(children, 7-14).
Upper respiratory symptoms (URS) PM................... 86,500................... 5
(asthmatic children, 9-11).
Shortness of breath (African PM................... 17,400................... 1
American asthmatics, 7-12).
Work loss days (WLD) (adults, 18- PM................... 682,900.................. 70
65).
Minor restricted activity days Ozone and PM......... 5,855,000................ 270
(MRAD)/Acute respiratory symptoms.
Other health effects c............ Ozone, PM, CO, HAPS.. U1+U2+U3+U4.............. B1+B2+B3+B4
Decreased worker productivity..... Ozone................ ......................... 140
Recreational visibility (86 Class PM................... ......................... 370
I Areas).
Residential visibility............ PM................... ......................... B5
Household soiling damage.......... PM................... ......................... B6
Materials damage.................. PM................... ......................... B7
Nitrogen Deposition to Estuaries.. Nitrogen............. ......................... B8
Agricultural crop damage (6 crops) Ozone................ ......................... 220
Commercial forest damage.......... Ozone................ ......................... B9
Other welfare effects e........... Ozone, PM, CO, HAPS.. ......................... B10+B11+B12+B13
Monetized Total f, g........ ..................... ......................... $25,220+B
----------------------------------------------------------------------------------------------------------------
Notes:
a Premature mortality associated with ozone is not separately included in this analysis. It is assumed that the
Pope, et al. C-R function for premature mortality captures both PM mortality benefits and any mortality
benefits associated with other air pollutants. Also note that the valuation assumes the 5 year distributed lag
structure described earlier.
b PM reductions are due to reductions in NOX and SO2 resulting from the Tier 2/Gasoline Sulfur rule.
c Incidences are rounded to the nearest 100.
d Dollar values are rounded to the nearest 10 million.
e The Ui are the incidences and the Bi are the values for the unquantified category i. A detailed listing of
unquantified PM, ozone, CO, and HAPS related health and welfare effects is provided in Table IV.D.-8.
f B is equal to the sum of all unmonetized categories, i.e. B1+B2+ * * * +B13.
g These estimates are based on the EPA preferred approach for valuing reductions in premature mortality, the VSL
approach. This approach and an alternative, age-adjusted approach--the VSLY approach--are discussed more fully
in section f above.
Table IV.D.-7.--Tier 2/Gasoline Sulfur Rule: 2030 Monetized Benefits
Estimates for Alternative Premature Mortality Valuation Approaches
[Millions of 1997 dollars]
------------------------------------------------------------------------
Premature mortality valuation PM mortality
approach benefits Total benefits
------------------------------------------------------------------------
Value of statistical life (VSL) $23,380 $25,220 + B
($5.9 million per life saved) a.
Value of statistical life-years 11,900 13,790 + B
(VSLY) ($360,000 per life-year
saved, which implies $3.6
million per life saved, based on
the mean of 14 life years saved)
a,b.
------------------------------------------------------------------------
Notes:
a Premature mortality estimates are determined assuming a 5 year
distributed lag, which applies 25 percent of the incidence in year 1
and 2, and then 16.7 percent of the incidence in years 3, 4, and 5.
b The VSLY estimate is calculated by amortizing the $5.9 million mean
VSL estimate over the 35 years of life expectancy associated with
subjects in the labor market studies used to obtain the VSL estimate.
The resulting estimate, using a 5 percent discount rate, is $360,000
per life-year saved in 1997 dollars. This approach is discussed more
fully in section f above.
[[Page 6786]]
Table IV.D.-8.--Additional, Non-monetized Benefits of the Tier 2/
Gasoline Sulfur Standards
------------------------------------------------------------------------
Pollutant Unquantified effects
------------------------------------------------------------------------
Ozone Health...................... Premature mortality.a
Increased airway responsiveness to
stimuli.
Inflammation in the lung
Chronic respiratory damage
Premature aging of the lungs
Acute inflammation and respiratory
cell damage
Increased susceptibility to
respiratory infection
Non-asthma respiratory emergency
room visits
Reductions in screening of UV-b
radiation
Ozone Welfare..................... Decreased yields for commercial
forests
Decreased yields for fruits and
vegetables
Decreased yields for non-commercial
crops
Damage to urban ornamental plants
Impacts on recreational demand from
damaged forest aesthetics
Damage to ecosystem functions
PM Health......................... Infant mortality
Low birth weight
Changes in pulmonary function
Chronic respiratory diseases other
than chronic bronchitis
Morphological changes
Altered host defense mechanisms
Nitrogen and Sulfate Deposition Impacts of acidic sulfate and
Welfare. nitrate deposition on commercial
forests
Impacts of acidic deposition to
commercial freshwater fishing
Impacts of acidic deposition to
recreation in terrestrial
ecosystems
Reduced existence values for
currently healthy ecosystems
Impacts of nitrogen deposition on
commercial fishing, agriculture,
and forests
Impacts of nitrogen deposition on
recreation in estuarine ecosystems
CO Health......................... Premature mortality a
Behavioral effects
Hospital admissions--respiratory,
cardiovascular, and other
Other cardiovascular effects
Developmental effects
Decreased time to onset of angina
Non-asthma respiratory ER visits
HAPS Health....................... Cancer (benzene, 1,3-butadiene,
formaldehyde, acetaldehyde)
Anemia (benzene)
Disruption of production of blood
components (benzene)
Reduction in the number of blood
platelets (benzene)
Excessive bone marrow formation
(benzene)
Depression of lymphocyte counts
(benzene)
Reproductive and developmental
effects (1,3-butadiene)
Irritation of eyes and mucus
membranes (formaldehyde)
Respiratory irritation
(formaldehyde)
Asthma attacks in asthmatics
(formaldehyde)
Asthma-like symptoms in non-
asthmatics (formaldehyde)
Irritation of the eyes, skin, and
respiratory tract (acetaldehyde)
HAPS Welfare...................... Direct toxic effects to animals
Bioaccumlation in the food chain
------------------------------------------------------------------------
a Premature mortality associated with ozone and carbon monoxide is not
separately included in this analysis. It is assumed that the Pope, et
al. C-R function for premature mortality captures both PM mortality
benefits and any mortality benefits associated with other air
pollutants.
In addition, in analyzing the present rule, we recognized that the
benefits estimates were subject to a number of uncertainties with other
parameters. In Table IV D-9, we present alternative calculations
representing the effect of different assumptions on individual elements
of the benefits analysis and on the total benefits estimate. For
example, this table can be used to answer questions like ``What would
total benefits be if we were to use the Dockery, et al. C-R function to
estimate avoided premature mortality?'' This table also displays some
assumptions that can be made to value some of the categories that are
indicated with a ``B'' in the primary estimate. Overall, this table
provides alternative calculations both for valuation issues (e.g., the
correct value for a statistical life saved) and for physical effects
issues (e.g., how reversals in chronic illnesses are treated). We show
how the alternative assumption being valued would change the resulting
total primary estimate, and the percentage change from the primary
estimate associated with the alternative calculation. This table is not
meant to be comprehensive. Rather, it reflects some of the key issues
identified by EPA or commenters as likely to have a significant impact
on total benefits.
[[Page 6787]]
Table IV.D.-9.--Alternative Benefits Calculations for the Tier 2
Gasoline Sulfur Rule in 2030
------------------------------------------------------------------------
Impact on primary benefit estimate
Alternative calculation (million 1997$)
------------------------------------------------------------------------
5th percentile of -$20,300 (-81%)
``measurement'' uncertainty
distribution.
95th percentile of +33,900 (+134%)
``measurement'' uncertainty
distribution.
PM-related premature mortality +30,200 (+120%)
based on Dockery et al..
Value of avoided premature -11,500 (-46%)
mortality incidences based on
statistical life years..
Reversals in chronic bronchitis +280 (+1%)
treated as lowest severity
cases.
Value of visibility changes in +180 (+1%)
all class I areas.
Value of visibility changes in +420 (+2%)
eastern U.S. residential areas.
Value of visibility changes in +130 (+1%)
western U.S. residential areas.
Household soiling damage....... +110 (+1%)
Avoided costs of reducing +160 (+1%)
nitrogen loadings in east
coast estuaries.
------------------------------------------------------------------------
The estimated adjusted cost of implementing the final Tier 2
program is $5.3 billion (1997$), while the estimate of monetized
benefits using EPA's preferred approach for monetizing reductions in
PM-related premature mortality--the VSL approach--are $25.2 billion
(1997$). Monetized net benefits using EPA's preferred method for
valuing avoided incidences of premature mortality are approximately
$19.9 billion (1997$). Using the alternative, age-adjusted approach--
the VSLY approach--total monetized benefits are projected to be around
$13.8 billion (1997$). Monetized net benefits using this approach are
approximately $8.5 billion (1997$). Therefore, implementation of the
Tier 2 program will provide society with a net gain in social welfare.
Tables VI.D.-10a and IV.D.-10b summarize the costs, benefits, and net
benefits for the two alternative valuation approaches.
Table IV.D.-10a.--2030 Annual Monetized Costs, Benefits, and Net
Benefits for the Final Tier 2/Gasoline Sulfur Rule: EPA Preferred
Estimate Using the Value of Statistical Lives Saved Approach to Value
Reductions In Premature Mortality a
------------------------------------------------------------------------
Billion 1997 (dollars)
------------------------------------------------------------------------
Adjusted compliance costs................ $5.3
Monetized PM-related benefits b.......... 24.7+BPM
Monetized Ozone-related benefitsb........ 0.5+BOzone
Monetized net benefits c,d............... 19.9+B
------------------------------------------------------------------------
Notes:
a For this section , all costs and benefits are rounded to the nearest
100 million. Thus, figures presented in this chapter may not exactly
equal benefit and cost numbers presented in earlier sections of the
chapter.
b Not all possible benefits or disbenefits are quantified and monetized
in this analysis. Potential benefit categories that have not been
quantified and monetized are listed in Table IV.D.-8. Unmonetized PM-
and ozone-related benefits are indicated by BPM. And BOzone,
respectively.
c B is equal to the sum of all unmonetized benefits, including those
associated with PM, ozone, CO, and HAPS.
d These estimates are based on the EPA preferred approach for valuing
reductions in premature morality, the VSL approach. This approach and
an alternative, age-adjusted approach--the VSLY approach--are
discussed more fully in section f above.
Table IV.D.-10b.--2030 Annual Monetized Costs, Benefits, and Net
Benefits for the Final Tier 2/Gasoline Sulfur Rule: Alternative
Estimates Using the Value of Statistical Life Years Saved Approach to
Value Reductions in Premature Mortality a
------------------------------------------------------------------------
Billion 1997 (dollars)
------------------------------------------------------------------------
Adjusted compliance costs................ $5.3
Monetized PM-related benefits b.......... $13.3+BPM
Monetized Ozone-related benefits b....... $0.5+BOzone
Monetized net benefits c, d.............. $8.5+B
------------------------------------------------------------------------
Notes:
a For this section, all costs and benefits are rounded to the nearest
100 million. Thus, figures presented in this chapter may not exactly
equal benefit and cost numbers presented in earlier sections of the
chapter.
b Not all possible benefits or disbenefits are quantified and monetized
in this analysis. Potential benefit categories that have not been
quantified and monetized are listed in Table IV.D.-8. Unmonetized PM-
and ozone-related benefits are indicated by BPM. And BOzone,
respectively.
c B is equal to the sum of all unmonetized benefits, including those
associated with PM, ozone, CO, and HAPS.
d The VSLY estimate is calculated by amortizing the $5.9 million mean
VSL estimate over the 35 years of life expectancy associated with
subjects in the labor market studies used to obtain the VSL estimate.
The resulting estimate, using a 5 percent discount rate, is $360,000
per life-year saved in 1997 dollars. This approach is discussed more
fully in section f above.
V. Other Vehicle-Related Provisions
The section describes several additional provisions of today's
final rule that were not previously discussed in this preamble.\108\
---------------------------------------------------------------------------
\108\ Generally the provisions of this section V that apply to
HLDTs also apply to MDPVs. See section IV.B.4.g for a thorough
discussion of the main program elements and how they impact MDPVs.
---------------------------------------------------------------------------
A. Final Tier 2 CO, HCHO and PM Standards
Tables IV.B.-4 and -5 in Section IV.B.4.a. above presented the Tier
2 standards for carbon monoxide (CO), formaldehyde (HCHO), and
particulate matter (PM). The following paragraphs discuss our selection
of these specific standards.
1. Carbon Monoxide (CO) Standards
Beyond aligning carbon monoxide (CO) standards for all LDVs and
LDTs, and harmonizing with California vehicle technology, reduction in
CO emissions is not a primary goal of the Tier 2 program. However, we
note that more than three-fourths of CO emissions in 1997 came from
mobile sources and that there are currently 20 officially designated CO
nonattainment areas in the U.S. These areas include 47 counties with a
combined population of 34 million. In addition, there are 23 officially
designated maintenance areas also with a combined population of 34
million. Further, CO is a deadly gas that leads to accidental poisoning
fatalities and injuries. Also, CO may play a role in ozone formation by
increasing the reactivities of VOCs in the atmosphere.
Although there remain many areas of nonattainment and maintenance
for the
[[Page 6788]]
CO NAAQS, and those areas include large populations, the broad trends
indicate that ambient levels are being reduced and the amount of
further reductions needed to meet the CO NAAQS will not be as
substantial as for the ozone NAAQS. The reductions in this program will
help ensure that emissions and ambient levels of CO continue to
decline, which will contribute to the attainment and maintenance of the
CO NAAQS in current nonattainment areas. These standards will also
ensure that CO levels do not increase in the future, which could
exacerbate any CO attainment and maintenance concerns. Our analysis
estimating of the tons of CO reduction due to the Tier 2/Gasoline
Sulfur program is found in Chapter III of the RIA.
Thus the CO standards we are finalizing for all Tier 2 LDVs and
LDTs are essentially the same as those from the NLEV program for LDV/
LLDTs. These standards will harmonize with CalLEV II CO standards
except at California's SULEV level (EPA Bin 2). This lone divergence
will not pose additional burden to manufacturers because the federal
Tier 2 CO standards for these vehicles will be less stringent than
California's. Bins applicable during the interim programs will include
CO values from the NLEV program for LDV/LLDTs and from the Cal LEV I
program for HLDTs.\109\ In our NPRM, we proposed tighter CO standards
than California for certain higher bins. Based upon comment, we are
aligning our CO standards with those of California to help ensure that
carry over between the two programs can occur.\110\ This alignment is
consistent with our goal of bringing all LDVs and all categories of
LDTs under common standards that allow for technology to be harmonized
to the extent possible with California. Despite these minor changes, we
still expect the standards in today's rule to lead to CO reductions.
---------------------------------------------------------------------------
\109\ We recognize that the standards we are finalizing for
interim LDT4s are more stringent than for equivalent vehicles
(MDV3s) under Cal LEV I. Still our interim HLDT standards harmonize
with Cal LEV I standards applicable to MDV2s.
\110\ Ibid.
---------------------------------------------------------------------------
2. Formaldehyde (HCHO) Standards
Similar to our approach to CO standards, we are aligning all Tier 2
LDVs and LDTs under the formaldehyde standards from the NLEV program or
CalLEV II program. HLDTs, which are not subject to the NLEV program,
will become subject to federal formaldehyde standards for the first
time under the provisions of this rulemaking.
Formaldehyde is a hazardous air pollutant and EPA is required to
regulate motor vehicle formaldehyde under section 202(l) of the Act.
The standards finalized today are primarily of concern for methanol and
methane (compressed natural gas or CNG)-fueled vehicles, because
formaldehyde is chemically similar to methanol and methane and is
likely to be produced when methanol or methane are not completely
burned in the engine. HLDTs are not included under the NLEV program and
will therefore not face formaldehyde standards as LDVs and LLDTs will
in 2001 (1999 in the northeast states). We believe it is appropriate to
bring HLDTs under HCHO standards in this rulemaking. Applying
formaldehyde standards to HLDTs will be consistent with our goals of
aligning standards for all LDVs and LDTs regardless of fuel type and
harmonizing technologically with California standards wherever possible
and reasonable and the burden will be minimal. Consequently, we are
including formaldehyde standards for HLDTs under the Tier 2 program as
well as under the interim programs.
3. Use of NMHC Data To Show Compliance with NMOG Standards; Alternate
Compliance With Formaldehyde Standards
In response to comments, we are finalizing a provision to allow
manufacturers to demonstrate compliance with the interim and Tier 2
NMOG standards using NMHC data (non-methane hydrocarbons) for gasoline
and diesel vehicles. For these vehicles, NMOG and NMHC emissions are
very similar and testing for NMHC is considerably simpler and cheaper
than measuring NMOG. Data available to us show that NMHC emissions at
levels expected from interim and Tier 2 LDVs and LDTs can be adjusted
to represent NMOG emissions by a small multiplicative factor. We are
finalizing to accept NMHC test results to demonstrate compliance with
the NMOG standards, but are requiring that the NMHC results be
multiplied by 1.04. We will permit the use of other adjustment factors
based upon comparative testing.
A drawback to NMHC testing is that NMHC testing does not yield
formaldehyde results as NMOG testing does. We noted in the NPRM that
HCHO is actually a component of NMOG and that we expect that all
vehicles able to meet the proposed Tier 2 or interim standards
(including methanol and CNG-fueled vehicles) will readily comply with
the HCHO standards. In fact, based upon a review of certification data,
we believe that gasoline and diesel vehicles will be far below the HCHO
standards, perhaps by as much as 90%. (See the Response to Comments
document for details)
To reduce testing costs while harmonizing with the CalLEV II
standards we are finalizing a provision that will permit manufacturers
of gasoline and diesel vehicles to demonstrate compliance with the
formaldehyde standards based on engineering judgement. This provision
will apply only to diesel and gasoline fueled vehicles and will require
manufacturers to make a demonstration in their certification
application that vehicles having similar engine and vehicle size and
engine and aftertreatment technologies have been shown to exhibit
compliance with the applicable formaldehyde standard for their full
useful life. This demonstration will be similar to that currently
required for gasoline vehicles to demonstrate compliance with the
particulate matter standard (see 40 CFR 86.1829(b)(1)), and should be
readily available from California vehicles where NMOG testing is
required and formaldehyde data is routinely generated.
4. Particulate Matter (PM) Standards
We proposed to adopt tighter PM standards. For Tier 2 vehicles, we
proposed PM bin values such that PM would consistently be 0.01 g/mi or
less. To provide manufacturers with flexibility, we proposed a 0.02 g/
mi PM standard for vehicles that certify to the highest Tier 2 bins. As
we have indicated elsewhere in this preamble, we anticipate that low
sulfur diesel fuel will be available by 2007 to enable diesel vehicles
to utilize advanced diesel technologies and meet these PM standards.
For the interim standards we proposed a PM standard of 0.06 g/mi
for the highest bins. We received considerable comment from
manufacturers and others about the PM standards we proposed. In the
final rule, we are raising the PM standard to 0.08 g/mi for bin 10. For
HLDTs, manufacturers would likely have had to use advanced diesel
technologies to attain our proposed interim standards and these
technologies require low sulfur diesel fuel. Since we do not expect
that fuel to be widely available until the 2006-2007 timeframe, we are
raising the PM standard so that diesels are not barred from the interim
program by a fuel situation beyond their manufacturers' control.
PM standards are primarily a concern for diesel-cycle vehicles, but
they also apply to gasoline and other otto-cycle
[[Page 6789]]
vehicles. We will continue to permit otto-cycle vehicles to certify to
PM standards based on representative test data from similar technology
vehicles.
B. Useful Life
The ``useful life'' of a vehicle is the period of time, in terms of
years and miles, during which a manufacturer is formally responsible
for the vehicle's emissions performance. For LDVs and LDTs, there have
historically been both ``full useful life'' values, approximating the
average life of the vehicle on the road, and ``intermediate useful
life'' values, representing about half of the vehicle's life. We
proposed and are finalizing several changes to the current useful life
provisions for LDVs and LDTs.
1. Mandatory 120,000 Mile Useful Life
We are finalizing our proposal to equalize full useful life values
for all Tier 2 LDVs and LDTs at 120,000 miles. Congress, in directing
EPA to perform the Tier 2 study, also directed EPA to consider changing
the useful lives of LDVs and LDTs. Manufacturers have made numerous
advances in quality, materials and engineering that have led to longer
actual vehicle lives and data show that each year of a vehicle's life,
people are driving more miles. Current data indicate that passenger
cars are driven approximately 120,000 miles in their first ten years of
life. Trucks are driven further. Current regulatory useful lives are 10
years/100,000 miles for LDV/LLDTs and 11 years/120,000 miles for HLDTs.
We project, based on our Tier 2 model, that approximately 13 percent of
light-duty NOX and 11 percent of light-duty VOCs is produced
between 100,000 and 120,000 miles. Given the trend toward longer actual
vehicle lives and increases in annual mileage, we believe that it is
reasonable to extend the regulatory useful life requirements
California, in its LEV II program, has adopted full useful life
standards for all LDVs and LDTs of 10 years or 120,000 miles, whichever
occurs first. The time period for federal LDV/LLDTs will be 10 years,
but will remain at 11 years for HLDTs consistent with the Clean Air
Act. Intermediate useful life values, where applicable, will remain at
5 years or 50,000 miles, whichever occurs first. Where manufacturers
elect to certify Tier 2 vehicles for 150,000 miles to gain additional
NOX credits, as discussed below, the useful life of those
vehicles will be 15 years and 150,000 miles. We are not harmonizing
with California on the mandatory useful life for evaporative emissions
of 15 years and 150,000 miles, but rather this useful life will be
mandatory for evaporative emissions only when a manufacturer elects
optional 150,000 mile exhaust emission certification.
We proposed to extend the useful life of interim LDV/LLDTs to 10
years/ 120,000 miles beginning in 2004. Based upon extensive comment,
we are not finalizing that provision and the useful lives of interim
LDV/LLDTs will remain unchanged to help facilitate their carryover from
the NLEV program into the interim program. Commenters provided
persuasive argument that the proposed provision, along with others,
would impose a large workload burden on manufacturers because they
would be unable to carry over certification data from 2003 and would
have to recertify virtually all of their LDV/LLDTs in 2004.
Manufacturers stressed that this would be an especially unproductive
use of their resources because these vehicles would all have to be
recertified again as they were phased into the Tier 2 standards between
2005 and 2007. This change in the final rule will have only minimal
impact on the benefits of our program.
2. 150,000 Mile Useful Life Certification Option
We are adopting as proposed a provision to provide additional
NOX credit in the fleet average calculation for vehicles
certified to a useful life of 150,000 miles. A manufacturer certifying
a test group to a 150,000 mile useful life will incorporate those
vehicles into its corporate NOX average as if they were
certified to a full useful life standard 0.85 times the applicable
120,000 mile NOX standard. To use this option, the
manufacturer will have to agree to (1) certify the engine family to the
applicable 120,000 mile exhaust and evaporative standards at 150,000
miles for all pollutants; and (2) increase the mileage on the single
extra-high mileage in-use test vehicle from a minimum of 90,000 miles
to a minimum of 105,000 miles.
Today's vehicles are lasting longer and being driven farther than
those built in past years and we believe it is reasonable to encourage
the development of more durable emission control systems. Consequently
we believe it is appropriate to provide incentives to manufacturers to
certify their vehicles to extended useful lives beyond 120,000 miles.
This is why we proposed and are today finalizing additional
NOX credits for Tier 2 vehicles certified to a useful life
of 150,000 miles.
In the final rule we are adding an option that, for a test group
certified to a 150,000 mile useful life, the manufacturer may choose
between the additional credits or a waiver of intermediate life
standards. Commenters suggested that some vehicles would be
discriminated against by our intermediate life standards, because they
might have flat deterioration curves, and could meet our full life
standards, but not the lower intermediate life standards. We are
reluctant to give up our intermediate life standards, because we
believe they provide an additional measure of certainty that vehicles
will meet standards. Nonetheless, we believe that certification to a
longer useful life is an important goal and that manufacturers who do
so will likely use technologies that have very flat deterioration
curves. This option provides manufacturers with the flexibility to
certify vehicles without having to comply with intermediate life
standards. In exchange they must comply with full life standards for
considerably longer mileage.
C. Supplemental Federal Test Procedure (SFTP) Standards \111\
---------------------------------------------------------------------------
\111\ SFTP requirements do not apply to MDPVs. We plan to
address the applicability of SFTP standards and test procedures to
MDPVs in a future rulemaking.
---------------------------------------------------------------------------
1. Background
Supplemental Federal Test Procedure (SFTP) standards require
manufacturers to control emissions from vehicles when operated at high
rates of speed and acceleration (the US06 test cycle) and when operated
under high ambient temperatures with air conditioning loads (the SC03
test cycle). The existing light duty SFTP requirements begin a three
year phase-in in model year 2000 for Tier 1 LDV/LLDTs.\112\ For HLDTs,
SFTP requirements begin a similar phase-in in 2002. Intermediate and
full useful life SFTP standards exist for all categories of Tier 1
vehicles except that SFTP standards do not apply to diesel fueled LDT2s
and HLDTs. Table V.A.-1 shows the full useful life federal SFTP
requirements applicable to Tier 1 vehicles.
---------------------------------------------------------------------------
\112\ For vehicles included in the NLEV program, this phase-in
becomes a four year phase-in beginning in 2001.
[[Page 6790]]
Table V.A.-1.--Full Useful Life Federal SFTP Standards Applicable to Tier 1 Vehicles
----------------------------------------------------------------------------------------------------------------
NMHC + NOX CO (g/mi) b
Vehicle category (weighted g/ -----------------------------------------------
mi) a US06 SC03 Weighted
----------------------------------------------------------------------------------------------------------------
LDV/LDT1 (gasoline)............................. 0.91 11.1 3.7 4.2
LDV/LDT1 (diesel)............................... 2.07 11.1 -- 4.2
LDT2............................................ 1.37 14.6 5.6 5.5
LDT3............................................ 1.44 16.9 6.4 6.4
LDT4............................................ 2.09 19.3 7.3 7.3
----------------------------------------------------------------------------------------------------------------
Notes:
a Weighting for NMHC+NOX and optional weighting for CO is 0.35x(FTP)+0.28x(US06)+0.37x(SC03).
b CO standards are stand alone for US06 and SC03 with option for a weighted standard.
2. SFTP Under the NLEV Program
The NLEV program includes SFTP requirements for LDVs, LDT1s and
LDT2s. These requirements impose the Tier 1 intermediate and full
useful life SFTP standards on Tier 1 and TLEV vehicles, but impose only
4000 mile standards adopted from California LEV I program on LEVs and
ULEVs.\113\
---------------------------------------------------------------------------
\113\ This disparity arose because neither EPA nor CARB had full
useful life SFTP standards for LEVs or ULEVs when the NLEV program
was adopted. Since a major requirement of the NLEV program was
harmony with California standards, EPA adopted the California SFTP
standards in place for the NLEV time frame (2001 and later).
---------------------------------------------------------------------------
NLEV SFTP standards for LEVs and ULEVs are shown in Table V.A.-2.
Table V.A.-2 also includes the California LEV I SFTP standards for
LDT3s and 4s. The standards in that table do not provide for a weighted
standard for NMHC+ NOX or for CO, but rather employ separate
sets of standards for the US06 and SC03 tests. Also, while the NLEV and
CAL LEV I SFTP standards apply to gasoline and diesel vehicles, they do
not include a standard for diesel particulates (PM).
Table V.A.-2.--SFTP Standards for LEVs and ULEVs in the NLEV/Cal LEV I Program
[4000 Mile Standards]
----------------------------------------------------------------------------------------------------------------
US06 SC03
---------------------------------------------------------------
NMHC+NOX (g/ NMHC+NOX (g/
mi) CO (g/mi) mi) CO (g/mi)
----------------------------------------------------------------------------------------------------------------
LDV/LDT1........................................ 0.14 8.0 0.20 2.7
LDT2............................................ 0.25 10.5 0.27 3.5
LDT 3 (Calif MDV 2)............................. 0.4 10.5 0.31 3.5
LDT 4 (Calif MDV 3)............................. 0.6 11.8 0.44 4.0
----------------------------------------------------------------------------------------------------------------
3. SFTP Standards for Interim and Tier 2 LDVs and LDTs: As Proposed
Since no significant numbers of vehicles certified to SFTP
standards will enter the fleet until 2001, manufacturers raised
concerns during the development of the NPRM regarding significant
changes to the SFTP program before its implementation. We stated in the
NPRM that it was reasonable not to increase SFTP stringency beyond
NLEV/CalLEV I levels for the Tier 2 program, but we proposed to include
SFTP standards adjusted for intermediate and full useful life
deterioration where there are currently only 4000 mile standards.
Full useful life standards for Tier 2 vehicles are consistent with
our mandate under the Clean Air Act. We derived the full and
intermediate useful life standards in the NPRM by applying
deterioration allowances from our draft MOBILE 6 model to the existing
4000 mile standards for LDVs and LLDTs. For HLDTs we applied similarly
derived deterioration allowances to California's LEV I SFTP standards
for MDV2s and MDV3s, which are the corresponding categories to LDT3s
and LDT4s in the California LEV I program. The full and intermediate
useful life SFTP standards we proposed would have applied to all Tier 2
vehicles including Tier 2 LDT3s and LDT4s. Further, since our interim
standards are derived from NLEV and Cal LEV I standards, we proposed
that our full life SFTP standards would apply to all interim LDV/LLDTs
beginning in 2004.\114\
---------------------------------------------------------------------------
\114\ Except that, we proposed to permit TLEV vehicles (EPA
interim Bin 10 in Table IV.B.-4), which are not subject to new SFTP
standards under NLEV, to continue to meet Tier 1 SFTP standards, and
to permit HLDTs under the interim programs to continue to meet Tier
1 SFTP standards that do not fully phase in until the 2004 model
year.
---------------------------------------------------------------------------
4. Final SFTP Standards for Interim and Tier 2 LDVs and LDTs
Based upon extensive comment from manufacturers, we are persuaded
that our proposed intermediate and full life SFTP standards need more
review and should possibly be reexamined in a separate rulemaking.
Manufacturers were quite concerned that the technique we used to obtain
the intermediate and full life SFTP standards led to standards that
were overly stringent. They argued that they have little experience
with SFTP compliant vehicles given the current infancy of the program
and they do not know whether SFTP emissions can be reasonably be
expected to deteriorate like FTP emissions. Consequently, in today's
notice, we are finalizing a program that will adopt the existing NLEV/
Cal LEV I 4000 mile standards and utilize adjusted full life standards
from the Tier 1 program, instead of values derived by applying the
draft MOBILE 6 model.
These standards will apply to all Tier 2 vehicles and to all
interim LDV/LLDTs. We proposed and are finalizing that interim HLDTs
meet Tier 1 SFTP standards which do not finish their phase-in until the
2004 model year.
With regard to intermediate and full life SFTP standards, the
preamble to the final rule implementing the SFTP program for the Tier 1
SFTP emission standards (61 FR 54856) provided a formula for computing
SFTP standards to apply under more stringent future
[[Page 6791]]
FTP standards. In the Tier 1 program, SFTP standards represent a
weighted average of FTP, US06 and SC03 standards. The three components
are weighted by factors of 0.35, 0.28, and 0.37 respectively. The
formula simply adjusts the Tier 1 SFTP weighted average standards
downward to reflect the decrease in the component FTP standards. The
weighting factors remain the same and the US06 and SC03 standards
remain the same, but the SFTP standard becomes tighter because the FTP
component becomes smaller. These standards will take effect for all
LDV/LLDTs beginning in 2004 and will phase in with the Tier 2 standards
for HLDTs in 2008 and 2009. The formula is as follows:
New SFTP Standard = Old SFTP Standard - [0.35 x (Tier 1 FTP
standard - New FTP Standard)]
In today's final rule, we will employ this formula to compute full
useful life SFTP standards for all Tier 2 vehicles and for interim LDV/
LLDTs. Because we are also adopting the California 4000 mile SFTP
standards for these vehicles, we are not adopting intermediate life
SFTP standards, so as to avoid the burden of three sets of SFTP
standards.
LDT3 and LDT4 SFTP standards do not currently apply to diesels.
Further, the standards applicable to Tier 1 diesel LDVs and LDT1s are
less stringent than gasoline standards and do not apply to the SC03
cycle. There are no SFTP standards under Tier 1 for diesel LDT2s. In
this final rule, we are applying the same approach we are using with
other standards in this document to the Tier 2 and interim SFTP
standards. Consequently, we are finalizing that Tier 2 vehicles and
interim LDV/LLDTs with diesel or gasoline engines must comply with the
same NMHC+NOX and CO SFTP limits. Thus, in computing Tier 2
SFTP full life standards for diesel LDVs and LDT1s from Tier 1 values,
the values for diesels must be determined from the standards applicable
to gasoline vehicles of the same category.
Because we lack certainty as to whether diesel vehicles can comply
with the 4,000 mile SFTP standards for gasoline vehicles that we are
adopting from the NLEV and Cal LEV I programs, we are providing an
option that diesel LDV/LLDTs may comply with intermediate life SFTP
standards instead.\115\ Manufacturers must calculate intermediate life
standards using the same approach described for full life standards,
but must substitute appropriate intermediate life values in the
equation above. This provision will only apply through model year 2006,
and thus will likely only impact interim non-Tier 2 vehicles, given the
very small market share that diesels occupy and given our expectation
that they will be the last LDV/LLDTs phased into Tier 2 standards. We
noted above that interim non-Tier 2 HLDTs will have the option of
meeting Tier 1 SFTP standards. Thus diesel HLDTs will not have to
comply with the 4,000 mile standards in the interim years and the
option we are providing for LDV/LLDTs is not needed for HLDTs.
---------------------------------------------------------------------------
\115\ The 4,000 mile standards under NLEV are phased-in in such
a way that diesels would not likely be subject to them until the
2004 model year, given their very small market share. Today's
rulemaking effectively supercedes the NLEV program beginning with
the 2004 model year. In other words, while NLEV contains 4,000 mile
SFTP standards for diesels, they are not likely to ever impact
diesel LDV/LLDTs.
---------------------------------------------------------------------------
5. Adding a PM Standard to the SFTP Standards
We requested comment on the appropriate SFTP PM standards for
diesel vehicles. We suggested it would be appropriate to establish a
margin above the applicable FTP PM standard to serve as the SFTP
standard. EPA has implemented such margins in recent consent decrees,
under which heavy-duty engine manufacturers have agreed not to exceed
emission levels 1.25 times the applicable exhaust standards (including
PM standards) when engines are operated over a wide range of operating
conditions. We received comments in favor of an SFTP PM standard of
1.25 times the FTP standard and we received many comments from
manufacturers against setting any SFTP PM standard until more data
become available.
We believe it is reasonable to include an SFTP standard for PM.
However, we are uncertain as to the technical appropriateness of the
1.25 value for passenger vehicles. Further, the 1.25 value would lead
to an SFTP standard for PM that would not match the stringency of the
other SFTP standards we are finalizing. Consequently, we are finalizing
a procedure for computing diesel PM standards that is nearly identical
to the procedure for computing weighted SFTP standards for
NMHC+NOX and CO described above. We believe standards
computed in this way will be readily feasible for both gasoline and
diesel vehicles.
To compute the SFTP PM standards, manufacturers will use the same
formula described above for NMHC+NOX and CO. Where that
formula calls for the Tier 1 SFTP standard to be inserted,
manufacturers must insert the Tier 1 FTP standard. This is because,
under Tier 1 standards, there is no SFTP standard for PM. However, the
Tier 1 weighted SFTP standards are equal to the Tier 1 FTP standards
(or the sum of the Tier 1 FTP standards in the case of
NMHC+NOX). Using the Tier 1 FTP PM standards in this way
will lead to a Tier 2 SFTP PM standard whose stringency is
appropriately matched to the other pollutants.
For HLDTs , we proposed and are finalizing that Tier 1 SFTP
standards would apply through the interim program. because of the late
start of SFTP phase-in for Tier 1 vehicles. We see no reason to impose
SFTP PM standards on these vehicles during the interim period when
their manufacturers will be under pressure to develop diesel vehicles
to comply with the Tier 2 standards. Also, if we were to impose an FTP
PM standard on the interim vehicles, it would likely be matched to the
interim phase in for HLDTs and manufacturers would simply defer
compliance for diesels until the last phase-in year (2007). The
manufacturers would then have to recertify to the Tier 2 standards by
2009. Given the relatively small number of diesel vehicles, we believe
the most reasonable approach is to defer SFTP PM standards for HLDTs
until the Tier 2 phase-in. Consequently, we are finalizing that Tier 2
HLDTs will have to comply with an SFTP PM standard computed as
described above.
For LDV/LLDTs we are also including the SFTP PM standard for the
Tier 2 vehicles. There are only a few diesel LDV/LLDTs currently
produced and no large increase in their numbers is expected. We see
little environmental benefit in imposing the SFTP PM standard on
interim vehicles.
6. Future Efforts Relevant to SFTP Standards
We are very concerned about ``off cycle'' emissions, i.e. those
emissions that occur under vehicle operational modes that are not
captured in the FTP. SFTP standards help to address our concerns and we
believe that they should apply to all vehicles, regardless of fuel. Our
final rule essentially promulgates Tier 1 SFTP standards that are
reduced to represent the reduction in the FTP component standards. As
we indicate under our discussion of SFTP for medium duty passenger
vehicles (see section IV.B.4.g) we expect to conduct a rulemaking to
establish appropriate ``Tier 2'' SFTP standards for all Tier 2
vehicles. In that rule, we expect to reexamine the US06 and SC03 test
cycles and their applicability to vehicles using different fuels and
technologies,
[[Page 6792]]
including whether these cycles are the most appropriate ones for
diesels. We will also examine whether it is necessary to have different
sets of standards for different vehicle sizes or whether it is possible
to establish one set of standards for all vehicles.
D. LDT Test Weight
Historically, HLDTs (LDT3s and LDT4s) have been emission tested at
their adjusted loaded vehicle weight (ALVW), while LDVs, LDT1s, and
LDT2s have been tested at their loaded vehicle weight (LVW). ALVW is
equivalent to the curb weight of the truck plus half its maximum
payload, while LVW is equivalent to the curb weight of the truck plus a
driver and one adult passenger (300 pounds). As we are equalizing
standards and useful lives across LDVs and all categories of LDTs, we
believe it is appropriate to test all the vehicles under the same
conditions. Therefore, we are finalizing as proposed to test HLDTs at
their loaded vehicle weight. We believe this is appropriate because the
standards we are imposing on HLDTs under Tier 2 are considerably more
stringent than the Tier 1 standards. Further, one of our reasons for
bringing HLDTs under the same standards as passenger cars is that these
trucks include many vans and sport utility vehicles that are often used
as passenger cars with just one or two passengers. Lastly, we note that
testing HLDTs at LVW is consistent with the way they have been tested
for fuel economy purposes for many years. Consequently, we believe it
is appropriate to test them at LVW.
The NPRM proposed that all HLDTs would certify using LVW beginning
in the 2004 model year. Based upon comments, the final rule will allow
the certification of HLDTs based on ALVW until those vehicles are
phased into the Tier 2 standards in 2008 and 2009 at which time they
must be tested at LVW. This will enhance carryover of California
vehicles to the Federal interim program in cases where the California
vehicles meet our interim standards.
E. Test Fuels
As discussed elsewhere in this preamble, the NLEV program was
adopted virtually in its entirety from California's program. Because
California's standards were developed around the use of California
Phase II reformulated gasoline (RFG) as the exhaust emission test fuel,
we adopted California Phase II test fuel as the exhaust emission test
fuel for gasoline-fueled vehicles in the federal NLEV program, although
we recognized at the time that vehicles outside of California would be
unlikely to operate on that fuel in use. In the NPRM we proposed
interim programs that were derived from NLEV (for LDV/LLDTs) and the
CAL LEVI program (for HLDTs), and we proposed to accept certification
test results generated on California fuel, but indicated that we might
test or require in-use testing on federal fuel.
Based upon comment we are finalizing provisions to permit, for
interim vehicles, that if a test group has been certified to the
exhaust emission standards using California fuel and is being carried
into the interim program from NLEV or is being carried across from
California LEV I certification, then we will not test or require in-use
exhaust testing on federal fuel. This change is intended to help
address recertification workload concerns raised by manufacturers. For
new certification not carried across from California LEV I or carried
over from NLEV, and for any Tier 2 vehicles, we will accept exhaust
certification test results based on California fuel for 50 state
vehicles only, but we will reserve the right to perform or require
certification confirmatory testing and in-use testing on federal test
fuel.
We recognize that manufacturers may want to perform calibration
changes on vehicles carried across from the California LEV I program or
carried over from NLEV program. These calibration changes will likely
be aimed at certifying the test group to the lowest possible
NOX value. We believe that these calibration changes would
be appropriate, provided they can still be covered by the existing
worst case durability data vehicle. We will perform or require
certification confirmatory testing and in-use emission testing on these
vehicles using California fuel.
Because differences exist between the California and federal
evaporative emission testing procedures, we proposed to continue to
require the use of federal certification fuel as the test fuel in
evaporative emission testing. Under current programs, where California
and federal evaporative emission standards are essentially the same,
California accepts evaporative results generated on the federal
procedure (using federal test fuel), because available data indicates
the federal procedure to be a ``worst case'' procedure. The evaporative
standards California has adopted for their LEV II program are more
stringent than those we are finalizing in this document. In the NPRM,
we requested comment and supporting emission test data on whether
vehicles certified to CalLEV II evaporative standards using California
fuels will necessarily comply with the federal Tier 2 evaporative
standards, including ORVR standards, when tested with federal test
fuel. While we got comments from manufacturers advocating that we
accept the results of California evaporative testing to demonstrate
compliance with the federal evaporative standards, we received no
supporting data. Still, given the fairly large difference between
California and federal evaporative standards, it seems reasonable that
a vehicle meeting the California standards under California fuels and
test conditions might also meet federal standards under federal fuels
and conditions. We believe it may be possible for manufacturers to
establish a relationship between the two sets of standards, fuels and
conditions that would enable us to grant federal certification based
upon data showing conformity with the California standards under
California fuels and conditions. Consequently, we are including a
provision in the certification regulations to enable manufacturers to
obtain federal evaporative certification based upon California results,
if they obtain advance approval from EPA. EPA will review test data
from manufacturers to establish whether it is appropriate to accept
California data to demonstrate compliance with federal standards.
F. Changes to Evaporative Certification Procedures To Address Impacts
of Alcohol Fuels
Current certification procedures, including regulations under the
new CAP2000 program,\116\ allow manufacturers to develop their own
durability process for calculating deterioration factors for
evaporative emissions. The regulations (Sec. 86.1824-01) permit
manufacturers to develop service accumulation (aging) methods based on
``good engineering judgement''. The manufacturer's durability process
must be designed to predict the expected evaporative emission
deterioration of in-use vehicles over their full useful lives. We
proposed and are finalizing requirements that these aging methods
include the use of alcohol fuels to address concerns that alcohol fuels
increase the permeability and thus the evaporative losses from hoses
and other evaporative components. Based upon comment, we are also
finalizing an option to the requirement that the manufacturer use the
alcohol fuel. Under this option, the manufacturer may demonstrate to
EPA using good engineering judgement
[[Page 6793]]
acceptable to EPA that its durability process for calculating
evaporative emission deterioration factors accurately predicts
deterioration under prolonged exposure to alcohol fuels.
---------------------------------------------------------------------------
\116\ The Compliance Assurance Program, (64 FR 23906) takes
effect in the 2000 model year.
---------------------------------------------------------------------------
We have reviewed data indicating that the permeability, and
therefore the evaporative losses, of hoses and other evaporative
components can be greatly increased by exposure to fuels containing
alcohols.\117\ Alcohols have been shown to promote the passage of
hydrocarbons through a variety of different materials commonly used in
evaporative emission systems. Data from component and fuel line
suppliers indicate that alcohols cause many elastomeric materials to
swell, which opens up pathways for hydrocarbon permeation and also can
lead to distortion and tearing of components like ``O'' ring seals.
Ethers such as MTBE and ETBE have a much smaller effect. Alcohol-
resistant materials such as fluoroelastomers are available and are
currently used by manufacturers to varying extents.
---------------------------------------------------------------------------
\117\ Numerous SAE papers examine the permeability of fuel and
evaporative system materials as well as the influence of alcohols on
permeability. See, for example SAE Paper #s 910104, 920163, 930992,
970307, 970309, 930992, and 981360, copies of which are in the
docket for this rulemaking.
---------------------------------------------------------------------------
Alcohols do not impact evaporative components and hoses
immediately, but rather it may take as long as one year of exposure to
alcohol fuels for permeation rates to stabilize. The end result is
higher permeation and increased in-use evaporative emissions.\118\
---------------------------------------------------------------------------
\118\ Ibid.
---------------------------------------------------------------------------
Today, roughly 10% of fuel sold in the U.S. contains alcohol,
mainly in the form of ethanol, and such fuels are often offered in
ozone nonattainment areas. We believe it is appropriate to ensure that
evaporative certification processes expose evaporative components to
alcohols and do so long enough to stabilize their permeability.
Therefore, we are finalizing our proposal to the evaporative
certification requirements to require manufacturers to develop their
deterioration factors using a fuel that contains the highest legal
quantity of ethanol available in the U.S.
To implement this change, we are modifying the Durability
Demonstration Procedures for Evaporative Emissions found at
Sec. 86.1824-01. The amendments will require manufacturers not using an
approved option, to age their systems using a fuel containing the
maximum concentration of alcohols allowed by EPA in the fuel on which
the vehicle is intended to operate, i.e., a ``worst case'' test fuel.
(Under current requirements, this fuel would be about 10% ethanol, by
volume.) We are also modifying the Durability Demonstration Procedures
to require manufacturers to ensure that their aging procedures are of
sufficient duration to stabilize the permeability of the fuel and
evaporative system materials. These modifications will take place as
vehicles are phased into the evaporative emission standards contained
in this final rule.
We requested comment on alternative ways by which manufacturers
could document or demonstrate that their components are made of
materials whose permeability is not significantly affected by alcohols.
We received no comments responsive to this request, but we did receive
comments that EPA should not change the CAP2000 provision allowing
manufacturers to develop their own durability process for calculating
evaporative emission deterioration factors ``using good engineering
judgement''. We do not wish to foreclose the possibility that an
alternative method may exist or may arise in the future. Consequently,
in the final rule we will permit manufacturers to use an optional
method based on good engineering judgement acceptable to EPA. As an
example, one method would be for the manufacturer to show that it is
exclusively using materials documented in the technical literature to
have low permeability in the presence of alcohols.
G. Other Test Procedure Issues
California's LEV II program implements a number of minor changes to
exhaust emissions test procedures. We have evaluated these changes and
found that, for tailpipe emissions, the California test procedures fall
within ranges and specifications permitted under the Federal Test
Procedure.
With regard to hybrid electric vehicles (HEVs) and zero emission
vehicles (ZEVs), we believe that these vehicles will be predominantly
available in California, or that they will typically be first offered
for sale in California, because of California's ZEV requirement, which
promotes the sale of HEVs and ZEVs. Where manufacturers market HEVs or
ZEVs outside of California, it is likely that they will market the same
vehicles in California. Consequently, we are finalizing our proposal to
incorporate by reference California's exhaust emission test procedures
for HEVs and ZEVs.\119\
---------------------------------------------------------------------------
\119\ California Exhaust Emission Standards and Test Procedures
for 2003 and Subsequent Model Zero-Emission Vehicles, and 2001 and
Subsequent Model Hybrid Electric Vehicles. In the Passenger Car,
Light-Duty Truck and Medium-Duty Vehicle Classes; adopted August 5,
1999.
---------------------------------------------------------------------------
In the NLEV program, we provided a specific formula used by
California that could be used to compute an HEV contribution factor to
NMOG emissions. This formula took into consideration the range without
engine operation of various types of HEVs and had the effect of
reducing the NMOG emission standard for a given emission bin (for HEV
vehicles only). This would have obvious beneficial effects on a
manufacturer's calculation of its corporate NMOG average.
The technology of HEVs is under rapid change and we do not believe
that we can design a formula now that will accurately predict the
impact of HEVs on corporate average NOX emissions in the
Tier 2 time frame. Consequently, we are finalizing the proposed
provision by which manufacturers could propose HEV contribution factors
for NOX to EPA. If approved, these factors can be used in
the calculation of a manufacturer's fleet average NOx emissions and
will provide a mechanism to credit an HEV for operating with no
emissions over some portion of its life.
These factors will be based on good engineering judgement and will
consider such vehicle parameters as vehicle weight, the portion of the
time during the test procedure that the vehicle operates with zero
emissions, the zero emission range of the vehicle, NOX
emissions from fuel-fired heaters and any measurable NOX
emissions from on-board electricity production and storage.
The final NLEV rule (See 62 FR pg 31219, June 6, 1997) incorporated
by reference California's NMOG measurement procedure and adopts
California's approach of using Reactivity Adjustment Factors (RAFs) to
adjust vehicle emission test results to reflect differences in the
impact on ozone formation between an alternative-fueled vehicle and a
vehicle fueled with conventional gasoline. As has been discussed
elsewhere in this preamble, the NLEV program is a special case in which
California standards and provisions were adopted virtually in their
entirety. In the preamble to the final NLEV rule (See 62 FR 31203), we
expressed our reservations about the use of RAFs. We also addressed our
reservations about the use of reactivity factors developed in
California in a program that spans a range of climates and geographic
locations across the United States in the final rule on reformulated
gasoline (RFG) (see 59 FR 7220). We continue to be concerned about the
validity of RAFs to predict ozone formation nationwide and asked the
National Academy of Sciences to
[[Page 6794]]
look at the scientific evidence in support of the use of these factors
nationwide. While we have recently received a report from NAS,\120\ we
have not yet developed a final position on how RAFs should be treated
in federal regulations. We are finalizing as proposed not to permit the
use of RAFs in the Tier 2 program.
---------------------------------------------------------------------------
\120\ Ozone-Forming Potential of Reformulated Gasoline, May
1999. National Academy of Sciences; National Academy Press.
Available from the NAS web site: http://www.nap.edu.
---------------------------------------------------------------------------
The issue of RAFs is relevant primarily to alcohol and CNG-fueled
vehicles. RAFs are not relevant at all if a manufacturer elects to use
NMHC data to show compliance with the NMOG standards. While, in our
final rule, alcohol and CNG vehicles will have to comply with NMOG
standards beginning in 2004 and while we desire to harmonize with
California when practical and reasonable, we will not permit the use of
RAFs for Tier 2 vehicles and interim non-Tier 2 vehicles. We note that
we are finalizing a provision from the NPRM that permits dual fueled
and flexible fueled vehicles to elect an NMOG value from the next
higher bin when they are tested on an alternative fuel. This provides
flexibility in compliance with applicable NMOG standards for these
vehicles. We do not believe that dedicated alcohol or CNG vehicles
should have any problems complying with the NMOG standards we are
finalizing and consequently the relief these vehicles might get when
RAFs are employed is unnecessary.
In its LEV II program, California is also implementing a number of
changes to evaporative emission test procedures.\121\ Many of these
changes address the evaporative emission testing of hybrid electric
vehicles. We proposed not to adopt California's changes, because
California uses different test temperatures and different test fuel in
its evaporative emission testing of gasoline vehicles than we use in
the federal program. The preamble to the final NLEV rule (See 62 FR
31227) explains that California and EPA are reviewing an industry
proposal to streamline and reconcile the California and federal
procedures. That work has not been completed. However, where California
adopts procedures specific to HEVs and ZEVs, we are adopting those
procedures, except that our testing will occur at lower temperatures,
and use a fuel determined by EPA to be representative of federal usage
(for HEVs only).
---------------------------------------------------------------------------
\121\ California Evaporative Emission Standards and Test
Procedures for 2001 and Subsequent Model Motor Vehicles. Adopted
August 5, 1999.
---------------------------------------------------------------------------
H. Small Volume Manufacturers
Our final rule includes the following flexibilities intended to
assist all manufacturers in complying with the stringent proposed
standards without harm to the program's environmental goals as
presented in the NPRM:
A four year phase-in of the standards for LDV/LLDTs;
A delayed phase-in for HLDTs;
The freedom to select from specific bins of standards;
A standard that can be met through averaging, banking and
trading of NOX credits;
Provisions for NOX credit deficit carryover;
and,
Provisions for alternative phase-in schedules.
These flexibilities apply to all manufacturers, regardless of size,
and in general we believe they eliminate the need for more specific
provisions for small volume manufacturers.\122\ However, we proposed
and are finalizing one additional flexibility for small volume
manufacturers. Today's rule exempts small volume manufacturers from the
25%, 50% and 75% Tier 2 phase-in requirements applicable to the 2004,
2005 and 2006 LDV/LLDTs and the 50% phase-in requirement applicable to
2008 HLDTs. Instead, small volume manufacturers will simply comply with
the appropriate Tier 2 100% requirement in the 2007 and 2009 model
year. In the phase-in years, small volume manufacturers will simply
comply with the appropriate interim standards for all of their
vehicles, except that we will also exempt small volume manufacturers
from the 25%, 50% and 75% phase-in requirements for the 0.20 g/mi
corporate average NOX standard applicable to interim HLDTs
in 2004-2006. Small volume HLDT manufacturers must simply comply with
the interim standards, including the corporate average NOX
standard, in 2007 for 100% of their vehicles. During model years 2004-
2006, these same small volume manufacturers must comply with any of the
applicable bins of standards for 100% of their HLDTs.\123, 124\
Provisions to deal with the leadtime issue related to HLDTs and
outlined in section IV.B. apply to small volume manufacturers.
Therefore unless the small volume manufacturer wants to use the
optional NMOG standards for interim LDT2s and LDT4s, it may optionally
meet the Tier 1 standards for its 2004 model year HLDTs, provided it
commences its model year for those vehicles before the fourth
anniversary date of today's rulemaking.
---------------------------------------------------------------------------
\122\ We define small volume manufacturers to be those with
total U.S. sales of less than 15,000 highway units per year.
Independent commercial importers (ICIs) with sales under 15,000 per
year are included under this term.
\123\ For a graphical illustration of the phase-ins through
time, see Table IV.B.-2.
\124\ 2005-2006 for vehicles where the small volume manufacturer
commences its 2004 model year for all its 2004 vehicles before the
fourth anniversary date of the signature of this rule.
---------------------------------------------------------------------------
As explained in the NPRM, we will continue to apply the federal
small volume manufacturer provisions, which provide relief from
emission data and durability showing and reduce the amount of
information required to be submitted to obtain a certificate of
conformity. In addition, the CAP2000 program contains reduced in-use
testing requirements for small volume manufacturers.
Exempting small volume manufacturers from the Tier 2 and interim
HLDT phase-in requirements eliminates a dilemma that phase-in
percentages can pose to a manufacturer that has a limited product line,
i.e., how to address percentage phase-in requirements if the
manufacturer makes vehicles in only one or two test groups. We have
implemented similar provisions for small entities in other rulemakings.
Approximately 15-20 manufacturers that currently certify vehicles, many
of which are independent commercial importers (ICIs), will qualify.
These manufacturers represent just a fraction of one percent of LDVs
and LDTs produced. We do not believe that this provision will have any
measurable impact on air quality.
1. Special Provisions for Independent Commercial Importers (ICIs)
We requested comment in the NPRM as to whether ICIs should be
exempted from the interim and Tier 2 fleet average NOX
standards. We explained that ICIs may not be able to predict their
sales and control their fleet average emissions because they may be
dependent upon vehicles brought to them by individuals attempting to
import uncertified vehicles. We noted that the NLEV program is optional
for ICIs and that ICIs are specifically prohibited, under existing
regulations, from complying with the fleet average NMOG standard under
the NLEV program. (See 40 CFR 85.1515(c)). Also, the existing
regulations specifically bar ICIs from participating in any emission
related averaging, banking or trading program. (See 40 CFR 85.1515(d)).
We expressed our concern that if we do not amend this provision, ICIs
would likely just pick the least stringent bin available to certify
their vehicles. This would create an inequity for other manufacturers,
[[Page 6795]]
especially other small volume manufacturers that must comply with the
fleet average NOX standards.
Since we do not believe it is wise to finalize a provision that
could lead to an inequity like this, and since averaging may not be
workable for ICIs, we are finalizing that ICIs must comply with the
standards from the bin that contains the relevant fleet average
NOX standard, e.g., in model years 2007 and later an ICI
would have to use bin 5 or below for all of its LDV/LLDTs. However, if
an ICI is able to purchase credits or to certify to bins below the one
containing the fleet average NOX standard, we will permit
the ICI to bank credits for future use. Where an ICI desires to certify
to bins above the fleet average standard, we will permit them to do so
if they have adequate and appropriate credits. Where an ICI desires to
certify to bins above the fleet average standard and does not have
adequate or appropriate credits to offset the vehicles, we will permit
the manufacturer to obtain a certificate for vehicles using those bins,
but will condition the certificate such that the manufacturer can only
produce vehicles if it first obtains credits from other manufacturers
or from other vehicles certified to lower bins during that model year.
We do not believe that ICIs can predict or estimate their sales of
various vehicles well enough to participate in a program that will
allow them leeway to produce some vehicles to higher bins now, knowing
that they will sell vehicles from lower bins later. We also do not
believe that we can reasonably assume that an ICI that certifies and
produces vehicles one year, will certify or even be in business the
next, consequently, we are also not permitting ICIs to utilize the
deficit carryforward provisions of the rule.
Essentially, ICIs will be allowed the major benefits of the
averaging, banking and trading program, but will be constrained from
getting into a situation where they can ever produce vehicles to higher
bins that they can not cover with credits at the time they produce the
vehicles.
2. Hardship Provision for Small Volume Manufacturers
The panel convened under the Small Business Regulatory Enforcement
Fairness Act recommended that we seek comment on the inclusion of a
hardship provision. We requested comment on whether we should include
such a provision in the NPRM. Based upon comment, we are including a
limited hardship provision in the final rule that will be applicable to
small volume manufacturers.
Small volume manufacturers include companies that independently
import motor vehicles (Independent Commercial Importers or ICIs),
companies that modify vehicles to operate on alternative fuels,
companies that produce specialty vehicles by modifying vehicles
produced by others, and companies that produce small quantities of
their own vehicles, but rely on major manufacturers for engines and
other vital emission related components. In these businesses,
predicting sales is difficult and it is often necessary to rely on
others for technology.
This provision will provide limited relief in the case where a
small volume manufacturer is unable to comply with the phase-in dates
or average NOX standard. The manufacturer will need to
provide evidence that, despite its best efforts, it cannot meet
implementation dates or required NOX averages.
Appeals for hardship relief must be made in writing, must be
submitted before the earliest date of noncompliance, must include
evidence that the noncompliance will occur despite the manufacturer's
best efforts to comply and must include evidence that severe economic
hardship will be faced by the company if the relief is not granted.
Hardship relief will only be granted for the first year after a new
standard is finally implemented. For small volume manufacturers, which
are already exempted from the phase-in schedules for the interim and
Tier 2 programs, this means that relief would be available for the
final phase-in year for the LDV/LLDT Tier 2 phase-in (2007), for the
final phase-in year for the interim HLDT phase-in (2007), and the final
phase-in year for the Tier 2 HLDT phase-in (2009). Relief will also be
available for manufacturers that did not opt into NLEV and must meet
our interim standards for all their LDV/LLDTs in 2004, and relief will
be available for HLDTs and MDPVs which must be brought under our
interim program in the 2004 model year.
We will work with the applicant to ensure that all other remedies
available under this rule, e.g., use of banked or purchased credits,
are exhausted before granting additional relief, and will limit the
period of relief to one year. Note that in our discussion of the credit
deficit carryforward provision in section IV.B.4.d.vi, we indicate that
we are not permitting small volume manufacturers to carry deficits
forward until they have demonstrated compliance with the NOX
averaging provisions for one year. This is to prevent small volume
manufacturers, that have already received additional time due to the
waiver of the phase-in requirements, from gaining even more time to
finally comply through the credit deficit carryforward provisions.
To avoid this provision creating a self-implementing problem, by
which the very existence of the hardship provision prompts small volume
manufacturers to delay development, acquisition and application of new
technology, we want to make clear that we expect this provision to be
rarely used. Our final rule contains numerous flexibilities for all
manufacturers and it waives the phase-in steps for small volume
manufacturers, which effectively provides them more time. We expect
small manufacturers, to prepare for the applicable implementation dates
in today's rule.
I. Compliance Monitoring and Enforcement
1. Application of EPA's Compliance Assurance Program, CAP2000
The CAP2000 program (64 FR 23905, May 14, 1999) streamlines and
simplifies the procedures for certification of new vehicles and will
also require manufacturers to test in-use vehicles to monitor
compliance with emission standards. The CAP2000 program was developed
jointly with the State of California and involved considerable input
and support from manufacturers. As the name implies, it can be
implemented as early as the 2000 model year.
We are finalizing our proposal that the Tier 2 and the interim
requirements will be implemented subject to the requirements of the
CAP2000 program. Certain CAP2000 requirements are being slightly
modified to reflect changes to useful lives, standard structure and
other aspects of the Tier 2 program, but we proposed no major changes
to fundamental principles of the CAP2000 program, and we are not adding
any major changes with today's final rule.
Although we proposed changes to useful lives, we did not propose to
amend the 50,000 mile minimum mileage used in manufacturer in-use
verification testing or in-use confirmatory testing under the CAP2000
program at this time. The CAP2000 in-use program is not yet implemented
and we believe it is appropriate to allow manufacturers to gain
experience with procuring and testing vehicles at the 50,000 mile level
before making significant changes. However, where one vehicle from each
in-use test group would have a minimum mileage of 75,000 miles under
the CAP2000 program, we proposed and are finalizing, consistent with
California, to
[[Page 6796]]
change that figure to 90,000 miles for Tier 2 vehicles.
We may, in our own in-use program, procure and test vehicles at
mileages higher than 50,000 and pursue remedial actions (e.g., recalls)
based on that data. We may also use that data as the basis to initiate
a rulemaking to make changes in the CAP2000 in-use requirements, if the
data indicate significant non-conformity at higher mileages.
We are finalizing certification test fuel specifications consistent
with our final fuel sulfur requirements. Given the phase-in for low
sulfur fuel we are finalizing in this rulemaking, we recognize that
2004 to 2007 vehicles (and vehicles certified in earlier model years to
bank early NOX credits) may be exposed to higher sulfur
levels early in their lives. Because of this sulfur exposure, these
vehicles could experience problems with OBD indicator light
illuminations.
Consistent with our approach under the NLEV program, we will
consider requests from manufacturers to permit OBD systems that
function properly on low sulfur fuel, but exhibit sulfur-induced passes
when operated on higher sulfur fuel. For OBD systems that exhibit
sulfur-induced indicator light illumination, we will consider requests
to modify such vehicles on a case-by-case basis.
2. Compliance Monitoring
We plan no new compliance monitoring activities or programs for
Tier 2 vehicles. These vehicles will be subject to the certification
and manufacturer in-use testing provisions of the CAP2000 rule. Also,
we expect to continue our own in-use testing program for exhaust and
evaporative emissions. We will pursue remedial actions when substantial
numbers of properly maintained and used vehicles fail any standard in
either in-use testing program.
Consistent with our approach under NLEV we will consider requests,
prior to manufacturer or EPA in-use testing to permit preconditioning
procedures designed solely to remove the effects of high sulfur
gasoline on vehicles produced through the 2007 model year.
We retain the right to conduct Selective Enforcement Auditing of
new vehicles at manufacturer's facilities. In recent years, we have
discontinued SEA testing of new LDVs and LDTs, because compliance rates
were routinely at 100%. We recognize that the need for SEA testing may
be reduced by the low mileage in-use testing requirements of the
CAP2000 program. However, we expect to re-examine the need for SEA
testing as standards tighten under the NLEV, interim, and Tier 2
programs.
We have established a data base to record and track manufacturers'
compliance with NLEV requirements including the corporate average NMOG
standards. We expect to monitor manufacturers' compliance with the Tier
2 and interim corporate average NOX standards in a similar
fashion and also to monitor manufacturers' phase-in percentages for
Tier 2 vehicles.
3. Relaxed In-Use Standards for Vehicles Produced During the Phase-in
Period
The Tier 2 standards will be challenging for manufacturers to
achieve, and some vehicles will pose more of a challenge than others.
Not only will manufacturers be responsible for assuring that vehicles
can meet the standards at the time of certification, they will also
have to ensure that the vehicles comply when self-tested in-use under
the provisions of the CAP2000 program, and when tested by EPA under its
in-use (``Recall'') test program.
With any new technology, or even with new calibrations of existing
technology, there are risks of in-use compliance problems that may not
appear in the certification process. In-use compliance concerns may
discourage manufacturers from applying new technologies or new
calibrations. Thus, we proposed and are finalizing, relaxed in-use
standards for those bins most likely to require the greatest
applications of effort, to provide assurance to the manufacturers that
they will not face recall if they exceed standards by a specified
amount.
For the first two years after a test group meeting a new standard
is introduced, that test group will be subject to more lenient in-use
standards. These ``in-use standards'' will apply only to bin 5 and
below, only for the pollutants indicated, and only for the first two
model years that a test group is certified under that bin. The in-use
standards will not be applicable to any test group first certified to a
new standard after 2007 for LDV/LLDTs or after 2009 for HLDTs.
The temporary in-use standards are shown in Table V.A.-3 below.
Table V.A.-3.--In-use Compliance Standards (g/mi)
[Certification standards shown for reference purposes]
------------------------------------------------------------------------
Durability
Bin period NOX In- NOX NMOG in-use NMOG
(miles) use certification certification
------------------------------------------------------------------------
5....... 50,000 0.05 n/a 0.075
5....... 120,000 0.10 0.07 n/a 0.090
4....... 120,000 0.06 0.04 n/a 0.070
3....... 120,000 0.05 0.03 0.09 0.055
2....... 120,000 0.03 0.02 0.02 0.010
------------------------------------------------------------------------
Because we are concerned that diesel vehicles may require low
sulfur fuel to comply with our interim requirements and that such fuel
may not be widely available until the 2006-2007 timeframe, we are
providing in-use standards specifically for diesel vehicles certified
to bin 10 standards. These standards will be determined by multiplying
the applicable NOX and PM certification standards by factors
of 1.2 and 1.35, respectively. These multipliers can be used only for
years during which bin 10 is viable, only for diesels and only for the
pollutants indicated.
We believe manufacturers should and will strive to meet
certification standards for the full useful lives of the vehicles, but
we recognize that the existence of such in-use standards poses some
risk that a manufacturer might aim for the in-use standard in its
design efforts rather than the certification standard, and thus market
less durable designs. We do not believe that risk to be significant. We
believe that such risks are more than balanced by the gains that can
result from earlier application of new technology or new calibration
techniques that might occur in a scenario where in-use liability is
slightly reduced. Further, we believe that the in-use standards will be
of short enough duration that any risks are minimal.
[[Page 6797]]
4. Enforcement of the Tier 2 and Interim Corporate Average
NOX Standards
We are finalizing, as proposed, that manufacturers can either
report that they meet the relevant corporate average NOX
standard in their annual reports to the Agency or they can show via the
use of NOX credits that they have offset any exceedance of
the corporate average NOX standard. Manufacturers will also
have to report their NOX credit balances or deficits.
The averaging, banking and trading program will be enforced through
the certificate of conformity that the manufacturer must obtain in
order to introduce any regulated vehicles into commerce. The
certificate for each test group will require all vehicles to meet the
applicable Tier 2 emission standards from the applicable bin of the
Tier 2 program, and will be conditioned upon the manufacturer meeting
the corporate average NOX standard within the required time
frame. If a manufacturer fails to meet this condition, the vehicles
causing the corporate average NOX exceedance will be
considered to be not covered by the certificate of conformity for that
engine family. A manufacturer will be subject to penalties on an
individual vehicle basis for sale of vehicles not covered by a
certificate. These provisions will also apply to the interim corporate
average standards.
As outlined in detail in the preamble to the final NLEV rule, EPA
will review the manufacturer's sales to designate the vehicles that
caused the exceedance of the corporate average NOX standard.
We will designate as nonconforming those vehicles in those test groups
with the highest certification emission values first, continuing until
a number of vehicles equal to the calculated number of noncomplying
vehicles as determined above is reached. In a test group where only a
portion of vehicles are deemed nonconforming, we will determine the
actual nonconforming vehicles by counting backwards from the last
vehicle produced in that test group. Manufacturers will be liable for
penalties for each vehicle sold that is not covered by a certificate.
During phase in years, the certificates will also require
manufacturers to meet the applicable phase-in requirements. Compliance
with the phase-in requirements will be enforced in the same manner as
for the corporate average NOX standard. For the optional
phase-in requirement for HLDTs for model year 2004, manufacturers must
declare in their application for certification whether they intend to
comply with the interim requirements for all of their HLDTs and
initiate phase-in to the interim corporate average NOX
standard in 2004 and receive the benefits of that phase-in (less
stringent NMOG standards for certain LDT2s and LDT4s). Compliance with
this phase-in requirement and the fleet average NOX standard
will be enforced just like compliance with any other average
NOX standard and phase-in requirement of today's program.
We will also condition certificates to enforce the requirements
that manufacturers not sell NOX credits that they have not
generated. A manufacturer that transfers NOX credits it does
not have will create an equivalent number of debits that it must offset
by the reporting deadline for the same model year. Failure to cover
these debits with NOX credits by the reporting deadline will
be a violation of the conditions under which EPA issued the certificate
of conformity, and nonconforming vehicles will not be covered by the
certificate. EPA will identify the nonconforming vehicles in the same
manner described above.
In the case of a trade that results in a negative credit balance
that a manufacturer could not cover by the reporting deadline for the
model year in which the trade occurred, we proposed, and are
finalizing, to hold both the buyer and the seller liable. This is
consistent with other mobile source rules, except for the NLEV rule as
discussed below. We believe that holding both parties liable will
induce the buyer to exercise diligence in assuring that the seller has
or will be able to generate appropriate credits and will help to ensure
that inappropriate trades do not occur.
In the NLEV program we implemented a system in which only the
seller of credits would be liable. In the preamble to the final NLEV
rule (See 62 FR 31216), we explained that a multiple liability approach
would be unnecessary in the context of the NLEV program given that the
main benefit to a multiparty liability approach would be to ``protect
against a situation where one party sells invalid credits and then goes
bankrupt, leaving no one liable for either penalties or compensation
for the environmental harm.'' Our preamble stated further that EPA
would not necessarily take the same approach for ``other differently
situated trading programs.''
The NLEV program was implemented to be a relatively short duration
program, during which time we could expect relative stability in the
industry. Also, given that NLEV is a voluntary program of lower than
mandated standards, we did not expect that the smallest manufacturers
would opt in. These are the companies whose stability is most in
jeopardy in a dynamic and very competitive worldwide business.
We currently believe that the Tier 2 program and its framework will
remain for many years. We note that the program is not scheduled for
complete phase-in for almost nine years after the publication of
today's rule. All manufacturers, large and small, will ultimately have
to meet the Tier 2 standards. We cannot predict that in the Tier 2
timeframe there will not be companies that leave the market or are
divided between other companies in mergers and acquisitions. Thus we
believe it is prudent to implement a program to provide inducements to
the seller to assure the validity of any credits that it purchases or
contracts for.
J. Addressing Environmentally Beneficial Technologies Not Recognized by
Test Procedures
Compliance with the current and proposed EPA motor vehicle emission
standards is based on the emission performance of a vehicle over EPA's
prescribed test procedure. While this test procedure addresses many of
the aspects of a vehicle's impact on air quality, it does not address
all such impacts. EPA is aware of two developing technologies which
have potential to improve ozone-related air quality, but that would not
do so over the current EPA test procedure.
The first example is a device that removes ozone from the air as
the vehicle is driven. A major producer of automotive catalysts,
Englehard, has developed a catalytic coating for vehicle radiators
(called PremAir) that converts ambient ozone to oxygen. ARB has been
working with Englehard for some time to develop a procedure which would
grant PremAir and other direct ozone reducing technologies a NMOG
credit under its LEV I and LEV II programs. ARB issued on December 20,
1999 a Manufacturers Advisory Circular outlining procedures for
establishing such a NMOG credit.
Englehard submitted substantial comments to the Tier 2 NPRM,
including ozone modeling results for five cities (Los Angeles, Houston,
Atlanta, New York City, and Chicago). This ozone modeling compared the
ozone reductions from reduced exhaust VOC and NOX emissions
to that from using PremAir. As a result of this modeling, Englehard
requested that EPA grant a typical PremAir system a NMOG or
NOX emission credit of 0.015 g/mi. This credit would be
adjusted based the exact design and performance of the system and
vehicle being certified.
[[Page 6798]]
The second example is an insulated catalyst. The insulation retains
heat for extended periods of time, increasing the catalyst temperature
when the engine is started and reducing the time required for the
catalyst to reach an operational temperature. This technology can
reduce cold start emissions for engine off times (called soaks) of 24
hours or less. The vast majority of engine soaks in-use are less than
24 hours. However, EPA's test procedure only tests emissions at two
fairly extreme soak times: 10 minutes and 12-36 hours. The 10 minute
soak is so short that even an uninsulated catalyst is warm enough to
quickly begin working upon restart. The 36 hour soak is beyond the
practical limit of cost-effective insulating techniques. As a result of
the Tier 2 NPRM, EPA received a number of inquiries from potential
manufacturers of insulated catalysts, requesting further information
about emission credits, test procedures and certification requirements.
EPA believes that both of these technologies, as well as other
potential technologies, will reduce regulated emissions and/or ambient
ozone levels, as long as they operate as designed in-use. EPA will work
with the developers of such technologies to establish regulatory
procedures to determine whether it is appropriate to grant emission
credit for particular technologies. This process will involve the
opportunity for public notice and comment.
With regard to Englehard's PremAir technology, EPA specifically
requested comments on ARB's proposed approach to determining an NMOG
credit and received no adverse comment on granting this type of
technology a VOC emission credit. Thus, EPA is promulgating today
procedures very similar to ARB's for certifying such technologies and
determining the appropriate VOC emission credit. The only difference
between EPA's and ARB's procedures involve assessing the effectiveness
of VOC emission reductions and ozone reducing devices in areas outside
of California.
In summary, the ozone reductions associated by both the ozone
reducing technology, such as PremAir, and exhaust VOC emission
reductions will be estimated using urban airshed modeling, using up-to-
date chemical and meteorological simulation techniques. Four local
areas shall be modeled: New York City, Chicago, Atlanta and Houston.
The ozone episodes to be modeled shall be those selected by the states
for use in their most recent ozone SIPs. Emissions shall be projected
for calendar year 2007. Baseline emissions will include the benefits of
the Tier 2 and sulfur standards being promulgated today, as well as all
other emission controls assumed in EPA's ozone modeling of the benefits
of the Tier 2 and sulfur standards described above. The ozone benefit
of VOC emission reductions will be modeled by assuming that Tier 2 LDVs
and LDTs meet a 0.055 g/mi exhaust NMOG standard instead of a 0.09 g/mi
NMOG standard. The relationship between changes in exhaust NMOG
emission standards and in-use VOC emissions shall be determined by
modeling LDV+LDT emission in 2030 assuming that all Tier 2 vehicles
meet a 0.055 g/mi exhaust NMOG standard instead of a 0.09 g/mi NMOG
standard. All emission modeling shall utilize the updated Tier 2
emission model developed by EPA as part of this rule, or MOBILE6, once
it is available. The measure of ozone to be used in calculating VOC
emission equivalency will be the peak one-hour ozone level anywhere in
the modeled region on the day when ozone is at its highest. The NMOG
credit will be determined by averaging the NMOG credit determined in
each of the four local areas.
Simulation of the benefits of the direct ozone reducing device will
assume that ozone levels immediately around the roadway will be 40%
less than that existing in the broader grid. The performance aspects of
the direct ozone reducing device can be simulated by any reasonable
values, since the appropriate NMOG credit for any specific application
of this technology will be scaled to the performance of the specific
application.
The manufacturer wishing to obtain an NMOG credit for use of this
technology must demonstrate its effectiveness to EPA as part of the
certification process. This will involve demonstrating the air flow
through the device, its ozone destruction capability under conditions
analogous to those photochemically modeled, the durability of this
capability over the useful life of the vehicle and the method to be
used to diagnose its effectiveness in-use.
Regarding the insulated catalyst technology, less information has
been received to date on its performance. We are not promulgating
regulations for determining the appropriate credit for such technology
today. However, when we were developing our SFTP standards, EPA
developed a methodology to assess the emission benefits of insulated
catalysts or other techniques which reduced emissions after the vehicle
soaks between 10 minutes and 12-36 hours. Thus, EPA expects to use this
methodology as a starting point in assessing the benefit of insulated
catalysts and will continue to assess development of options in this
area. Because an insulated catalyst operates essentially like a typical
catalyst, we do not expect that the test procedures for its
certification would differ from those applicable to typical Tier 2
vehicles. The primary difference will be an assessment of its
effectiveness relative to conventional catalyst technology over a range
of vehicle soak times between 10 minutes and 36 hours. Then, it will be
necessary to estimate the average effectiveness in-use relative to
conventional technology using the in-use frequency of vehicle soak
times.
K. Adverse Effects of System Leaks
The standards set forth in today's final rule are very stringent.
They require extremely tight control of air/fuel ratios and also tight
control of the inputs to the catalyst(s). A sealed exhaust system is
crucial to the proper operation and emission control of current
vehicles and even more so to the expected Tier 2 vehicles. Because a
given point in the exhaust system intermittently sees negative
pressure, exhaust leaks can permit air to enter the exhaust system.
Even tiny amounts of air entering this way can have large impacts on
the output of the oxygen sensor. If the output of the oxygen sensor is
affected, then the exhaust output of the cylinders will be affected.
Consequently, an exhaust leak can lead to both excess NOX
and NMOG emissions. Air entering through exhaust leaks can also impact
the NOX conversion efficiency of catalysts.
In the preamble to the NPRM, we expressed our concerns about the
impact of small exhaust leaks and requested comment on design or on-
board monitoring measures we could finalize to ensure that exhaust
systems were manufactured and installed in such a way that leaks are
prevented. We also asked for comment on whether we should implement a
provision that would require manufacturers to demonstrate through
engineering analysis or design that the possibilities of exhaust leaks
have been addressed.
Manufacturers indicated in their comments that they believe
addressing exhaust leaks is unnecessary. We believe otherwise. Data we
have seen suggest that very large emission effects can occur due to
very small leaks. Consequently, we are finalizing a provision in
today's rule that will require, as part of the certification process,
for manufacturers to indicate that they have conducted an engineering
analysis of the exhaust system. This
[[Page 6799]]
analysis must cover the entire exhaust system, including air injection
systems, from the engine block exhaust manifold gasket surface to a
point beyond the last catalyst or oxygen sensor. This analysis must
determine whether the exhaust system has been designed to facilitate
leak-free assembly, installation, repair and operation for the full
useful life of the vehicle.
With regard to the concept of ``facilitating leak-free repair'', we
intend that manufacturers should ascertain that the exhaust system can
be removed in a dealership or repair shop for repairs to the exhaust
system itself or to other components of the vehicle and be able to be
reassembled and reinstalled in a leak free manner using commonly
available tools. It is not our intention that the concept of
``facilitating leak-free repair'' apply to situations of gross misuse,
tampering or serious vehicle damage.
L. The Future Development of Advanced Technology and the Role of Fuels
The EPA staff will continue to assess the emission control
potential of vehicles powered by technologies such as lean-burn and/or
fuel-efficient technologies, including diesel engines equipped with
advanced aftertreatment systems, gasoline direct injection engines, and
other technologies that show promise for significant advances in fuel
economy and meeting the Tier 2 standards in the post-2004 time frame.
In this assessment, we will maintain a ``systems'' perspective,
considering the progress of advanced vehicle technologies in the
context of the role that sulfur in fuels plays in enabling the
introduction of these advanced technologies or maximizing their
effectiveness.
M. Miscellaneous Provisions
We are finalizing, as proposed, to continue existing emission
standards from Tier 1 and NLEV that apply to cold CO, certification
short testing, refueling, running loss, and highway NOX. We
are discontinuing, as proposed, the 50 degree (F) standards and testing
included in the NLEV program. The 50 degree standards are a part of the
NLEV program because that national program adopted California
requirements virtually in their entirety. These standards had not
previously been part of any federal program. We are also discontinuing
idle CO standards for LDTs, based upon comment. These standards are
adequately covered by the certification short test standards.
VI. Gasoline Sulfur Program Compliance and Enforcement Provisions
A. Overview
The gasoline sulfur program promulgated today has many of the same
features as the reformulated gasoline/conventional gasoline (RFG/CG)
program, including refinery averaging, refinery and downstream level
caps, and the generation and use of credits. These features raise
similar compliance issues for both programs. As a result, the
enforcement mechanisms of the gasoline sulfur rule generally track
those of the RFG/CG rule, where applicable. Because low sulfur gasoline
is necessary to avoid significant impairment of Tier 2 motor vehicle
emissions technology, we believe measures are needed to assure that
gasoline meets the standards promulgated in today's rule at the time
the gasoline leaves the refinery gate or is imported, and to assure
that the quality of the gasoline is maintained downstream of the
refinery.
More specifically, today's rule includes the following provisions:
Refiners and importers must test each batch of gasoline
produced or imported for sulfur content and maintain testing records
and retain test samples;
Refiners and importers must submit reports regarding
compliance with the average standards and credit provisions;
Attest procedures \125\ similar to those of the RFG/CG
rule will be applied to the sulfur standards and credit provisions;
---------------------------------------------------------------------------
\125\ 40 CFR Part 80, subpart F.
---------------------------------------------------------------------------
Refiners and importers are prohibited from using, selling
or purchasing invalid sulfur credits, and are required to adjust
compliance calculations if invalid credits have been used, sold or
purchased;
Small foreign refiners subject to the small refiner
standards described in section IV.C. above must comply with the rule's
small refiner compliance requirements and other requirements to ensure
the separation of such foreign gasoline from all other gasoline to the
U.S. port of entry; any foreign refiners participating in the early
credit generation program must also meet certain provisions concerning
credit generation, including reporting and recordkeeping;
All regulated parties in the gasoline distribution system
who are downstream from the refiner or importer must comply with
downstream sulfur cap standards;
Regulated parties are subject to presumptive liability for
violations at a party's own facility and for violations at other
facilities that could have been caused by the regulated party; branded
refiners are subject to liability for violations occurring at branded
facilities.
Refiners and distributors may implement downstream quality
assurance testing to assure compliance and to establish an element of
defense against presumptive liability.
As in other fuels programs, the sulfur standards apply to all motor
vehicle fuel that meets the definition of gasoline, except for aviation
fuel and racing gasoline, as was proposed in the NPRM. See 40 CFR
80.2(c). Gasoline sulfur standards apply, however, to gasoline that is
ultimately used in nonroad equipment or marine engines.
As we noted in the NPRM, we are aware there are certain fuels, such
as aviation fuel and racing fuel, that are generally segregated from
gasoline throughout the distribution system. Where such fuels are
segregated from motor vehicle gasoline and not made available for use
in motor vehicles, the fuel is not subject to sulfur rule standards.
However, if such fuels are not segregated throughout the distribution
system, but are used as motor vehicle gasoline or are commingled with
motor vehicle gasoline, then any person who introduces such fuels into
the gasoline distribution system is a refiner, subject to all the
refiner requirements of today's regulations, including registration,
reporting, testing and meeting the national refiner average and cap
standards for the volume of gasoline that person added to the
distribution system. Today's rule adopts the provisions concerning fuel
used for racing vehicles as proposed.
One commenter suggested that racing gasoline or aviation gas should
be allowed to be used as motor vehicle gasoline by downstream parties
so long as the racing gasoline or aviation gas does not exceed the
applicable downstream cap standard. We disagree. Racing gas that meets
the applicable downstream sulfur cap would nevertheless not be subject
to the refinery gate cap or averaging standards, and may not meet such
standards. Allowing such fuels to be distributed for motor vehicle use
would thus circumvent the intent of the rule.
The rule promulgated today clarifies the definition of ``refinery''
at 40 CFR 80.2(h), as was proposed in the NPRM. We received no comments
on this clarifying change. Specifically, section 80.2(h) now provides
that ``refinery''
[[Page 6800]]
means any facility, including a plant, tanker truck or vessel where
gasoline or diesel fuel is produced, including any facility at which
blendstocks are combined to produce gasoline or diesel fuel, or at
which blendstock is added to gasoline or diesel fuel. This is
consistent with all current EPA fuels rules, interpretations, policies
and question and answer documents.
Oxygenate Blenders
In the NPRM we proposed that oxygenate blenders \126\ would not be
subject to the refiner sulfur standard like other blenders, because we
felt it unlikely that oxygenates will have sulfur levels that will
raise the sulfur content of the gasoline. This approach also was
proposed because gasoline is the denaturant normally used to produce
denatured ethanol. However, we received comments that denatured ethanol
may contain as much as 50 ppm sulfur, which could result in significant
increases in sulfur content from ethanol blending alone.
---------------------------------------------------------------------------
\126\ The term ``oxygenate blenders'' includes ``ethanol
elnders.''
---------------------------------------------------------------------------
While it is true that some of today's gasoline has a sulfur content
as high as 1,000 ppm which if used as an ethanol denaturant results in
ethanol having a sulfur content of 50 ppm, the average sulfur content
of gasoline is about 300 ppm which if used as an ethanol denaturant
results in ethanol with a sulfur content of 15 ppm. In addition, when
the gasoline sulfur standards being promulgated today are in effect,
the average sulfur levels of gasoline will be significantly reduced,
which will further reduce the sulfur content of denatured ethanol to
very low levels. For this reason, we are finalizing the regulation as
proposed that oxygenate blenders are not subject to refiner sulfur
standards.
However, if gasoline blendstock instead of finished gasoline is
used as a denaturant for ethanol the oxygenate blender who adds the
ethanol would become a ``refiner,'' who is required to demonstrate
compliance with the sulfur standards for the denatured ethanol added to
gasoline. This is because the oxygenate blender would be adding a
blendstock along with the ethanol, which subjects the blendstock
blender to refiner standards and requirements. Moreover, if the
blendstock has a high sulfur content the denatured ethanol could have a
sulfur content greater than 30 ppm, or even greater than 80 ppm, which
could make compliance by such a ``refiner'' difficult or impossible. In
addition, as discussed above, in certain cases ethanol is included in
the refinery compliance calculations of the refiner who produced the
gasoline or RBOB with which the ethanol is blended. Refiners assume
this ethanol has no sulfur content, an assumption that could be
incorrect if high sulfur blendstock is used as the denaturant.
For these reasons we believe it is important that ethanol blenders
use denatured ethanol with a sulfur content of 30 ppm or less, which
would occur if the current practice of using finished gasoline as
ethanol denaturant continues. In order to ensure this result, the
regulations include a provision that prohibits ethanol blenders from
using denatured ethanol with a sulfur content greater than 30 ppm. We
believe ethanol blenders can comply with this requirement through
commercial arrangements with their ethanol suppliers, that specify the
maximum sulfur content of denatured ethanol. In addition, ethanol
blenders can assure compliance with this requirement by testing to
determine the sulfur content of denatured ethanol received.
Gasoline Treated as Blendstock (GTAB)
One commenter suggested that the Agency policy under the RFG/CG
rule that allows certain imported gasoline to be treated as a
blendstock by importer-refiners should be applied to today's rule. The
GTAB policy was originally issued in the RFG Question and Answer
document, and was subsequently published as part of a proposed RFG
rulemaking in 1997.\127\ We intend to address GTAB issues in that RFG
rulemaking, including issues regarding compliance with today's rule.
---------------------------------------------------------------------------
\127\ Reformulated Gasoline and Anti-dumping Questions and
Answers, (11/12/96); Proposed Rule for Modifications to Standards
and Requirements for Reformulated and Conventional Gasoline; 62 FR
37337 et seq. (July 11, 1997).
---------------------------------------------------------------------------
Transmix
We are aware that when gasoline meeting the requirements finalized
in today's rule is transported through pipelines, there will be some
situations where adjacent distillate product in the pipeline will mix
with a portion of the gasoline to create an interface product, commonly
referred to as transmix. This transmix may not be blended into the
diesel fuel because the gasoline in the transmix may result in diesel
fuel performance problems. Historically, this type of transmix product
has either been blended into the gasoline, in limited concentrations,
or the transmix has been separated into its gasoline and distillate
components at a reprocessing plant. However, the practice of blending
the transmix into gasoline may result in violations of the downstream
standards for RFG, and such blending could violate the downstream
sulfur caps finalized in today's rule, because many distillates have a
very high sulfur content. Therefore, we believe regulatory provisions
are needed to resolve these issues. We have not addressed transmix
issues in today's rule because we have already proposed regulations
regarding transmix blending and processing in another rulemaking.\128\
We plan to address transmix issues, including issues regarding
compliance with today's rule, in that rulemaking, which we plan to
finalize in the near future.
---------------------------------------------------------------------------
\128\ 62 FR 37337 et seq. (July 11, 1997) (proposed 40 CFR
80.84).
---------------------------------------------------------------------------
Inability To Produce Conforming Gasoline in Extraordinary Circumstances
Several commenters suggested the rule should include a provision,
similar to the RFG rule provision at 40 CFR 80.73, to address
situations where, due to extraordinary circumstances, a refiner or
importer cannot produce or distribute conforming gasoline. Section
80.73 applies to refiners, importers and oxygenate blenders. Today's
rule has adopted the provisions of section 80.73 for RFG and CG, for
importers and refiners, but not for oxygenate blenders. This is because
the gasoline sulfur program does not include provisions that would be
expected to require oxygenate blender relief.
In the remainder of this section we discuss enforcement issues
regarding today's rule that are not covered in this Overview or in
section IV.C., above.
B. Requirements for Foreign Refiners and Importers
In the NPRM we proposed that standards for gasoline produced by
foreign refineries that are not subject to small refiner individual
refinery standards would be met by the importer. Standards for gasoline
produced by a foreign refinery subject to an individual sulfur rule
standard would be met by the foreign refinery, with certain limited
exceptions as provided in the foreign refinery provisions. The rule
promulgated today adopts the provisions as proposed, except for several
changes aimed at clarifying the proposed requirements, changes relating
to the temporary relief provision, and changes relating to foreign
refiners' participation in the early credit program. These provisions
are very similar to the foreign refinery provisions of the RFG/CG rule.
[[Page 6801]]
1. Requirements for Foreign Refiners With Individual Refinery Sulfur
Standards or Credit Generation Baselines
Under the RFG/CG rule, EPA promulgated regulations \129\ addressing
the establishment and implementation of individual baselines for CG
produced by certain foreign refiners. The purpose of these regulations
is to ensure the compliance of gasoline supplied from foreign
refineries with individual compliance baselines. It includes
comprehensive controls, requirements and enforcement mechanisms to
monitor the movement of gasoline from the foreign refinery to the U.S.,
to monitor gasoline quality and to provide for enforcement as
necessary.
---------------------------------------------------------------------------
\129\ 40 CFR 80.94.
---------------------------------------------------------------------------
In the NPRM, we proposed similar requirements for compliance with
the applicable sulfur standards that would apply to any foreign refiner
who demonstrates that it meets the sulfur program's small refiner
criteria. We proposed that foreign refinery baselines would be based on
annual average sulfur levels and the volume of gasoline imported to the
U.S. during the same baseline period as would be applicable to domestic
small refiners. In today's final rule we have also adopted provisions
for foreign refiners to establish baselines to participate in the early
credit generation program, and to request temporary relief. Any foreign
refiner who obtains a foreign refinery gasoline sulfur baseline would
be subject to the same requirements as domestic refiners with
individual refinery baselines under today's rule. Additionally,
provisions similar to the provisions at 40 CFR 80.94 would apply, which
include:
Segregating gasoline produced at the small refinery until
it reaches the U.S.;
Refinery registration;
Controls on product designation;
Load port and port of entry testing;
Attest requirements; and
Requirements regarding bonds and sovereign immunity.
The rationale for these enforcement provisions is discussed more
fully in the Agency's preamble to the final RFG/CG foreign refineries
rule (62 FR 45533 (Aug. 28, 1997)).
Several commenters suggested that the rule should have even
stronger enforcement provisions concerning foreign refiners, including
criminal provisions against foreign individuals who violate the
requirements of the rule. While we agree that the rule's enforcement
provisions pertaining to foreign refiners must be effective, we believe
the proposed enforcement provisions are sufficient, and that attempts
to further strengthen them would not significantly increase their
overall effectiveness. Today's rule imposes various requirements on
foreign refiners not required of domestic refiners, as noted above,
which we believe are more effective for ensuring environmental
compliance than criminal provisions would be for foreign individuals,
in light of the potential difficulties of enforcing sanctions against
foreign individuals. EPA's experience to date with the similar RFG/CG
requirements under section 80.94 of the RFG/CG rule does not indicate
the provisions are inadequate.
Therefore, today's rule generally retains these provisions as
proposed. The final rule makes several technical changes, including
changes regarding baselines for foreign refiners, to be consistent with
the requirements for domestic small refiners and refiners generating
early credits finalized in today's rule. The rule's foreign refiner
enforcement provisions now also apply to foreign refiners participating
in the early credits program, and to the use of credits by foreign
small refiners.
One commenter stated that the language of the proposed
Sec. 80.410(n) would be too broad in that prohibiting any ``person''
from combining certified small foreign refiner gasoline with non-
certified small foreign refiner gasoline or with certified small
foreign refinery gasoline produced at a different refinery would
prohibit even retail level commingling of such products. This was not
intended and today's rule clarifies that such commingling can occur
subsequent to importation.
Under the proposal, when the small refiner standards sunset (and
additionally under today's rule, when the temporary refiner relief
provisions sunset),\130\ all gasoline would be subject to a single
national averaged standard and one national refinery level cap.
Thereafter, standards for all imported gasoline would be met by U.S.
importers. We have retained this provision as proposed. With a single
national average standard and cap standard, gasoline sulfur content can
most readily be monitored at the U.S. importer level, since there will
no longer be a special class of gasoline with different standards that
would need to be monitored.
---------------------------------------------------------------------------
\130\ Small refiner and temporary refiner hardship individual
refinery standards sunset January 1, 2008, except for any small
refineries that receive a hardship extension not to exceed two
years.
---------------------------------------------------------------------------
2. Requirements for Truck Importers
Today's final rule adopts the proposed requirement for importers to
sample and test each batch of gasoline imported. However, as noted in
the preamble to the NPRM, for parties that import gasoline into the
U.S. by truck, the every-batch testing requirement would include
testing the gasoline in each truck compartment, or if the gasoline is
homogeneous, testing the gasoline in the truck.
In the NPRM we recognized that this every-batch testing requirement
may not be feasible for truckers hauling many small loads of gasoline,
and we therefore proposed a limited alternative approach for truck
importers in lieu of every-batch testing. The proposed alternative
approach is based on the importer meeting the 30 ppm sulfur standard on
a per-gallon basis. Under this alternative approach, the importer would
be allowed to rely on the sulfur results based on sampling and testing
conducted by the operator of the foreign truck loading terminal.
Because, in most cases, the terminal operator will not be subject to
United States laws, we also proposed safeguards intended to ensure that
the gasoline in fact meets the applicable standard. This includes the
requirement that the importer conduct a quality assurance sampling and
testing program independent from the sampling and testing conducted by
the terminal. Under this approach the reporting requirements would be
minimized since no averaging would be required. The environmental
consequences of this approach would be neutral, because by meeting the
30 ppm sulfur standard on an every-gallon basis the standard also would
be met on average.
One commenter stated that the 30 ppm per-gallon standard would be
difficult for truck importers to meet due to the fact that Canadian
terminals may not always have gasoline with a sulfur content no greater
than 30 ppm. The commenter suggested that truck importers be allowed to
rely on testing conducted by the foreign gasoline terminal, as
discussed above, to meet the average and cap standards like other
importers.
We agree that truck importers may have difficulty obtaining
gasoline that meets the 30 ppm sulfur standard on a per-gallon basis.
Under Canadian regulations, Canadian refiners will be subject to a 150
ppm average standard and a 300 ppm cap in 2004, and in 2005 Canadian
refiners will be subject to a 30 ppm average standard and an 80 ppm
[[Page 6802]]
cap.\131\ This means that truck importers should be able to meet the
standards applicable to other importers, including the ultimate average
standard and cap standard under today's rule (30 ppm average and 80 ppm
cap), without great difficulty. However, meeting a per-gallon cap of 30
ppm might be difficult since the sulfur content of gasoline in the
storage tanks of Canadian terminals, like those of U.S. terminals, will
likely exceed 30 ppm at times, even after the 30/80 standards are
implemented. We have concluded that we can address this concern by
providing additional flexibility to truck importers, and still assure
compliance.
---------------------------------------------------------------------------
\131\ Vol. 133 23/6/99 C. Gaz. II, 23 June 99 (pp. 1469 et seq.)
---------------------------------------------------------------------------
While today's rule retains the proposed alternative, with some
modifications, it also provides a second alternative approach. Under
this second approach, truckers are allowed to meet the national average
and cap applicable to other importers, and rely on testing conducted by
the foreign gasoline terminal so long as all the other requirements
applicable to the proposed alternative approach are complied with. In
addition, truckers using this second alternative approach will be
subject to more extensive reporting than required for the proposed
alternative, since the importer will have to demonstrate compliance
with the annual average sulfur standard applicable to other importers.
One commenter urged that truckers should be subject only to the
national downstream cap. We cannot agree to this approach as it is not
environmentally neutral relative to the national standards in effect
for other importers and refiners. If truck importers were required to
meet only the downstream cap, sulfur levels for their imported gasoline
could be substantially higher than for other importers, which could
have a detrimental environmental consequence.
One commenter stated that the 30 ppm per-gallon standard for truck
importers should not go into effect until the 30 ppm standard becomes
the national average standard for refineries and other importers. We
agree. Under today's rule, the per-gallon standards applicable to truck
importers under the proposed alternative will be the same sulfur level
as the sulfur average standard that applies to other importers (in 2004
there is no average standard; however, truck importers using this
alternative compliance approach must meet the corporate pool standard
on a per-gallon basis).\132\ Under the second alternative approach, the
truck importer will be subject to the same average standard and cap
standard applicable to other importers.\133\
---------------------------------------------------------------------------
\132\ In 2004, a 120 ppm cap; In 2005 and beyond, a 30 ppm cap.
See Table IV.C.-1.
\133\ In 2004, a 120 ppm average standard and a 300 ppm cap; In
2005, a 30 ppm average standard, a corporate pool average no greater
than 90 ppm, and a 300 ppm cap; In 2006 and beyond, a 30 ppm average
standard and a 80 ppm cap. See Table IV.C.-1.
---------------------------------------------------------------------------
Similar provisions as provided above apply to truck importers for
gasoline subject to the geographic phase-in area (GPA) standards (see
section IV.C. of this preamble for a discussion of GPA standards).
However, because of the small volumes of truck-imported gasoline, and
the consequent difficulty in meeting corporate pool averages for a
trucker who imports gasoline into both the GPA and areas outside the
GPA, today's rule requires that for truck importers using the averaging
option, the corporate pool average does not have to be met. The 150 ppm
average standard and the 300 ppm cap standard apply to gasoline
imported by truck into the GPA in 2004 through 2006. For truck
importers meeting the per-gallon standard option for gasoline imported
into the GPA, the per-gallon standards are 150 ppm for 2004 through
2006.
Truck Import of Foreign Small Refiner Gasoline
The NPRM addressed issues associated with gasoline produced by a
foreign small refinery with an individual baseline and certified as
subject to the refinery's individual interim standard (S-FRGAS), and
imported by truck. The proposed requirements for S-FRGAS included
segregating the gasoline from all other gasoline from the refinery gate
to the U.S., so that compliance with standards can be tracked. For
ordinary, non-truck importers, each batch of certified S-FRGAS must be
tested at the load port and port of entry. Today's rule finalizes these
proposed requirements for S-FRGAS.
However, in the case of gasoline imported by truck, the NPRM
acknowledged that the testing and other procedures proposed for
certified S-FRGAS may not be feasible. As a result, we proposed an
alternative to the requirement for testing every truckload of imported
certified S-FRGAS, and to other importer requirements. This alternative
approach includes a requirement that small foreign refiners producing
any S-FRGAS that will be imported by truck submit a petition to EPA
that includes a plan which is designed to ensure that certified S-FRGAS
remains segregated from all other gasoline from the refinery to the
U.S. Rather than specifying the precise requirements of such a plan in
the regulations, we proposed to allow the refiner to develop its own
procedures for ensuring that S-FRGAS remains segregated. However, the
plan must contain certain elements, such as product transfer documents
which identify the origin of the gasoline and prohibit its commingling
with any product other than certified S-FRGAS from that refinery.
This approach also requires the refiner of such truck-imported
gasoline to receive and maintain all such product shipment documents,
including U.S. import documents, for five years and review these to
ensure that segregation is maintained until reaching the U.S. To ensure
that refiners conduct this review, we proposed to require the refiner's
plan to include attest audit procedures to be conducted annually by an
independent third party.
We received no comments on this proposal for ensuring the integrity
of S-FRGAS imported by truck. Today's final rule adopts the petitioning
provision to permit alternative segregation procedures for S-FRGAS
imported by truck as proposed since we continue to believe that it will
provide flexibility to foreign refiners and to importers and will
adequately assure enforceability.
C. What Standards and Requirements Apply Downstream?
We proposed per-gallon cap standards that would apply to all
parties in the distribution system downstream of the refinery and
importer level, including pipelines, terminals, oxygenate blenders,
distributors, carriers, retailers and wholesale purchaser-consumers. We
believe that downstream cap standards and compliance monitoring based
on downstream standards are needed to ensure that the sulfur level of
gasoline remains below the cap level when dispensed for use in motor
vehicles, to avoid adverse emissions consequences that would be caused
by the use of gasoline having a sulfur content above the cap level. The
following discussion addresses downstream standards generally,
downstream standards and requirements for gasoline produced by
refineries subject to standards under Sec. 80.240 and 80.270, and
downstream standards and requirements for gasoline produced or imported
for the geographic phase-in area (GPA).
[[Page 6803]]
Determination of Downstream Cap Standards
We proposed that the downstream standards would be more lenient
than the refinery-level cap standards so that refiners and importers
can produce gasoline that equals the refinery-level cap standard. We
did so because it has been EPA's experience that if a refiner produces
gasoline that equals, or almost equals a standard, that gasoline may be
shown to violate the standard when subsequently tested at a location
downstream of the refinery due to testing variability. As a result,
parties downstream of the refinery (primarily pipelines) set commercial
specifications for the quality of the gasoline they will accept that
are more stringent than the standard that applies to the downstream
party. This, in effect, forces refiners to produce gasoline that is
``cleaner'' than the refinery-level standard.
In other fuels programs (for example, the benzene per-gallon
standard for RFG) we resolved this concern by announcing enforcement
tolerances for fuels standards that apply downstream of the refinery-
level, thereby reducing the need for pipelines to set specifications
more stringent than the refinery level standards. We believe that
having more lenient downstream standards will have the same effect as
enforcement tolerances.
In the NPRM we proposed that the values of the downstream cap
standards would reflect the testing variability that could reasonably
be expected when different laboratories test gasoline for sulfur
content; that is, lab-to-lab variability, or reproducibility. Industry
commenters supported this approach, and today's rule adopts this
approach. For gasoline subject to the 80 ppm refinery-level sulfur cap,
the downstream maximum standard is 95 ppm. This difference reflects the
reproducibility established by the American Society for Testing and
Materials (ASTM).\134\ For gasoline subject to refinery-level sulfur
caps higher than 80 ppm, which will be the case for gasoline produced
before 2006 and for gasoline produced by certain small refineries
through 2007, the downstream cap is similarly established by using ASTM
reproducibility data. The national downstream cap is 378 in 2004, when
the refinery level cap can be as high as 350 ppm. The national
downstream cap in 326 in 2005, when the refinery level cap is 300.
---------------------------------------------------------------------------
\134\ ASTM standard method D 2622-98, entitled `Standard Test
Method for Sulfur in Petroleum Products by Wavelength Dispersive X-
ray Fluorescence Spectrometry.''
---------------------------------------------------------------------------
Because these downstream caps are based on sulfur test
reproducibility, we intend to amend the rule in the future if
improvements in test precision are made for the designated method. We
may also consider amending the rule to make some other method the
designated method if a more precise method is available in the future.
The Proposed Downstream Standards Compliance Scheme
Under the proposal, if gasoline produced by a small refiner with a
less stringent cap standard is mixed in the distribution system with
gasoline subject to the national cap standard, the entire mixture would
then be subject to the higher cap standard, even though most of the
gasoline, at the refinery level, would be subject to the more stringent
national cap standard. We proposed that during the period that small
refinery individual standards are in effect, for gasoline that is
comprised, in whole or in part, of small refiner gasoline with a higher
sulfur cap standard than the national cap standard, product transfer
documents (PTDs) would specify that the gasoline is small refiner
gasoline and the level of the downstream cap applicable to the
gasoline.
The purpose of the proposed provisions was to make it possible to
determine the standard that applies to any gasoline downstream of the
refinery. If the gasoline contains no small refiner gasoline, the
downstream standard would be based on the national cap. If the gasoline
is comprised, in whole or in part, of small refiner gasoline subject to
a less stringent cap standard, the downstream standard would be based
on this less stringent cap standard. As gasoline is mixed and remixed
in the fungible distribution system, the percentage of gasoline that is
small refinery gasoline will progressively diminish until the fungibly
mixed gasoline meets the national downstream cap. Therefore, we
proposed in the NPRM that a downstream party may no longer classify
gasoline as containing small refiner gasoline if a test result shows
the sulfur content of the gasoline is below the applicable national
(i.e., not small refiner) downstream cap.
Several commenters suggested that this tracking scheme would be
unworkable. Some of these comments were based on the belief that the
proposal intended to require segregation of the small refiner gasoline
through the distribution system. The proposal was not intended to
require that small refiner gasoline must be segregated, and under
today's final rule there is no requirement that small refiner gasoline
must be segregated from gasoline produced by other refiners. Some
commenters also believed that testing by downstream parties would be
required under the proposed rule. These commenters were concerned that
a downstream testing requirement could be costly and could delay
distribution of gasoline. This latter point is addressed later in this
discussion. Some commenters stated that the proposed PTD provisions of
the downstream enforcement scheme were too complex and that some means
other than changing PTD designations should be found to track small
refiner gasoline.
Other commenters, including automobile manufacturer trade
associations, stated they believed that EPA enforcement and testing
downstream of the refinery is necessary to assure that gasoline
complies with standards at the retail gasoline pump.
We have carefully considered the comments and we have concluded
that the tracking scheme as proposed would not be effective because
most pipeline shipments are expected to include some small refiner
gasoline (although the amount of small refiner gasoline may comprise
less than 1% of the shipment) and therefore, most of the gasoline in
the nation might be classified as small refiner gasoline, even though
only a small fraction of the supply will actually be small refiner
gasoline. Therefore, a downstream cap much less stringent than the
national downstream cap would attach to most gasoline produced to meet
the national refinery standards, and the scheme would not be effective
in monitoring whether the quality of most gasoline is maintained after
it enters the gasoline distribution system.
The proposed scheme could lead to other unintended results. The
gasolines contained in a fungible mixture in the distribution system
may not be fully mixed and homogenous. As a result, a distinct,
unmixed, portion of gasoline within a fungible mixture could be small
refiner gasoline with a sulfur content above the national downstream
cap, while other parts of the fungible mixture would meet the national
downstream cap. This is especially true for fungible mixtures in
pipelines and could also be true for gasoline in storage tanks. If a
test result for a sample collected from part of such a fungible mixture
in a pipeline shows compliance with the national downstream cap, under
the proposed rule the entire mixture would become subject to the
national downstream cap, and the pipeline PTDs could not classify the
gasoline as small refiner gasoline. Thus,
[[Page 6804]]
under the proposal, parties downstream of the pipeline could be subject
to liability because they might receive small refiner gasoline not
meeting the national standard even where a pipeline PTD does not
represent that the gasoline is small refiner gasoline. That was not
intended by the proposal.
Because of these difficulties, we concluded that the proposed
scheme must be modified to address these concerns, in order for there
to be effective enforcement of the downstream standards. We are
concerned that the quality of gasoline will be affected downstream of
the refinery. Gasoline may be contaminated with high sulfur blendstocks
or other high sulfur products such as distillates after it leaves the
refinery gate. There is likely to be an economic incentive for some
downstream parties to sell or use gasoline or blendstocks that have a
higher sulfur content than the national downstream standard. The
inability to monitor downstream compliance would result in
environmental degradation that is not intended by the rule, and in an
inability to assure a level playing field for all parties in the
gasoline distribution industry.
Tracking Gasoline Downstream of the Refinery
We believe that an effective downstream compliance and enforcement
scheme is necessary in order to achieve the full emissions reduction
benefits of the rule. Today's rule modifies the proposed tracking
scheme so that compliance with the program can be monitored.
Under today's rule, all gasoline downstream of the refiner or
importer is subject to the national downstream standard unless a
different downstream standard, based on the highest sulfur content of
any small refiner/temporary refiner relief gasoline in the gasoline
mixture (as determined by the small refiners' batch testing), is
supported by PTDs and a test result confirming the presence of small
refiner/temporary refiner relief gasoline. The test result must be for
gasoline sampled from the downstream facility classifying the gasoline
as small refiner gasoline, unless the facility is a trucker, retailer
or wholesale purchaser-consumer. We have concluded that this
requirement is necessary to monitor compliance with the downstream
standards during the period that small refiner/temporary refiner relief
standards are in effect, because the vast majority of the gasoline
transported by pipelines will be gasoline produced to comply with the
national cap,\135\ even though most of those pipeline shipments will be
classified as small refiner gasoline.\136\
---------------------------------------------------------------------------
\135\ For example, most pipeline shipments are expected to
contain small refiner gasoline in the two U.S. pipelines that carry
the highest volume of gasoline. However, in most shipments the small
refiner gasoline is expected to account for substantially less than
5% of the total volume of gasoline in the shipment.
\136\ For purposes of this discussion, ``small refiner gasolne''
includes any gasoline from a refiner to whom EPA grants relief based
on a showing of extreme hardship.
---------------------------------------------------------------------------
We believe that the ability to track small refiner gasoline is made
even more important due to the geographic phase-in area (GPA) gasoline
provisions finalized today.\137\ GPA gasoline is subject to less
stringent refiner/importer standards than gasoline produced for use in
other parts of the country. Therefore, its use is limited to the GPA
states. However, it may be produced or imported at any location in the
country before it is transported for use in the GPA. EPA would have
little ability to assure GPA-designated gasoline is only being used in
the GPA if it cannot determine if gasoline at a downstream location
outside the GPA that exceeds the applicable downstream cap for non-
small refiner gasoline, is in fact small refiner gasoline or if it may
include gasoline that was designated for use in the GPA but has been
diverted for use elsewhere. The tracking requirements for small refiner
gasoline will help us to make that determination.
---------------------------------------------------------------------------
\137\ See section IV.C. of this preamble for refiner/importer
standards and the discussion below regarding downstream compliance
and enforcement provisions.
---------------------------------------------------------------------------
The only parties required to perform testing in order to
demonstrate that a shipment, or tank, of gasoline contains small
refiner gasoline are gasoline pipelines and terminals. Where a terminal
properly classifies gasoline in its storage tank as small refiner
gasoline, and subsequently receives a load of gasoline into that tank,
it may not continue to classify the gasoline as small refiner gasoline
unless the tank is sampled, and a test demonstrates that the tank still
contains small refiner gasoline and the gasoline sulfur content exceeds
the national refinery level cap. In 2004 the test result would have to
exceed 350 ppm; in 2005, 300 ppm; and starting with 2006, 80 ppm. In
the GPA, the test result would have to exceed 350 ppm in 2004, and 300
ppm in 2005 and 2006.
We have concluded that the pipeline and terminal testing provisions
are necessary for effective enforcement. We believe that terminals and
pipelines will be able to perform sampling and testing that will enable
them to identify the presence of small refiner gasoline in a cost-
effective manner. These parties have knowledge regarding the mixing of
gasoline as it moves from the pipeline and into the terminal tank, and
knowledge of the distribution system, that will enable them to make
judgments regarding the extent of testing that may be needed to
demonstrate whether gasoline meets the national downstream cap.
Further, a terminal operator may take additional tests if it believes a
tank may contain a stratified portion of small refiner gasoline,
despite a test result showing the tank complies with the national
downstream cap.
Many terminals may have sufficient reason to believe they are
receiving only gasoline meeting the national cap such that they will
not normally test each receipt of gasoline. Additionally, even for
terminals who receive small refiner gasoline, we do not believe the
sampling and testing will be burdensome. This is partly because many
terminals already conduct periodic sampling, or even sampling after
every delivery of gasoline into storage tanks, at least in the summer
VOC or RVP season, to test gasoline for various parameters, which may
already include sulfur testing in RFG areas. Field test instruments
already exist that are adequate for this testing in 2004 and 2005 when
the national downstream cap is 378 ppm and 326 ppm, respectively.
Moreover, we believe that because of today's rule, better field test
instruments for sulfur analysis at lower levels are likely to be
developed in the next few years. Therefore, it will not be necessary
for quality assurance samples to be sent to a laboratory for testing.
Thus, we do not believe shipments will be held up while terminals await
a test result. We also believe that it is likely that these instruments
will be available for a cost that will be far less than most laboratory
instruments available today.
Under today's rule, retailers are not required to conduct testing.
The retailer can demonstrate that the gasoline is properly designated
small refiner gasoline subject to a less stringent downstream standard
by maintaining PTDs from its suppliers that demonstrate a terminal
classified gasoline supplied to the retailer's storage tank as small
refiner gasoline.
Downstream Standards and Requirements for GPA Gasoline
Consistent with the way today's rule sets downstream sulfur
standards for other gasoline, the GPA program downstream standard is
determined by adding the ASTM reproducibility applicable to the
refinery level sulfur
[[Page 6805]]
cap to that refinery level cap, which for GPA gasoline is as high as
350 ppm in 2004, and 300 ppm in 2005 and 2006. This results in
downstream standards for GPA gasoline of 378 ppm in 2004, and 326 ppm
in 2005 and 2006.
Because GPA gasoline must be used only within the GPA states,\138\
today's rule requires that refiners and importers producing or
importing gasoline subject to the GPA standards must designate each
such batch of gasoline as GPA gasoline and segregate such batches from
all other gasoline. Product transfer documents must identify the
gasoline as GPA gasoline so that all downstream parties will be aware
that it must be sold or distributed for use only in the GPA.
---------------------------------------------------------------------------
\138\ As stated in section IV.C. of this preamble, the GPA
states are Alaska, Idaho, Montana, North Dakota, Wyoming, Utah,
Colorado and New Mexico.
---------------------------------------------------------------------------
Gasoline produced for use in all areas of the country outside the
GPA may be sold for use in the GPA, including gasoline subject to small
refiner standards under section 80.240 of today's rule.
Where GPA gasoline is commingled with other gasoline, the
commingled gasoline must be classified as GPA gasoline and used only in
the GPA states. Where GPA gasoline is commingled with S-RGAS, the
applicable downstream sulfur standard for that gasoline is the greater
of the GPA downstream standard or the applicable small refiner/
temporary refiner relief standard as determined under section 80.210 of
the rule.
Lead-Time for Downstream Compliance With New Standards
Some commenters stated that there should be a lead-time of several
months between the implementation date of a new refinery level sulfur
standard and the implementation date of the corresponding downstream
standard. Based on our experience with other fuels programs, we believe
that a one-month lead time will be adequate for gasoline at the
terminal level to meet new standards. An additional one month for
retailers will give them ample time to comply. Therefore, under today's
rule, the 378 ppm downstream sulfur standard (or any applicable small
refiner downstream cap standard) is effective February 1, 2004 at the
terminal level and March 1, 2004 at the retail level. The 326 ppm
downstream sulfur standard is effective February 1, 2005 at the
terminal level and March 1, 2005 at the retail level. The 95 ppm
downstream standard is effective February 1, 2006 at the terminal level
and March 1, 2006 at the retail level (or February 1, 2007, and March
1, 2007, respectively, in the case of gasoline at facilities in the
GPA).
Retail Gasoline Pump Labeling
EPA believes gasoline advertised as being ``low sulfur gasoline''
when sold at retail outlets should have a sulfur content of no more
than 95 ppm because this is the maximum sulfur level of gasoline at
retail outlets that would protect the emission controls of Tier 2
vehicles. We are stating this to inform refiners and other regulated
parties, when making advertisement decisions regarding gasoline, that
it is EPA's position that effective January 1, 2004, if any retailer
represents that gasoline is low sulfur gasoline, or representations to
the same effect, the gasoline sulfur content should be no greater than
95 ppm.
D. Testing and Sampling Methods and Requirements
1. Test Method for Sulfur in Gasoline
We proposed ASTM standard method D 2622-98, ``Standard Test Method
for Sulfur in Petroleum Products by Wavelength Dispersive X-ray
Fluorescence Spectrometry,'' as the primary method for testing sulfur
in gasoline by refiners and importers. This is the designated method
under the RFG/CG rule.\139\ We also requested comment on adopting other
methods as the primary method, in particular, ASTM method D 5453-93,
``Standard Test Method for Determination of Total Sulfur in Light
Hydrocarbons, Motor Fuels and Oils by Ultraviolet Fluorescence,'' and
ASTM D 4045, ``Standard Test Method for Sulfur in Petroleum Products by
Hydrogenolysis and Rateometric Colorimetry,'' which is used under the
California fuels program for sulfur levels below 10 ppm. We also
proposed ASTM D 5453 as an alternative method for determining the
sulfur content of gasoline and we requested comment on this proposal.
---------------------------------------------------------------------------
\139\ See 40 CFR 80.46(a). Today's rule updates the former
designated test method, ASTM D 2622-94.
---------------------------------------------------------------------------
Most comments supported the continued use of ASTM D 2622 as the
designated method for testing sulfur in gasoline under the various
fuels rules, including today's rule. Commenters indicated that most
refineries outside of California are currently using ASTM D 2622. Under
the California fuels regulations, California refineries currently use
ASTM D 5453, as well as ASTM D 2622 and ASTM D 4045. Comments were
generally favorable to the proposed use of ASTM D 5453 as an alternate
method. However, one California refinery, an automobile manufacturers
association and a manufacturer of analytical equipment stated that ASTM
D 5453 should be the primary method, primarily due to its greater
precision at low sulfur levels. Favorable comments were received to the
use of ASTM D 4045, especially for gasoline sulfur content of 10 ppm or
less. One commenter suggested that ASTM D 5623-94 should be allowed;
one commenter suggested that ASTM D 3120 should be allowed, and one
commenter suggested that ASTM D 6428 should be allowed. Several
commenters stated that we should utilize a performance based criteria
system to determine what test methods can be used.
We have considered the comments carefully. We believe there are a
number of test methods for determining the sulfur content of gasoline
that may eventually be shown to be as good as, or better than, ASTM D
2622. We also considered that the Agency is likely to issue a proposed
rulemaking for a performance-based test method approach that would
apply to motor vehicle fuel parameters. This rule, once promulgated,
would set forth criteria for determining whether an alternative
analytical test method could be used instead of the designated
analytical test method for a given fuel parameter and would set forth
criteria for correlating alternative analytical test methods to the
designated analytical test method.
We believe it is appropriate that alternate analytical methods
should be qualified and correlated to the regulatory method according
to standardized criteria. Today's rule therefore provides that ASTM D
2622, the recognized standard analytical method for determining sulfur
in gasoline, is the sole regulatory method, anticipating that a
performance-based testing rule may be issued before 2004, and that
under its terms anyone will be able to qualify and correlate additional
testing methods. We do not believe this will result in undue hardship
for several reasons. First, our current fuels rules already provide
that ASTM D 2622 is the sole regulatory method for determining the
sulfur content of gasoline. Second, California refiners currently using
ASTM D 5453 or ASTM D 4045 will not face any hardship because today's
rule allows the use of approved California test methods by California
refiners.\140\ Third, today's rule allows continued use of composite
samples for sulfur testing for CG during the period of early credit
generation, and therefore refiners currently using outside labs to test
composite samples,
[[Page 6806]]
but who may elect to conduct testing in-house when the every-batch
sulfur testing requirement is implemented, will not need to determine
whether a less expensive alternative to ASTM D 2622 is available for
several years. Last, if a performance-based test method rule is not
issued by the Agency in the near future, then we may reconsider this
issue in a subsequent rulemaking.
---------------------------------------------------------------------------
\140\ See preamble discussion in section VI.E., below.
---------------------------------------------------------------------------
We also believe that a standardized approach for determining the
appropriateness of alternate test methods, correlation methodology and
quality control criteria for alternate test methods would be the most
fair approach to the test equipment manufacturers and to the purchasers
of testing equipment. It should result in a level playing field for
competition among manufacturers of test equipment. We already know that
ASTM D 5453 can be purchased for about half the price of ASTM D 2622
equipment, and competition may result in even less expensive equipment.
Some commenters suggested that where a refiner or importer uses
ASTM D 2622 to test gasoline, and where the test result is less than 10
ppm, the refiner or importer should be able to report a test result of
zero or perhaps use a default value of 5 ppm. This sort of approach has
been allowed under the RFG and Anti-dumping Question and Answer
Document. However, we disagree with the commenters that this practice
is appropriate under the sulfur rule. Under the sulfur rule, with a
refiner average standard of 30 ppm, it is important whether a bias is
consistently drawn in favor of zero ppm as opposed to 10 ppm. This
could artificially increase the number of credits earned or could allow
more batches to be produced by the refiner that are near the 80 ppm
cap. We believe that any imprecision of sulfur values derived from
analysis using ASTM D 2622, will, over the course of numerous batches,
average out to near zero. Further, we believe that the precision of
ASTM D 2622 is likely to be improved by 2004. Also, by 2004 there may
be other methods that will be shown to be precise at low sulfur levels
that may be made available for use under a performance-based test
method rule. Under today's rule the refiner or importer must report the
test result that the test method provides, so long as the result is not
less than zero (in which case a result of zero would be reported).
If alternative methods are ultimately made available for use under
a performance based rule, refiners and importers who are producing or
importing gasoline with low levels of sulfur may desire to use an
alternative test method for low sulfur levels, especially if ASTM D
2622 is less precise at such levels. Under today's rule, if any
approved alternative method is used for this purpose, a party could not
choose to use the test result from ASTM D 2622 when its result is
lower, and the test result from the alternative method when its result
is lower. For any alternative test method that is eventually approved,
if the party uses it for a certain range of sulfur concentrations, and
ASTM D 2622 for another range, it must be consistent in such use. For
example, if the alternate method were used for test results below 10
ppm, its result would always have to be used for sulfur levels below 10
ppm and ASTM D 2622 would always have to be used for sulfur levels
greater than 10 ppm.
2. Test Method for Sulfur in Butane
We proposed the use of ASTM standard test method D 5623-94 \141\ as
the designated method for testing the sulfur content of butane and
requested comment on whether this method should be the designated
method. Although some butane suppliers or refiners currently use this
method, several commenters stated that many refiners do not have ready
access to ASTM D 5623 and that it is not necessarily the most precise
method for determination of low levels of sulfur in butane. Commenters
suggested at least three other methods are equal to ASTM D 5623. These
are ASTM D 2784, ASTM D 4468, and ASTM D 3246.\142\ One commenter also
suggested that ASTM D 3227-92,\143\ should be allowed. Several
commenters requested that EPA at least allow alternative test methods
for quality assurance testing.
---------------------------------------------------------------------------
\141\ ASTM D 5623, entitled ``Standard Test Method for Sulfur
Compounds in Light Petroleum Liquids by Gas Chromatography and
Sulfur Selective Detection.''
\142\ ASTM D 2784, entitled ``Standard Test Method for Sulfur in
liquefied Petroleum Gases''; ASTM D 4468-85(1995), entitled
``Standard Test Method for Total Sulfur in Gaseous Fuels by
Hydrogenolysis and Rateometric Colorimetry''; and ASTM D 3246-96,
entitled ``Standard Test Method for Sulfur in Petroleum Gas by
Oxidative Microcoulometry.''
\143\ ASTM D 3227, entitled ``Mercaptan sulfur in Gasoline,
Kerosine, Aviation Turbine, and Distillate Fuels''. The commenter
suggested it should be allowed with the use of the x-ray finish.
---------------------------------------------------------------------------
We have reviewed the suitability of ASTM D 5623 and agree that it
is not the best method for testing for sulfur content in butane. ASTM D
5623 measures sulfur compounds rather than total elemental sulfur, and
the current ASTM 5623 method is specified for liquid fuels, not gaseous
fuels.
ASTM D 2784 does not seem to be a better method than ASTM D 5623.
Commenters stated that ASTM D 2784 is not the most precise method and
that it is not widely used. We believe there may be some difficulty in
even obtaining the apparatus for ASTM D 2784. ASTM D 3227 is not
appropriate since it is designed for measuring a single sulfur
compound, and it is currently designated for testing liquid samples.
We believe that ASTM D 4468 appears to be a good method for testing
butane for sulfur levels below 20 ppm. However, dilution would be
necessary to test for sulfur levels above 20 ppm. This may be
problematical, since it may be difficult to dilute a gaseous fuel. We
expect that under today's rule, butane being tested will frequently
have sulfur content in excess of 20 ppm. Several other methods exist
that might work well for testing for sulfur content of gaseous fuels,
but their current scope does not include determination of sulfur in
gaseous fuels.
ASTM D 3246-96, which was suggested by API and NPRA as a suitable
method, is an appropriate method for measuring gaseous compounds and
provides test results for total elemental sulfur. Its range is 1.5 to
100 ppm, which is ideal for testing for the alternative 30 ppm butane
sulfur standard applicable to butane blenders promulgated in today's
rule.\144\
---------------------------------------------------------------------------
\144\ Discussed in section VI.D.3.
---------------------------------------------------------------------------
After considering the strengths and weaknesses of all the available
options we believe ASTM D 3246 is the best currently-available method.
Therefore, today's rule makes ASTM D 3246 the designated method for
testing the sulfur content of butane or other gaseous blendstocks. As
discussed above, we anticipate that a performance-based test method
rule for motor vehicle fuel parameters may be promulgated before 2004,
and that the efficacy of other methods would be demonstrable under that
rule. However, if that is not the case, the Agency may reconsider the
issue of appropriate alternate test methods in a future rulemaking.
3. Quality Assurance Testing
Several commenters urged that alternate test methods be allowed for
quality assurance test purposes. Under today's rule, the use of
alternate test methods for quality assurance testing for purposes of
establishing a defense to liability, for butane quality assurance
testing under section 80.340(b)(4), and for determination of whether
gasoline is small refiner gasoline, is allowed, so long as the
alternate test method is correlated to the regulatory test method, the
method is ASTM approved, and the
[[Page 6807]]
protocols under the method are followed. However, the regulatory method
is required for the truck importer quality assurance testing under
section 80.350(c).
4. Requirement To Test Every Batch of Gasoline Produced or Imported
We proposed in the NPRM that refiners and importers \145\ would be
required to sample each batch of gasoline produced or imported and
perform a test on each sample to determine the sulfur content prior to
the gasoline leaving the refinery gate or importer facility. We
received comments on several aspects of this proposed requirement.
---------------------------------------------------------------------------
\145\ Except for certain truck importers, as noted above.
---------------------------------------------------------------------------
Several commenters urged that we continue to allow composite
sampling and testing for sulfur. Some refiners commented that the
requirement to test each batch would raise testing costs. However, one
refiner commented that every-batch testing for sulfur would not be a
substantial burden so long as every-batch testing for other CG
parameters is not required.\146\ This commenter stated that testing for
sulfur content is much less complex than testing for certain other CG
parameters.
---------------------------------------------------------------------------
\146\ As noted above, we are not requiring every batch testing
for CG parameters other than sulfur.
---------------------------------------------------------------------------
We believe that with a refinery gate sulfur cap combined with
refinery averaged standards, there is no realistic alternative to
every-batch testing. The Agency has no way to know whether a composite
sample that is tested and found to meet the applicable refinery cap
included a sample from an individual batch of gasoline that was
introduced into commerce that exceeded the cap by a factor of 2 or 3.
Further, we believe that with averaged standards for refiners and
importers, and with multiple cap standards in effect during the phase-
in period, monitoring compliance without every-batch testing would be
impossible even if we could somehow be assured that no individual batch
significantly exceeded the applicable refinery level cap.
We realize that there will be an additional cost associated with
testing every batch of CG--for sulfur content (this is already required
for RFG). However, we believe less expensive test methods for sulfur
content already exist, and may continue to be developed, that will
likely be acceptable as alternative methods in the future, as discussed
above. Therefore, today's rule retains the requirement for every-batch
testing. Under today's final rule, the test results for each batch of
gasoline will be used to determine compliance with the applicable
refiner/importer cap standard and to calculate the refiner's or
importer's annual average sulfur level. Any batch of gasoline that
exceeds the applicable sulfur cap cannot be distributed or sold in the
U.S. (unless it is exempted from the standards under today's rule, as
described in section VI.G., below).
Refiners who use computerized in-line blending methods objected to
the proposed requirement for a batch test before the gasoline is
released from the refinery. These commenters stated that refiners using
the sophisticated in-line blending practice cannot produce a complete
batch test until a portion of the batch is already past the refinery
gate. These commenters did not urge that we eliminate the requirement
for every-batch testing, but urged that the sulfur rule adopt the RFG
rule provisions for in-line blending found at 40 CFR 80.65(f)(4), for
both RFG and CG.
We believe that the importance of assuring compliance with the
refinery level cap is such that the rule must generally require that
gasoline must be tested for sulfur content before it leaves the
refinery. Based on experience under the RFG rule, we do not believe
that the requirement to test each batch before it is released will
substantially increase the cost of testing or cause delays in
shipments.
However, today's rule recognizes the unique circumstances involved
in computerized in-line blending. We believe that with appropriate
safeguards, compliance with sulfur standards for gasoline produced by
refineries using in-line blending can be assured. Therefore, today's
rule incorporates the RFG rule provisions for in-line blending at 40
CFR 80.65(f)(4). Such provisions will be applicable to RFG and CG.
However, refineries presently having an in-line blending waiver will be
asked to submit additional information under the auditing procedures
included in approvals of in-line blending petitions already in place.
We will contact individual holders of in-line blending approvals to
request information on how sulfur is monitored and how streams of
gasoline are distributed in the in-line blending process. If we cannot
conclude that the monitoring procedures will assure compliance with
sulfur standards, we will revoke the in-line blending approval for that
purpose. We believe it is important to ensure that the in-line analyzer
technology and the refiner's methodology and procedures are sufficient
for the gasoline sulfur levels the refinery will have after this rule
is implemented, for both RFG and CG.
Several commenters stated that the proposed rule's requirement to
test every batch of CG for sulfur is unnecessary during the period of
early credit generation because there is no cap standard in effect
during this period, even for those refiners generating credits. We
agree that every-batch testing is not essential for CG until the
refinery gate per-gallon cap standards go into effect. Thus, today's
final rule allows composite sample testing for CG to continue during
the period of early credits generation, until January 1, 2004, when a
cap standard for sulfur is first imposed on gasoline.
5. Exceptions to the Every-Batch Testing Requirement
Under the RFG rule, refiners who blend butane or other blendstocks
to previously certified gasoline (PCG) must determine the volume and
parameter values of the blendstock, including sulfur content, by
testing the gasoline before and after blending, and calculating the
properties of the blendstock by subtracting the volume and parameter
values of the PCG. For CG only, under certain conditions, we have
allowed butane blenders to use the parameter specifications of butane
as tested by the butane producer. We have allowed this alternative to
every-batch testing because of the costs of testing each load of
butane. We proposed a similar alternative to every-batch testing for
butane blenders in the NPRM, which allows butane blenders to use the
sulfur test result of their suppliers, if the butane contains no more
than 30 ppm sulfur and if the butane blender undertakes a quality
assurance program of periodic sampling and testing to ensure that the
supplier's sampling and testing is accurate.
We also proposed to allow refiners that blend other blendstocks
into PCG to meet an alternative testing requirement in lieu of testing
every batch of gasoline. Provided that the refiner's test result for
the sulfur content of each of the blendstocks is less than the national
refinery level per-gallon cap standard, a refiner can sample and test
each blendstock when received at the refinery, and treat each
blendstock receipt as a separate batch for purposes of compliance
calculations for the annual average sulfur standard.
Today's rule adopts these provisions. Several commenters urged us
to delay the 30 ppm per-gallon cap standard until other refiners must
meet a 30 ppm average standard. The proposed 30 ppm per gallon standard
was intended to be environmentally neutral in relation to
[[Page 6808]]
the standard applicable to other refiners. Therefore, today's final
rule makes clear that for the alternative compliance approach for
butane blenders, the 30 ppm per-gallon cap is not applicable until
January 1, 2005. The per-gallon cap starting January 1, 2004 is 120
ppm.\147\ For GPA gasoline the per-gallon cap under this alternative
compliance option is 150 ppm in 2004 through 2006.
---------------------------------------------------------------------------
\147\ See Table IV.C.-1.
---------------------------------------------------------------------------
6. Sampling Methods
Sampling methods apply to all parties who conduct sampling and
testing under the rule. We proposed to require the use of sampling
methods that were proposed in the July 11, 1997 Federal Register notice
for the RFG/CG rule (62 FR 37338, at 37341-37342, 37375-37376). These
sampling methods include ASTM D 4057-95 (manual sampling), ASTM D 4177-
95 (automatic sampling from pipelines/in-line blending), and ASTM D
5842 (this sampling method is primarily concerned with sampling where
gasoline volatility is going to be tested, but it would also be an
appropriate sampling method to use when testing for sulfur). There were
no adverse comments to the proposed sampling provisions. Today's rule
adopts the methods as proposed.
7. Gasoline Sample Retention Requirements
In the NPRM, we proposed a refiner and importer (collectively
referred to in this section as ``refiner'') sampling and testing
program to establish the sulfur compliance of each batch of gasoline
produced or imported. We were aware that there were possible drawbacks
to a self-testing scheme. For example, a party might sample or test
gasoline in a manner that is inconsistent with the required procedures,
or employees might inaccurately record the test results by mistake or
otherwise. Parties might also attempt to conceal a discovered violation
or to save money by not correcting a violation.
To address our concerns about self-testing, we considered an
alternative option of requiring independent sampling and testing for
all gasoline, including conventional gasoline. We did not propose this
requirement for independent sampling and testing for all gasoline
because of the costs of such a requirement,\148\ and we are not
adopting such a program in today's final rule. Instead, we proposed in
the NPRM a different strategy to complement the self-testing program
that would help ensure refinery sulfur compliance. This strategy would
have required refiners to retain for thirty days a representative
sample from each batch of gasoline produced, and to provide such
samples to the Agency upon request. We believed that, by means of this
option, EPA could verify the refiner test results. We believe that this
would create an incentive for refiners to sample, test, and record
their sulfur results in an accurate and truthful manner. We also
proposed that refiners be required to certify annually that the samples
have been collected in the manner required under the sulfur rule. In
addition, we proposed that specific procedures be followed by refiners
to properly collect, retain, and ship the samples in a manner
consistent with requirements already imposed or proposed under the RFG
program. Under the proposal, a minimum representative sample of 330 ml
of each gasoline batch would need to be retained (and submitted to EPA
upon request).\149\
---------------------------------------------------------------------------
\148\ See the discussion on this subject in the preamble to the
reformulated gasoline program's final rule, 59 FR 7765 (Feb. 16,
1994).
\149\ See 40 CFR 80.65(f)(3)(F)(ii), and the Proposed Rule for
Modifications to Standards and Requirements for Reformulated and
Conventional Gasoline, 62 FR 37337 et seq, proposed 40 CFR
80.101(i)(1)(i)(C)(iii).
---------------------------------------------------------------------------
Although there were few comments on this proposal, one commenter,
the National Petrochemical & Refiners Association (``NPRA''), did
comment extensively on it, and strongly urged the Agency not to
finalize it. One of the points raised by the NPRA was that the RFG
regulations have their own sample retention and submission
requirements, (40 CFR 80.65), so that a sulfur rule provision for RFG
batches was not necessary. The Agency continues to believe that sample
and retention requirements are useful to ensure compliance with the
sulfur standards, but we agree with NPRA that the sample retention and
submission requirements found in the RFG rule will serve equally as
well for the sulfur rule. Therefore, the final sulfur rule requires all
refiners, including those producing RFG, to comply with the sulfur
rule's retention requirements. However, any refiner of RFG using an
independent laboratory pursuant to 40 CFR 80.65(f), either under the
100% Option or the 10% Option, will be considered to be in compliance
with the sulfur rule's retain requirements provided the refiner ensures
that the independent laboratory conducting the retain program for the
refiner, is in compliance with these requirements. In particular, the
refiner must ensure that its independent laboratory sends the
appropriate certificate of analysis along with any sample forwarded to
EPA. Under the RFG program's 100% Option, the refiner must ensure that
its independent laboratory sends the independent lab's certificate of
analysis; and under the 10% Option, the refiner must ensure that its
independent laboratory sends the refiner's certificate of analysis.
In addition to urging EPA not to finalize the sample retention and
submission requirements for RFG gasoline, NPRA urged us not to finalize
these requirements for CG as well. NPRA argued that these requirements
would not prove useful in deterring non-compliance with the sulfur
requirements for this product, primarily because false samples could be
forwarded to EPA. The Agency disagrees with NPRA's argument. First, the
goal of these requirements is not only to deter cheating but also to
reveal inadequacies that exist in refiners' sulfur testing procedures.
We do not expect that most non-compliance with the sulfur standards
will occur through cheating, but rather through operational problems.
Agency enforcement experience under the RFG rule reveals that some
refiners' testing procedures are not always accurate in measuring
parameters and thus detecting noncompliance. EPA verification testing
will expose such testing inaccuracy, enabling the refiner to improve
its testing procedures and thus improve its ability to detect, and
correct, its own compliance problems. To ensure the effectiveness of
these sulfur sample retention and submission requirements, the final
rule requires all refiners to provide EPA with the sulfur test result
the refiner has obtained for the sample, along with each sample the
refiner provides to the Agency under this rule.
EPA will use these retained samples in compliance determinations.
Gasoline samples that are forwarded to EPA under the sample retention
requirements that are found to be in violation of a refinery cap, will
be considered by EPA to be evidence of violations of the cap standard,
regardless of the refiner's own test result. In addition, EPA testing
of these samples may establish that the refiners' test results are
generally incorrect, i.e., are biased. EPA will evaluate whether such a
bias constitutes evidence of a violation of the sulfur average
standards applicable to the refiner, including whether the bias extends
to other sulfur tests conducted by the refiner during the current or
previous averaging periods. Further, evidence of testing bias could
constitute evidence a refiner has not met the requirement to conduct
sulfur testing in accordance with specified
[[Page 6809]]
procedures, and any reports submitted to EPA that reflect the bias
could be evidence a refiner has not met the requirement to properly
report the sulfur content of gasoline produced.
While it is true that a party can submit false samples to EPA in
order to prevent the Agency from discovering what in actuality is a
non-compliant batch of gasoline, we do not believe that there will be
many examples of such flagrant cheating. Our enforcement experience
indicates that the great majority of parties regulated under the fuels
programs work to comply with the regulatory requirements. We believe
that the potential penalties for the submission of false samples to the
government, and the potential criminal liability which such conduct
would subject parties to under to section 113 of the Clean Air Act,
will act as significant deterrents to this cheating. Last, to further
decrease perceived incentives for such cheating, the regulation
specifically requires that the refinery official signing and submitting
the refinery's annual sulfur report must make inquiries to verify the
correctness of the sampling collection and retention procedures and
include with the annual sulfur report a personal certification of the
correctness of the procedures used to collect the retained samples. If
such certification cannot be made, then the report cannot be timely
filed.
NPRA further commented that CG being counted to create early
credits under the sulfur rule's ABT program should not be subject to
the proposed sample retention and submission requirements. NPRA argues
that the lack of a sulfur cap during the early credit timeframe makes
such retention and submission unnecessary. The Agency disagrees. During
the early credit generation timeframe, refiners participating in the
credit program must comply with sulfur averaging requirements, even
though sulfur caps are not required to be met. Accurate determination
of compliance with the averaging requirements necessitates accurate
sulfur testing in the early credit period, just as it does during
implementation of the full sulfur program, even though sulfur testing
of CG composite samples will be permitted. Hence, the sample retention
and submission requirements, whose purpose is to ensure accurate
testing and compliance determination, continue to be necessary for the
early credit period. The final rule retains the sample retention
requirements for CG during the early credit time frame.
NPRA also suggested that in place of the proposed 30 day sample
retention requirement, EPA instead should require refiners to maintain
samples only from the last three batches of gasoline produced. NPRA
argued that this alternative requirement would prove more economical
for the refiners, yet would still provide EPA with the ability to test
some samples itself. Although the Agency believes that the proposed 30
day retention period would provide a valuable amount of samples to be
retained and thus available for testing by EPA, the Agency agrees that
a more limited sample retention requirement could provide an acceptable
means of confirming refiner testing accuracy and sulfur compliance,
while being less burdensome to refiners. We do not believe, however,
that retention of samples from only three batches of gasoline would be
effective in accomplishing the goal of producing greater testing
accuracy. Three samples would not be a great enough number to
realistically demonstrate if a pattern of testing irregularities exists
or to demonstrate that a significant volume of the refiner's production
is covered by the testing verification process. Consequently, instead
of the three batch sample retention requirement proposed by this
commenter, the Agency has instead required in the final rule that at
least the last 20 samples be retained, and that each sample be retained
for a minimum of 21 days. The Agency believes this amended requirement
addresses NPRA's concern that the amount of days of sample retention be
reduced from thirty days, while also providing the Agency with an
effective means of assuring a reasonable number of samples,
representing a significant period of refining activity, will be
available for accuracy testing. We believe the retention requirement is
not burdensome given the limited number of samples that must be
retained. Further, many refineries already retain samples.
A final comment by NPRA about the sample retention and submission
requirements is addressed in the final rule. NPRA raised a concern
about the required retention and submission of samples of pressurized
blendstock, particularly butane, which would require the use of
specialized high-pressure containers. The Agency agrees that there is
legitimate concern about the handling, storing and shipping of such
samples. We also believe that the final rule's quality assurance
testing requirements and the testing requirements for blendstock
suppliers provides adequate assurance of the compliance of these
blendstocks. Hence, the final sulfur rule does not contain a
requirement that samples of pressurized blendstock must be retained.
E. Federal Enforcement Provisions for California Gasoline and for Use
of California Test Methods To Determine Compliance
Requirements to Segregate Gasoline and to Use Product Transfer
Documents for Certain California gasoline; Definition of California
Gasoline
In the NPRM, the Agency proposed to generally exempt from the
requirements of the federal sulfur rule certain gasoline sold or
intended for sale in California. For the purpose of program
consistency, the gasoline to be exempt in the sulfur rule would meet
the same definition of California gasoline as found in the RFG rule (40
CFR 80.81(a)(2)). The exempt gasoline would include all gasoline sold,
intended for sale, or made available for sale in California that was
also either: produced within California; imported into California from
outside the U.S.; or imported into California from another state,
provided that the out-of-state refinery did not also produce federal
RFG.
Although the NPRM proposed to exempt California gasoline from
compliance with the proposed sulfur standards (for reasons discussed
elsewhere in this preamble), we did propose two requirements that would
apply to some exempt California gasoline. The first would require
exempt gasoline produced outside of California but intended for use in
California, to be segregated from non-exempt gasoline at all points in
the distribution system. The second would require out-of-state
producers of exempt gasoline intended for sale in California to create
PTDs identifying the product as California gasoline, and would require
such PTDs to be provided to all transferees of this gasoline in the
distribution system. Requiring such documentation is intended to
facilitate enforcement and compliance by identifying gasoline that is
not federally regulated. The same PTD requirements currently apply
under the RFG program.\150\
---------------------------------------------------------------------------
\150\ See 40 CFR 80.81(g).
---------------------------------------------------------------------------
One commenter expressed a reservation about the sulfur rule's
proposed segregation requirement. The commenter was concerned that the
segregation requirement for exempt California gasoline might interfere
with the ability of California importers to import into California,
non-exempt, federal RFG gasoline that happened to comply with
California Air Resources Board (ARB) sulfur requirements, but had not
been kept segregated by its out-
[[Page 6810]]
of-state refiner from the refiner's federal RFG product. Out of a
concern about potential gasoline supply problems in California, the
commenter asked for assurances from the Agency that such gasoline would
not be prohibited from sale in California because of the sulfur rule's
segregation requirement.
The Agency agrees that it would not be beneficial to restrict the
flow of complying gasoline into California. However, since the federal
and the ARB sulfur control programs provide for differing calculations
of standard compliance, and since the standards themselves are not
always consistent between the two programs, EPA does not believe that
the compliance of gasoline produced for federal purposes will
necessarily assure its compliance with ARB program requirements, and
vice-versa. Therefore, we believe it is necessary to require the
physical segregation of the gasolines produced for the different
programs in order to best ensure compliance with our uniquely
determined federal sulfur standards. To ensure segregation, it is
necessary that refiners and importers designate gasoline batches
destined for California as California gasoline and that PTDs identify
the gasoline as being for use only in California.
Further, one of the purposes of creating the California exemption
in the federal sulfur rule is to ensure the exclusion of California
gasoline from the refiner's compliance calculations under the federal
rule. This exclusion is necessary to prevent gasoline that is produced
to comply with the strict California standards from unfairly effecting
the refiner's compliance with the federal requirements, thereby
facilitating the production of higher sulfur gasoline for use in a
federal market supplied by the refiner. EPA believes that segregation
of the two gasolines is necessary because it facilitates accurate
identification of the product to be included solely in the federal
compliance calculations.
EPA does not believe that requiring the segregation of California
gasoline from gasoline produced for the federal market should create a
significant restriction in the flow of gasoline to California. The
Agency believes that if a California marketer needs to acquire ARB-
complying gasoline from out-of-state, the marketer should generally be
able to satisfy that need by ordering a batch of California gasoline to
be created for it by out-of-state producers. Under this circumstance of
the creation of a unique batch of California gasoline, segregation of
the gasoline will typically be assured.
In analyzing the above comment on segregation of California
gasoline, the Agency realized that the sulfur rule's proposed
definition of exempted California gasoline, which paralleled the
definition existing in the RFG rule, was not as complete as it should
be to properly address the unique needs of the sulfur program.
Specifically, the exclusion from the sulfur rule's exemption of out-of-
state gasoline sold or intended for sale in California solely because
it happens to be produced at a refinery that produces federal RFG
gasoline, is not appropriate. Basing an exemption on whether or not an
out-of-state refinery produces federal RFG is relevant to the RFG
program, but it has no relevance to the sulfur control program. To
ensure effective determination of compliance with federal sulfur
standards, the final sulfur rule deletes any reference to RFG
production in the rule's definition of exempt California gasoline.
Hence, the example presented in the comment, in which out-of-state
gasoline for sale in California could be considered non-exempt
gasoline, would not arise under the expanded definition of California
gasoline.
Use of California Test Methods and Off-Site Sampling Procedures for 49
State Gasoline
Under the NPRM and the final rule, refineries and importers located
in California would be required to meet the federal sulfur standards
and other requirements with regard to their ``federal'' gasoline to be
used outside of California. However, we proposed that gasoline produced
in California for sale outside of California could be tested for
compliance under the federal sulfur rule using the methodologies
approved by the ARB, provided that the producer complies with the
procedures for such testing as already required under 40 CFR 80.81(h),
which permits California test methods not identical to federal test
methods to be used for conventional gasoline. Today's rule adopts this
provision, as well as the corollary proposed provision that gasoline
produced by California refiners for use out-of-state may be tested at
off-site testing as already permitted pursuant to 40 CFR 80.81(h) for
CG purposes. Both provisions in today's rule should alleviate duplicate
testing burdens on California refiners subject to both the federal and
California programs, since the test methods acceptable under these
alternative provisions in today's rule are also currently used to
comply with California requirements. No comments were received on these
provisions.
F. Recordkeeping and Reporting Requirements
1. Product Transfer Documents
Small Refiner Gasoline Transfers
The NPRM proposed that the business practice PTDs that accompany
each transfer of custody or title of gasoline that includes gasoline
produced by any small refiner subject to sulfur rule individual
refinery standards would be required to identify the gasoline as such,
including the applicable downstream cap, as an aid to enforcing the
national downstream cap. Today's rule adopts the proposed PTD
requirement, with modifications regarding how the PTD requirement
relates to testing, as described in section VI.C. The requirement for
printing information on PTDs has been simplified in the final rule. All
parties may use brief codes to identify the small refiner status of the
gasoline and to identify the small refiner downstream standard it is
subject to. This small refiner gasoline PTD provision is also applied
to gasoline subject to individual refinery standards under the
temporary refiner relief provision of today's rule.
GPA Gasoline Transfers
Under the geographic phase-in program finalized today, gasoline
produced or imported for use in the GPA may be used only in the GPA
states. Therefore, it is necessary for PTDs for gasoline that is
comprised in whole, or in part, of GPA gasoline, to identify the
gasoline as such and state that the gasoline may not be distributed or
sold for use outside the GPA. Product codes may be used to provide this
information, except in the case of transfers to truck carriers,
retailers and wholesale purchaser-consumers.
2. Recordkeeping Requirements
Under today's rule, refiners and importers will be required to keep
and make available to EPA certain records that demonstrate compliance
with the sulfur program standards and requirements. This includes
records pertaining to the generation, use and transfer of credits and
allotments. The RFG/CG regulations currently require refiners and
importers to retain records that include much of the information
required in the sulfur rule. Where this is the case, there is no
requirement for duplication of records or information.
Under the final rule, all parties in the gasoline distribution
system, including refiners, importers, oxygenate blenders, retailers,
and all types of distributors will be required to retain PTDs and
records of quality assurance programs (including, where applicable,
sulfur test
[[Page 6811]]
results) that parties conduct to establish a defense to downstream
violations. All parties in the gasoline distribution system currently
are required to keep PTDs for RFG. However, since there are no
downstream CG standards under the anti-dumping regulations, only
refiners and importers are required to retain PTDs for conventional
gasoline under the current regulations. Because the sulfur rule, like
the RFG rule, includes downstream standards, we believe that a
requirement to retain PTDs for all parties in the gasoline distribution
system is appropriate under the sulfur rule. The PTD information will
help us identify the source of any gasoline found to be in violation of
the sulfur standards, and will provide downstream parties with
information regarding the applicable downstream standard.
Parties are required to keep records for a period of five
years,\151\ with additional requirements for records pertaining to
credits and allotments. Records pertaining to credits or allotments
that were banked and never transferred to another party are required to
be retained for five years after the credits or allotments are used for
compliance purposes. Records pertaining to credits or allotments that
were transferred are required to be retained by the transferor for five
years after the year the credits or allotments were transferred, and by
the transferee for five years after use.
---------------------------------------------------------------------------
\151\ Five years is the applicable statute of limitations for
the RFG and other fuels programs. See 28 U.S.C. 2462.
---------------------------------------------------------------------------
We received comment that the regulations should allow records to be
maintained in non-hard copy formats, such as photographic or electronic
means. We do not believe that the recordkeeping requirements, as
proposed, disallow the retention of records in electronic or
photographic form. However, parties that electronically generate and/or
maintain records must make available to EPA the hardware and software
necessary to review the records, or if requested by EPA, electronic
records shall be converted to paper documents.
The sulfur rule, like the RFG/CG rule, requires regulated parties
to keep the results of tests conducted on the gasoline. A number of
parties previously have asked EPA to clarify whether, under the RFG/CG
rule, this recordkeeping requirement requires parties to keep copies of
all documents that contain test results. To clarify what the
recordkeeping requirements require with regard to test data, we
proposed for the RFG/CG rule to add language which specifies that the
test result as originally printed by the testing apparatus is required
to be kept, or, where no printed result is generated by the testing
apparatus, the results as originally recorded by the person who
performed the tests. Today's action incorporates this clarification in
the sulfur rule. Under this provision, where the test data is initially
recorded into a database system and there are no prior written
recordings of the data, the information in the database system may
serve as the original record of the test data. The final rule also
specifies that any record that contains results for a test that are not
identical to the results as originally printed by the testing apparatus
or recorded by the person who performed the test must also be kept.
Although this language was not included in the NPRM, we have concluded
it is a logical outgrowth of the proposal regarding recordkeeping for
test data, and that it will make the regulation clearer with regard to
this requirement. As a result, it is appropriate to include this
language in the final rule.
3. Reporting Requirements
Refiners and importers will be required to submit an annual report
that demonstrates compliance with the applicable sulfur standards and
data on individual batches of gasoline, including batch volume and
sulfur content. The rule requires that refiners and importers report on
the generation, use and transfer of credits and allotments. The RFG/CG
programs contain similar reporting requirements. Based on our
experience with these programs, we believe that requiring an annual
sulfur report and batch information will provide an appropriate and
effective means of monitoring compliance with the average standards
under the sulfur program. The batch data also will serve to verify that
each batch of gasoline met the applicable sulfur cap standard when it
left the refinery or import facility. The batch data must also show
which batches were designated as GPA gasoline, as appropriate.
For the 2004 and 2005 annual averaging periods, refiners will be
required to submit a report for the refiner's gasoline production (RFG
and conventional gasoline) for all refineries during the averaging
period, which demonstrates compliance with the applicable corporate
average and per-gallon cap standards. For the 2005 annual averaging
period, refiners will also be required to submit a separate report for
each refinery, which demonstrates compliance with the refinery average
standard. For the 2004 and 2005 annual averaging periods, importers
will be required to submit a report for all of the gasoline they import
during the averaging period, which demonstrates compliance with the
applicable corporate average and per-gallon cap standards. The
importer's report for 2005 must also demonstrate compliance with the
refinery average (30 ppm) standard. Any refiner who is also an importer
must aggregate the refining and importing activities for the purpose of
demonstrating compliance with the applicable corporate average
standards. Importers of gasoline produced by foreign refiners with
individual baselines have additional reporting requirements. For the
2006 averaging period and beyond, corporate average reports are no
longer required for either refiners or importers. Refiners will be
required to submit an annual report for each refinery (importers for
the gasoline they import), which demonstrates compliance with the
refinery average and per-gallon cap standards. Refiners or importers
producing both GPA gasoline and gasoline for the remainder of the
country, must separately report compliance with the different
standards. Annual reports, on forms provided by the Agency, must be
received by EPA by the last day of February for the prior calendar
year.
The annual reports will also provide a vehicle for accounting for
any sulfur allotments or credits created, sold or used to achieve
compliance during the averaging period. (See Section IV.C. for a
discussion of the sulfur allotment and ABT credit programs.) Each
refiner or importer choosing to participate in the ABT program will be
required to report to the Agency on an annual basis (refiners for each
refinery, and importers for the gasoline they import) the applicable
sulfur baseline and the annual average gasoline sulfur level produced
at that refinery or by that importer (in ppm sulfur) during the
averaging period. Credit calculations will be reported, along with an
accounting of credits banked, used, traded, acquired or terminated. The
credits will be in units of ppm-gallons. The identity of the refiners/
refineries and importers involved in these transactions will be
reported, along with the registration numbers assigned to them by the
Agency under the RFG/CG program (40 CFR 80, subparts D, E, and F).
For years 2000 through 2003, parties who generate early ABT credits
will be required to report information relating to the generation of
these credits. These early credit reports will only cover credits
banked and traded. Beginning in 2004 and beyond, refiners and importers
[[Page 6812]]
who generate and/or use ABT credits will be required to submit
information relating to the generation and use of the credits as part
of their annual compliance reports, including any credit debit that is
carried over to the subsequent year. For each purchase of ABT credits,
as reported on the buyer's annual report, there must be a corresponding
entry on the seller's annual report. The annual report must also
indicate any credits that are used to achieve compliance with the
refinery average standard.
As discussed above, during the 2004 and 2005 annual averaging
periods, refiners for the combined production from all their
refineries, and importers for the gasoline they import, will also be
required to demonstrate compliance with the applicable corporate
average standard. In addition, refiners and importers must demonstrate
compliance with the requirements for the generation, use, transfer and
termination of allotments. Refiners and importers who trade sulfur
allotments to meet the corporate average standard will be required to
submit information relating to these transactions. All sulfur allotment
transactions must be concluded by the last day of February of the
calendar year following the year the allotments were used to meet the
corporate average. Information relating to such transactions, including
the identity of the refiners and importers involved in the transactions
and their EPA registration numbers, must be reported by both parties to
the transaction as part of their annual compliance reports.
As discussed in Section IV.C., above, parties that only blend
oxygenates into gasoline are not treated as refiners under the sulfur
rule, and, as a result, are not subject to the reporting requirements
under Sec. 80.370.
Refiners and importers are also required to arrange for a certified
public accountant or certified internal auditor to conduct an annual
review of the company's records that form the basis of the annual
sulfur compliance report (called an ``attest engagement''). The purpose
of the attest engagement is to determine whether representations by the
company are supported by the company's internal records. Attest
engagements are already required under the RFG/CG regulations. The
refiner's attest engagement under the RFG/CG rule partially encompasses
sulfur rule compliance since the attest auditors are already required
to verify sulfur results for both CG and RFG. However, the RFG/CG
attest engagements do not require the attest auditor to review sulfur
credit generation, credit purchases, credit trading or small refiner
issues. Because of the complexity of the sulfur credit program and
small refiner program, sulfur attest engagement provisions have been
adopted by today's rule that require the attest auditor to review
sulfur credit generation, credit trading, credit purchasing, credit
selling, corporate pool averaging, and small refiner issues. Consistent
with the RFG regulations, the attest reports for sulfur are to be
included in the presently required attest engagement submitted by May
31 of each year.
G. Exemptions for Research, Development, and Testing
The final rule provides for an exemption from the sulfur
requirements for gasoline used for research, development and testing
purposes. We recognize that there may be legitimate research programs
that require the use of gasoline with higher sulfur levels than those
allowed under the sulfur rule. As a result, the final rule includes
provisions for obtaining an exemption from the prohibitions for persons
distributing, transporting, storing, selling or dispensing gasoline
that exceeds the standards, where such gasoline is necessary to conduct
a research, development or testing program. Parties are required to
submit to EPA an application for exemption that describes the purpose
and scope of the program and the reasons why use of the higher sulfur
gasoline is necessary. In approving any application, EPA will impose
reasonable conditions such as recordkeeping, reporting, volume
limitations and possible requirements to repair vehicles.
We received comment that the regulations should clarify that
suppliers of gasoline used for R&D purposes are exempt from the
prohibitions and penalties under the sulfur rule. To clarify this
point, we have added a provision which explicitly states that gasoline
subject to an R&D exemption is exempt from the provisions of subpart H,
so long as the gasoline is used in a way that complies with the terms
of the memorandum of exemption. If the R&D exemption is shown to be
based on false information or is not properly maintained, parties will
be liable for violations of the provisions under subpart H regarding
any gasoline covered under the exemption.
We also received comment that the regulations should ensure that
vehicles which have been used for testing with high sulfur test fuels
are not later returned to the general fleet, or if they are, the
vehicles should be required to be restored to their original condition.
EPA agrees that it would be improper to permit such vehicles to be used
in general use if their emission controls have been rendered
inoperative through fueling with high sulfur gasoline. This issue may
be effectively addressed through the anti-tampering requirements of
section 203(a)(3) of the Clean Air Act, 42 U.S.C. Sec. 7522(a)(3), and
is also addressed in today's rule, which provides the Administrator
with the power to include appropriate conditions when granting R&D
exemptions.
H. Liability and Penalty Provisions for Noncompliance
The liability and penalty provisions under the sulfur rule are
similar to the liability and penalty provisions of the RFG and other
fuels regulations.\152\ Regulated parties will be liable for committing
certain prohibited acts, such as selling or distributing gasoline that
does not meet the sulfur standards, or causing others to commit
prohibited acts. In addition, parties will be liable for a failure to
meet certain affirmative requirements, such as the recordkeeping or PTD
requirements, or causing others to fail to meet such requirements.
---------------------------------------------------------------------------
\152\ See section 80.5 (penalties for fuels violations); section
80.23 (liability for lead violations); section 80.28 (liability for
volatility violations); section 80.30 (liability for diesel
violations); section 80.79 (liability for violation of RFG
prohibited acts); section 80.80 (penalties for RFG/CG violations).
---------------------------------------------------------------------------
The sulfur rule, like other EPA fuels regulations, includes a
presumptive liability scheme for violations of prohibited acts. Under
this approach, the party in the gasoline distribution system that
controls the facility where the violation occurred, and other parties
in that gasoline's distribution system (such as the refiner, reseller,
and distributor), are presumed liable for the violation.\153\ The
sulfur rule explicitly includes causing another person to commit a
prohibited act and causing the presence of non-conforming gasoline to
be in the distribution system as prohibitions. The final rule clarifies
that causing the presence of non-conforming gasoline to be in the
distribution system includes gasoline that does not conform to the
applicable average standard, as well as gasoline that does not conform
to the cap standard. Affirmative defenses are provided for each party
that is deemed presumptively liable for a violation, and all
presumptions of liability are refutable. The defenses under the sulfur
rule are similar to those
[[Page 6813]]
available to parties for violations of the RFG regulations.
---------------------------------------------------------------------------
\153\ An additional type of liability, vicarious liability, is
also imposed on branded refiners under these fuels programs.
---------------------------------------------------------------------------
The final sulfur rule, like the proposal, applies the provisions of
section 211(d)(1) of the Clean Air Act (Act) for the collection of
penalties. The penalty provisions subject any person who violates any
requirement or prohibition of the sulfur rule to a civil penalty of up
to $27,500 for every day of each such violation and the amount of
economic benefit or savings resulting from the violation. A violation
of the applicable average sulfur standard constitutes a separate day of
violation for each day in the averaging period. A violation of a sulfur
cap standard constitutes a separate day of violation for each day the
gasoline giving rise to the violation remained in the gasoline
distribution system. The length of time the gasoline in question
remained in the distribution system is deemed to be twenty-five days
unless there is evidence that the gasoline remained in the gasoline
distribution system for fewer than or more than twenty-five days. The
penalty provisions are similar to the penalty provisions for violations
of the RFG regulations.
After consideration of the comments received, the Agency is
adopting regulations that specify the regulated parties who may be
subject to liability for causing a violation of the sulfur rule. As
proposed, the regulation would have applied to any person, not limited
to the parties in the gasoline distribution system whose actions could
logically have caused the nonconformity. This provision would have
potentially broadened the range of liable parties under the sulfur rule
beyond the range established under other fuel programs. EPA believes
that the presumptive liability schemes of current fuels regulations
have generally been effective and finds no compelling reason to apply
the regulatory provision at issue to ``any person'' rather than to
specific parties. Therefore, in the final sulfur rule, the liability
sections for the causation violations will specify the regulated
parties subject to the liability, and will not encompass unspecified
parties. The final rule clarifies that oxygenate blenders are among the
specified parties potentially subject to liability. Today's final rule
also clarifies that parent corporations are liable for violations of
subsidiaries. This is consistent with our interpretation of the RFG
rule, as stated in the RFG and Anti-dumping Question and Answer
document. Finally, the final rule clarifies that each partner to a
joint venture will be jointly and severally liable for the violations
at a joint venture facility or by a joint venture operation.
We received several comments on the proposal. Some commenters
believe that the Act does not authorize EPA to establish prohibitions
against causing another person to commit a prohibited act or causing
the presence of non-conforming gasoline to be in the distribution
system. These commenters believe that these prohibitions are a
departure from the liability scheme under the existing fuels
regulations and that they constitute double jeopardy by imposing
liability for multiple violations for a single act. The commenters also
believe that imposing liability for causing another person to commit a
prohibited act extends the limits that Congress placed on liability
under section 211 of the Act, since sections 211(d) and 211(k)(5) do
not expressly mention imposing liability for causing another person to
violate regulations. The commenter also noted that, had Congress
intended for such actions to be prohibited, it could have expressly
included such a prohibition in section 211. This commenter cites
section 211(g) as an example of a statutory provision with such a
prohibition. One commenter said that, rather than clarify the
presumptive liability scheme, the rule provides no guidance regarding
what it means to cause someone to violate a prohibition or cause non-
conforming gasoline to be in the distribution system. A commenter also
stated that these proposed prohibitions are unnecessary, since EPA has
issued violations to multiple parties under current fuels regulations.
EPA disagrees with the comment that the sulfur rule's proposed
liability scheme is a marked departure from the liability schemes
typically found in the other fuels programs promulgated pursuant to
section 211 of the Act and with the comment that the regulations
constitute double jeopardy (the double jeopardy issue is addressed in
the Response to Comment document). The majority of these programs,
including the proposed sulfur rule, contain presumptive liability
enforcement structures which impose liability on parties who, through
their actions, could logically have caused the fuel nonconformity. The
sulfur rule's presumptive liability scheme is thus consistent with the
liability schemes of typical prior fuels programs. While EPA has issued
notices of violations to multiple parties for violations under current
fuels regulations, the Agency believes it is appropriate to clarify
that the act of causing another party to violate the regulations is a
prohibited act. Therefore, the regulatory language in the sulfur
regulations explicitly addresses this issue.
EPA also disagrees with the comment that this provision is
inconsistent with Section 211(d) of the Act because Section 211(d) does
not mention imposing liability for causing another person to violate
the regulations promulgated under Section 211(c). For the reasons
described above, EPA is adopting a provision in today's regulations
that prohibits causing another entity to violate the standards. This
prohibition is a reasonable exercise of EPA's discretion under Section
211(c), and the penalty provision of Section 211(d) apply to violations
of the prohibition. The fact that Section 211(d) does not specifically
mention causing another person to violate the regulations is therefore
irrelevant, such action is itself a violation of the regulations.
Moreover, Section 211(d) does not mention any specific violations for
which penalties may be assessed, but rather states generally that
violations shall result in penalties. Thus, the absence of specific
mention of causing another entity to violate the regulations is
irrelevant, since all other specific prohibitions in regulations
subject to Section 211(d) penalties are similarly not mentioned.
The Agency also disagrees with the comment that the Clean Air Act
does not give EPA the authority to establish causation violations under
the sulfur rule. We believe that the Act gives us ample authority to
categorize the sulfur rule's causative acts, i.e., the causing of
another party to commit a violation, and the causing of nonconforming
gasoline to be present in the distribution system, as prohibited acts.
Section 211(c) of the Act authorizes the Agency to promulgate
regulations for the purpose of prohibiting or controlling the
manufacture, introduction into commerce, sale, or offering for sale of
fuels or fuel additives where the fuel or additive causes or
contributes to air pollution which may reasonably be anticipated to
endanger public health or welfare, or where the fuel or additive will
impair to a significant degree the performance of emission control
devices that are or will be in general use. Today's gasoline sulfur
rule is promulgated pursuant to this authority.
Section 211(c) gives EPA broad discretion to fashion regulations to
control or prohibit the manufacture, introduction into commerce, sale,
or offering for sale of fuels once the Agency has made the requisite
findings regarding contribution to harmful air pollution or impairment
of vehicle emissions control system performance. This includes the
discretion to adopt
[[Page 6814]]
reasonable regulatory provisions that are necessary and appropriate to
ensure that the controls or prohibitions are effective. To effectively
regulate sulfur in gasoline under section 211, it is necessary for the
Agency to regulate the actions of those parties who do the
manufacturing, introducing into commerce, and selling of gasoline
subject to the sulfur requirements.
When one or several of these regulated parties causes another
regulated party to violate the rule (or causes nonconforming gasoline
to be present in the system), such an act could logically result in the
high sulfur gasoline contributing to harmful air pollution or to the
impairment of vehicle emission control device performance, which are
the adverse impacts that legislative authority under section 211(c) was
created to control. Examples of such upstream causative acts include
the scenario where a refiner produces high sulfur gasoline which it
sells to a distributor. That distributor then resells the nonconforming
product to a variety of retail outlets which, in their turn, also
violate the rule by selling the high sulfur gasoline to owners of motor
vehicles. Another example occurs where a distributor has created high
sulfur gasoline by blending high sulfur blendstock into his gasoline.
This distributor then makes several different sales of this
noncomplying product to a variety of retail outlets, which, in their
turn, also violate the rule by selling the product to numerous motor
vehicle owners. A third upstream causation scenario could occur if
several refiners happen to make nonconforming gasoline. Each then sells
its nonconforming product to a different distributor, and a retail
outlet which is a customer of both distributors, purchases some of the
noncomplying gasoline from both distributors. The retailer then commits
a violation by offering this product for sale to its customers.
In some cases, an upstream action has more severe environmental
impacts through causing a downstream violation than would occur if the
violation was corrected upstream. For example, a refiner may violate
the sulfur regulations by shipping gasoline that exceeds the applicable
standards when it leaves the refinery. If that violation is corrected
before the gasoline reaches the retail outlets, the adverse
environmental impacts could be mitigated or avoided. However, if the
refiner's violation is not corrected and ultimately causes a number of
violations of the standards at retail outlets, the environmental impact
would be more severe, since high sulfur gasoline would be introduced
into vehicles and impair catalyst performance. Therefore, it is
reasonable to consider causing a downstream violation by another party
to be a separate violation, since an upstream party's actions can have
more severe environmental consequences if they cause downstream parties
to violate applicable requirements. For these reasons, it is reasonable
to conclude that section 211(c) authorizes the Agency to prohibit and
control such causative acts in order to ensure that gasoline ultimately
introduced into vehicles meets the low sulfur standards.
Our approach is also reasonable under section 211(c) even though
section 211(c) does not expressly prohibit causing another party to
violate standards adopted under this subsection. In fact, section
211(c) itself does not contain any express prohibitions, but rather
provides EPA authority to regulate fuels and fuel additives, based on
certain findings. In contrast, other provisions of section 211, such as
section 211(g), do include express prohibitions against certain
actions. Thus, under section 211(g), the specified actions are
prohibited even in the absence of EPA adopting regulations to codify
the prohibitions. In section 211(g), Congress indicated a clear intent
to prohibit a specific action (misfueling), without requiring EPA to
adopt regulations to implement that prohibition. However, section
211(c) authorizes EPA to establish regulations with certain controls
and prohibitions, and, as described above, EPA has the discretion to
adopt reasonable measures to ensure that the requirements of such
regulations are met.
Moreover, the commenters' assertion that this provision is
inconsistent with other subsections of section 211 of the Act is
misplaced. First, while the sulfur standards do apply to all gasoline,
including gasoline subject to the reformulated gasoline requirements,
the sulfur standards are being adopted pursuant to EPA's authority
under section 211(c)(1), not under section 211(k). Therefore, section
211(k)(5)'s prohibitions, which describe actions that are violations of
section 211(k), are not relevant to the sulfur standards. In addition,
the enumeration of specific prohibitions in section 211(k) does not
mean that EPA may establish no other prohibited acts with respect to
reformulated gasoline; rather, it simply identifies certain actions
that ``shall be'' violations of section 211(k), but does not preclude
establishment of other appropriate prohibited acts pursuant to EPA's
authority under the Act.
The Agency also disagrees with the argument that the proposed
causation violations under the sulfur rule would impose unjustifiable,
multiple liability for the commission of a single prohibited act. The
Agency is generally not in the best position to know the exact cause of
a gasoline nonconformity since so many parties and actions are involved
with the sale and transfer of the gasoline. Therefore, for effective
enforcement, we must have the ability to assert the liability of all
the parties in the system who were connected with the nonconforming
gasoline because they each could have caused the violation. Similarly,
we must also have the ability to assert upstream liability for the full
number of downstream violations a party may be responsible for causing,
even if the multiple downstream violations may all ultimately be found
to stem from one gasoline sale or transfer on the part of the upstream
party. The enforcement possibility exists that the separate downstream
violations may each have stemmed from separate actions by that party.
Any party may rebut the presumption of liability for each asserted
violation by establishing through affirmative defenses that it did not
cause the violation. Moreover, any party against whom EPA institutes an
enforcement action may raise equitable factors about its own conduct as
part of settlement of the violation enforcement action. In settling
fuels matters, the Agency typically takes into account such matters as
the volume of nonconforming product that a party was connected with,
and the severity and the amount of proscribed activity that the party
was actually involved with in causing the violation. We do not believe
that either the sulfur rule's liability scheme or its future
implementation will be arbitrary or unjustified.
To further alleviate commenters' concern about potential liability
for multiple violations under the sulfur rule, we want to clarify that
the Agency does not ordinarily attempt to collect separate penalties
from an entity for the array of possible standard violations (e.g.,
both for the manufacturing and the selling of noncomplying product),
that a party might be liable for in respect to the same gasoline. In
addition, we do not intend to seek penalties from a single party for
violating regulatory standard requirements while also seeking penalties
for that party's causing of other entities to violate regulatory
standard requirements, where both violations involve the same gasoline,
unless very unusual circumstances exist which would warrant such
action, such as egregious conduct on the part of the party.
[[Page 6815]]
In a similar fashion, we do not expect to collect penalties from
one party for both types of causation violations for the same amount of
gasoline under normal circumstances. A primary Agency purpose in
defining the causation violations as two separate prohibited acts
(i.e., causing another to commit a violation, and causing the presence
of nonconforming product in the distribution system), was not to
collect a double penalty, but to address different scenarios of
evidence collection. For example, if the Agency finds a sulfur rule
standard violation in a sample from a retail outlet supplied by a
certain distributor, but we do not have a nonconforming sample from the
distributor, the evidence would most easily permit us to assert that
the distributor was responsible for causing the retailer violation that
we do have evidence for. It is reasonable for us to assert the
causation violation against the distributor in spite of our lack of a
sample from the distributor, because any distributor who transfers
gasoline to a retailer, which gasoline is found to be noncompliant,
could logically have caused the noncompliance of the gasoline when it
was under the distributor's control, such as by blending high sulfur
blendstock into the gasoline.
On the other hand, if we have a violation sample from a
distributor, but no samples from its downstream customers, we may
assert that the distributor caused the presence of nonconforming
gasoline in the distribution system, rather than assert that the
distributor caused another party to sell nonconforming product, since
we don't have a nonconforming sample from another party's facility. It
would be reasonable for us to assert that the distributor caused the
presence of nonconforming gasoline in the distribution system since we
do have a sample of nonconforming gasoline from the distributor, and
provided also that there is evidence that the distributor had sold,
transferred, etc. this product to downstream customers.
In summary, the Agency intends to enforce the liability scheme of
the sulfur rule in the same reasonable manner that we have enforced the
similar liability schemes in our prior fuels regulations. This does not
include attempting to penalize a party for multiple variations of
noncompliance in regard to the same gasoline unless unusual
circumstances make such action appropriate.
I. How Will Compliance With the Sulfur Standards Be Determined?
We have often used a variety of evidence to establish non-
compliance with the requirements imposed under our current fuels
regulations. Test results of the content of gasoline have been used to
establish violations, both in situations where the sample has been
taken from the facility at which the violation occurred, and where the
sample has been obtained from other parties' facilities when such test
results have had probative value of the gasoline's characteristics at
points upstream or downstream. The Agency has also commonly used
documentary evidence to establish non-compliance or a party's liability
for non-compliance. Typical documentary evidence has included PTDs
identifying the gasoline as inappropriate for the facility it is being
delivered to, or identifying parties having connection with the non-
complying gasoline.
EPA proposed that compliance with the sulfur standards would be
determined based on the sulfur level of the gasoline, as measured using
the regulatory testing methodologies. We further proposed that any
evidence from any source or location could be used to establish the
gasoline sulfur level, provided that such evidence is relevant to
whether the level would have been in compliance if the regulatory
sampling and testing methodology had been correctly performed. In
today's action, EPA is adopting the proposed regulatory provision.
Several commenters interpreted this proposed language as evidencing
the Agency's intent to make all evidence, including evidence not
derived from regulatory test methods, equal in probative value to that
from the regulatory test methods. One commenter also stated that the
proposed provision is inconsistent with other parts of the proposal
because it undercuts the benefits of having clearly defined regulatory
test methodologies. EPA disagrees that the regulatory language
indicates such an intent, or has such an effect. The regulations
provide that compliance with the standards is to be determined using
specified test methodologies. While other information may be used,
including test results using different test methods, such other
information may only be used if it is relevant to determining whether
the sulfur level would meet applicable standards had compliance been
properly measured using the specified test methodologies. Thus, the
regulation adopted today does not result in a situation where any and
all evidence carries equal weight in an enforcement action. In fact,
the regulation establishes the regulatory test method as the standard
against which other evidence is measured. Moreover, since any evidence
other than regulatory test results must be relevant to compliance using
the test method, EPA disagrees with the commenter who stated that the
validity of the sulfur standards can be challenged in any enforcement
action because neither EPA nor regulated entities will be able to rely
on measurements taken using the regulatory test methods. Rather than
causing more confusion regarding compliance with the standard, this
provision clarifies that the regulatory test method defines compliance,
since other evidence can only be used if it relates to compliance using
that test method.
The following is an example of how the Agency believes evidence of
standard non-compliance not based on regulatory test results might be
used for compliance purposes under today's rule provisions. Under a
first scenario, the Agency might not have sulfur results derived from
regulatory test methods for a certain amount of gasoline sold by a
terminal, yet the terminal's own test results, based on testing using
methods other than those specified in the regulations, show an
exceedance of the sulfur standard. Under the requirements of today's
rule, the evidence from the non-regulatory test method could only be
used to establish noncompliance if the terminal's test results are
relevant to the determination of the gasoline's sulfur level that would
have resulted if the regulatory test method had been used. Thus, the
Agency would have to present evidence to link the results of the
alternative test method to sulfur levels as measured using the
regulatory test method.
Another commenter has suggested that, if the Agency decides to
finalize a ``credible evidence'' provision, it use the language in the
current RFG regulations which establishes a presumption that the
regulatory testing methods prevail, except in exceptional
circumstances. Other commenters also opposed the proposed provision in
part because it differs from that in EPA's current fuels regulations.
As described above, EPA believes that the provision adopted today does
not undercut the importance of the regulatory testing methodologies,
since other evidence may be used only as relevant to compliance as
measured using the regulatory methods. In addition, as is consistent
with the RFG scheme, EPA believes it is appropriate to use such other
evidence even in some circumstances where test results using the
regulatory test methods do exist, and the provision adopted today
clarifies this. EPA also notes that it intends to undertake rulemaking
in the near future to revise the current fuels regulations to
[[Page 6816]]
include the same language for use of other evidence as adopted today in
the final sulfur rule.
The provision adopted today also clarifies that any probative
evidence obtained from any source or location may be used to establish
non-compliance with requirements other than the sulfur standards, such
as recordkeeping requirements and requirements to properly calculate
sulfur credits and averages, as well as to establish which parties have
facility control or some other basis for liability for sulfur rule non-
compliance. Since proof of these elements is not predicated on
establishing sulfur levels, whether or not regulatory test methods are
used is not significant. Therefore commenters' concern about the use of
other evidence undercutting the primacy of the regulatory test methods
is not germane to this part of the regulation which is not directed
toward standards. This provision is being included in the final sulfur
rule to clarify that this rule, as is consistent with our
interpretation of our other fuels rules, contemplates the full use of
all relevant evidence to establish non-standard violations and rule
liability.
EPA disagrees with the commenters who stated that EPA lacks
authority under the Clean Air Act to permit the use of any evidence of
non-compliance of the sulfur standards other than test results using
the regulatory test methods. One commenter notes that the only explicit
reference in the Act to the use of ``credible evidence'' is in section
113(e), which applies only to stationary sources, and that neither
section 211 nor section 205 mention ``credible evidence.'' Finally, the
commenter states that the proposed provision is inconsistent with the
directive of section 211(k) that EPA determine appropriate measures of
and methods for ascertaining the emissions of air pollutants.
EPA disagrees with the comments asserting that the Agency lacks
authority to promulgate this provision. While section 113(e) does refer
to ``credible evidence,'' that provision is not relevant to EPA's
action today. Moreover, the absence of the explicit use of the term
``credible evidence'' in sections 205 and 211 does not compel a
conclusion that EPA lacks authority to allow the consideration of
relevant evidence in determining compliance with the sulfur standards.
EPA believes that section 211(c) provides sufficient authority to adopt
such a provision. Section 211(c) authorizes the Agency to promulgate
regulations for the purpose of prohibiting or controlling the
manufacture, introduction into commerce, sale, or offering for sale of
fuels or fuel additives where the fuel or additive causes or
contributes to air pollution which may reasonably be anticipated to
endanger public health or welfare, or where the fuel or additive will
impair to a significant degree the performance of emission control
devices that are or will be in general use. As described in other
sections of this preamble and in the RIA, today's regulation is
promulgated pursuant to this authority. Section 211(c) gives EPA broad
discretion to fashion regulations to control or prohibit the
manufacture, introduction into commerce, sale, or offering for sale of
fuels once the Agency has made the requisite findings regarding
contribution to harmful air pollution or impairment of vehicle
emissions control system performance. This includes the discretion to
adopt reasonable regulatory provisions that are necessary and
appropriate to ensure that the controls or prohibitions are effective
and can be enforced.
To ensure the effectiveness and the ability to adequately enforce
the sulfur standards, it is reasonable for EPA to consider evidence
other than actual test results using the regulatory test method, where
such evidence can be related to the test results. As described above,
test results using the regulatory test method are often not available.
In such circumstances, it is reasonable to consider other evidence of
compliance, such as test results using other methods or commercial
documents, if such evidence can be shown to be relevant to determining
whether the gasoline would meet the standard if tested using the
regulatory methods. This provision would not permit the use of other
evidence that is not relevant to such a determination, and is therefore
reasonably limited to allow for effective enforcement, without creating
uncertainty about compliance.
Finally, EPA disagrees with the commenter's assertion that this
provision is inconsistent with section 211(k). First, while the sulfur
standards do apply to all gasoline, including gasoline subject to the
reformulated gasoline requirements, the sulfur standards are being
adopted pursuant to EPA's authority under section 211(c)(1), not under
section 211(k). In any case, the directive of section 211(k)(4) that
EPA determine through regulation appropriate measures of and methods
for ascertaining the emissions of air pollutants explicitly applies
only for purposes of section 211(k), and applies for determining the
emissions levels of VOCs and toxic air pollutants from baseline
vehicles when operating on baseline gasoline, as defined by section
211(k). Thus, the commenter's reference to section 211(k)(4) as
inconsistent with the provision adopted today is misplaced,
particularly in light of the limited applicability of the language in
section 211(k)(4).\154\
---------------------------------------------------------------------------
\154\ The commenter references section 211(k)(5) as support for
its assertion, but quotes language from section 211(k)(4). EPA
assumes that the commenter intended to cite section 211(k)(4) rather
than section 211(k)(5).
---------------------------------------------------------------------------
As described in the NPRM, the Agency frequently uses a variety of
evidence to establish compliance with fuel programs' regulatory
requirements and liability for non-compliance. Such evidence has
included test results obtained from a variety of sources, including
bills of lading, delivery records, manifests, and other commercial
documents. The compliance determination provisions included in today's
final rule are created to provide the most effective Agency capability
to enforce the rule's requirements.
VII. Public Participation
A wide variety of interested parties participated in the rulemaking
process that culminates with this final rule. The formal comment period
and four public hearings associated with the NPRM provided additional
opportunities for public input. EPA also met with a variety of
stakeholders, including environmental and public health organizations,
oil company representatives, auto company representatives, emission
control equipment manufacturers, and states at various points in the
process.
We have prepared a detailed Response to Comments document that
describes the comments received on the NPRM and presents our response
to each of these comments. The Response to Comments document is
available in the docket for this rule and on the Office of Mobile
Sources internet home page. Comments and our responses are also
included throughout this preamble for several key issues.
VIII. Administrative Requirements
A. Administrative Designation and Regulatory Analysis
Under Executive Order 12866 (58 FR 51735, Oct. 4, 1993), the Agency
is required to determine whether this regulatory action would be
``significant'' and therefore subject to review by the Office of
Management and Budget (OMB) and the requirements of the Executive
Order. The order defines a ``significant regulatory action'' as any
regulatory action that is likely to result in a rule that may:
[[Page 6817]]
Have an annual effect on the economy of $100 million or
more or adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities;
Create a serious inconsistency or otherwise interfere with
an action taken or planned by another agency;
Materially alter the budgetary impact of entitlements,
grants, user fees, or loan programs or the rights and obligations of
recipients thereof; or,
Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
Pursuant to the terms of Executive Order 12866, EPA has determined
that this final rule is a ``significant regulatory action'' because the
vehicle standards, gasoline sulfur standards, and other regulatory
provisions, if implemented, would have an annual effect on the economy
in excess of $100 million. Accordingly, we have prepared a Final
Regulatory Impact Analysis (RIA) which is available in the docket for
this rulemaking and at the internet address listed under ADDRESSES
above. This action was submitted to the Office of Management and Budget
(OMB) for review as required by Executive Order 12866. Any written
comments from OMB on today's action and any responses from EPA to OMB
comments are in the public docket for this rulemaking.
B. Regulatory Flexibility
The Regulatory Flexibility Act, 5 U.S.C. 601-612, was amended by
the Small Business Regulatory Enforcement Fairness Act of 1996
(SBREFA), Public Law 104-121, to ensure that concerns regarding small
entities are adequately considered during the development of new
regulations that affect them. EPA has identified industries subject to
this rule and has provided information to, and received comment from,
small entities and representatives of small entities in these
industries. We have prepared a Final Regulatory Flexibility Analysis
(RFA) to evaluate the economic impacts of today's proposal on small
entities.\155\ The key elements of the RFA include:
---------------------------------------------------------------------------
\155\ The Final RFA is contained in Chapter 8 of the Regulatory
Impact Analysis.
---------------------------------------------------------------------------
The number of affected small entities;
The projected reporting, record keeping, and other
compliance requirements of the proposed rule, including the classes of
small entities that would be affected and the type of professional
skills necessary for preparation of the report or record;
Other federal rules that may duplicate, overlap, or
conflict with the proposed rule; and
Any significant alternatives to the proposed rule that
accomplish the stated objectives of applicable statutes and that
minimize significant economic impacts of the proposed rule on small
entities.
The Agency convened a Small Business Advocacy Review Panel (the
Panel) under section 609(b) of the Regulatory Flexibility Act as added
by SBREFA. The purpose of the Panel was to collect the advice and
recommendations of representatives of small entities that could be
affected by today's proposed rule and to report on those comments and
the Panel's findings as to issues related to the key elements of the
Regulatory Flexibility Analysis under section 603 of the Regulatory
Flexibility Act. The report of the Panel has been placed in the docket
for this rulemaking.\156\
---------------------------------------------------------------------------
\156\ Report of the Small Business Advocacy Panel on Tier 2
Light-Duty Vehicle and Light-Duty Truck Emission Standards, Heavy-
Duty Gasoline Engine Standards, and Gasoline Sulfur Standards,
October 1998.
---------------------------------------------------------------------------
The contents of today's final rule and the Final Regulatory
Flexibility Analysis reflect the recommendations in the Panel's report.
We summarize our outreach to small entities and our responses to the
recommendations of the Panel below.
1. Potentially Affected Small Businesses
The Regulatory Flexibility Analysis identifies small businesses
from the industries in the following table as subject to the provisions
of today's rule:
Table VIII.1.--Industries Containing Small Businesses Potentially Affected by Today's Rule
----------------------------------------------------------------------------------------------------------------
Defined by SBA as a small business
Industry NAICS a codes SIC b codes if: c
----------------------------------------------------------------------------------------------------------------
Motor Vehicle Manufacturers................ 336111 3711 1000 employees.
336112
336120
Alternative Fuel Vehicle Converters........ 336311 3592 500 employees.
541690 8931
336312 3714 750 employees.
422720 5172 100 employees.
454312 5984 7549 $5 million annual sales.
811198 8742
541514
Independent Commercial Importers of 811112 7533 $5 million annual sales.
Vehicles and Vehicle Components. 7549
811198 8742
541514
Petroleum Refiners......................... 324110 2911 1500 employees.
Petroleum Marketers and Distributors....... 422710 5171 5172 100 employees.
422720
----------------------------------------------------------------------------------------------------------------
a North American Industry Classification System.
b Standard Industrial Classification system.
c According to SBA's regulations (13 CFR 121), businesses with no more than the listed number of employees or
dollars in annual receipts are considered ``small entities'' for purposes of a regulatory flexibility
analysis.
The Final RFA identifies about 15 small petroleum refiners, several
hundred small petroleum marketers, and about 15 small certifiers of
covered vehicles (belonging to the other categories in the above table)
that would be subject to the rule.
[[Page 6818]]
2. Small Business Advocacy Review Panel and the Evaluation of
Regulatory Alternatives
The Small Business Advocacy Review Panel was convened by EPA on
August 27, 1998. The Panel consisted of representatives of the Small
Business Administration (SBA), the Office of Management and Budget
(OMB), and EPA. During the development of the proposal, EPA and the
Panel were in contact with representatives from the small businesses
that would be subject to the provisions of the rule. In addition to
verbal comments from industry noted by the Panel at meetings and
teleconferences, we received written comments from each of the affected
industry segments or their representatives. These comments,
alternatives suggested by the Panel to mitigate adverse impacts on
small businesses, and issues the Panel requested EPA take additional
comment on are contained in the report of the Panel and are summarized
below. Today's final rule incorporates the major recommendations of the
Panel.
Fuel-Related Small Business Issues
Most of the small refiners stated that if they were required to
achieve 30 ppm sulfur levels on average with an 80 ppm per-gallon cap
without some regulatory relief, they would be forced out of business.
Thus, the Panel devoted much attention to regulatory alternatives to
address this concern. Most small refiners strongly supported delaying
mandatory compliance for their facilities. On the other hand, most
small refiners stated that a phase-in of gasoline sulfur standards
would not be helpful because it would be more cost-effective for them
to install the maximum technology required for the most stringent
sulfur levels that would ultimately be imposed.
The Society of Independent Gasoline Marketers of America (SIGMA)
commented that EPA should consider giving relief not only to refiners
that meet the SBA definition of small refiner but also to refineries
with relatively small production capacity that are owned by large
refining companies. This was because a refinery with a small production
capacity would operate essentially as an SBA-defined small refiner
would. SIGMA also noted that small gasoline marketers would be affected
by the closure of any refinery with small production capacity, whether
it was owned by a large company or an SBA-defined small refining
company.
The Panel recommended that small refiners be given a four to six
year period of relief during which less stringent gasoline sulfur
requirements would apply. The Panel also advised that EPA specifically
request comment on an alternative duration of ten years for the relief
period. Small refiners would be assigned interim sulfur standards
during this relief period based on their current individual refinery
sulfur levels. Following this relief period, small refiners would be
required to meet the industry-wide standard, although temporary
hardship relief would be available on a case-by-case basis. The Panel
concluded that additional time provided to small refiners before
compliance with the industry-wide standard was required would allow (1)
new sulfur-reduction technologies to be proven-out by larger refiners,
(2) the costs of advanced technology units to drop as the volume of
their sales increases, (3) industry engineering and construction
resources to be freed-up, and (4) the acquisition of the necessary
capital by small refiners.
The Panel also concluded that adding gasoline sulfur to the fuel
parameters already being sampled and tested by gasoline marketers would
likely result in little, if any, additional burden. Therefore, the
Panel did not recommend any special provision for gasoline marketers.
EPA's final action on this issue closely follows the Panel's
recommendations. You can find a description of the small refiner
provisions of today's final rule in Section IV.C.2. above. Comments and
our responses on related issues are collected in the Response to
Comments document.
Vehicle-Related Small Business Issues
Independent commercial importers of vehicles (ICIs) suggested that
the new emissions standards be phased-in with the phase-in schedule
based on the small vehicle manufacturer's annual production volume.
Secondly, the ICIs requested that small testing laboratories be
permitted to use older technology dynamometers than proposed for use by
the Agency. Finally, the ICIs commented that the certification process
should be waived for certain foreign vehicles. Small-volume vehicle
manufacturers (SVMs) stated that a phase-in of Tier-2 emissions
standards is essential. They further stated that SVMs should not be
required to comply until the end of the phase-in period, which should
not be before model year 2007. The SVMs also stated that a case-by-case
hardship relief provision should be provided for their members. SVMs
requested that a credit program be established with incentives for
larger manufacturers to make credits available to SVMs in meeting their
compliance goals.
Based on the above comments, the Panel advised that EPA consider
several alternatives, individually or in combination, for the potential
relief that they might provide to small certifiers of vehicles.
The Final Regulatory Flexibility Analysis evaluates the financial
impacts of the proposed vehicle standards and fuel controls on small
entities. EPA believes that the regulatory alternatives incorporated in
today's final rule will provide substantial relief to small business
from the potential adverse economic impacts of complying with today's
proposed rule.
C. Paperwork Reduction Act
The information collection requirements (ICRs) associated with
today's rule belong to two distinct categories: (1) those that pertain
to amendments to the vehicle certification requirements, and (2) those
that pertain to requirements for the control of gasoline sulfur
content. These information collection requirements are contained in two
separate ICR documents according to the category to which they belong.
The ICR in this final rule that pertains to the amendments to the
vehicle certification requirements has been submitted for approval to
the Office of Management and Budget (OMB) under the Paperwork Reduction
Act, 44 U.S.C. 3501 et seq. Copies of this ICR \157\ can be obtained
from Sandy Farmer, Office of Environmental Information, Collections
Strategy Division, U.S. Environmental Protection Agency (Mail Code
2822), 401 M Street, SW, Washington, D.C. 20460, or by calling (202)
260-2740. Please refer to ICR #783.40 in any correspondence. Copies may
also be downloaded from the internet at http://www.epa.gov/icr.
---------------------------------------------------------------------------
\157\ The information collection requirements associated with
the amendments to the requirements for vehicle certification are
contained in the Information Collection Request entitled
``Amendments to the Reporting and Recordkeeping Requirements for
Motor Vehicle Certification Under the Tier 2 Rule'', OMB No. 2060-
0114, EPA ICR # 783.40.
---------------------------------------------------------------------------
The ICR in this final rule that pertains to the requirements for
the control of gasoline sulfur will be submitted for approval to the
Office of Management and Budget (OMB) under the Paperwork Reduction
Act, 44 U.S.C. 3501 et seq. The submission to OMB of the ICR document
that contains this ICR and its availability to the public will be
announced in a subsequent Federal Register notice.
[[Page 6819]]
The Agency may not conduct or sponsor an information collection,
and a person is not required to respond to a request for information
unless the information collection request displays a currently valid
OMB control number. The OMB control numbers for EPA's regulations are
listed in 40 CFR Part 9 and 48 CFR Chapter 15. The OMB control numbers
for the information collection requirements in this rule will be listed
in an amendment to 40 CFR part 9 in a subsequent Federal Register
notice after OMB approves the ICRs.
The Paperwork Reduction Act stipulates that ICR documents estimate
the burden of activities required of regulated parties within a three
year time period. Consequently, the ICR documents associated with
today's final rule contain burden estimates for the activities that
will be required under the first three years of the program.
ICRs Pertaining to the Amendments to Vehicle Certification
Requirements: The information collection burden to vehicle certifiers
associated with the amendments to the vehicle certification
requirements in today's notice pertain to the fleet-average
NOX standard and emission credits provisions. These
requirements are very similar to those under the voluntary National Low
Emission Vehicle (NLEV) program, which includes a fleet-average
standard for nonmethane hydrocarbon organic gases (NMOG) and associated
emission credits provisions. The hours spent annually by a given
vehicle certifier on the information collection activities associated
with the these recordkeeping and reporting requirements depends upon
certifier-specific variables, including: the scope/variety of their
product line as reflected in the number of test groups and strategy
used to comply with the fleet-average NOX standard, the
extent they utilize emissions credits provisions, and whether they
opted into the NLEV program. Vehicle certifiers that use the provisions
for early banking of emission credits will be subject to the associated
information collection requirements as early as September 1, 2000.\158\
All vehicle certifiers will be required to comply with the information
collection requirements associated with the amendments to the vehicle
certification program beginning September 1, 2003.\159\ The ICR
document for the amendments to the vehicle certification program in
this final rule provides burden estimates for all of the associated
information collection requirements. The total information collection
burden associated with the amendments to the vehicle certification
requirements is estimated at 8,406 hours and $567,217 annually for the
certifiers of light-duty vehicles, medium-duty passenger vehicles, and
light-duty trucks.
---------------------------------------------------------------------------
\158\ These ICRs will become effective on the date that model
year 2001 vehicles are introduced into commerce. EPA assumes that
September 1, 2000 is the earliest date that model year 2001 vehicles
will be marketed.
\159\ Assuming model year 2004 vehicles are introduced into
commerce on this date.
---------------------------------------------------------------------------
ICRs Pertaining to the Requirements for Gasoline Sulfur Control:
The information collection burden to gasoline refiners, importers,
marketers, distributors, retailers and wholesale purchaser-consumers
(WPCs), and users of research and development (R&D) gasoline pertain to
the gasoline sulfur control program in today's rule. The scope of the
recordkeeping and reporting requirements for each regulated party, and
therefore the cost to that party, reflects the party's opportunity to
create, control, or alter the sulfur content of gasoline. As a result,
refiners and importers have significant requirements, which are
necessary both for their own tracking, and that of downstream parties,
and for EPA enforcement. Parties downstream from the gasoline
production or import point, such as retailers, have minimal burdens
that are primarily associated with the transfer and retention of
product transfer documents. Many of the reporting and recordkeeping
requirements for refiners and importers regarding the sulfur content of
gasoline currently exist under EPA's Reformulated Gasoline (RFG) and
Anti-Dumping programs. The ICR for the RFG program covered start up
costs associated with reporting gasoline sulfur content under the RFG
program. Consequently, much of the cost of the information collection
requirements under the gasoline sulfur control program has already been
accounted for under the RFG program ICR. In addition, many of the
information collection burdens associated with the sulfur program are
the result of provisions designed to provide refiners with flexibility
in demonstrating compliance with the sulfur standards in the early
years of the program, such as the credit trading and small refiner
programs.
The information collection requirements under the sulfur control
program evolve over time as the program is phased-in. Beginning July 1,
2000, certain requirements apply to parties that voluntarily opt to
generate credits for early sulfur reduction under the average banking
and trading (ABT) provisions. Many of the requirements do not become
applicable until the beginning of the sulfur control program on October
1, 2003, when all refiners are required to meet the sulfur standards.
The information collection requirements under the sulfur control
program become stable after January 1, 2008, when the optional small
refiner provisions expire.\160\
---------------------------------------------------------------------------
\160\ A refiner can petition EPA for an extension of the small
refiner provisions beyond January 1, 2008, based on hardship.
---------------------------------------------------------------------------
The ICR document for the sulfur control program in this final rule
will provide burden estimates for the activities required under the
first three years of the program, from July 1, 2000, through June 30,
2003. The burden associated with activities required after June 30,
2003, will be estimated in later ICRs. The initial ICR for the gasoline
sulfur control program, however, will provide a qualitative
characterization of all of the required activities and associated
burdens for the various regulated parties as they develop, and until
they become stable after January 1, 2008.
In the ICR associated with the NPRM for this final rule, we
estimated that the total burden of the information collection
requirements that would be applicable during the first three years of
the proposed gasoline sulfur control program would be 42,479 hours and
$2,149,865 annually.\161\ Annual burden estimates for the various
regulated entities under the initial three year period of the gasoline
sulfur control program were also provided in the NPRM ICR as follows:
---------------------------------------------------------------------------
\161\ The information collection requirements associated with
the proposed gasoline sulfur control program are contained in the
Information Collection Request that accompanied the Tier 2 NPRM
which is entitled ``Recordkeeping and Reporting Requirements
Regarding the Sulfur Content of Motor Vehicle Gasoline Under the
Tier 2 Proposed Rule'', ICR #1907.01. Copies of this ICR can be
obtained as discussed earlier in this section.
---------------------------------------------------------------------------
Refiners: 31,231 hours; $1,879,822.
Importers: 40 hours; $2,067.
Pipelines: 85 hours; $2,785.
Terminals: 1,700 hours; $55,700.
Truckers: 3,333 hours; $118,000.
Retailers/WPCs: 6,087 hours; $91,298.
R&D Gasoline Users: 3 hours; $193.
We received few comments on the ICR burden estimates in the
proposed sulfur rule. Most regulated parties have been fulfilling
reporting, recordkeeping and testing requirements under the
reformulated and conventional gasoline regulations. The only negative
comments we received related to the batch testing for sulfur content
and sample retention for conventional gasoline. We believe the
estimated cost of complying with these requirements is somewhat higher
than the actual
[[Page 6820]]
burdens industry will realize. The ICR for this final rule will be
adjusted accordingly.
We estimate that there will be some additional costs and hourly
burdens over those estimated in the NPRM associated with certain
changes made to the sulfur program from the NPRM to this final rule. In
particular, this final rule includes a program which provides for
relaxed standards in the early years of the program for refiners and
importers who produce or import gasoline for use in certain states in
the western U.S. This program requires some additional reporting and
recordkeeping burdens for those refiners and importers who participate
in the program, since they will be required to submit an application
for the program, including a baseline for purposes of establishing
their sulfur standard. This program requires gasoline intended for use
in the geographic area to be identified on product transfer documents
and segregated from other gasoline in the distribution system. This
final rule also includes provisions for trading sulfur allotments to
provide refiners and importers additional flexibility in meeting the
corporate pool average standards. This program requires additional
reporting and recordkeeping to track allotment trading activity. In
addition, the final rule requires small refiners to submit information
regarding their crude oil capacity in order to qualify for the small
refiner standards under the rule. Small refiners are also required to
submit reports of their progress toward compliance with the sulfur
standards. The additional total annual cost and hourly burden over the
first three years of the program, as a result of changes made to the
program in the final rule, are estimated to add less than one percent
to the overall burden estimates contained in the NPRM ICR for the
sulfur control program.
Total Burden of the ICRs: In the NPRM, we estimated that the total
burden of the recordkeeping and reporting requirements associated with
the proposed vehicle certification and gasoline sulfur control
requirements would be 50,840 hours and $2,714,037 annually over the
first three years that these requirements would be in effect. In the
ICR document for this final rule which covers the ICRs for the vehicle
certification program, the burden estimates were increased by 45 hours
and $3,045 over the burden estimates in the NPRM ICR. This increase
reflects changes from the NPRM in the final rule associated the
inclusion of the medium-duty passenger vehicles (MDPVs) under the
program. As discussed above, we anticipate that changes to the ICR
document for this final rule which covers the ICRs for the sulfur
control program will have burden estimates less than one percent higher
than the estimates contained in the NPRM. Adding these increased costs
to the burden estimates presented in the NPRM, we arrive at an estimate
of the total burden of the recordkeeping and reporting requirements
associated with the vehicle certification and gasoline sulfur control
requirements in this final rule of less than 51,350 hours and
$2,742,000 annually over the first three years that these requirements
will be in effect. These burden estimates will be more precisely stated
in the forthcoming Federal Register notice which announces the
submission to OMB of the ICR document for this final rule that covers
the ICRs for the sulfur control program and the availability of this
ICR document to the public.
D. Intergovernmental Relations
1. Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L.
104-4, establishes requirements for federal agencies to assess the
effects of their regulatory actions on state, local, and tribal
governments, and the private sector. Under section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``federal mandates'' that
may result in expenditures to state, local, and tribal governments, in
the aggregate, or to the private sector, of $100 million or more for
any single year. Before promulgating a rule for which a written
statement is needed, section 205 of the UMRA generally requires EPA to
identify and consider a reasonable number of regulatory alternatives
and adopt the least costly, most cost-effective, or least burdensome
alternative that achieves the objectives of the rule. The provisions of
section 205 do not apply when they are inconsistent with applicable
law. Moreover, section 205 allows EPA to adopt an alternative that is
not the least costly, most cost-effective, or least burdensome
alternative if EPA provides an explanation in the final rule of why
such an alternative was adopted.
Before we establish any regulatory requirement that may
significantly or uniquely affect small governments, including tribal
governments, we must develop a small government plan pursuant to
section 203 of the UMRA. Such a plan must provide for notifying
potentially affected small governments, and enabling officials of
affected small governments to have meaningful and timely input in the
development of our regulatory proposals with significant federal
intergovernmental mandates. The plan must also provide for informing,
educating, and advising small governments on compliance with the
regulatory requirements.
This rule contains no federal mandates for state, local, or tribal
governments as defined by the provisions of Title II of the UMRA. The
rule imposes no enforceable duties on any of these governmental
entities. Nothing in the rule would significantly or uniquely affect
small governments.
EPA has determined that this rule contains federal mandates that
may result in expenditures of more than $100 million to the private
sector in any single year. EPA believes that today's final rule
represents the least costly, most cost-effective approach to achieve
the air quality goals of the rule. The cost-benefit analysis required
by the UMRA is discussed in Section IV.D. above and in the Draft RIA.
See the ``Administrative Designation'' and Regulatory Analysis' section
in today's preamble (VIII.A.) for further information regarding these
analyses.
2. Executive Order 13084: Consultation and Coordination With Indian
Tribal Governments
Under Executive Order 13084, EPA may not issue a regulation that is
not required by statute, that significantly or uniquely affects the
communities of Indian Tribal governments, and that imposes substantial
direct compliance costs on those communities, unless the federal
government provides the funds necessary to pay the direct compliance
costs incurred by the tribal governments, or EPA consults with those
governments. If EPA complies by consulting, Executive Order 13084
requires EPA to provide to the Office of Management and Budget, in a
separately identified section of the preamble to the rule, a
description of the extent of EPA's prior consultation with
representatives of affected tribal governments, a summary of the nature
of their concerns, and a statement supporting the need to issue the
regulation. In addition, Executive Order 13084 requires EPA to develop
an effective process permitting elected officials and other
representatives of Indian tribal governments ``to provide meaningful
and timely input in the development of regulatory policies on matters
that significantly or uniquely affect their communities.''
Today's rule does not significantly or uniquely affect the
communities of Indian Tribal governments. The motor
[[Page 6821]]
vehicle emissions, motor vehicle fuel, and other related requirements
for private businesses in today's rule would have national
applicability, and thus would not uniquely affect the communities of
Indian Tribal Governments. Further, no circumstances specific to such
communities exist that would cause an impact on these communities
beyond those discussed in the other sections of today's document. Thus,
EPA's conclusions regarding the impacts from the implementation of
today's rule discussed in the other sections of this preamble are
equally applicable to the communities of Indian Tribal governments.
Accordingly, the requirements of section 3(b) of Executive Order 13084
do not apply to this rule.
3. Executive Order 13132 (Federalism)
Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
``meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.''
``Policies that have federalism implications'' is defined in the
Executive Order to include regulations that have ``substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.
Under Section 6 of Executive Order 13132, EPA may not issue a
regulation that has federalism implications, that imposes substantial
direct compliance costs, and that is not required by statute, unless
the Federal government provides the funds necessary to pay the direct
compliance costs incurred by State and local governments, or EPA
consults with State and local officials early in the process of
developing the proposed regulation. EPA also may not issue a regulation
that has federalism implications and that preempts State law, unless
the Agency consults with State and local officials early in the process
of developing the proposed regulation.
Section 4 of the Executive Order contains additional requirements
for rules that preempt State or local law, even if those rules do not
have federalism implications (i.e., the rules will not have substantial
direct effects on the States, on the relationship between the national
government and the states, or on the distribution of power and
responsibilities among the various levels of government). Those
requirements include providing all affected State and local officials
notice and an opportunity for appropriate participation in the
development of the regulation. If the preemption is not based on
express or implied statutory authority, EPA also must consult, to the
extent practicable, with appropriate State and local officials
regarding the conflict between State law and Federally protected
interests within the agency's area of regulatory responsibility.
This final rule does not have federalism implications. It will not
have substantial direct effects on the States, on the relationship
between the national government and the States, or on the distribution
of power and responsibilities among the various levels of government,
as specified in Executive Order 13132. This rule adopts national
emissions standards for certain categories of motor vehicles and
national standards to control gasoline sulfur. The requirements of the
rule will be enforced by the federal government at the national level.
Thus, the requirements of section 6 of the Executive Order do not apply
to this rule. Although section 6 of Executive Order 13132 does not
apply to this rule, EPA did consult with State and local officials in
developing this rule. In addition, EPA provided state and local
officials an opportunity to comment on the proposed regulations. A
summary of concerns raised by commenters, including state and local
commenters, and EPA's response to those concerns, is found in the
Response to Comments document for this rulemaking.
This final rule preempts State and local controls or prohibitions
respecting gasoline sulfur content, pursuant to Section 211(c)(4) of
the Clean Air Act. The basis and scope of preemption is described in
Section IV.C.1.d of this notice. Although this rule was proposed before
the November 2, 1999 effective date of Executive Order 13132, EPA
provided State and local officials notice and an opportunity for
appropriate participation when it published the proposed rule, as
described above. Thus, EPA has complied with the requirements of
section 4 of the Executive Order.
E. National Technology Transfer and Advancement Act
Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (NTTAA), Section 12(d) of Public Law 104-113, directs EPA
to use voluntary consensus standards in its regulatory activities
unless it would be inconsistent with applicable law or otherwise
impractical. Voluntary consensus standards are technical standards
(e.g., materials specifications, test methods, sampling procedures, and
business practices) developed or adopted by voluntary consensus
standards bodies. The NTTAA directs EPA to provide Congress, through
OMB, explanations when the Agency decides not to use available and
applicable voluntary consensus standards.
This rule references technical standards adopted by the Agency
through previous rulemakings. No new technical standards are
established in today's rule. The standards referenced in today's rule
involve the measurement of gasoline fuel parameters and motor vehicle
emissions. The measurement standards for gasoline fuel parameters
referenced in today's proposal are all voluntary consensus standards.
The motor vehicle emissions measurement standards referenced in today's
rule are government-unique standards that were developed by the Agency
through previous rulemakings. These standards have served the Agency's
emissions control goals well since their implementation and have been
well accepted by industry. EPA is not aware of any voluntary consensus
standards for the measurement of motor vehicle emissions. Therefore,
the Agency is using the existing EPA-developed standards found in 40
CFR Part 86 for the measurement of motor vehicle emissions
F. Executive Order 13045: Children's Health Protection
Executive Order 13045, ``Protection of Children from Environmental
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies
to any rule that (1) is determined to be ``economically significant''
as defined under Executive Order 12866, and (2) concerns an
environmental health or safety risk that EPA has reason to believe may
have a disproportionate effect on children. If the regulatory action
meets both criteria, section 5-501 of the Order directs the Agency to
evaluate the environmental health or safety effects of the planned rule
on children, and explain why the planned regulation is preferable to
other potentially effective and reasonably feasible alternatives
considered by the Agency.
This rule is subject to the Executive Order because it is an
economically significant regulatory action as defined by Executive
Order 12866 and it concerns in part an environmental health or safety
risk that we have reason to believe may have a disproportionate effect
on children.
This rulemaking will achieve significant reductions of various
emissions from passenger cars and light trucks, primarily
NOX, but also NMOG
[[Page 6822]]
and PM. These pollutants raise concerns regarding environmental health
or safety risks that EPA has reason to believe may have a
disproportionate effect on children, such as impacts from ozone, PM and
certain toxic air pollutants. See Section III of this preamble and the
RIA for a further discussion of these issues.
The effects of ozone and PM on children's health were addressed in
detail in EPA's rulemaking to establish the NAAQS for these pollutants,
and we are not revisiting those issues here. We believe, however, that
the emission reductions from the strategies established in this
rulemaking will further reduce air toxics and the related adverse
impacts on children's health. We will be addressing the issues raised
by air toxics from motor vehicles and their fuels in a separate
rulemaking that we will initiate in the near future under section
202(l) of the Act. That rulemaking will address the emissions of
hazardous air pollutants from vehicles and fuels, and the appropriate
level of control of HAPs from these sources.
In this final rule, we have evaluated several regulatory strategies
for reductions in emissions from passenger cars and light trucks. (See
sections IV, V, and VI of this preamble as well as the RIA.) For the
reasons described there, we believe that these strategies are
preferable under the Clean Air Act to other potentially effective and
reasonably feasible alternatives that we considered for purposes of
reducing emissions from these sources (as a way of helping areas
achieve and maintain the NAAQS for ozone and PM). Moreover, we believe
that we have selected for proposal the most stringent and effective
control reasonably feasible at this time, in light of the technology
and cost requirements of the Act.
G. Congressional Review Act
The congressional review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the comptroller General of the
United States. EPA will submit a report containing this rule and other
required information to the U.S. Senate, the U.S. House of
representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. This rule is a
``major rule'' as defined by 5 U.S.C. 804(2).
IX. Statutory Provisions and Legal Authority
Statutory authority for the vehicle controls set in today's final
rule can be found in sections 202, 206, 207, 208, and 301 of the Clean
Air Act (CAA), as amended, 42 U.S.C. sections 7521, 7525, 7541, 7542
and 7601.
Statutory authority for the fuel controls set in today's final rule
comes from section 211(c) of the CAA (42 U.S.C., section 7545(c)),
which allows EPA to regulate fuels that either contribute to air
pollution which endangers public health or welfare or which impair
emission control equipment. Both criteria are satisfied for the
gasoline sulfur controls we are establishing today. Additional support
for the procedural and enforcement-related aspects of the fuel's
controls in today's final rule, including the record keeping
requirements, comes from sections 114(a) and 301(a) of the CAA.
List of Subjects
40 CFR Part 80
Environmental protection, Air pollution control, Fuel additives,
Gasoline, Imports, Incorporation by reference, Labeling, Motor vehicle
pollution, Penalties, Reporting and recordkeeping requirements.
40 CFR Part 85
Environmental protection, Administrative practice and procedure,
Confidential business information, Imports, Labeling, Motor vehicle
pollution, Penalties, Reporting and recordkeeping requirements,
Research, Warranties.
40 CFR Part 86
Environmental protection, Administrative practice and procedure,
Confidential business information, Incorporation by reference,
Labeling, Motor vehicle pollution, Penalties, Reporting and
recordkeeping requirements.
Dated: December 21, 1999.
Carol M. Browner,
Administrator.
For the reasons set forth in the preamble, parts 80, 85 and 86 of
title 40, of the Code of Federal Regulations are amended as follows:
PART 80--REGULATION OF FUELS AND FUEL ADDITIVES
1. The authority citation for part 80 continues to read as follows:
Authority: Secs. 114, 211, and 301(a) of the Clean Air Act, as
amended (42 U.S.C. 7414, 7545 and 7601(a)).
2. Section 80.2 is amended by removing and reserving paragraph
(aa), adding paragraph (d), and revising paragraphs (h), (s) and (gg)
to read as follows:
Sec. 80.2 Definitions.
* * * * *
(d) Previously certified gasoline means gasoline or RBOB that
previously has been included in a batch for purposes of complying with
the standards for reformulated gasoline, conventional gasoline or
gasoline sulfur, as appropriate.
* * * * *
(h) Refinery means any facility, including but not limited to, a
plant, tanker truck, or vessel where gasoline or diesel fuel is
produced, including any facility at which blendstocks are combined to
produce gasoline or diesel fuel, or at which blendstock is added to
gasoline or diesel fuel.
* * * * *
(s) Gasoline blending stock, blendstock, or component means any
liquid compound which is blended with other liquid compounds to produce
gasoline.
* * * * *
(gg) Batch of gasoline means a quantity of gasoline that is
homogeneous with regard to those properties that are specified for
conventional or reformulated gasoline.
* * * * *
3. Section 80.46 is amended by revising paragraphs (a) and (h) to
read as follows:
Sec. 80.46 Measurement of reformulated gasoline fuel parameters.
(a) Sulfur. Sulfur content of gasoline and butane must be
determined by use of the following methods:
(1) The sulfur content of gasoline must be determined by use of
American Society for Testing and Materials (ASTM) standard method D
2622-98, entitled ``Standard Test Method for Sulfur in Petroleum
Products by Wavelength Dispersive X-ray Fluorescence Spectrometry.''
(2) The sulfur content of butane must be determined by the use of
ASTM standard method D 3246-96, entitled ``Standard Test Method for
Sulfur in Petroleum Gas by Oxidative Microcoulometry.''
* * * * *
(h) Incorporations by reference. ASTM standard methods D 2622-98, D
3246-96, D 3606-92, D 1319-93, D 4815-93, and D 86-90 with the
exception of the degrees Fahrenheit figures in Table 9 of D 86-90, are
incorporated by reference. These
[[Page 6823]]
incorporations by reference were approved by the Director of the
Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51.
Copies may be obtained from the American Society for Testing and
Materials, 100 Barr Harbor Dr., West Conshohocken, PA 19428. Copies may
be inspected at the Air Docket Section (LE-131), room M-1500, U.S.
Environmental Protection Agency, Docket No. A-97-03, 401 M Street, SW.,
Washington, DC 20460, or at the Office of the Federal Register, 800
North Capitol Street, NW., Suite 700, Washington, DC.
4. Subpart H is added to part 80 to read as follows:
Subpart H--Gasoline Sulfur
General Information
Sec.
80.180 [Reserved]
80.185 [Reserved]
80.190 Who must register with EPA under the sulfur program?
Gasoline Sulfur Standards
80.195 What are the gasoline sulfur standards for refiners and
importers?
80.200 What gasoline is subject to the sulfur standards and
requirements?
80.205 How is the annual refinery or importer average and
corporate pool average sulfur level determined?
80.210 What sulfur standards apply to gasoline downstream from
refineries and importers?
80.211 [Reserved]
80.212 What requirements apply to oxygenate blenders?
80.213-80.214 [Reserved]
Geographic Phase-In Program
80.215 What is the scope of the geographic phase-in program?
80.216 What standards apply to gasoline produced or imported for
use in the GPA?
80.217 How does a refiner or importer apply for the GPA standards?
80.218 [Reserved]
80.219 Designation and downstream requirements for GPA gasoline.
80.220 What are the downstream standards for GPA gasoline?
Hardship Provisions
80.225 What is the definition of a small refiner?
80.230 Who is not eligible for the hardship provisions for small
refiners?
80.235 How does a refiner obtain approval as a small refiner?
80.240 What are the small refiner gasoline sulfur standards?
80.245 How does a small refiner apply for a sulfur baseline?
80.250 How is the small refiner sulfur baseline and volume
determined?
80.255 Compliance plans and demonstration of commitment to produce
low sulfur gasoline.
80.260 What are the procedures and requirements for obtaining a
hardship extension?
80.265 How will the EPA approve or disapprove a hardship extension
application?
80.270 Can a refiner seek temporary relief from the requirements
of this subpart?
Allotment Trading Program
80.275 How are allotments generated and used?
Averaging, Banking and Trading (ABT) Program--General Information
80.280 [Reserved]
80.285 Who may generate credits under the ABT program?
80.290 How does a refiner apply for a sulfur baseline?
ABT Program--Baseline Determination
80.295 How is a refinery sulfur baseline determined?
80.300 [Reserved]
ABT Program--Credit Generation
80.305 How are credits generated during the time period 2000
through 2003?
80.310 How are credits generated beginning in 2004?
ABT Program--Credit Use
80.315 How are credits used and what are the limitations on credit
use?
80.320 [Reserved]
80.325 [Reserved]
Sampling, Testing and Retention Requirements for Refiners and Importers
80.330 What are the sampling and testing requirements for refiners
and importers?
80.335 What gasoline sample retention requirements apply to
refiners and importers?
80.340 What standards and requirements apply to refiners producing
gasoline by blending blendstocks into previously certified gasoline
(PCG)?
80.345 [Reserved]
80.350 What alternative sulfur standards and requirements apply to
importers who transport gasoline by truck?
80.355 [Reserved]
Recordkeeping and Reporting Requirements
80.360 [Reserved]
80.365 What records must be kept?
80.370 What are the sulfur reporting requirements?
80.371-80.373 [Reserved]
Exemptions
80.374 What if a refiner or importer is unable to produce gasoline
conforming to the requirements of this subpart?
80.375 What requirements apply to California gasoline?
80.380 What are the requirements for obtaining an exemption for
gasoline used for research, development or testing purposes?
Violation Provisions
80.385 What acts are prohibited under the gasoline sulfur program?
80.390 What evidence may be used to determine compliance with the
prohibitions and requirements of this subpart and liability for
violations of this subpart?
80.395 Who is liable for violations under the gasoline sulfur
program?
80.400 What defenses apply to persons deemed liable for a
violation of a prohibited act?
80.405 What penalties apply under this subpart?
Provisions for Foreign Refiners With Individual Sulfur Baselines
80.410 What are the additional requirements for gasoline produced
at foreign refineries having individual small refiner sulfur
baselines, foreign refineries granted temporary relief under
Sec. 80.270, or baselines for generating credits during 2000 through
2003?
Attest Engagements
80.415 What are the attest engagement requirements for gasoline
sulfur compliance applicable to refiners and importers?
Subpart H--Gasoline Sulfur
General Information
Sec. 80.180 [Reserved]
Sec. 80.185 [Reserved]
Sec. 80.190 Who must register with EPA under the sulfur program?
(a) Refiners and importers who are registered by EPA under
Sec. 80.76 are deemed to be registered for purposes of this subpart.
(b) Refiners and importers subject to the standards in Sec. 80.195
who are not registered by EPA under Sec. 80.76 must provide to EPA the
information required by Sec. 80.76 by November 1, 2003, or not later
than three months in advance of the first date that such person
produces or imports gasoline, whichever is later.
(c) Refiners with any refinery subject to the small refiner
standards under Sec. 80.240, or refiners subject to the geographic
phase-in area (GPA) standards under Sec. 80.216, who are not registered
by EPA under Sec. 80.76 must provide to EPA the information required
under Sec. 80.76 by December 31, 2000.
(d) Any refiner who plans to generate credits or allotments under
Sec. 80.305 or Sec. 80.275 in any year prior to 2004 who is not
registered by EPA under Sec. 80.76 must register under Sec. 80.76 no
later than September 30 of the year prior to the first year of credit
generation. Any refiner who plans to generate credits in 2000 who is
not registered by EPA under Sec. 80.76 must register under Sec. 80.76
no later than May 10, 2000.
[[Page 6824]]
Gasoline Sulfur Standards
Sec. 80.195 What are the gasoline sulfur standards for refiners and
importers?
(a)(1) The gasoline produced by small refiners subject to the
standards at Sec. 80.240, and gasoline designated as GPA gasoline under
Sec. 80.219(a), are as follows:
----------------------------------------------------------------------------------------------------------------
Gasoline sulfur standards for the averaging
period beginning:
-----------------------------------------------
January 1,
January 1, January 1, 2006 and
2004 2005 subsequent
----------------------------------------------------------------------------------------------------------------
Refinery or Importer Average.................................... \(1)\ 30.00 30.00
Corporate Pool Average.......................................... 120.00 90.00 \(1)\
Per-Gallon Cap.................................................. 300 300 80
----------------------------------------------------------------------------------------------------------------
\1\ Not applicable.
(2) The sulfur standards and all compliance calculations for sulfur
under this subpart are in parts per million (ppm) and volumes are in
gallons.
(3) The averaging period is January 1 through December 31 of each
year.
(4) The standards under this paragraph (a) for all imported
gasoline shall be met by the importer.
(b)(1) The refinery or importer annual average gasoline sulfur
standard is the maximum average sulfur level allowed for gasoline
produced at a refinery or imported by an importer during each calendar
year starting January 1, 2005.
(2) The annual average sulfur level is calculated in accordance
with Sec. 80.205.
(3) The refinery or importer annual average gasoline sulfur
standard may be met using credits as provided under Sec. 80.275 or
Sec. 80.315.
(4) In 2005 only, the refinery or importer annual average sulfur
standard may be met using credits or allotments as provided under
Sec. 80.275 or credits as provided under Sec. 80.315.
(c)(1) The corporate pool average gasoline sulfur standards
applicable in 2004 and 2005 are the maximum average sulfur levels
allowed for a refiner's or importer's gasoline production from all of
the refiner's refineries or all gasoline imported by an importer in a
calendar year. The corporate pool average standards for a party that is
both a refiner and an importer are the maximum average sulfur levels
allowed for all the party's combined gasoline production from all
refineries and imported gasoline in a calendar year.
(2) The corporate pool average is calculated in accordance with the
provisions of Sec. 80.205.
(3) The corporate pool average standard may be met using sulfur
allotments under Sec. 80.275.
(4) The corporate pool average standards do not apply to approved
small refiners subject to the small refiner gasoline sulfur standards
under Sec. 80.240.
(5)(i) Joint ventures, in which two or more parties collectively
own and operate one or more refineries, will be treated as a separate
refiner under this section.
(ii) One partner to a joint venture may include one or more joint
venture refineries in its corporate pool for purposes of complying with
the corporate pool average standards. The joint venture will be in
compliance for such joint venture refinery(ies) if the partner's
corporate pool average meets the corporate pool average standards. The
joint venture entity must demonstrate compliance with the corporate
pool average standards for any refinery(ies) owned by the joint venture
that are not included in one partner's corporate pool.
(d)(1) The per-gallon cap standard is the maximum sulfur level
allowed for each batch of gasoline produced or imported starting
January 1, 2004.
(2) In 2004 only, a refiner or importer may produce or import
gasoline with a per-gallon sulfur content greater than 300 ppm, to a
maximum of 350 ppm, provided the following conditions are met:
(i) The refinery or importer becomes subject to an adjusted per-
gallon cap standard in 2005, calculated using the following formula:
ACS=300-(Smax-300)
Where:
ACS=Adjusted cap standard.
Smax=Maximum sulfur content of any gasoline produced at a
refinery or imported by an importer during 2004.
(ii) The adjusted cap standard calculated under paragraph (d)(2)(i)
of this section applies to all gasoline produced at a refinery or
imported by an importer during 2005.
(iii) The refinery or importer remains subject to the 30.00 average
standard under paragraph (a) of this section for 2005.
(iv) The provisions of this paragraph (d)(2) apply to gasoline
designated as GPA gasoline under Sec. 80.219(a).
(v) The provisions of this paragraph (d)(2) do not apply to small
refiners as defined in Sec. 80.225.
Sec. 80.200 What gasoline is subject to the sulfur standards and
requirements?
For the purpose of this subpart, all reformulated and conventional
gasoline and RBOB, collectively called ``gasoline'' unless otherwise
specified, is subject to the standards and requirements under this
subpart, with the following exceptions:
(a) Gasoline that is used to fuel aircraft, racing vehicles or
racing boats that are used only in sanctioned racing events, provided
that:
(1) Product transfer documents associated with such gasoline, and
any pump stand from which such gasoline is dispensed, identify the
gasoline either as gasoline that is restricted for use in aircraft, or
as gasoline that is restricted for use in racing motor vehicles or
racing boats that are used only in sanctioned racing events;
(2) The gasoline is completely segregated from all other gasoline
throughout production, distribution and sale to the ultimate consumer;
and
(3) The gasoline is not made available for use as motor vehicle
gasoline, or dispensed for use in motor vehicles, except for motor
vehicles used only in sanctioned racing events.
(b) California gasoline as defined in Sec. 80.375.
(c) Gasoline that is exported for sale outside the U.S.
[[Page 6825]]
Sec. 80.205 How is the annual refinery or importer average and
corporate pool average sulfur level determined?
(a) The annual refinery or importer average and corporate pool
average gasoline sulfur level is calculated as follows:
[GRAPHIC] [TIFF OMITTED] TR10FE00.007
Where:
Sa=The refinery or importer annual average sulfur value, or
corporate pool average sulfur value, as applicable.
Vi=The volume of gasoline produced or imported in batch i.
Si=The sulfur content of batch i determined under
Sec. 80.330.
n=The number of batches of gasoline produced or imported during the
averaging period.
i=Individual batch of gasoline produced or imported during the
averaging period.
(b) All annual refinery or importer average or corporate pool
average calculations shall be conducted to two decimal places.
(c) A refiner or importer may include oxygenate added downstream
from the refinery or import facility when calculating the sulfur
content, provided the following requirements are met:
(1) For oxygenate added to conventional gasoline, the refiner or
importer must comply with the requirements of Sec. 80.101(d)(4)(ii).
(2) For oxygenate added to RBOB, the refiner or importer must
comply with the requirements of Sec. 80.69(a).
(d) Refiners and importers must exclude from compliance
calculations all of the following:
(1) Gasoline that was not produced at the refinery;
(2) In the case of an importer, gasoline that was imported as
Certified Sulfur-FRGAS;
(3) Blending stocks transferred to others;
(4) Gasoline that has been included in the compliance calculations
for another refinery or importer; and
(5) Gasoline exempted from standards under Sec. 80.200.
(e)(1) A refiner or importer may exceed the refinery or importer
annual average sulfur standard specified in Sec. 80.195 for a given
averaging period for any calendar year through 2010, creating a
compliance deficit, provided that in the calendar year following the
year the standard is not met, the refinery or importer shall:
(i) Achieve compliance with the refinery or importer annual average
sulfur standard specified in Sec. 80.195; and
(ii) Use additional sulfur credits sufficient to offset the
compliance deficit of the previous year.
(2) No refiner or importer may have a compliance deficit in any
year after 2010. Any deficit that exists in 2010 must be made up in
2011.
(f) For refiners subject to the corporate pool average who produce
some GPA gasoline, the refinery average sulfur value for its GPA
gasoline shall be the average sulfur value after applying credits.
Sec. 80.210 What sulfur standards apply to gasoline downstream from
refineries and importers?
The sulfur standard for gasoline at any point in the gasoline
distribution system downstream from refineries and import facilities,
including gasoline at facilities of distributors, carriers, oxygenate
blenders, retailers and wholesale purchaser-consumers (``downstream
location''), shall be determined in accordance with the provisions of
this section.
(a) Definition. S-RGAS means gasoline that is subject to the
standards under Sec. 80.240 or Sec. 80.270, including Certified Sulfur-
FRGAS as defined in Sec. 80.410, except that no batch of gasoline may
be classified as S-RGAS if the actual sulfur content is less than the
applicable per-gallon refinery cap standard specified in Sec. 80.195.
(b) Standards for gasoline that does not qualify for S-RGAS
downstream standards. The following standards apply to any gasoline
that does not qualify for S-RGAS downstream standards under in
paragraph (d) of this section:
(1) Starting February 1, 2004 the sulfur content of gasoline at any
downstream location other than at a retail outlet or wholesale
purchaser-consumer facility, and starting March 1, 2004 the sulfur
content of gasoline at any downstream location, shall not exceed 378
ppm.
(2) Except as provided in Sec. 80.220(a), starting February 1, 2005
the sulfur content of gasoline at any downstream location other than at
a retail outlet or wholesale purchaser-consumer facility, and starting
March 1, 2005 the sulfur content of gasoline at any downstream
location, shall not exceed 326 ppm.
(3) Except as provided in Sec. 80.220(a), starting February 1, 2006
the sulfur content of gasoline at any downstream location other than at
a retail outlet or wholesale purchaser-consumer facility, and starting
March 1, 2006 the sulfur content of gasoline at any downstream
location, shall not exceed 95 ppm.
(c) Standards for gasoline that qualifies for S-RGAS downstream
standards. In the case of any gasoline that qualifies for S-RGAS
downstream standards under paragraph (d) of this section, the sulfur
standard shall be the downstream standard for the gasoline calculated
under paragraph (f) of this section. In the case of mixtures of
gasoline that qualify for different S-RGAS downstream standards, the
sulfur standard shall be the highest downstream standard applicable to
any of the S-RGAS in the mixture.
(d) Gasoline that qualifies for S-RGAS downstream standards.
Gasoline qualifies for S-RGAS downstream standards if all of the
following conditions are met:
(1) The gasoline must be comprised in whole or part of S-RGAS.
(2) Product transfer documents applicable to the gasoline when
received at that location must represent that the gasoline contains S-
RGAS.
(3) Except as provided in paragraph (d)(4) of this section, the
gasoline must have been sampled and tested at that location subsequent
to the most recent receipt of gasoline at that location, and the test
result must show a sulfur content greater than:
(i) 350 ppm starting February 1, 2004;
(ii) 300 ppm starting February 1, 2005; and
(iii) 80 ppm (or in the GPA, 300 ppm) starting February 1, 2006.
(4) This sampling and testing condition does not apply for gasoline
at any retail outlet, wholesale purchaser-consumer facility, or
contained in any transport truck.
(e) Product transfer document information for S-RGAS. (1) On each
occasion when any refiner or importer of S-RGAS transfers custody or
title to such gasoline, the refiner or importer shall provide to the
transferee documents that include the following information:
(i) Identification of the gasoline as being S-RGAS; and
(ii) The downstream standard applicable to the batch of gasoline
under paragraph (f) of this section.
(2) Where gasoline in whole or part is classified as S-RGAS when
received by the transferor, and where the gasoline transferred meets
the conditions under paragraph (d) of this section, the transferor
shall provide to the transferee, on each occasion when custody or title
to gasoline is transferred, documents that include the following
information:
(i) Identification of the gasoline as S-RGAS; and
[[Page 6826]]
(ii) The applicable downstream standard under paragraph (c) of this
section. This does not apply when gasoline is sold or dispensed for use
in motor vehicles at a retail outlet or wholesale purchaser-consumer
facility.
(3) No person shall classify gasoline as being S-RGAS except as
provided in paragraphs (e)(1) and (e)(2) of this section.
(4) Product codes may be used to convey the information required by
paragraphs (e)(1) and (e)(2) of this section if such codes are clearly
understood by each transferee.
(f) Downstream standards applicable to S-RGAS when produced or
imported. (1) The downstream standard applicable to any gasoline
classified as S-RGAS when produced or imported shall be calculated
using the following equation:
D=S+105 x ((S+2)/104)0.4
Where:
D=Downstream sulfur standard.
S=The sulfur content of the refiner's batch determined under
Sec. 80.330.
(2) Where more than one S-RGAS batch is combined, prior to
shipment, at the refinery or import facility where the S-RGAS is
produced or imported, the downstream standard applicable to the mixture
shall be the highest downstream standard, calculated under paragraph
(f)(1) of this section, for any S-RGAS contained in the mixture.
Sec. 80.211 [Reserved]
Sec. 80.212 What requirements apply to oxygenate blenders?
Effective January 1, 2004, oxygenate blenders who blend oxygenate
into gasoline downstream of the refinery that produced the gasoline or
the import facility where the gasoline was imported, are not subject to
the requirements of this subpart applicable to refiners for this
gasoline, but are subject to the requirements and prohibitions
applicable to downstream parties and the prohibition specified in
Sec. 80.385(e).
Secs. 80.213-80.214 [Reserved]
Geographic Phase-In Program
Sec. 80.215 What is the scope of the geographic phase-in program?
(a) Geographic phase-in area. (1) The following states comprise the
geographic phase-in area (GPA) subject to the provisions of the
geographic phase-in program: North Dakota, Montana, Idaho, Wyoming,
Utah, Colorado, New Mexico, and Alaska.
(2) Additional counties or tribal lands in states adjacent to the
states identified in paragraph (a) of this section will be included in
the GPA if any of the following criteria is met:
(i) Approximately 50% or more of the total volume of gasoline in
the county or tribal land in 1999, as measured at the terminal(s) and
bulk station(s) in the county or tribal land, was received from a
refinery or refineries located in the area specified in paragraph
(a)(1) of this section; or
(ii) Approximately 50% or more of the total volume of gasoline
dispensed in the county or tribal land in 1999 was received from a
refinery or refineries located in the area specified in paragraph
(a)(1) of this section; or
(iii) Approximately 50% or more of the total commercial and private
dispensing outlets in the county or tribal land in 1999 were supplied
by gasoline produced by a refinery or refineries located in the area
specified in paragraph (a)(1) of this section.
(3) The criteria of paragraphs (a)(2)(i), (ii) and (iii) of this
section are without regard to the method of gasoline delivery (e.g,
pipeline, truck, rail or barge). The criteria of paragraphs (a)(2)(ii)
and (a)(2)(iii) of this section are without regard to whether the
gasoline was transported directly from the refinery to the dispensing
outlet or distributed through a terminal or bulk station.
(b) Duration of the program. The geographic phase-in program
applies to the 2004, 2005, and 2006 annual averaging periods.
(c) Persons eligible. Any refiner or importer who produces or
imports gasoline for use in the geographic area under paragraph (a) of
this section is eligible to apply for the geographic phase-in program.
The provisions of the geographic phase-in program shall apply to
imported gasoline through the importer.
Sec. 80.216 What standards apply to gasoline produced or imported for
use in the GPA?
(a)(1) The refinery or importer annual average sulfur standard for
gasoline produced or imported for use in the geographic area under
Sec. 80.215 shall be the lesser of:
(i) 150 ppm; or
(ii) The refinery's or importer's 1997/1998 average sulfur level,
calculated in accordance with Sec. 80.295, plus 30 ppm.
(2) In the case of any refinery whose actual annual sulfur average
decreases to a level lower than the refinery's annual average sulfur
standard established under paragraph (a)(1) of this section during the
period 2000 through 2003, the standard applicable to that refinery from
2004 through 2006 shall be the lowest average sulfur content for any
year in which the refinery generated allotments or credits under
Sec. 80.275(a) or Sec. 80.305 plus 30 ppm, not to exceed 150 ppm.
(b) The per-gallon cap standard for gasoline produced or imported
for use in the GPA under paragraph (a) of this section shall be 300
ppm, except as specified in Sec. 80.195(d).
(c) The refinery or importer annual average sulfur level is
calculated in accordance with the provisions of Sec. 80.205.
(d) The refinery or importer annual average standard under
paragraph (a) of this section may be met using sulfur allotments or
credits as provided under Secs. 80.275 and 80.315.
(e) Gasoline produced by approved small refiners subject to the
standards under Sec. 80.240 is not subject to the standards under
paragraphs (a) and (b) of this section.
(f)(1) A refiner or importer whose gasoline production or volume of
imported gasoline in 2004 or 2005 is comprised of 50% of
gasoline designated as GPA gasoline under Sec. 80.219 shall not be
required to meet the corporate pool average standards under Sec. 80.195
for its gasoline production or imported gasoline during the applicable
averaging period.
(2) A refiner or importer whose gasoline production or volume of
imported gasoline in 2004 or 2005 is comprised of less than 50% of
gasoline designated as GPA gasoline under Sec. 80.219 must meet the
corporate pool average standards under Sec. 80.195 for all the
refiner's gasoline production or the importer's volume of imported
gasoline during the applicable averaging period.
(g) The provisions for compliance deficits under Sec. 80.205(e) do
not apply to gasoline subject to the standards under paragraphs (a) and
(b) of this section.
Sec. 80.217 How does a refiner or importer apply for the GPA
standards?
(a) To apply for the GPA standards under Sec. 80.216, a refiner or
importer must submit an application in accordance with the provisions
of Sec. 80.290.
(b) Applications under paragraph (a) of this section must be
submitted by December 31, 2000.
(c)(1) If approved, EPA will notify the refiner or importer of each
refinery's or the importer's annual average sulfur standard for
gasoline produced for use in the GPA for the 2004 through 2006 annual
averaging periods.
(2) If disapproved, the refiner or importer must comply with the
standards in Sec. 80.195 for gasoline produced for use in the GPA.
(d) If EPA finds that a refiner or importer provided false or
inaccurate
[[Page 6827]]
information on its application under this section, upon notice from
EPA, the refiner's or importer's application will be void ab initio.
Sec. 80.218 [Reserved]
Sec. 80.219 Designation and downstream requirements for GPA gasoline.
The requirements and prohibitions specified in this section apply
during the period January 1, 2004 through December 31, 2006.
(a) Designation. Any refiner or importer shall designate any
gasoline produced or imported that is subject to the standards under
Sec. 80.216 as ``GPA'' gasoline.
(b) Product transfer documents. (1) On each occasion that any
person transfers custody or title to gasoline designated as GPA
gasoline, other than when gasoline is sold or dispensed for use in
motor vehicles at a retail outlet or wholesale purchaser-consumer
facility, the transferor shall provide to the transferee documents that
include the following information:
(i) Identification of the gasoline as being GPA gasoline;
(ii) A statement that the gasoline may not be distributed or sold
for use outside the geographic phase-in area.
(2) Except for transfers to truck carriers, retailers and wholesale
purchaser-consumers, product codes may be used to convey the
information required by paragraph (b)(1) of this section if such codes
are clearly understood by each transferee.
(3) The requirements under paragraph (b)(1) of this section are in
addition to the requirement under Sec. 80.210(e), where appropriate, to
identify gasoline as being S-RGAS.
(c) GPA gasoline use prohibitions. (1) All parties in the
distribution system, including refiners, importers, distributors,
carriers, oxygenate blenders, retailers and wholesale purchaser-
consumers, are prohibited from:
(i) Selling, offering for sale, dispensing, distributing, storing
or transporting GPA gasoline for use outside the geographic phase-in
area; and
(ii) Commingling GPA gasoline with gasoline not designated as GPA
gasoline unless the mixture is classified as GPA gasoline.
(2) Gasoline not designated as GPA gasoline may be distributed or
sold for use in the geographic phase-in area.
Sec. 80.220 What are the downstream standards for GPA gasoline?
(a) GPA gasoline. (1) During the period February 1, 2004 through
January 31, 2005, the sulfur content of GPA gasoline at any downstream
location other than at a retail outlet or wholesale purchaser-consumer
facility, and during the period March 1, 2004 through February 28,
2005, the sulfur content of GPA gasoline at any downstream location
shall not exceed 378 ppm.
(2) During the period February 1, 2005 through January 31, 2007,
the sulfur content of GPA gasoline at any downstream location other
than at a retail outlet or wholesale purchaser-consumer facility, and
during the period March 1, 2005 through February 28, 2007, the sulfur
content of GPA gasoline at any downstream location shall not exceed 326
ppm.
(b) GPA gasoline mixed with S-RGAS. Notwithstanding the
requirements in paragraph (a) of this section, the sulfur standard
applicable to a mixture of GPA gasoline and S-RGAS gasoline at a
downstream location shall be the greater of the standard under
paragraph (a) of this section or the standard determined under
Sec. 80.210.
Hardship Provisions
Sec. 80.225 What is the definition of a small refiner?
(a) A small refiner is defined as any person, as defined by 42
U.S.C. 7602(e), who: (1)(i) Produces gasoline at a refinery by
processing crude oil through refinery processing units;
(ii) Employed an average of no more than 1,500 people, based on the
average number of employees for all pay periods from January 1, 1998,
to January 1, 1999; and
(iii) Had an average crude capacity less than or equal to 155,000
barrels per calendar day (bpcd) for 1998.
(2) For the purpose of determining the number of employees and
crude capacity under paragraph (a)(1) of this section, the refiner
shall include the employees and crude capacity of any subsidiary
companies, any parent company and subsidiaries of the parent company,
and any joint venture partners.
(b) The definition under paragraph (a) of this section applies to
domestic and foreign refiners. For any refiner owned by a governmental
entity, the number of employees as specified in paragraph (a) of this
section shall include all employees of the governmental entity.
(c) If, without merger with, or acquisition of, another business
unit, a company with approved small refiner status under Sec. 80.235
exceeds 1,500 employees, or a corporate crude capacity of 155,000 bpcd
after January 1, 1999, it will be considered a small refiner for the
duration of the small refiner program.
(d) Notwithstanding the definition in paragraph (a) of this
section, refiners who acquire a refinery after January 1, 1999, or
reactivate a refinery that was shutdown or was non-operational between
January 1, 1998, and January 1, 1999, may apply for small refiner
status in accordance with the provisions of Sec. 80.235.
Sec. 80.230 Who is not eligible for the hardship provisions for small
refiners?
(a) The following are not eligible for the hardship provisions for
small refiners:
(1) Refiners of refineries built after January 1, 1999;
(2) Refiners who exceed the employee or crude oil capacity criteria
under Sec. 80.225(a) on January 1, 1999, but who meet these criteria
after that date, regardless of whether the reduction in employees or
crude capacity is due to operational changes at the refinery or a
company sale or reorganization;
(3) Importers; and
(4) Refiners who produce gasoline other than by processing crude
oil through refinery processing units.
(b)(1) Refiners who qualify as small under Sec. 80.225, and
subsequently employ more than 1,500 people as a result of merger with
or acquisition of or by another entity, are disqualified as small
refiners. If this occurs the refiner shall notify EPA in writing no
later than 20 days following this disqualifying event.
(2) Any refiner who qualifies as small under Sec. 80.225 may elect
to meet the standards under Sec. 80.195 by notifying EPA in writing no
later than November 15 prior to the year the change will occur.
(3) Any refiner whose status changes under paragraph (b)(1) or (2)
of this section shall meet the standards under Sec. 80.195 beginning
with the first averaging period subsequent to the status change.
Sec. 80.235 How does a refiner obtain approval as a small refiner?
(a) Applications for small refiner status must be submitted to EPA
by December 31, 2000, except for applications submitted pursuant to
Sec. 80.225(d), which must be submitted by June 1, 2002.
(b) Applications for small refiner status must be sent to: U.S.
EPA, Attn: Sulfur Program (6406J), 401 M Street, SW, Washington, DC
20460. For commercial delivery: U.S. EPA, Attn: Sulfur Program (6406J),
501 3rd Street, NW, Washington, DC 20001.
(c) The small refiner status application must contain the following
information for the company seeking
[[Page 6828]]
small refiner status, plus any subsidiary companies, any parent company
and subsidiaries of the parent company, and any joint venture partners:
(1)(i) A listing of the name and address of each location where any
employee worked during the 12 months preceding January 1, 1999; the
average number of employees at each location based upon the number of
employees for each pay period for the 12 months preceding January 1,
1999; and the type of business activities carried out at each location;
or
(ii) In the case of a refiner who acquires a refinery after January
1, 1999, or reactivates a refinery that was shutdown between January 1,
1998, and January 1, 1999, a listing of the name and address of each
location where any employee of the refiner worked since the refiner
acquired or reactivated the refinery; the average number of employees
at any such acquired or reactivated refinery during each calendar year
since the refiner acquired or reactivated the refinery; and the type of
business activities carried out at each location.
(2) The total corporate crude capacity of each refinery as reported
to the Energy Information Administration (EIA) of the U.S. Department
of Energy (DOE). The information submitted to EIA is presumed to be
correct. In cases where a company disagrees with this information, the
company may petition EPA with appropriate data to correct the record
within 60 days after the company submits its application for small
refiner status.
(3) A letter signed by the president, chief operating or chief
executive officer of the company, or his/her designee, stating that the
information contained in the application is true to the best of his/her
knowledge.
(4) Name, address, phone number, facsimile number and E-mail
address (if available) of a corporate contact person.
(d) For joint ventures, the total number of employees includes the
combined employee count of all corporate entities in the venture.
(e) For government-owned refiners, the total employee count
includes all government employees.
(f) Approval of small refiner status for refiners who apply under
Sec. 80.225(d) will be based on all information submitted under
paragraph (c) of this section. Where appropriate, the employee and
crude oil capacity criteria for such refiners will be based on the most
recent 12 months of operation.
(g) EPA will notify a refiner of approval or disapproval of small
refiner status by letter.
(1) If approved, EPA will notify the refiner of each refinery's
applicable baseline standard and volume, and per-gallon cap under
Sec. 80.240.
(2) If disapproved, the refiner must comply with the standards in
Sec. 80.195.
(h) If EPA finds that a refiner provided false or inaccurate
information on its application for small refiner status, upon notice
from EPA the refiner's small refiner status will be void ab initio.
(i) Upon notification to EPA, an approved small refiner may
withdraw its status as a small refiner. Effective on January 1 of the
year following such notification, the small refiner will become subject
to the standards at Sec. 80.195.
Sec. 80.240 What are the small refiner gasoline sulfur standards?
(a) The gasoline sulfur standards for an approved small refiner are
as follows:
----------------------------------------------------------------------------------------------------------------
Temporary sulfur standards for small refiners applicable from January
1, 2004 through December 31, 2007
Refinery baseline sulfur level ------------------------------------------------------------------------
Annual average Per gallon cap
----------------------------------------------------------------------------------------------------------------
0 to 30................................ 30.00 300
31 to 200.............................. Baseline level 300
201 to 400............................. 200.00 300
401 to 600............................. 50% of baseline Factor of 1.5 times the average
standard.
601 and above.......................... 300.00 450
----------------------------------------------------------------------------------------------------------------
(b) The refinery annual average sulfur standards must be met on an
annual calendar year basis for each refinery owned by a small refiner.
The refinery annual average sulfur level is calculated in accordance
with the provisions of Sec. 80.205.
(c)(1) The refinery annual average standards specified in paragraph
(a) of this section apply to the volume of gasoline produced by a small
refiner's refinery up to the lesser of:
(i) 105% of the baseline gasoline volume as determined under
Sec. 80.250(a)(1); or
(ii) The volume of gasoline produced at that refinery during the
averaging period by processing crude oil.
(2) If a refiner exceeds the volume limitation in paragraph (c)(1)
of this section during any averaging period, the annual average sulfur
standard applicable to the refiner for that averaging period is
calculated as follows:
[GRAPHIC] [TIFF OMITTED] TR10FE00.008
Where:
Ssr=Small refiner annual average sulfur standard.
Vb=Applicable volume under paragraph (c)(1) of this section.
Va=Averaging period gasoline volume.
Sb=Small refiner sulfur baseline as determined under
Sec. 80.250.
AF=Adjustment factor (120 in 2004; 90 in 2005; and 30 in 2006 and
thereafter).
(3) The small refiner average standards under paragraph (a) of this
section may be met using sulfur allotments or credits as provided under
Sec. 80.275 or Sec. 80.315.
(4) The provisions for compliance deficits under Sec. 80.205(e) do
not apply to small refiners subject to the standards under this
section.
(d) In the case of any refiner with small refiner status who
generates sulfur allotments or credits pursuant to Sec. 80.275(a) or
Sec. 80.305, the baseline applicable to that refiner's refinery for
purposes of establishing the standard for the refinery under paragraph
(a) of this section beginning in 2004 shall be the lowest annual
average sulfur content for any year during the period in which the
refiner generated allotments or credits.
Sec. 80.245 How does a small refiner apply for a sulfur baseline?
(a) Any refiner seeking small refiner status must apply for a
refinery sulfur baseline by the deadline under Sec. 80.235 for each of
the refiner's refineries by providing the following information:
[[Page 6829]]
(1) A sulfur baseline and baseline volume for every refinery
calculated in accordance with Sec. 80.250.
(2) The following information for each batch of gasoline produced
in 1997-1998:
(i) Batch number assigned to the batch under Sec. 80.65(d) or
Sec. 80.101(i);
(ii) Volume; and
(iii) Sulfur content.
(3) For any refiner who acquires a refinery after January 1, 1999,
or reactivates a refinery that was shut down or non-operational between
January 1, 1998, and January 1, 1999, the average sulfur level and
average volume of gasoline produced during each year the refinery was
in operation after the refinery was acquired or reactivated. Where
appropriate, the baseline sulfur level and volume for such refineries
will be determined based on the annual average for the most recent year
of operation.
(b) The sulfur baseline application must be submitted to the
address specified in Sec. 80.235(b).
Sec. 80.250 How is the small refiner sulfur baseline and volume
determined?
(a)(1) The small refiner baseline volume is determined for each
refinery as follows:
[GRAPHIC] [TIFF OMITTED] TR10FE00.009
Where:
VB=Baseline volume.
VI=Volume of gasoline batch i.
n=Total number of batches of gasoline produced from January 1, 1997,
through December 31, 1998.
i=Individual batch of gasoline produced from January 1, 1997, through
December 31, 1998.
(2) The small refiner sulfur baseline is determined for each
refinery as follows:
[GRAPHIC] [TIFF OMITTED] TR10FE00.010
Where:
Sb=Small refiner sulfur baseline.
Vi=Volume of gasoline batch i.
Si=Sulfur content of batch i.
n=Total number of batches of gasoline produced from January 1, 1997,
through December 31, 1998.
i=Individual batch of gasoline produced from January 1, 1997, through
December 31, 1998.
(b) Foreign refiners who do not have an approved refinery baseline
under Sec. 80.94 must follow the procedures specified in
Sec. 80.410(b).
(c) If at any time a small refinery baseline is determined to be
incorrect, the corrected baseline applies ab initio and the annual
average standards and cap standards are deemed to be those applicable
under the corrected information.
Sec. 80.255 Compliance plans and demonstration of commitment to
produce low sulfur gasoline.
The requirements of this section apply to any refiner approved for
small refiner standards who wishes to be eligible for a hardship
extension under Sec. 80.260.
(a) Compliance commitment. By no later than June 1, 2004, any
refiner who is approved for small refinery standards must submit a
preliminary report to EPA which outlines the refiner's timeline for
compliance and a project plan which discusses permits, capital
commitments and engineering plans for making the necessary
modifications to produce gasoline that meets the 30 ppm refinery
average and 80 ppm per-gallon cap sulfur standards under Sec. 80.195 on
or before January 1, 2008. Documents showing activities and progress in
these areas should be provided, if available.
(b) Demonstration of Progress. (1)(i) By no later than June 1,
2005, the small refiner must submit a report to EPA that states in
detail the progress toward compliance with the 30 ppm refinery average
and 80 ppm cap sulfur standards to date based on their timeline and
project plan. The report must include:
(A) Copies of approved permits for construction of the equipment,
or the permit application if approval is still pending;
(B) Copies of contracts for design and construction; and
(C) Any available evidence of having secured the necessary
financing to complete the required construction;
(ii) If the refiner anticipates any difficulties in meeting its
compliance commitments under this section, the refiner must submit a
detailed report of all efforts made to date and the factors that may
cause delay, including costs, specification of engineering or other
design work needed and reasons for delay, specification of equipment
needed and any reasons for delay, potential equipment suppliers and
history of negotiations, and any other relevant information. If
unavailability of equipment is a factor, the report must include a
discussion of other options considered and the reasons these other
options are not feasible.
(2) By no later than June 1, 2006, the small refiner must submit to
EPA evidence that on-site construction has begun and that, absent
unforeseen difficulties, the small refiner will be producing complying
gasoline by January 1, 2008. If construction has not begun, the refiner
must demonstrate that it has made all reasonable efforts to begin
construction, that substantial progress is being made to begin
construction as soon as possible, and that construction can be
completed in time to begin production of gasoline that complies with
the standards of Sec. 80.195 by January 1, 2008.
(c) Additional information. The Administrator may request any
additional information necessary to determine a refiner's commitment
and/or progress toward meeting the standards in Sec. 80.195 by 2008.
(d) Failure to comply with requirements. Any small refiner who
fails to submit the progress reports required under this section will
not be eligible for a hardship extension under Sec. 80.260.
Sec. 80.260 What are the procedures and requirements for obtaining a
hardship extension?
(a) An approved small refiner who has filed the reports specified
in Sec. 80.255 may apply to EPA for a hardship extension of the small
refiner standards for calendar years 2008 and 2009. The application
must be submitted in writing no later than January 1, 2007, to U.S.
EPA, Attn: Sulfur Program (6406J), 401 M Street, SW, Washington, DC
20460. For commercial (non-postal) delivery: U.S. EPA, Attn: Sulfur
Program, 501 3rd Street NW, Washington, DC 20001.
(b) The application must specify the factors that demonstrate a
significant economic hardship and must provide a detailed discussion
regarding the inability of the refinery to produce gasoline meeting the
requirements of Sec. 80.195. Such an application must include, at a
minimum, the following information:
(1) Documentation of efforts made to obtain necessary financing,
including:
(i) Copies of loan applications for the necessary financing of the
construction of appropriate sulfur reduction technology and other
equipment procurements or improvements; and
(ii) If financing has been disapproved or is otherwise
unsuccessful, documents supporting the basis for that disapproval and
evidence of efforts to pursue other means of financing;
(2) A detailed analysis of the reasons the refinery is unable to
produce gasoline meeting the standards of
[[Page 6830]]
Sec. 80.195 in 2008, including costs, specification of equipment still
needed, potential equipment suppliers, and efforts already completed to
obtain the necessary equipment;
(3) If unavailability of equipment is part of the reason for the
inability to comply, a discussion of other options considered, and the
reasons these other options are not feasible;
(4) If relevant, a demonstration that a needed or lower cost
technology is immediately unavailable, but will be available in the
near future, and full information regarding when and from what sources
it will be available;
(5) Schematic drawings of the refinery configuration as of January
1, 1999, and as of the date of the hardship extension application, and
any planned future additions or changes;
(6) If relevant, a demonstration that a temporary unavailability
exists of engineering or construction resources necessary for design or
installation of the needed equipment;
(7) If sources of crude oil lower in sulfur than what the refiner
is currently using are available, full information regarding the
availability of these different crude sources, the sulfur content of
those crude sources, the cost of the different crude sources over the
past five years, and an estimate of gasoline sulfur levels achievable
by the refinery if the lower sulfur crude sources were used;
(8) A discussion of any sulfur reductions that can be achieved from
current levels;
(9) The date the refiner anticipates compliance with the standards
in Sec. 80.195 can be achieved at its refinery;
(10) An analysis of the economic impact of compliance on the
refiner's business (including financial statements from the last 5
years, or for any time period up to 10 years, at EPA's request); and
(11) Any other information regarding other strategies considered,
including strategies or components of strategies that do not involve
installation of equipment, and why meeting the standards in Sec. 80.195
beginning in 2008 is infeasible.
(c) The hardship extension application must contain a letter signed
by the president or the chief operating or chief executive officer of
the company, or his/her designee, stating that the information
contained in the application is true to the best of his/her knowledge.
Sec. 80.265 How will the EPA approve or disapprove a hardship
extension application?
(a) EPA will evaluate each application for hardship extension on a
case-by-case basis. The factors considered for a hardship extension may
include: The refiner's financial position and efforts to obtain capital
funding; the refiner's efforts to procure necessary equipment, obtain
design and engineering services and construction contractors; the
availability of desulfurization equipment; and any other relevant
factor. An extension will be granted for a refinery for the 2008
averaging period if the small refiner who owns the refinery adequately
demonstrates that severe economic hardship would result if compliance
with the standards in Sec. 80.195 is required in 2008, or that
compliance with the standard in 2008 is not feasible for reasons beyond
the refiner's control, and that the refiner has made the best efforts
possible to achieve compliance with the national standards by January
1, 2008. Upon reapplication by the refiner, if EPA determines that
further relief is appropriate, EPA may grant a further extension
through the 2009 averaging period. In no case will a further extension
for the 2009 averaging period be granted unless the refiner
demonstrates conclusively that it has financing in place and that it
will be able to complete construction and meet the national gasoline
sulfur standards no later than December 31, 2009.
(b) EPA may request more information, if necessary, for evaluation
of the application. If requested information is not submitted within
the time specified in EPA's request, or any extensions granted, the
application may be denied.
(c) EPA will notify the refiner of approval or disapproval of
hardship extension by letter.
(1) If approved, EPA will also notify the refiner of the date that
full compliance with the standards specified at Sec. 80.195 must be
achieved or what interim sulfur levels or schedules apply, if any.
(2) If disapproved, beginning January 1, 2008, the refinery is
subject to the requirements in Sec. 80.195. Refiners who receive an
extension for the 2008 averaging period shall meet the standards in
Sec. 80.195 beginning on January 1, 2009, unless EPA grants an
extension of the hardship relief for an additional year. If such an
additional extension is granted, the refiner shall meet the standards
in Sec. 80.195 on January 1, 2010.
(d) Refiners who receive a hardship extension may be required to
meet more stringent standards than those which apply to them during
2007, and/or could be required to offset excess sulfur levels. EPA may
impose reasonable conditions on an extension, such as requiring
segregation of the small refiner's gasoline or requiring the gasoline
to be sold for use in older vehicles only.
Sec. 80.270 Can a refiner seek temporary relief from the requirements
of this subpart?
(a) EPA may permit a refiner to produce and distribute gasoline
which does not meet the requirements of this subpart if the refiner
demonstrates that:
(1) Unusual circumstances exist that impose extreme hardship and
significantly affect ability to comply by the applicable date; and
(2) It has made best efforts to comply with the requirements of
this subpart (including making efforts to obtain credits and/or
allotments).
(b) Applications must be submitted to EPA by September 1, 2000.
Relief may be granted from some or all of the requirements of this
subpart, at EPA's discretion; however, EPA reserves the right to deny
applications for appropriate reasons, including unacceptable
environmental impact. Approval to distribute gasoline which does not
meet the requirements of this subpart may be granted for such time
period as EPA determines is appropriate, but shall not extend beyond
January 1, 2008.
(c)(1) Applications must include a plan demonstrating how the
refiner will comply with the requirements of this subpart as
expeditiously as possible. The plan shall include a showing that
contracts are or will be in place for engineering and construction of
desulfurization equipment, a plan for applying for and obtaining any
permits necessary for construction, a description of plans to obtain
necessary capital, and a detailed estimate of when the requirements of
this subpart will be met.
(2) Applications must include a detailed description of the
refinery configuration and operations, including, at a minimum, the
following information:
(i) The portion of gasoline production that is produced using an
FCC unit;
(ii) The refinery's hydrotreating capacity;
(iii) The refinery's total reformer unit throughput capacity;
(iv) The refinery's total crude capacity;
(v) Total crude capacity of any other refineries owned by the same
entity;
(vi) Total volume of gasoline production at the refinery;
(vii) Total volume of other refinery products; and
(viii) Geographic location(s) in which gasoline will be sold.
(3) Applications must include, at a minimum, the following
information:
[[Page 6831]]
(i) Detailed description of efforts to obtain capital for refinery
investments;
(ii) Bond rating of entity that owns the refinery; and
(iii) Estimated capital investment needed to comply with the
requirements of this subpart by the applicable date.
(4) Applicants must also provide any other relevant information
requested by EPA.
(d) EPA may impose any reasonable conditions on waivers granted
under this section.
Allotment Trading Program
Sec. 80.275 How are allotments generated and used?
(a) Generation of allotments and credits in 2003. (1) During 2003
only, any domestic or foreign refiner may have the option to generate
credits in accordance with the provisions of Sec. 80.305 or generate
allotments and credits under paragraph (a)(2) of this section.
(2) If the average sulfur content of the gasoline produced at a
refinery is less than the refinery's baseline as determined under
Sec. 80.295 and is 60 ppm or less, allotments and credits may be
generated using the following procedures. This paragraph (a) does not
apply to importers.
(i) If the average sulfur content of the gasoline produced at a
refinery is less than or equal to 30, and the refinery's sulfur
baseline is greater than 120, the following procedures apply:
SATypeB = (30 - Saa) x V
SATypeA = (V x 90) x 0.8
CR = (SBase - 120) x V
(ii) If the average sulfur content of the gasoline produced at a
refinery is less than or equal to 30, and the refinery's sulfur
baseline is greater than 30 but less than or equal to 120, the
following procedures apply:
SATypeB = (30 - Sa) x V
SATypeA = ((SBase - 30) x V) x 0.8
(iii) If the average sulfur content of the gasoline produced at a
refinery is less than or equal to 30, and the refinery's sulfur
baseline is less than or equal to 30, the following procedures apply:
SATypeB = ( SBase - Sa) x V
(iv) If the average sulfur content of the gasoline produced at a
refinery is greater than 30, and the refinery's sulfur baseline is
greater than 120, the following procedures apply:
SATypeA = ((120 - Sa) x V) x 0.8
CR = (SBase - 120) x V
(v) If the average sulfur content of the gasoline produced at a
refinery is greater than 30, and the refinery's sulfur baseline is less
than or equal to 120, the following procedures apply:
SATypeA = ((SBase - Sa) x V) x 0.8
(vi) For purposes of the equations under paragraphs (a)(2)(i)
through (v) of this section, the following definitions apply:
SATypeB = Type B sulfur allotments generated.
SATypeA = Type A sulfur allotments generated.
CR = Credits generated.
SBase = Refinery's sulfur baseline value under Sec. 80.295.
Sa = Average sulfur content of the gasoline produced at the
refinery during 2003 (or for a foreign refinery, all gasoline produced
during 2003 that was imported into the U.S.).
V = Volume of gasoline produced at the refinery during 2003 (or for a
foreign refinery, all gasoline produced during 2003 that was imported
into the U.S.).
(b) Generation of allotments in 2004 and 2005. During 2004 and 2005
only, refiners and importers that have corporate pool average sulfur
levels below the corporate pool average standards under Sec. 80.195 may
generate sulfur allotments separately for each year using the following
procedures.
(1) If the average sulfur content of the gasoline produced or
imported is less than 30 the following procedures apply:
SATypeB = (30 - Sa) x Va
SATypeA = (SPS - 30) x Va
(2) If the average sulfur content of the gasoline produced or
imported is equal to or greater than 30 the following procedures apply:
SATypeA = (SPS - Sa) x Va
(3) For purposes of the equations under paragraphs (b)(1) and (2)
of this section, the following definitions apply:
SATypeB = Type B sulfur allotments generated.
SATypeA = Type A sulfur allotments generated.
Sa = Corporate pool average sulfur level for the year.
SPS = Corporate pool average standard (120 in 2004; 90 in
2005).
Va = Total volume of gasoline produced and/or imported
during the year.
(c) Use of sulfur allotments to meet standards. (1) Refiners and
importers may use Type A and Type B sulfur allotments to meet the
corporate pool average standards under Sec. 80.195, except that if
allotments generated in 2003 or 2004 are used to meet the corporate
pool standard in 2005 the allotments generated in 2003 or 2004 shall be
reduced in value by 50%.
(2) Small refiners subject to the standards under Sec. 80.240, and
refiners and importers of gasoline designated as GPA gasoline under
Sec. 80.219(a), may use sulfur allotments to meet their annual average
refinery or importer standards.
(d) Transfers of sulfur allotments. Sulfur allotments generated
under this section may be transferred, provided that:
(1) No allotment may be transferred more than twice: The first
transfer by the refiner or importer who generated the allotment may
only be made to a refiner or importer who intends to use the allotment;
if the transferee cannot use the allotment, it may make the second, and
final, transfer only to a refiner or importer who intends to use the
allotment. In no case may an allotment be transferred more than twice
before being used or terminated.
(2) The allotment transferor must apply any allotments necessary to
meet the transferor's corporate pool average standard before
transferring allotments to any other refiner or importer or before
converting allotments into credits.
(3) The transferor must supply to the transferee records indicating
the year of generation and type of the allotments, the identity of the
refiner or importer who generated the allotments, and the identity of
the transferring party, if it is not the same part that generated the
allotments.
(4) The transferor must inform the transferee whether any
transferred allotments are Type A allotments or Type B allotments, as
defined in paragraphs (a) and (b) of this section.
(5) In the case of allotments that have been calculated or created
improperly, or are otherwise determined to be invalid, the following
provisions apply:
(i) Invalid allotments cannot be used to achieve compliance with
the transferee's corporate pool average standard or be converted to
credits, regardless of the transferee's good faith belief that the
allotments were valid.
(ii) The refiner or importer who used the allotments, and any
transferor of the allotments, must adjust their allotment records and
reports and sulfur calculations as necessary to reflect the proper
allotments.
(iii) Any allotments remaining after correcting for the improperly
created allotments must first be applied to correct the invalid
transfers before the transferor may transfer any other allotments or
before converting allotments into credits.
(e) Conversion of allotments into credits. A refiner or importer
may convert allotments into credits using the following procedures:
(1) Type A allotments may be converted into credits with the same
requirements and limitations on use that
[[Page 6832]]
apply under Sec. 80.315 to credits generated in 2000 through 2003.
(2) Type B allotments may be converted into credits with the same
requirements and limitations on use that apply under Sec. 80.315 to
credits generated in 2004 and later, based on the year of creation of
the allotment.
(f) Small refiners. Small refiners subject to the standards under
Sec. 80.240 may not generate sulfur allotments under paragraph (b) of
this section.
(g) GPA gasoline. GPA gasoline that is included in the refiner's or
importer's corporate pool average under Sec. 80.216(f)(2) must be
included in the calculations under paragraph (b) of this section. No
refiner or importer may generate allotments in 2004 or 2005 who is not
required to meet the corporate pool average standards.
Averaging, Banking and Trading (ABT) Program--General Information
Sec. 80.280 [Reserved]
Sec. 80.285 Who may generate credits under the ABT program?
(a) Credit generation in 2000 through 2003. (1) Credits may be
generated in 2000 through 2003 under Sec. 80.305 by refiners who
produce gasoline from crude oil, and are:
(i) Refiners who establish a sulfur baseline under Sec. 80.295;
(ii) Foreign refiners with approved baselines under Sec. 80.94, or
baselines established in accordance with Sec. 80.410; or
(iii) Small refiners for any refinery subject to the standards
under Sec. 80.240, using their small refiner baseline established under
Sec. 80.250.
(2) Importers and oxygenate blenders may not generate credits under
Sec. 80.305.
(b) Credit generation beginning in 2004. (1) Credits may be
generated beginning in 2004 under Sec. 80.310 by:
(i) Refiners and importers subject to the standards under
Sec. 80.195;
(ii) Refiners and importers of gasoline designated as GPA gasoline
under Sec. 80.219, using the lesser of: 150 ppm; or the refiner's or
importer's baseline calculated under Sec. 80.295; or the refinery's
lowest annual average sulfur content for any year from 2000 through
2003 during which the refiner generated credits (for any party
generating credits under both paragraph (b)(1)(i) of this section and
this paragraph (b)(1)(ii), such credits must be calculated separately);
or
(iii) Small refiners for any refinery subject to the standards
under Sec. 80.240, using refinery's standard established under
Sec. 80.240.
(2) Generation of credits for all imported gasoline shall be
through the importer.
(3) Oxygenate blenders may not generate credits under Sec. 80.310.
Sec. 80.290 How does a refiner apply for a sulfur baseline?
(a) The refiner must submit an application to EPA which includes
the information required under paragraph (c) of this section no later
than September 30 of the year in which the refiner plans to begin
generating credits, or the refiner or an importer plans to sell
gasoline in the geographic phase-in area in accordance with
Sec. 80.217.
(b) The sulfur baseline request must be sent to: U.S. EPA, Attn:
Sulfur Program (6406J), 401 M Street SW., Washington, DC 20460. For
commercial (non-postal) delivery: U.S. EPA, Attn: Sulfur Program, 501
3rd Street NW., Washington, DC 20001.
(c) The sulfur baseline application must include the following
information:
(1) A listing of the names and addresses of all refineries owned by
the corporation for which the refiner is applying for a sulfur
baseline.
(2) The annual average gasoline sulfur baseline for gasoline
produced in 1997-1998, for each refinery for which the refiner is
applying for a sulfur baseline, calculated in accordance with
Sec. 80.295.
(3) A letter signed by the president, chief operating or chief
executive officer, of the company, or his/her delegate, stating that
the information contained in the sulfur baseline determination is true
to the best of his/her knowledge.
(4) Name, address, phone number, facsimile number and E-mail
address of a corporate contact person.
(5) The following information for each batch of gasoline produced
in 1997-1998:
(i) Batch number assigned to the batch under Sec. 80.65(d) or
Sec. 80.101(i);
(ii) Volume; and
(iii) Sulfur content.
(d) Foreign refiners who do not have an approved refinery baseline
under Sec. 80.94 must follow the procedures specified in
Sec. 80.410(b).
(e) Within 60 days of receipt of an application under this section,
EPA will notify the refiner of approval of the refinery's baseline or
of any deficiencies in the application.
(f) If at any time the baseline submitted in accordance with the
requirements of this section is determined to be incorrect, EPA will
notify the refiner of the corrected baseline.
(g) Any refiner that seeks temporary relief under Sec. 80.270 shall
apply for a refinery sulfur baseline in accordance with the provisions
of this section and Sec. 80.295, and if applicable, Sec. 80.410(b), no
later than September 1, 2000.
ABT Program--Baseline Determination
Sec. 80.295 How is a refinery sulfur baseline determined?
(a) A refinery's gasoline sulfur baseline for the purpose of
generating credits during years 2000 through 2003 is calculated using
the following equation:
[GRAPHIC] [TIFF OMITTED] TR10FE00.011
Where:
SBase=Sulfur baseline value.
Vi=Volume of gasoline batch i.
Si=Sulfur content of gasoline batch i.
n=Total number of batches of gasoline produced during January 1, 1997
through December 31, 1998.
i=Individual batch of gasoline produced during January 1, 1997 through
December 31, 1998.
(b) Any refiner who, under Sec. 80.65 or Sec. 80.101(d)(4),
included oxygenate blended downstream in compliance calculations for
1997-1998 must include this oxygenate in the baseline calculations for
sulfur content under paragraph (a) of this section.
Sec. 80.300 [Reserved]
ABT Program--Credit Generation
Sec. 80.305 How are credits generated during the time period 2000
through 2003?
(a) Credits must be calculated as follows:
CRa=Va x (SBase - Sa)
Where:
CRa=Credits generated for the averaging period.
Va=Total volume of gasoline produced during the averaging
period at the refinery.
SBase=Sulfur baseline value for the refinery established
under Sec. 80.250 or Sec. 80.295.
Sa=Actual annual average sulfur level for gasoline produced
during the averaging period by the refinery exclusive of any credits.
(b) The refiner may include any oxygenates included in its RFG or
conventional gasoline volume under Secs. 80.65 and 80.101(d)(4),
respectively, for the purpose of generating credits.
(c) Credits under this program are in units of ``ppm-gallons''.
(d) Refiners may generate credits for gasoline produced during an
averaging period only if the annual average sulfur level for the
gasoline produced during the averaging period is less than 0.90 of the
refiners baseline under Sec. 80.250 or Sec. 80.295.
[[Page 6833]]
(e) Credits generated in accordance with paragraph (a) of this
section must be identified by the year of creation.
Sec. 80.310 How are credits generated beginning in 2004?
(a) A refiner for any refinery, or an importer, may generate
credits in 2004 and thereafter if the annual average sulfur level for
gasoline produced or imported for the averaging period is less than the
applicable refinery or importer annual average sulfur standard for that
refinery or importer in that year.
(b) Credits are calculated as follows:
CRa=Va x (SStd - Sa)
Where:
CRa=Credits generated for the averaging period.
Va=Total annual volume gasoline produced at a refinery or
imported during the averaging period.
Sstd=30 ppm; or the sulfur standard for a small refinery
established under Sec. 80.240; or, for gasoline designated as GPA
gasoline under Sec. 80.219, the lesser of 150 ppm, the refinery's or
importer's baseline calculated under Sec. 80.295, or the refinery's
lowest annual average sulfur content for any year from 2000 through
2003 during which the refinery generated credits or allotments.
Sa=Actual annual average sulfur level of gasoline produced
at a refinery or imported during the averaging period exclusive of any
credits.
(c) Credits generated in accordance with this section must be
identified by the year of creation.
ABT Program--Credit Use
Sec. 80.315 How are credits used and what are the limitations on
credit use?
(a) Credit use. Credits may be used to meet the applicable refinery
or importer annual average sulfur standards under Sec. 80.195,
Sec. 80.216, or Sec. 80.240, provided that:
(1) Sulfur credits used were generated pursuant to the requirements
of this subpart; and
(2) The requirements of paragraphs (b) and (c) of this section are
met.
(b) Credit transfers. (1) Credits obtained from other persons may
be used to meet the annual average standards specified in Sec. 80.195,
Sec. 80.216, or Sec. 80.240 if all the following conditions are met:
(i) The credits are generated and reported according to the
requirements of this subpart.
(ii) The credits are used in compliance with the limitations
regarding the appropriate periods for credit use in this subpart.
(iii) Any credit transfer takes place no later than the last day of
February following the calendar year averaging period when the credits
are used.
(iv) No credit may be transferred more than twice: The first
transfer by the refiner or importer who generated the credit may only
be made to a refiner or importer who intends to use the credit; if the
transferee cannot use the credit, it may make the second, and final,
transfer only to a refiner or importer who intends to use the credit.
In no case may a credit be transferred more than twice before being
used or terminated.
(v) The credit transferor must apply any credits necessary to meet
the transferor's applicable average standard before transferring
credits to any other refiner or importer.
(vi) No credits may be transferred that would result in the
transferor having a negative credit balance.
(vii) Each transferor must supply to the transferee records
indicating the years the credits were generated, the identity of the
refiner or importer who generated the credits, and the identity of the
transferring party, if it is not the same party that generated the
credits.
(2) In the case of credits that have been calculated or created
improperly, or are otherwise determined to be invalid, the following
provisions apply:
(i) Where a refiner's baseline has been determined to be incorrect
under Sec. 80.250(c) or Sec. 80.290(f), any credits generated, banked,
used or traded must be adjusted to reflect the corrected baseline.
(ii) Invalid credits cannot be used to achieve compliance with the
transferee's averaging standard, regardless of the transferee's good
faith belief that the credits were valid.
(iii) The refiner or importer who used the credits, and any
transferor of the credits, must adjust their credit records and reports
and sulfur calculations as necessary to reflect the proper credits.
(iv) Any properly created credits existing in the transferor's
credit balance after correcting the credit balance, and after the
transferor applies credits as needed to meet the average standard at
the end of the compliance year, must first be applied to correct the
invalid transfers before the transferor trades or banks the credits.
(c) Limitations on credit use. (1) Credits generated prior to 2004
may only be used for demonstrating compliance with the refinery or
importer annual average standards under Sec. 80.195 during the 2005 and
2006 averaging periods. Such credits may be used to demonstrate
compliance with the standards under Sec. 80.216 during the 2004 through
2006 averaging periods, and with the standards under Sec. 80.240 during
the 2004 through 2007 averaging periods, and the 2008 and 2009
averaging periods, if allowed under the terms of a hardship extension
under Sec. 80.265.
(2) Credits generated in 2004 or later may only be used for
demonstrating compliance with standards during an averaging period
within five years of the year of generation.
(3) A refiner or importer possessing credits must use all credits
prior to falling into compliance deficit under Sec. 80.205(e).
(4) Credits may not be used to meet corporate pool average
standards under Sec. 80.195.
Sec. 80.320 [Reserved]
Sec. 80.325 [Reserved]
Sampling, Testing and Retention Requirements for Refiners and
Importers
Sec. 80.330 What are the sampling and testing requirements for
refiners and importers?
(a) Sample and test each batch of gasoline. (1) Refiners and
importers shall collect a representative sample from each batch of
gasoline produced or imported and test each sample to determine its
sulfur content for compliance with requirements under this subpart
prior to the gasoline leaving the refinery or import facility, using
the sampling and testing methods provided in this section.
(2) Except as provided in paragraph (a)(3) of this section, the
requirements of this section apply beginning January 1, 2004, or
January 1 of the first year of allotment or credit generation under
Sec. 80.275 or Sec. 80.305, whichever is earlier.
(3) Prior to January 1, 2004, for purposes of meeting the sampling
and testing requirements of this section for conventional gasoline, any
refiner may, prior to analysis, combine samples of gasoline from more
than one batch of gasoline or blendstock and treat such composite
sample as one batch of gasoline or blendstock pursuant to the
requirements of Sec. 80.101(i)(2).
(4) Any refiner who produces reformulated gasoline or conventional
gasoline using computer-controlled in-line blending equipment may meet
the testing requirement of paragraph (a)(1) of this section under the
terms of an exemption granted under Sec. 80.65(f)(4).
(b) Sampling methods. For purposes of paragraph (a) of this
section, refiners and importers shall sample each batch of gasoline by
using one of the following methods:
[[Page 6834]]
(1) Manual sampling of tanks and pipelines shall be performed
according to the applicable procedures specified in one of the two
following methods:
(i) American Society for Testing and Materials (ASTM) method D
4057-95, entitled ``Standard Practice for Manual Sampling of Petroleum
and Petroleum Products.''
(ii) Samples collected under the applicable procedures in ASTM
method D 5842-95, entitled ``Standard Practice for Sampling and
Handling of Fuels for Volatility Measurement,'' may be used for
measuring sulfur content if there is no contamination present that
could affect the sulfur test result.
(2) Automatic sampling of petroleum products in pipelines shall be
performed according to the applicable procedures specified in ASTM
method D 4177-95, entitled ``Standard Practice for Automatic Sampling
of Petroleum and Petroleum Products.''
(c) Test method for measuring the sulfur content of gasoline. (1)
For purposes of paragraph (a) of this section, refiners and importers
shall use the method provided in Sec. 80.46(a)(1) to measure the sulfur
content of gasoline they produce or import.
(2) Except as provided in Sec. 80.350 and in paragraph (c)(1) of
this section, any ASTM sulfur test method for liquefied fuels may be
used for quality assurance testing under Sec. 80.400, or to determine
whether gasoline qualifies for a S-RGAS downstream standard, if the
protocols of the ASTM method are followed and the alternative method is
correlated to the method provided in Sec. 80.46(a)(1).
(d) Test method for sulfur in butane. (1) Refiners and importers
shall use the method provided in Sec. 80.46(a)(2) to measure the sulfur
content of butane when the butane constitutes a batch of gasoline.
(2) Except as provided in paragraph (d)(1) of this section, any
ASTM sulfur test method for gaseous fuels may be used for quality
assurance testing under Secs. 80.340(b)(4) and 80.400, if the protocols
of the ASTM method are followed and the alternative method is
correlated to the method provided in Sec. 80.46(a)(2).
(e) Incorporations by reference. ASTM standard practices D 4057-95,
D 4177-95 and D 5842-95 are incorporated by reference. These
incorporations by reference were approved by the Director of the
Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51.
Copies may be obtained from the American Society for Testing and
Materials, 100 Barr Harbor Dr., West Conshohocken, PA 19428. Copies may
be inspected at the Air Docket Section (LE-131), room M-1500, U.S.
Environmental Protection Agency, Docket No. A-97-03, 401 M Street, SW.,
Washington, DC 20460, or at the Office of the Federal Register, 800
North Capitol Street, NW., Suite 700, Washington, DC.
Sec. 80.335 What gasoline sample retention requirements apply to
refiners and importers?
(a) Sample retention requirements. Beginning January 1, 2004, or
January 1 of the first year allotments or credits are generated under
Secs. 80.275 and 80.305, whichever is earlier, any refiner or importer
shall:
(1) Collect a representative portion of each sample analyzed under
Sec. 80.330(a), of at least 330 ml in volume;
(2) Retain sample portions for the most recent 20 samples
collected, or for each sample collected during the most recent 21 day
period, whichever is greater;
(3) Comply with the gasoline sample handling and storage procedures
under Sec. 80.330(b) for each sample portion retained; and
(4) Comply with any request by EPA to:
(i) Provide a retained sample portion to the Administrator's
authorized representative; and
(ii) Ship a retained sample portion to EPA, within 2 working days
of the date of the request, by an overnight shipping service or
comparable means, to the address and following procedures specified by
EPA, and accompanied with the sulfur test result for the sample
determined under Sec. 80.330(a).
(b) Sample retention requirement for samples subject to independent
analysis requirements. (1) Any refiner or importer who meets the
independent analysis requirements under Sec. 80.65(f) for any batch of
reformulated gasoline or RBOB will have met the requirements of
paragraph (a) of this section, provided the independent laboratory
meets the requirements of paragraph (a) of this section for the
gasoline batch.
(2) For samples retained by an independent laboratory under
paragraph (b) of this section, the test results required to be
submitted under paragraph (a) of this section shall be the test results
determined under Sec. 80.65(e).
(c) Sampling compliance certification. Any refiner or importer
shall include with each annual report filed under Sec. 80.370, the
following statement, which must accurately reflect the facts and must
be signed and dated by the same person who signs the annual report:
I certify that I have made inquiries that are sufficient to give
me knowledge of the procedures to collect and store gasoline
samples, and I further certify that the procedures meet the
requirements of the ASTM procedures required under 40 CFR 80.330.
Sec. 80.340 What standards and requirements apply to refiners
producing gasoline by blending blendstocks into previously certified
gasoline (PCG)?
(a) Any refiner who produces gasoline by blending blendstock into
PCG must meet the requirements of Sec. 80.330 to sample and test every
batch of gasoline as follows:
(1)(i) Sample and test to determine the volume and sulfur content
of the PCG prior to blendstock blending.
(ii) Sample and test to determine the volume and sulfur content of
the gasoline subsequent to blendstock blending.
(iii) Calculate the volume and sulfur content of the blendstock, by
subtracting the volume and sulfur content of the PCG from the volume
and sulfur content of the gasoline subsequent to blendstock blending.
The blendstock is a batch for purposes of compliance calculations and
reporting. For purposes of this paragraph (a), compliance with the
applicable cap standard under Sec. 80.195(a) shall be determined based
on the sulfur content of the gasoline subsequent to blendstock
blending.
(2) In the alternative, a refiner may sample and test each batch of
blendstock when received at the refinery to determine the volume and
sulfur content, and treat each blendstock receipt as a separate batch
for purposes of compliance calculations for the annual average sulfur
standard and for reporting. This alternative applies only if every
batch of blendstock used at a refinery during an averaging period has a
sulfur content that is equal to, or less than, the applicable per-
gallon cap standard under Secs. 80.195 or 80.216.
(b) Refiners who blend only butane into PCG may meet the sampling
and testing requirements by using sulfur test results of the butane
supplier, provided that the following requirements are also met:
(1) The sulfur content of the butane received from the butane
supplier must not exceed the following sulfur standards on a per-gallon
basis as follows:
(i) 120 ppm in 2004, and 30 ppm for 2005 and any subsequent year;
(ii) Except that the per-gallon sulfur content of butane blended to
PCG that is designated as GPA gasoline shall not exceed 150 ppm from
January 1, 2004, through December 31, 2006.
(2) The refiner obtains test results from the butane supplier that
demonstrate that the sulfur content of
[[Page 6835]]
each load of butane supplied does not exceed the applicable per-gallon
sulfur standard under paragraph (b)(1) of this section through test
results of samples of the butane contained in the storage tank from
which the butane blender is supplied.
(i) Testing for the sulfur content of the butane by the supplier
must be subsequent to each receipt of butane into the supplier's
storage tank, or the testing must be immediately before transfer of
butane to the butane blender.
(ii) The testing must be performed by the method specified in
Sec. 80.46(a)(2).
(iii) The butane blender must obtain a copy of the butane
supplier's test results, at the time of each transfer of butane to the
butane blender, that reflect the sulfur content of each load of butane
supplied to the butane blender.
(3) The sulfur content and volume of each batch of gasoline
produced is that of the butane the refiner blends into gasoline for
purposes of calculating compliance with the standards in Secs. 80.195
and 80.216.
(4) The refiner must conduct a quality assurance program of
sampling and testing for each butane supplier that demonstrates the
butane sulfur content does not exceed the applicable per-gallon sulfur
standard in paragraph (b)(1) of this section. The frequency of butane
sampling and testing, for each butane supplier, must be one sample for
every 500,000 gallons of butane received, or one sample every 3 months,
whichever results in more frequent sampling.
(5) If any of the requirements of this section are not met, in
whole or in part, for any butane blended into gasoline, that butane is
deemed in violation of the gasoline sulfur standards in Sec. 80.195 or
Sec. 80.216, as applicable.
Sec. 80.345 [Reserved]
Sec. 80.350 What alternative sulfur standards and requirements apply
to importers who transport gasoline by truck?
Importers who import gasoline into the United States by truck may
comply with the following requirements instead of the requirements to
sample and test every batch of gasoline under Sec. 80.330, and the
annual sulfur average and per-gallon cap standards otherwise applicable
to importers under Secs. 80.195 and 80.216:
(a) Alternative standards. The imported gasoline must comply with
the standards in paragraph (a)(1) or (a)(2) of this section as follows:
(1) The applicable average standards, corporate average standards
and per-gallon standards under Sec. 80.195(a)(1), except that imported
gasoline designated for use in the geographic phase-in area from
January 1, 2004, through December 31, 2006 must comply with an average
standard of 150 ppm and a per-gallon standard of 300 ppm; or
(2) In 2004, a per-gallon standard of 120 ppm, and in 2005 and
subsequent years a per-gallon standard of 30 ppm, except that imported
gasoline designated for use in the geographic phase-in area from
January 1, 2004, through December 31, 2006 must comply with a per-
gallon standard of 150 ppm.
(b) Terminal testing. The importer may use test results for sulfur
content testing conducted by the terminal operator, for gasoline
contained in the storage tank from which trucks used to transport
gasoline into the United States are loaded, for purposes of
demonstrating compliance with the standards in paragraph (a) of this
section, provided the following conditions are met:
(1) The sampling and testing shall be performed after each receipt
of gasoline into the storage tank, or immediately before each transfer
of gasoline to the importer's truck.
(2) The sampling and testing shall be performed using the methods
specified in Sec. 80.330(b) and 80.46(a)(1), respectively.
(3) At the time of each transfer of gasoline to the importer's
truck for import to the U.S., the importer must obtain a copy of the
terminal test result that indicates the sulfur content of the truck
load.
(c) Quality assurance program. The importer must conduct a quality
assurance program, as specified in this paragraph, for each truck
loading terminal.
(1) Quality assurance samples must be obtained from the truck-
loading terminal and tested by the importer, or by an independent
laboratory, and the terminal operator must not know in advance when
samples are to be collected.
(2) The sampling and testing must be performed using the methods
specified in Secs. 80.330(b) and 80.46(a)(1), respectively.
(3) The quality assurance test results for sulfur must differ from
the terminal test result by no more than the ASTM reproducibility of
the terminal's test results, as determined by the following equation:
R = 105 x ((S+2)/104)0.4
Where:
R = ASTM reproducibility.
S = Sulfur content based on the terminal's test result.
(4) The frequency of the quality assurance sampling and testing
must be at least one sample for each fifty of an importer's trucks that
are loaded at a terminal, or one sample per month, whichever is more
frequent.
(d) Party required to conduct quality assurance testing. The
quality assurance program under paragraph (c) of this section shall be
conducted by the importer. In the alternative, this testing may be
conducted by an independent laboratory that meets the criteria under
Sec. 80.65(f)(2)(iii), provided the importer receives, no later than 21
days after the sample was taken, copies of all results of tests
conducted.
(e) Assignment of batch numbers. The importer must treat each truck
load of imported gasoline as a separate batch for purposes of assigning
batch numbers and maintaining records under Sec. 80.365, and reporting
under Sec. 80.370.
(f) EPA inspections of terminals. EPA inspectors or auditors, and
auditors conducting attest engagements under Sec. 80.415, must be given
full and immediate access to the truck-loading terminal and any
laboratory at which samples of gasoline collected at the terminal are
analyzed, and must be allowed to conduct inspections, review records,
collect gasoline samples, and perform audits. These inspections or
audits may be either announced or unannounced.
(g) Certified Sulfur-FRGAS. This section does not apply to
Certified Sulfur-FRGAS.
(h) Reporting requirements. Any importer who elects to comply with
the alternative standards in paragraph (a) of this section shall comply
with the following requirements:
(1) All importer recordkeeping and reporting requirements under
Secs. 80.365 and 80.370, except as provided in paragraph (h)(2) of this
section.
(2) An importer who elects to comply with the alternative standards
in paragraph (a)(2) of this section must certify in the annual report
whether it is in compliance with the applicable per-gallon batch
standard set forth in paragraph (a)(2) of this section, in lieu of
providing the information required by Sec. 80.370(a) regarding annual
average sulfur content and compliance with the average standard under
Sec. 80.195.
(i) Effect of noncompliance. If any of the requirements of this
section are not met, all gasoline imported by the truck importer during
the time any requirements are not met is deemed in violation of the
gasoline sulfur average and per-gallon cap standards in Sec. 80.195 or
Sec. 80.216, as applicable. Additionally, if any requirement is not
met, EPA may notify the importer of the violation and,
[[Page 6836]]
if the requirement is not fulfilled within 10 days of notification, the
truck importer may not in the future use the sampling and testing
provisions in this section in lieu of the provisions in Sec. 80.330.
Sec. 80.355 [Reserved]
Recordkeeping and Reporting Requirements
Sec. 80.360 [Reserved]
Sec. 80.365 What records must be kept?
(a) Records that must be kept. Beginning January 1, 2004, any
person who produces, imports, sells, offers for sale, dispenses,
distributes, supplies, offers for supply, stores, or transports
gasoline, shall keep records that contain the following information:
(1) The product transfer document information required under
Secs. 80.77, 80.106, 80.210 and 80.219; and
(2) For any sampling and testing for sulfur content required under
this subpart:
(i) The location, date, time and storage tank or truck
identification for each sample collected;
(ii) The name and title of the person who collected the sample and
the person who performed the test;
(iii) The results of the test as originally printed by the testing
apparatus, or where no printed result is produced, the results as
originally recorded by the person who performed the test; and
(iv) Any record that contains a test result for the sample that is
not identical to the result recorded under paragraph (a)(2)(iii) of
this section.
(b) Additional records that refiners and importers must keep.
Beginning January 1, 2004, or January 1 of the first year allotments or
credits are generated under Sec. 80.275 or Sec. 80.305, whichever is
earlier, any refiner for each of its refineries, and any importer for
the gasoline it imports, shall keep records that include the following
information:
(1) For each batch of gasoline produced or imported:
(i) The batch volume;
(ii) The batch number assigned under Sec. 80.65(d)(3) and the
appropriate designation under paragraph (b)(1)(i) of this section;
except that if composite samples of conventional gasoline representing
multiple batches produced subsequent to December 31, 2003, are tested
under Sec. 80.101(i)(2) for anti-dumping compliance purposes, for
purposes of this subpart a separate batch number must be assigned to
each batch using the batch numbering procedures under Sec. 80.65(d)(3);
(iii) The date of production or importation; and
(iv) If appropriate, the designation of the batch as GPA gasoline
under Sec. 80.219, California gasoline under Sec. 80.375, exempt
gasoline for research and development under Sec. 80.380, or for export
outside the United States.
(2) Information regarding credits and allotments, separately kept
for credits and for allotments; separately kept according to the year
of creation for the credits and for the allotments; and for credit
generation or use starting in 2004, separately kept for GPA gasoline
and other gasoline. Information shall be kept separately for different
types of allotments and credits generated under Secs. 80.275(e)(1),
80.275(e)(2), 80.305 and 80.310:
(i) The number in the refiner's or importer's possession at the
beginning of the averaging period;
(ii) The number generated;
(iii) The number used;
(iv) If any were obtained from or transferred to other parties, for
each other party its name, its EPA refiner or importer registration
number, and the number obtained from, or transferred to, the other
party;
(v) The number that expired at the end of the averaging period;
(vi) The number of allotments, by type, that were converted into
credits under Sec. 80.275(e);
(vii) The number in the refiner's or importer's possession that
will carry over into the subsequent averaging period; and
(viii) Contracts or other commercial documents that establish each
transfer of credits and allotments from the transferor to the
transferee.
(3) The calculations used to determine the applicable refiner
baseline under Sec. 80.250 or Sec. 80.295.
(4) The calculations used to determine compliance with the
applicable sulfur average standards of Sec. 80.195, Sec. 80.216,
Sec. 80.240, or Sec. 80.270.
(5) The calculations used to determine the number of credits or
allotments generated under Sec. 80.305, Sec. 80.310 or Sec. 80.275.
(6) The calculations used to determine any applicable adjusted cap
standard under Sec. 80.195(d).
(7) A copy of all reports submitted to EPA under Sec. 80.370.
(c) Additional records importers must keep. Any importer shall keep
records that identify and verify the source of each batch of certified
Sulfur-FRGAS and non-certified Sulfur-FRGAS imported and demonstrate
compliance with the requirements for importers under Sec. 80.410(o).
(d) Length of time records must be kept. The records required in
this section shall be kept for five years from the date they were
created; except that:
(1) Transfers of credits and allotments. Records relating to credit
and allotment transfers, except as provided in paragraph (d)(2) of this
section, shall be kept by the transferor for 5 years from the date the
credits or allotments are transferred, and shall be kept by the
transferee for 5 years from the date the credits or allotments were
transferred, used or terminated, whichever is later.
(2) Early credits. (i) Where the party generating the credits does
not transfer the credits, records must be kept for 5 years from the
date of creation, use or termination whichever is later.
(ii) Where early credits are transferred, records relating to such
credits shall be kept by both parties for 5 years from the date the
credits were transferred, used or terminated, whichever is later.
(e) Make records available to EPA. On request by EPA the records
required in paragraphs (a), (b) and (c) of this section shall be
provided to the Administrator's authorized representative. For records
that are electronically generated or maintained the equipment and
software necessary to read the records shall be made available, or if
requested by EPA, electronic records shall be converted to paper
documents which shall be provided to the Administrator's authorized
representative.
Sec. 80.370 What are the sulfur reporting requirements?
Beginning with the 2004 averaging period, or the first year credits
or allotments are generated under Sec. 80.275 or Sec. 80.305, whichever
is earlier, and continuing for each averaging period thereafter, any
refiner or importer shall submit to EPA annual reports that contain the
information required in this section, and such other information as EPA
may require.
(a) Refiner and importer annual reports. Any refiner, for each of
its refineries, and any importer for the gasoline it imports, shall
submit a report for each calendar year averaging period that includes
the following information, and in the case of a refiner or importer
producing or importing both GPA gasoline and other gasoline, the
information shall be separately reported:
(1) The EPA importer, or refiner and refinery facility registration
numbers;
(2) The applicable baseline, average standard, and adjusted cap
standard as follows:
(i) For the years 2000 through 2003, the applicable baseline under
Sec. 80.250 or Sec. 80.295.
(ii) For the 2004 averaging period and subsequent averaging
periods:
[[Page 6837]]
(A) All applicable average standards under Sec. 80.195,
Sec. 80.216, Sec. 80.240 or Sec. 80.270;
(B) All applicable adjusted cap standards under Sec. 80.195(d),
with the 2005 report identifying both the 2004 and 2005 applicable
adjusted cap standards;
(3) The total volume of gasoline produced or imported;
(4) The annual average sulfur content of the gasoline produced or
imported;
(5) The annual average sulfur level after inclusion of any credits
and allotments;
(6) Information, separately provided, for credits and allotments,
and separately by year of creation, as follows:
(i) The number of credits and allotments at the beginning of the
averaging period;
(ii) The number of credits and allotments generated;
(iii) The number of credits and allotments used;
(iv) If any credits or allotments were obtained from or transferred
to other parties, for each other party its name and EPA refiner or
importer registration number, and the number of credits or allotments
obtained from or transferred to the other party;
(v) The number of credits and allotments that expired at the end of
the averaging period;
(vi) The number of credits and allotments that will carry over into
the subsequent averaging period; and
(vii) The number of each type of allotments converted to credits;
(7) For each batch of gasoline produced or imported during the
averaging period:
(i) The batch number assigned under Sec. 80.65(d)(3) and the
appropriate designation under Sec. 80.365; except that if composite
samples of conventional gasoline representing multiple batches produced
subsequent to December 31, 2003, are tested under Sec. 80.101(i)(2) for
anti-dumping compliance purposes, for purposes of this subpart a
separate batch number must be assigned to each batch using the batch
numbering procedures under Sec. 80.65(d)(3);
(ii) The date the batch was produced;
(iii) The volume of the batch; and
(iv) The sulfur content of the batch as determined under
Sec. 80.330; and
(8) When submitting reports under this paragraph (a), any importer
shall exclude certified Sulfur-FRGAS.
(b) Additional reporting requirements for importers. Any importer
shall report the following information for Sulfur-FRGAS imported during
the averaging period:
(1) The EPA refiner and refinery registration numbers of each
foreign refiner and refinery where the certified Sulfur-FRGAS was
produced; and
(2) The total gallons of certified Sulfur-FRGAS and non-certified
Sulfur-FRGAS imported from each foreign refiner and refinery.
(c) Corporate pool average reports. (1) Annual reports filed under
this section for the 2004 and 2005 averaging periods must include the
party's corporate pool average as determined under Sec. 80.205.
(2) If the party submitting the annual report under paragraph
(c)(1) of this section is a refiner with more than one refinery or is a
refiner who also imports gasoline, then for the purposes of this
paragraph, the party shall report the information required for
individual refineries and for importers under paragraph (a) of this
section, also in the aggregate for all the gasoline produced and
imported during the calendar year.
(3) Refiners and importers exempted from corporate pool standards
under Sec. 80.216 or Sec. 80.240 are exempt from reporting the
information required under paragraphs (c)(1) and (c)(2) of this
section.
(d) Report submission. Any annual report required under this
section shall be:
(1) Signed and certified as meeting all of the applicable
requirements of this subpart by the owner or a responsible corporate
officer of the refiner or importer; and
(2) Submitted to EPA no later than the last day of February for the
prior calendar year averaging period.
(f) Attest reports. Attest reports for refiner and importer attest
engagements required under Sec. 80.415 shall be submitted to the
Administrator by May 31 of each year for the prior calendar year
averaging period.
Secs. 80.371--80.373 [Reserved]
Exemptions
Sec. 80.374 What if a refiner or importer is unable to produce
gasoline conforming to the requirements of this subpart?
In appropriate extreme and unusual circumstances (e.g., natural
disaster or Act of God) which are clearly outside the control of the
refiner or importer and which could not have been avoided by the
exercise of prudence, diligence, and due care, EPA may permit a refiner
or importer, for a brief period, to distribute gasoline which does not
meet the requirements of this subpart provided the refiner or importer
meets all the criteria, requirements and conditions contained in
Sec. 80.73 (a) through (e).
Sec. 80.375 What requirements apply to California gasoline?
(a) Definition. For purposes of this subpart California gasoline
means any gasoline designated by the refiner as for use in California.
(b) California gasoline exemption. California gasoline that
complies with all the requirements of this section is exempt from all
other provisions of this subpart.
(c) Requirements for California gasoline. The requirements are:
(1) Each batch of California gasoline must be designated as such by
its refiner or importer;
(2) Designated California gasoline must be kept segregated from
gasoline that is not California gasoline, at all points in the
distribution system;
(3) Designated California gasoline must ultimately be used in the
State of California and not used elsewhere;
(4) In the case of California gasoline produced outside the State
of California, the transferors and transferees must meet the product
transfer document requirements under Sec. 80.81(g); and
(5) Gasoline that is ultimately used in any part of the United
States outside of the State of California must comply with the
standards and requirements of this subpart, regardless of any
designation as California gasoline.
(d) Use of California test methods and off site sampling
procedures. In the case of any gasoline that is not California gasoline
and that is either produced at a refinery located in the State of
California or is imported from outside the United States into the State
of California, the refiner or importer may, with regard to such
gasoline:
(1) Use the sampling and testing methods approved in Title 13 of
the California Code of Regulations instead of the sampling and testing
methods required under Sec. 80.330; and
(2) Determine the sulfur content of gasoline at off site tankage as
permitted in Sec. 80.81(h)(2).
Sec. 80.380 What are the requirements for obtaining an exemption for
gasoline used for research, development or testing purposes?
Any person may request an exemption from the provisions of this
subpart for gasoline used for research, development or testing
(``R&D'') purposes by submitting to EPA an application that includes
all the information listed in paragraph (b) of this section.
(a) Criteria for an R&D exemption. For an R&D exemption to be
granted, the proposed test program must:
(1) Have a purpose that constitutes an appropriate basis for
exemption;
[[Page 6838]]
(2) Necessitate the granting of an exemption;
(3) Be reasonable in scope; and
(4) Have a degree of control consistent with the purpose of the
program and EPA's monitoring requirements.
(b) Information required to be submitted. To demonstrate each of
the four elements in paragraphs (a)(1) through (4) of this section, the
application required under this section must include the following
information:
(1) A statement of the purpose of the program demonstrating that
the program has an appropriate R&D purpose.
(2) An explanation of why the stated purpose of the program cannot
be achieved in a practicable manner without performing one or more of
the prohibited acts under Sec. 80.385.
(3) To demonstrate the reasonableness of the scope of the program:
(i) An estimate of the program's beginning and ending dates;
(ii) An estimate of the maximum number of vehicles and engines
involved in the program, and the number of miles and engine hours that
will be accumulated on each;
(iii) The sulfur content of the gasoline expected to be used in the
program; and
(iv) The quantity of gasoline that exceeds the applicable sulfur
standard that is expected to be used in the program.
(4) With regard to control, a demonstration that the program
affords EPA a monitoring capability, including at a minimum:
(i) A description of the technical and operational aspects of the
program;
(ii) The site(s) of the program (including street address, city,
county, State, and ZIP code);
(iii) The manner in which information on vehicles and engines used
in the program will be recorded and made available to EPA;
(iv) The manner in which results of the program will be recorded
and made available to EPA;
(v) The manner in which information on the gasoline used in the
program (including quantity, sulfur content, name, address, telephone
number and contact person of the supplier, and the date received from
the supplier), will be recorded and made available to EPA;
(vi) The manner in which distribution pumps will be labeled to
insure proper use of the gasoline where appropriate;
(vii) The name, address, telephone number and title of the
person(s) in the organization requesting an exemption from whom further
information on the application may be obtained; and
(viii) The name, address, telephone number and title of the
person(s) in the organization requesting an exemption who is
responsible for recording and making available the information
specified in paragraphs (b)(4)(iii), (iv) and (v) of this section, and
the location in which such information will be maintained.
(c) Additional requirements. (1) The product transfer documents
associated with R&D gasoline must identify the gasoline as such, and
must state that the gasoline is to be used only for research,
development, or testing purposes.
(2) The R&D gasoline must be designated by the refiner or importer
as exempt R&D gasoline.
(3) The R&D gasoline must be kept segregated from non-exempt
gasoline at all points in the distribution system of the gasoline.
(4) The R&D gasoline must not be sold, distributed, offered for
sale or distribution, dispensed, supplied, offered for supply,
transported to or from, or stored by a gasoline retail outlet, or by a
wholesale purchaser-consumer facility, unless the wholesale purchaser-
consumer facility is associated with the R&D program that uses the
gasoline.
(d) Memorandum of exemption. The Administrator will grant an R&D
exemption upon a demonstration that the requirements of this section
have been met. The R&D exemption will be granted in the form of a
memorandum of exemption signed by the applicant and the Administrator
(or delegate), which may include such terms and conditions as the
Administrator determines necessary to monitor the exemption and to
carry out the purposes of this section, including restoration of motor
vehicle emissions control systems. Any violation of such a term or
condition of the exemption or any requirement under this section will
cause the exemption to be void ab initio.
(e) Effects of exemption. Gasoline that is subject to an R&D
exemption under this section is exempt from other provisions of this
subpart provided that the gasoline is used in a manner that complies
with the memorandum of exemption granted under paragraph (d) of this
section.
Violation Provisions
Sec. 80.385 What acts are prohibited under the gasoline sulfur
program?
No person shall:
(a) Averaging violation. Produce or import gasoline that does not
comply with the applicable sulfur average standard under Sec. 80.195,
Sec. 80.216 or Sec. 80.240.
(b) Cap standard violation. Produce, import, sell, offer for sale,
dispense, supply, offer for supply, store or transport gasoline that
does not comply with the applicable sulfur cap standard under
Sec. 80.195, Sec. 80.216, Sec. 80.210, Sec. 80.220 or Sec. 80.240.
(c) Causing an averaging, cap standard, or geographic phase-in area
(GPA) use violation. Cause another person to commit an act in violation
of paragraph (a), (b), or (f) of this section.
(d) Causing violating gasoline to be in the distribution system.
Cause gasoline to be in the distribution system which does not comply
with an applicable sulfur cap standard under Sec. 80.195, Sec. 80.210,
Sec. 80.216, Sec. 80.220 or Sec. 80.240; a sulfur average standard
under Sec. 80.195, Sec. 80.216 or Sec. 80.240; or a GPA use prohibition
under Sec. 80.219(c).
(e) Denatured ethanol violation. Blend into gasoline denatured
ethanol with a sulfur content higher than 30 ppm.
(f) GPA use violation. Produce, import, sell, offer for sale,
dispense, supply, offer for supply, store or transport gasoline that
does not comply with a GPA use prohibition under Sec. 80.219(c).
Sec. 80.390 What evidence may be used to determine compliance with the
prohibitions and requirements of this subpart and liability for
violations of this subpart?
(a) Compliance with the sulfur standards of this subpart shall be
determined based on the sulfur level of the gasoline, measured using
the methodologies specified in Secs. 80.330(b) and 80.46(a). Any
evidence or information, including the exclusive use of such evidence
or information, may be used to establish the sulfur level of gasoline
if the evidence or information is relevant to whether the sulfur level
of gasoline would have been in compliance with the standards if the
appropriate sampling and testing methodology had been correctly
performed. Such evidence may be obtained from any source or location
and may include, but is not limited to, test results using methods
other than those specified in Secs. 80.330(b) and 80.46(a), business
records, and commercial documents.
(b) Determinations of compliance with the requirements of this
subpart other than the sulfur standards, and determinations of
liability for any violation of this subpart, may be based on
information obtained from any source or location. Such information may
include, but is not limited to, business records and commercial
documents.
Sec. 80.395 Who is liable for violations under the gasoline sulfur
program?
(a) Persons liable for violations of prohibited acts. (1) Averaging
violation.
[[Page 6839]]
Any refiner or importer who violates Sec. 80.385(a) is liable for the
violation.
(2) Causing an averaging violation. Any refiner, importer,
distributor, reseller, carrier, retailer, wholesale purchaser-consumer,
or oxygenate blender who causes another party to violate
Sec. 80.385(a), is liable for a violation of Sec. 80.385(c).
(3) Cap standard violation. Any refiner, importer, distributor,
reseller, carrier, retailer, wholesale purchaser-consumer, or oxygenate
blender who owned, leased, operated, controlled or supervised a
facility where a violation of Sec. 80.385 (b) occurred, is deemed in
violation of Sec. 80.385(b).
(4) Causing a cap standard violation. Any refiner, importer,
distributor, reseller, carrier, retailer, wholesale purchaser-consumer,
or oxygenate blender who produced, imported, sold, offered for sale,
dispensed, supplied, offered for supply, stored, transported, or caused
the transportation or storage of gasoline that violates Sec. 80.385(b),
is deemed in violation of Sec. 80.385(c).
(5) GPA use violation. Any refiner, importer, distributor,
reseller, carrier, retailer, wholesale purchaser-consumer, or oxygenate
blender who produced, imported, sold, offered for sale, dispensed,
supplied, offer for supply, stored, transported, or caused the
transportation or storage of gasoline that violates Sec. 80.385(f), is
deemed in violation of Sec. 80.385(f).
(6) Causing a GPA use violation. Any refiner, importer,
distributor, reseller, carrier, retailer, wholesale purchaser-consumer,
or oxygenate blender who causes another party to violate
Sec. 80.385(f), is deemed liable for a violation of Sec. 80.385(c).
(7) Branded refiner/importer liability. Any refiner or importer
whose corporate, trade, or brand name, or whose marketing subsidiary's
corporate, trade, or brand name appeared at a facility where a
violation of Sec. 80.385(b) or (f) occurred, is deemed in violation of
Sec. 80.385(b) or (f), as applicable.
(8) Causing violating gasoline to be in the distribution system.
Any refiner, importer, distributor, reseller, carrier, or oxygenate
blender, who owned, leased, operated, controlled or supervised a
facility from which gasoline was released into the distribution system
which does not comply with an applicable sulfur cap standard, a sulfur
averaging standard, or a GPA use prohibition, is deemed in violation of
Sec. 80.385(d).
(9) Carrier causation. In order for a carrier to be liable under
paragraph (a)(2), (4), (6), or (8) of this section, EPA must
demonstrate, by reasonably specific showing by direct or circumstantial
evidence, that the carrier caused the violation.
(10) Denatured ethanol violation. Any oxygenate blender who
violates Sec. 80.385(e) is liable for the violation.
(11) Parent corporation liability. Any parent corporation is liable
for any violations of this subpart that are committed by any of its
wholly-owned subsidiaries.
(12) Joint venture liability. Each partner to a joint venture is
jointly and severally liable for any violation of this subpart that
occurs at the joint venture facility or is committed by the joint
venture operation.
(b) Persons liable for failure to meet other provisions of this
subpart. (1) Any refiner, importer, distributor, reseller, carrier,
wholesale purchaser-consumer, retailer, or oxygenate blender who fails
to meet a provision of this subpart not addressed in paragraph (a) of
this section is liable for a violation of that provision.
(2) Any refiner, importer, distributor, reseller, carrier,
wholesale purchaser-consumer, retailer, or oxygenate blender who caused
another person to fail to meet a requirement of this subpart not
addressed in paragraph (a) of this section, is liable for causing a
violation of that provision.
Sec. 80.400 What defenses apply to persons deemed liable for a
violation of a prohibited act?
(a) Any person deemed liable for a violation of a prohibition under
Sec. 80.395 (a)(3) through (8), will not be deemed in violation if the
person demonstrates that:
(1) The violation was not caused by the person or the person's
employee or agent; and
(2) The person conducted a quality assurance sampling and testing
program, as described in paragraph (d) of this section. A carrier may
rely on the quality assurance program carried out by another party,
including the party who owns the gasoline in question, provided that
the quality assurance program is carried out properly. Retailers and
wholesale purchaser-consumers are not required to conduct quality
assurance programs.
(b) In the case of a violation found at a facility operating under
the corporate, trade or brand name of a refiner or importer, or a
refiner's or importer's marketing subsidiary, the refiner or importer
must show, in addition to the defense elements required under
paragraphs (a)(1) and (2) of this section, that the violation was
caused by:
(1) An act in violation of law (other than the Clean Air Act or
this part 80), or an act of sabotage or vandalism;
(2) The action of any refiner, importer, retailer, distributor,
reseller, oxygenate blender, carrier, retailer or wholesale purchaser-
consumer in violation of a contractual agreement between the branded
refiner or importer and the person designed to prevent such action, and
despite periodic sampling and testing by the branded refiner or
importer to ensure compliance with such contractual obligation; or
(3) The action of any carrier or other distributor not subject to a
contract with the refiner or importer, but engaged for transportation
of gasoline, despite specifications or inspections of procedures and
equipment which are reasonably calculated to prevent such action.
(c) Under paragraph (a) of this section for any person to show that
a violation was not caused by that person, or under paragraph (b) of
this section to show that a violation was caused by any of the
specified actions, the person must demonstrate by reasonably specific
showing, by direct or circumstantial evidence, that the violation was
caused or must have been caused by another person and that the person
asserting the defense did not contribute to that other person's
causation.
(d) Quality assurance and testing program. To demonstrate an
acceptable quality assurance and testing program under paragraph (a)(2)
of this section, a person must present evidence of the following:
(1) A periodic sampling and testing program to ensure the gasoline
the person sold, dispensed, supplied, stored, or transported, meets the
applicable sulfur standard; and
(2) On each occasion when gasoline is found not in compliance with
the applicable sulfur standard:
(i) The person immediately ceases selling, offering for sale,
dispensing, supplying, offering for supply, storing or transporting the
non-complying product; and
(ii) The person promptly remedies the violation and the factors
that caused the violation (for example, by removing the non-complying
product from the distribution system until the applicable standard is
achieved and taking steps to prevent future violations of a similar
nature from occurring).
(3) For any carrier who transports gasoline in a tank truck, the
quality assurance program required under this paragraph (d) need not
include periodic sampling and testing of gasoline in the tank truck,
but in lieu of such tank truck sampling and testing, the carrier shall
demonstrate evidence of an oversight program for monitoring compliance
with the requirements of this subpart
[[Page 6840]]
relating to the transport or storage of gasoline by tank truck, such as
appropriate guidance to drivers regarding compliance with the
applicable sulfur standard and product transfer document requirements,
and the periodic review of records received in the ordinary course of
business concerning gasoline quality and delivery.
Sec. 80.405 What penalties apply under this subpart?
(a) Any person liable for a violation under Sec. 80.395 is subject
to civil penalties as specified in section 205 of the Clean Air Act for
every day of each such violation and the amount of economic benefit or
savings resulting from each violation.
(b) Any person liable under Sec. 80.395(a)(1) or (2) for a
violation of the applicable sulfur averaging standard or causing
another party to violate that standard during any averaging period, is
subject to a separate day of violation for each and every day in the
averaging period. Any person liable under Sec. 80.395(b) for a failure
to fulfill any requirement for credit or allotment generation,
transfer, use, banking, or deficit correction, is subject to a separate
day of violation for each and every day in the averaging period in
which invalid credits or allotments are generated or used.
(c)(1) Any person liable under Sec. 80.395(a)(3), (4), (5), or (6)
for a violation of an applicable sulfur per gallon cap standard under
Sec. 80.195, Sec. 80.210, Sec. 80.216, Sec. 80.220 or Sec. 80.240, a
GPA use prohibition under Sec. 80.219(c), or of causing another party
to violate a cap standard or a GPA use prohibition, is subject to a
separate day of violation for each and every day the non-complying
gasoline remains any place in the gasoline distribution system.
(2) Any person liable under Sec. 80.395(a)(8) for causing gasoline
to be in the distribution system which does not comply with an
applicable sulfur cap standard, a sulfur averaging standard, or a GPA
use prohibition, is subject to a separate day of violation for each and
every day that the non-complying gasoline remains any place in the
gasoline distribution system.
(3) For purposes of paragraph (c) of this section, the length of
time the gasoline in question remained in the gasoline distribution
system is deemed to be twenty-five days, unless a person subject to
liability or EPA demonstrates by reasonably specific showings, by
direct or circumstantial evidence, that the non-complying gasoline
remained in the gasoline distribution system for fewer than or more
than twenty-five days.
(d) Any person liable under Sec. 80.395(b) for failure to meet, or
causing a failure to meet, a provision of this subpart is liable for a
separate day of violation for each and every day such provision remains
unfulfilled.
Provisions for Foreign Refiners With Individual Sulfur Baselines
Sec. 80.410 What are the additional requirements for gasoline produced
at foreign refineries having individual small refiner sulfur baselines,
foreign refineries granted temporary relief under Sec. 80.270, or
baselines for generating credits during 2000 through 2003?
(a) Definitions. (1) A foreign refinery is a refinery that is
located outside the United States, the Commonwealth of Puerto Rico, the
Virgin Islands, Guam, American Samoa, and the Commonwealth of the
Northern Mariana Islands (collectively referred to in this section as
``the United States'').
(2) A foreign refiner is a person who meets the definition of
refiner under Sec. 80.2(i) for a foreign refinery.
(3) A small foreign refiner is a refiner that meets the definition
of a small refiner under Sec. 80.225.
(4) ``Sulfur-FRGAS'' means gasoline produced at a foreign refinery
that has been assigned an individual refinery sulfur baseline under
Secs. 80.250 or 80.295, or has been granted temporary relief under
Sec. 80.270, and that is imported into the United States.
(5) ``Non-Sulfur-FRGAS'' means gasoline that is produced at a
foreign refinery that has not been assigned an individual refinery
sulfur baseline, gasoline produced at a foreign refinery with an
individual refinery sulfur baseline that is not imported into the
United States, and gasoline produced at a foreign refinery with an
individual sulfur baseline during a year when the foreign refiner has
opted to not participate in the Sulfur-FRGAS program under paragraph
(c)(3) of this section.
(6) ``Certified Sulfur-FRGAS'' means Sulfur-FRGAS the foreign
refiner intends to include in the foreign refinery's sulfur compliance
calculations under Sec. 80.205 pursuant to Sec. 80.240 or Sec. 80.270
or credit calculations under Secs. 80.305 or 80.310 and allotment
calculations under Sec. 80.275(a), and does include in these compliance
calculations when reported to EPA.
(7) ``Non-Certified Sulfur-FRGAS'' means Sulfur-FRGAS that is not
Certified Sulfur-FRGAS.
(b) Baseline establishment. Any foreign refiner who does not have
an approved refinery baseline under Sec. 80.94 may submit a petition to
the Administrator for an individual refinery sulfur baseline pursuant
to Secs. 80.245 and 80.250, a baseline for generating credits or
allotments under Secs. 80.290 and 80.295, or a baseline for temporary
refinery relief under Secs. 80.270 and 80.295.
(1) The refiner shall follow the procedures specified in
Secs. 80.91 through 80.93 to establish the volume and sulfur content of
gasoline that was produced at the foreign refinery and imported into
the United States during 1997 and 1998 for purposes of establishing
baselines under Sec. 80.250 or Sec. 80.295.
(2) In making determinations for foreign refinery baselines EPA
will consider all information supplied by a foreign refiner, and in
addition may rely on any and all appropriate assumptions necessary to
make such determinations.
(3) Where a foreign refiner submits a petition that is incomplete
or inadequate to establish an accurate baseline, and the refiner fails
to cure this defect after a request for more information, EPA will not
assign an individual refinery sulfur baseline.
(c) General requirements for foreign refiners with individual
refinery sulfur baselines. A foreign refiner of a refinery that has
been assigned an individual sulfur baseline under Sec. 80.250 or
Sec. 80.295 must designate all gasoline produced at the foreign
refinery that is exported to the United States as either Certified
Sulfur-FRGAS or as Non-Certified Sulfur-FRGAS, except as provided in
paragraph (c)(3) of this section.
(1) In the case of Certified Sulfur-FRGAS, the foreign refiner must
meet all provisions that apply to refiners under this subpart H.
(2) In the case of Non-Certified Sulfur-FRGAS, the foreign refiner
shall meet all the following provisions, except the foreign refiner
shall substitute the name Non-Certified Sulfur-FRGAS for the names
``reformulated gasoline'' or ``RBOB'' wherever they appear in the
following provisions:
(i) The designation requirements in this section;
(ii) The recordkeeping requirements under Sec. 80.365;
(iii) The reporting requirements in Sec. 80.370 and this section;
(iv) The product transfer document requirements in this section;
(v) The prohibitions in this section and Sec. 80.385; and
(vi) The independent audit requirements under Sec. 80.415,
paragraph (h) of this section, Secs. 80.125 through
[[Page 6841]]
80.127, Sec. 80.128(a),(b),(c),(g) through (i), and Sec. 80.130.
(3)(i) Any foreign refiner that generates sulfur credits under
Sec. 80.305 during the period 2000 through 2003, or allotments under
Sec. 80.275(a) during 2003, and any small refiner generating credits
under Sec. 80.310, shall designate all Sulfur-FRGAS as Certified
Sulfur-FRGAS for any year that such credits are generated.
(ii) Any foreign refiner that has been assigned an individual
sulfur baseline for a foreign refinery under Sec. 80.250 or Sec. 80.295
may elect to classify no gasoline imported into the United States as
Sulfur-FRGAS, provided the foreign refiner notifies EPA of the election
no later than November 1 of the prior calendar year.
(iii) An election under paragraph (c)(3)(ii) of this section shall:
(A) Apply to an entire calendar year averaging period, and apply to
all gasoline produced during the calendar year at the foreign refinery
that is used in the United States; and
(B) Remain in effect for each succeeding calendar year averaging
period, unless and until the foreign refiner notifies EPA of a
termination of the election. The change in election shall take effect
at the beginning of the next calendar year.
(d) Designation, product transfer documents, and foreign refiner
certification. (1) Any foreign refiner of a foreign refinery that has
been assigned an individual sulfur baseline must designate each batch
of Sulfur-FRGAS as such at the time the gasoline is produced, unless
the refiner has elected to classify no gasoline exported to the United
States as Sulfur-FRGAS under paragraph (c)(3)(i) of this section.
(2) On each occasion when any person transfers custody or title to
any Sulfur-FRGAS prior to its being imported into the United States, it
must include the following information as part of the product transfer
document information in this section:
(i) Identification of the gasoline as Certified Sulfur-FRGAS or as
Non-Certified Sulfur-FRGAS; and
(ii) The name and EPA refinery registration number of the refinery
where the Sulfur-FRGAS was produced.
(3) On each occasion when Sulfur-FRGAS is loaded onto a vessel or
other transportation mode for transport to the United States, the
foreign refiner shall prepare a certification for each batch of the
Sulfur-FRGAS that meets the following requirements:
(i) The certification shall include the report of the independent
third party under paragraph (f) of this section, and the following
additional information:
(A) The name and EPA registration number of the refinery that
produced the Sulfur-FRGAS;
(B) The identification of the gasoline as Certified Sulfur-FRGAS or
Non-Certified Sulfur-FRGAS;
(C) The volume of Sulfur-FRGAS being transported, in gallons;
(D) In the case of Certified Sulfur-FRGAS:
(1) The sulfur content as determined under paragraph (f) of this
section; and
(2) A declaration that the Sulfur-FRGAS is being included in the
compliance calculations under Sec. 80.205 or credit calculations under
Sec. 80.305 or allotments under Sec. 80.275(a) for the refinery that
produced the Sulfur-FRGAS.
(ii) The certification shall be made part of the product transfer
documents for the Sulfur-FRGAS.
(e) Transfers of Sulfur-FRGAS to non-United States markets. The
foreign refiner is responsible to ensure that all gasoline classified
as Sulfur-FRGAS is imported into the United States. A foreign refiner
may remove the Sulfur-FRGAS classification, and the gasoline need not
be imported into the United States, but only if:
(1)(i) The foreign refiner excludes:
(A) The volume of gasoline from the refinery's compliance
calculations under Sec. 80.205; and
(B) In the case of Certified Sulfur-FRGAS, the volume and sulfur
content of the gasoline from the compliance calculations under
Sec. 80.205 or credit calculations under Sec. 80.305.
(ii) The exclusions under paragraph (e)(1)(i) of this section shall
be on the basis of the sulfur content and volumes determined under
paragraph (f) of this section; and
(2) The foreign refiner obtains sufficient evidence in the form of
documentation that the gasoline was not imported into the United
States.
(f) Load port independent sampling, testing and refinery
identification. (1) On each occasion Sulfur-FRGAS is loaded onto a
vessel for transport to the United States a foreign refiner shall have
an independent third party:
(i) Inspect the vessel prior to loading and determine the volume of
any tank bottoms;
(ii) Determine the volume of Sulfur-FRGAS loaded onto the vessel
(exclusive of any tank bottoms present before vessel loading);
(iii) Obtain the EPA-assigned registration number of the foreign
refinery;
(iv) Determine the name and country of registration of the vessel
used to transport the Sulfur-FRGAS to the United States; and
(v) Determine the date and time the vessel departs the port serving
the foreign refinery.
(2) On each occasion Certified Sulfur-FRGAS is loaded onto a vessel
for transport to the United States a foreign refiner shall have an
independent third party:
(i) Collect a representative sample of the Certified Sulfur-FRGAS
from each vessel compartment subsequent to loading on the vessel and
prior to departure of the vessel from the port serving the foreign
refinery;
(ii) Prepare a volume-weighted vessel composite sample from the
compartment samples, and determine the value for sulfur using the
methodology specified in Sec. 80.330 by:
(A) The third party analyzing the sample; or
(B) The third party observing the foreign refiner analyze the
sample;
(iii) Review original documents that reflect movement and storage
of the certified Sulfur-FRGAS from the refinery to the load port, and
from this review determine:
(A) The refinery at which the Sulfur-FRGAS was produced; and
(B) That the Sulfur-FRGAS remained segregated from:
(1) Non-Sulfur-FRGAS and Non-Certified Sulfur-FRGAS; and
(2) Other Certified Sulfur-FRGAS produced at a different refinery.
(3) The independent third party shall submit a report:
(i) To the foreign refiner containing the information required
under paragraphs (f)(1) and (2) of this section, to accompany the
product transfer documents for the vessel; and
(ii) To the Administrator containing the information required under
paragraphs (f)(1) and (2) of this section, within thirty days following
the date of the independent third party's inspection. This report shall
include a description of the method used to determine the identity of
the refinery at which the gasoline was produced, assurance that the
gasoline remained segregated as specified in paragraph (n)(1) of this
section, and a description of the gasoline's movement and storage
between production at the source refinery and vessel loading.
(4) The independent third party must:
(i) Be approved in advance by EPA, based on a demonstration of
ability to perform the procedures required in this paragraph (f);
(ii) Be independent under the criteria specified in
Sec. 80.65(e)(2)(iii); and
(iii) Sign a commitment that contains the provisions specified in
paragraph (i) of this section with regard to activities, facilities and
documents relevant to
[[Page 6842]]
compliance with the requirements of this paragraph (f).
(g) Comparison of load port and port of entry testing. (1)(i)
Except as described in paragraph (g)(1)(ii) of this section, any
foreign refiner and any United States importer of Certified Sulfur-
FRGAS shall compare the results from the load port testing under
paragraph (f) of this section, with the port of entry testing as
reported under paragraph (o) of this section, for the volume of
gasoline and the sulfur value.
(ii) Where a vessel transporting Certified Sulfur-FRGAS off loads
this gasoline at more than one United States port of entry, and the
conditions of paragraph (g)(2)(i) of this section are met at the first
United States port of entry, the requirements of paragraph (g)(2) of
this section do not apply at subsequent ports of entry if the United
States importer obtains a certification from the vessel owner, that
meets the requirements of paragraph (s) of this section, that the
vessel has not loaded any gasoline or blendstock between the first
United States port of entry and the subsequent port of entry.
(2)(i) The requirements of this paragraph (g)(2) apply if:
(A) The temperature-corrected volumes determined at the port of
entry and at the load port differ by more than one percent; or
(B) The sulfur value determined at the port of entry is higher than
the sulfur value determined at the load port, and the amount of this
difference is greater than the reproducibility amount specified for the
port of entry test result by the American Society of Testing and
Materials (ASTM).
(ii) The United States importer and the foreign refiner shall treat
the gasoline as Non-Certified Sulfur-FRGAS, and the foreign refiner
shall exclude the gasoline volume and properties from its gasoline
sulfur compliance calculations under Sec. 80.205.
(h) Attest requirements. The following additional procedures shall
be carried out by any foreign refiner of Sulfur-FRGAS as part of the
applicable attest engagement for each foreign refinery under
Sec. 80.415:
(1) The inventory reconciliation analysis under Sec. 80.128(b) and
the tender analysis under Sec. 80.128(c) shall include Non-Sulfur-FRGAS
in addition to the gasoline types listed in Sec. 80.128(b) and (c).
(2) Obtain separate listings of all tenders of Certified Sulfur-
FRGAS, and of Non-Certified Sulfur-FRGAS. Agree the total volume of
tenders from the listings to the gasoline inventory reconciliation
analysis in Sec. 80.128(b), and to the volumes determined by the third
party under paragraph (f)(1) of this section.
(3) For each tender under paragraph (h)(2) of this section where
the gasoline is loaded onto a marine vessel, report as a finding the
name and country of registration of each vessel, and the volumes of
Sulfur-FRGAS loaded onto each vessel.
(4) Select a sample from the list of vessels identified in
paragraph (h)(3) of this section used to transport Certified Sulfur-
FRGAS, in accordance with the guidelines in Sec. 80.127, and for each
vessel selected perform the following:
(i) Obtain the report of the independent third party, under
paragraph (f) of this section, and of the United States importer under
paragraph (o) of this section.
(A) Agree the information in these reports with regard to vessel
identification, gasoline volumes and test results.
(B) Identify, and report as a finding, each occasion the load port
and port of entry parameter and volume results differ by more than the
amounts allowed in paragraph (g) of this section, and determine whether
the foreign refiner adjusted its refinery calculations as required in
paragraph (g) of this section.
(ii) Obtain the documents used by the independent third party to
determine transportation and storage of the Certified Sulfur-FRGAS from
the refinery to the load port, under paragraph (f) of this section.
Obtain tank activity records for any storage tank where the Certified
Sulfur-FRGAS is stored, and pipeline activity records for any pipeline
used to transport the Certified Sulfur-FRGAS, prior to being loaded
onto the vessel. Use these records to determine whether the Certified
Sulfur-FRGAS was produced at the refinery that is the subject of the
attest engagement, and whether the Certified Sulfur-FRGAS was mixed
with any Non-Certified Sulfur-FRGAS, Non-Sulfur-FRGAS, or any Certified
Sulfur-FRGAS produced at a different refinery.
(5)(i) Select a sample from the list of vessels identified in
paragraph (h)(3) of this section used to transport certified and Non-
Certified Sulfur-FRGAS, in accordance with the guidelines in
Sec. 80.127, and for each vessel selected perform the following:
(ii) Obtain a commercial document of general circulation that lists
vessel arrivals and departures, and that includes the port and date of
departure of the vessel, and the port of entry and date of arrival of
the vessel. Agree the vessel's departure and arrival locations and
dates from the independent third party and United States importer
reports to the information contained in the commercial document.
(6) Obtain separate listings of all tenders of Non-Sulfur-FRGAS,
and perform the following:
(i) Agree the total volume of tenders from the listings to the
gasoline inventory reconciliation analysis in Sec. 80.128(b).
(ii) Obtain a separate listing of the tenders under paragraph
(h)(6) of this section where the gasoline is loaded onto a marine
vessel. Select a sample from this listing in accordance with the
guidelines in Sec. 80.127, and obtain a commercial document of general
circulation that lists vessel arrivals and departures, and that
includes the port and date of departure and the ports and dates where
the gasoline was off loaded for the selected vessels. Determine and
report as a finding the country where the gasoline was off loaded for
each vessel selected.
(7) In order to complete the requirements of this paragraph (h) an
auditor shall:
(i) Be independent of the foreign refiner;
(ii) Be licensed as a Certified Public Accountant in the United
States and a citizen of the United States, or be approved in advance by
EPA based on a demonstration of ability to perform the procedures
required in Secs. 80.125 through 80.130 and this paragraph (h); and
(iii) Sign a commitment that contains the provisions specified in
paragraph (i) of this section with regard to activities and documents
relevant to compliance with the requirements of Secs. 80.125 through
80.130, Sec. 80.415 and this paragraph (h).
(i) Foreign refiner commitments. Any foreign refiner shall commit
to and comply with the provisions contained in this paragraph (i) as a
condition to being assigned an individual refinery sulfur baseline.
(1) Any United States Environmental Protection Agency inspector or
auditor will be given full, complete and immediate access to conduct
inspections and audits of the foreign refinery.
(i) Inspections and audits may be either announced in advance by
EPA, or unannounced.
(ii) Access will be provided to any location where:
(A) Gasoline is produced;
(B) Documents related to refinery operations are kept;
(C) Gasoline or blendstock samples are tested or stored; and
(D) Sulfur-FRGAS is stored or transported between the foreign
refinery
[[Page 6843]]
and the United States, including storage tanks, vessels and pipelines.
(iii) Inspections and audits may be by EPA employees or contractors
to EPA.
(iv) Any documents requested that are related to matters covered by
inspections and audits will be provided to an EPA inspector or auditor
on request.
(v) Inspections and audits by EPA may include review and copying of
any documents related to:
(A) Refinery baseline establishment, including the volume and
sulfur content, and transfers of title or custody, of any gasoline or
blendstocks, whether Sulfur-FRGAS or Non-Sulfur-FRGAS, produced at the
foreign refinery during the period January 1, 1997 through the date of
the refinery baseline petition or through the date of the inspection or
audit if a baseline petition has not been approved, and any work papers
related to refinery baseline establishment;
(B) The volume and sulfur content of Sulfur-FRGAS;
(C) The proper classification of gasoline as being Sulfur-FRGAS or
as not being Sulfur-FRGAS, or as Certified Sulfur-FRGAS or as Non-
Certified Sulfur-FRGAS;
(D) Transfers of title or custody to Sulfur-FRGAS;
(E) Sampling and testing of Sulfur-FRGAS;
(F) Work performed and reports prepared by independent third
parties and by independent auditors under the requirements of this
section and Sec. 80.415 including work papers; and
(G) Reports prepared for submission to EPA, and any work papers
related to such reports.
(vi) Inspections and audits by EPA may include taking samples of
gasoline or blendstock, and interviewing employees.
(vii) Any employee of the foreign refiner will be made available
for interview by the EPA inspector or auditor, on request, within a
reasonable time period.
(viii) English language translations of any documents will be
provided to an EPA inspector or auditor, on request, within 10 working
days.
(ix) English language interpreters will be provided to accompany
EPA inspectors and auditors, on request.
(2) An agent for service of process located in the District of
Columbia will be named, and service on this agent constitutes service
on the foreign refiner or any employee of the foreign refiner for any
action by EPA or otherwise by the United States related to the
requirements of this subpart H.
(3) The forum for any civil or criminal enforcement action related
to the provisions of this section for violations of the Clean Air Act
or regulations promulgated thereunder shall be governed by the Clean
Air Act, including the EPA administrative forum where allowed under the
Clean Air Act.
(4) United States substantive and procedural laws shall apply to
any civil or criminal enforcement action against the foreign refiner or
any employee of the foreign refiner related to the provisions of this
section.
(5) Submitting a petition for an individual refinery sulfur
baseline, producing and exporting gasoline under an individual refinery
sulfur baseline, and all other actions to comply with the requirements
of this subpart H relating to the establishment and use of an
individual refinery sulfur baseline constitute actions or activities
that satisfy the provisions of 28 U.S.C. section 1605(a)(2), but solely
with respect to actions instituted against the foreign refiner, its
agents and employees in any court or other tribunal in the United
States for conduct that violates the requirements applicable to the
foreign refiner under this subpart H, including conduct that violates
Title 18 U.S.C. section 1001 and Clean Air Act section 113(c)(2).
(6) The foreign refiner, or its agents or employees, will not seek
to detain or to impose civil or criminal remedies against EPA
inspectors or auditors, whether EPA employees or EPA contractors, for
actions performed within the scope of EPA employment related to the
provisions of this section.
(7) The commitment required by this paragraph (i) shall be signed
by the owner or president of the foreign refiner business.
(8) In any case where Sulfur-FRGAS produced at a foreign refinery
is stored or transported by another company between the refinery and
the vessel that transports the Sulfur-FRGAS to the United States, the
foreign refiner shall obtain from each such other company a commitment
that meets the requirements specified in paragraphs (i)(1) through (7)
of this section, and these commitments shall be included in the foreign
refiner's baseline petition.
(j) Sovereign immunity. By submitting a petition for an individual
foreign refinery baseline under this section, or by producing and
exporting gasoline to the United States under an individual refinery
sulfur baseline under this section, the foreign refiner, its agents and
employees, without exception, become subject to the full operation of
the administrative and judicial enforcement powers and provisions of
the United States without limitation based on sovereign immunity, with
respect to actions instituted against the foreign refiner, its agents
and employees in any court or other tribunal in the United States for
conduct that violates the requirements applicable to the foreign
refiner under this subpart H, including conduct that violates Title 18
U.S.C. section 1001 and Clean Air Act section 113(c)(2).
(k) Bond posting. Any foreign refiner shall meet the requirements
of this paragraph (k) as a condition to being assigned an individual
refinery sulfur baseline.
(l) The foreign refiner shall post a bond of the amount calculated
using the following equation:
Bond=G x $ 0.01
where:
Bond=amount of the bond in U. S. dollars.
G=the largest volume of gasoline produced at the foreign refinery and
exported to the United States, in gallons, during a single calendar
year among the most recent of the following calendar years, up to a
maximum of five calendar years: the calendar year immediately preceding
the date the baseline petition is submitted, the calendar year the
baseline petition is submitted, and each succeeding calendar year.
(2) Bonds shall be posted by:
(i) Paying the amount of the bond to the Treasurer of the United
States;
(ii) Obtaining a bond in the proper amount from a third party
surety agent that is payable to satisfy United States administrative or
judicial judgments against the foreign refiner, provided EPA agrees in
advance as to the third party and the nature of the surety agreement;
or
(iii) An alternative commitment that results in assets of an
appropriate liquidity and value being readily available to the United
States, provided EPA agrees in advance as to the alternative
commitment.
(3) If the bond amount for a foreign refinery increases, the
foreign refiner shall increase the bond to cover the shortfall within
90 days of the date the bond amount changes. If the bond amount
decreases, the foreign refiner may reduce the amount of the bond
beginning 90 days after the date the bond amount changes.
(4) Bonds posted under this paragraph (k) shall:
(i) Be used to satisfy any judicial judgment that results from an
administrative or judicial enforcement action for conduct in violation
of this subpart H, including where such conduct violates Title 18
U.S.C. section
[[Page 6844]]
1001 and Clean Air Act section 113(c)(2);
(ii) Be provided by a corporate surety that is listed in the United
States Department of Treasury Circular 570 ``Companies Holding
Certificates of Authority as Acceptable Sureties on Federal Bonds and
Acceptable Reinsuring Companies'' (Available from the U.S. Department
of the Treasury, Financial Management Service, Surety Bond Branch, 3700
East-West Highway, Room 6A04, Hyattsville, Md. 20782. Also available on
the internet at http://www.fms.treas.gov/c570/c570.html); and
(iii) Include a commitment that the bond will remain in effect for
at least five (5) years following the end of latest averaging period
that the foreign refiner produces gasoline pursuant to the requirements
of this Subpart H.
(5) On any occasion a foreign refiner bond is used to satisfy any
judgment, the foreign refiner shall increase the bond to cover the
amount used within 90 days of the date the bond is used.
(l) [Reserved]
(m) English language reports. Any report or other document
submitted to EPA by an foreign refiner shall be in English language, or
shall include an English language translation.
(n) Prohibitions. (1) No person may combine Certified Sulfur-FRGAS
with any Non-Certified Sulfur-FRGAS or Non-Sulfur-FRGAS, and no person
may combine Certified Sulfur-FRGAS with any Certified Sulfur-FRGAS
produced at a different refinery, until the importer has met all the
requirements of paragraph (o) of this section, except as provided in
paragraph (e) of this section.
(2) No foreign refiner or other person may cause another person to
commit an action prohibited in paragraph (n)(1) of this section, or
that otherwise violates the requirements of this section.
(o) United States importer requirements. Any United States importer
shall meet the following requirements:
(1) Each batch of imported gasoline shall be classified by the
importer as being Sulfur-FRGAS or as Non-Sulfur-FRGAS, and each batch
classified as Sulfur-FRGAS shall be further classified as Certified
Sulfur-FRGAS or as Non-certified Sulfur-FRGAS.
(2) Gasoline shall be classified as Certified Sulfur-FRGAS or as
Non-Certified Sulfur-FRGAS according to the designation by the foreign
refiner if this designation is supported by product transfer documents
prepared by the foreign refiner as required in paragraph (d) of this
section, unless the gasoline is classified as Non-Certified Sulfur-
FRGAS under paragraph (g) of this section.
(3) For each gasoline batch classified as Sulfur-FRGAS, any United
States importer shall perform the following procedures:
(i) In the case of both Certified and Non-Certified Sulfur-FRGAS,
have an independent third party:
(A) Determine the volume of gasoline in the vessel;
(B) Use the foreign refiner's Sulfur-FRGAS certification to
determine the name and EPA-assigned registration number of the foreign
refinery that produced the Sulfur-FRGAS;
(C) Determine the name and country of registration of the vessel
used to transport the Sulfur-FRGAS to the United States; and
(D) Determine the date and time the vessel arrives at the United
States port of entry.
(ii) In the case of Certified Sulfur-FRGAS, have an independent
third party:
(A) Collect a representative sample from each vessel compartment
subsequent to the vessel's arrival at the United States port of entry
and prior to off loading any gasoline from the vessel;
(B) Prepare a volume-weighted vessel composite sample from the
compartment samples; and
(C) Determine the sulfur value using the methodologies specified in
Sec. 80.330, by:
(1) The third party analyzing the sample; or
(2) The third party observing the importer analyze the sample.
(4) Any importer shall submit reports within thirty days following
the date any vessel transporting Sulfur-FRGAS arrives at the United
States port of entry:
(i) To the Administrator containing the information determined
under paragraph (o)(3) of this section; and
(ii) To the foreign refiner containing the information determined
under paragraph (o)(3)(ii) of this section.
(5)(i) Any United States importer shall meet the requirements
specified in Sec. 80.195 for any imported gasoline that is not
classified as Certified Sulfur-FRGAS under paragraph (o)(2) of this
section.
(p) Truck imports of Certified Sulfur-FRGAS produced at a small
refinery. (1) Any refiner whose Certified Sulfur-FRGAS is transported
into the United States by truck may petition EPA to use alternative
procedures to meet the following requirements:
(i) Certification under paragraph (d)(5) of this section;
(ii) Load port and port of entry sampling and testing under
paragraphs (f) and (g) of this section;
(iii) Attest under paragraph (h) of this section; and
(iv) Importer testing under paragraph (o)(3) of this section.
(2) These alternative procedures must ensure Certified Sulfur-FRGAS
remains segregated from Non-Certified Sulfur-FRGAS and from Non-Sulfur-
FRGAS until it is imported into the United States. The petition will be
evaluated based on whether it adequately addresses the following:
(i) Provisions for monitoring pipeline shipments, if applicable,
from the refinery, that ensure segregation of Certified Sulfur-FRGAS
from that refinery from all other gasoline;
(ii) Contracts with any terminals and/or pipelines that receive
and/or transport Certified Sulfur-FRGAS, that prohibit the commingling
of Certified Sulfur-FRGAS with any of the following:
(A) Other Certified Sulfur-FRGAS from other refineries;
(B) All Non-Certified Sulfur-FRGAS; or
(C) All Non-Sulfur-FRGAS;
(iii) Procedures for obtaining and reviewing truck loading records
and United States import documents for Certified Sulfur-FRGAS to ensure
that such gasoline is only loaded into trucks making deliveries to the
United States; and
(iv) Attest procedures to be conducted annually by an independent
third party that review loading records and import documents based on
volume reconciliation, or other criteria, to confirm that all Certified
Sulfur-FRGAS remains segregated throughout the distribution system and
is only loaded into trucks for import into the United States.
(3) The petition required by this section must be submitted to EPA
along with the application for small refiner status and individual
refinery sulfur baseline and standards under Sec. 80.240 and this
section.
(q) Withdrawal or suspension of a foreign refinery's baseline. EPA
may withdraw or suspend a baseline that has been assigned to a foreign
refinery where:
(1) A foreign refiner fails to meet any requirement of this
section;
(2) A foreign government fails to allow EPA inspections as provided
in paragraph (i)(1) of this section;
(3) A foreign refiner asserts a claim of, or a right to claim,
sovereign immunity in an action to enforce the requirements in this
subpart H; or
(4) A foreign refiner fails to pay a civil or criminal penalty that
is not satisfied using the foreign refiner bond specified in paragraph
(k) of this section.
[[Page 6845]]
(r) Early use of a foreign refinery baseline. (1) A foreign refiner
may begin using an individual refinery baseline before EPA has approved
the baseline, provided that:
(i) A baseline petition has been submitted as required in paragraph
(b) of this section;
(ii) EPA has made a provisional finding that the baseline petition
is complete;
(iii) The foreign refiner has made the commitments required in
paragraph (i) of this section;
(iv) The persons who will meet the independent third party and
independent attest requirements for the foreign refinery have made the
commitments required in paragraphs (f)(3)(iii) and (h)(7)(iii) of this
section; and
(v) The foreign refiner has met the bond requirements of paragraph
(k) of this section.
(2) In any case where a foreign refiner uses an individual refinery
baseline before final approval under paragraph (r)(1) of this section,
and the foreign refinery baseline values that ultimately are approved
by EPA are more stringent than the early baseline values used by the
foreign refiner, the foreign refiner shall recalculate its compliance,
ab initio, using the baseline values approved by EPA, and the foreign
refiner shall be liable for any resulting violation of the conventional
gasoline requirements.
(s) Additional requirements for petitions, reports and
certificates. Any petition for a refinery baseline under Sec. 80.250 or
Sec. 80.295, any alternative procedures under paragraph (r) of this
section, any report or other submission required by paragraphs (c),
(f)(2), or (i) of this section, and any certification under paragraph
(d)(3) of this section shall be:
(1) Submitted in accordance with procedures specified by the
Administrator, including use of any forms that may be specified by the
Administrator; and
(2) Be signed by the president or owner of the foreign refiner
company, or by that person's immediate designee, and shall contain the
following declaration:
I hereby certify: (1) that I have actual authority to sign on
behalf of and to bind [insert name of foreign refiner] with regard
to all statements contained herein; (2) that I am aware that the
information contained herein is being certified, or submitted to the
United States Environmental Protection Agency, under the
requirements of 40 CFR. Part 80, subpart H, and that the information
is material for determining compliance under these regulations; and
(3) that I have read and understand the information being certified
or submitted, and this information is true, complete and correct to
the best of my knowledge and belief after I have taken reasonable
and appropriate steps to verify the accuracy thereof.
I affirm that I have read and understand the provisions of 40
CFR Part 80, subpart H, including 40 CFR 80.410 [insert name of
foreign refiner]. Pursuant to Clean Air Act section 113(c) and Title
18, United States Code, section 1001, the penalty for furnishing
false, incomplete or misleading information in this certification or
submission is a fine of up to $10,000, and/or imprisonment for up to
five years.
Attest Engagements
Sec. 80.415 What are the attest engagement requirements for gasoline
sulfur compliance applicable to refiners and importers?
In addition to the requirements for attest engagements that apply
to refiners and importers under Secs. 80.125 through 80.130, and
Sec. 80.410, the attest engagements for importers and refiners must
include the following procedures and requirements each year.
(a) Baseline. (1) Obtain the EPA sulfur baseline approval letter
for the refinery to determine the refinery's applicable sulfur baseline
and baseline volume under Secs. 80.250 or 80.295.
(2) If the year being reviewed is 2004 through 2006 (2007 for
refineries with small refiner status) and the refinery or importer
produced or imported any GPA gasoline under Sec. 80.216 or the refiner
has approved status for a small refinery:
(i) Obtain the refinery's annual sulfur reports for 2000 through
2003; and
(ii) Determine whether the annual average sulfur level for any year
credits were generated for 2000 through 2003 was less than the baseline
level under paragraph (a)(1) of this section.
(3) If the annual average sulfur content for any year credits were
created for 2000 through 2003 was less than the baseline level under
paragraph (a)(1) of this section, report as a finding the lowest annual
sulfur level as the new baseline value. For GPA gasoline add 30 ppm to
obtain the GPA standard, not to exceed 150 ppm.
(4) If the refinery being reviewed is a small refinery and the
annual volume under paragraph (b)(2) of this section is greater than
the baseline volume, calculate the applicable standard in accordance
with Sec. 80.240(c).
(5) Obtain a written representation from the company representative
stating the sulfur value that the company used as its baseline and
agree that number to paragraphs (a)(1) through (a)(4) of this section
and to the reports to EPA.
(b) EPA reports. (1) Obtain and read a copy of the refinery's or
importer's annual sulfur reports filed with EPA for the year.
(2) Agree the yearly volume of gasoline reported to EPA in the
sulfur reports with the inventory reconciliation analysis under
Sec. 80.128.
(3) For the years 2004 through 2006, calculate the annual volume
and average sulfur level for gasoline classified as GPA gasoline under
Secs. 80.216 and 80.219, and calculate the annual volume and average
sulfur level for gasoline not classified as GPA gasoline, and agree
these values with the values reported to EPA.
(4) Except as provided in paragraph (b)(3) of this section,
calculate the annual average sulfur level for all gasoline and agree
that value with the value reported to EPA.
(5) Obtain and read a copy of the refinery's or importer's sulfur
credit report.
(c) Credit generation before 2004. In the case of a refinery that
only generates credits during 2000 through 2003:
(1) Obtain a written representation from the company representative
stating the refinery produces gasoline from crude oil.
(2) Compute and report as a finding the sulfur baseline from
paragraph (a) of this section multiplied by 0.9.
(3) Obtain the annual average sulfur level from paragraph (b)(4) of
this section.
(4) If the sulfur value under paragraph (c)(3) of this section is
less than the sulfur value under paragraph (c)(2) of this section,
compute and report as a finding the difference between the annual
average sulfur level and the refinery's sulfur baseline from paragraph
(a) of this section.
(5) Compute and report as a finding the total number of sulfur
credits generated by multiplying the value in paragraph (c)(4) of this
section by the volume of gasoline in paragraph (b)(2) of this section,
and agree this value with the value reported to EPA.
(d) Credit generation in 2004 and thereafter. The following
procedures shall be completed for a refinery or importer that generates
credits in 2004 and thereafter:
(1) Obtain the annual average sulfur level for gasoline not
classified as GPA from paragraph (b)(3) of this section.
(2) If the sulfur value under paragraph (d)(1) of this section is
less than 30 ppm, compute and report as a finding the difference
between the sulfur level under paragraph (d)(1) of this section and 30
ppm.
(3) Compute and report as a finding the total number of sulfur
credits generated by multiplying the value calculated in paragraph
(d)(2) of this
[[Page 6846]]
section by the volume of gasoline not classified as GPA in paragraph
(b)(3) of this section, and agree this number with the number reported
to EPA.
(4) Obtain the annual average sulfur level for gasoline classified
as GPA from paragraph (b)(3) of this section.
(5) If the sulfur value under paragraph (d)(4) of this section is
less than the applicable level under Sec. 80.310, compute and report as
a finding the difference between the sulfur level under paragraph
(d)(4) of this section and the appropriate level in Sec. 80.310 .
(6) Compute and report as a finding the total number of sulfur
credits generated by multiplying the value calculated in paragraph
(d)(5) of this section by the volume of gasoline classified as GPA in
paragraph (b)(3) of this section, and agree this number with the number
reported to EPA.
(7) If the refiner has an approved status as a small refinery,
obtain the annual average sulfur level for gasoline from paragraph
(b)(4) of this section.
(8) If the sulfur value under paragraph (d)(7) of this section is
less than the applicable standard under Sec. 80.240, compute and report
as a finding the difference between the sulfur level under paragraph
(d)(7) of this section and the appropriate standard under Sec. 80.240.
(9) Compute and report as a finding the total number of sulfur
credits generated by multiplying the value calculated in paragraph
(d)(8) of this section by the volume of gasoline in paragraph (b)(4) of
this section, and agree this number with the number reported to EPA.
(e) Credit purchases and sales. The following attest procedures
shall be completed for a refinery or importer that is a transferor or
transferee of credits during an averaging period:
(1) Obtain contracts or other documents for all credits transferred
to another refinery or importer during the year being reviewed; compute
and report as a finding the number and year of creation of credits
represented in these documents as being transferred away; and agree
with the report to EPA.
(2) Obtain contracts or other documents for all credits received
during the year being reviewed; compute and report as a finding the
number and year of creation of credits represented in these documents
as being received; and agree with the report to EPA.
(f) Credits required for non-GPA gasoline. The following attest
procedures shall be completed for refineries and importers in 2005 and
thereafter (2004 and thereafter for refineries having standards under
Sec. 80.240):
(1) Obtain the annual average sulfur level for gasoline not
classified as GPA from paragraph (b)(3) of this section.
(2) If the value in paragraph (f)(1) of this section is greater
than 30 ppm (or greater than the small refinery standard), compute and
report as a finding the difference between 30 ppm (or the standard
under Sec. 80.240) and the value in paragraph (f)(1) of this section.
(3) Compute and report as a finding the total sulfur credits
required by multiplying the value in paragraph (f)(2) of this section
times the volume of gasoline not classified as GPA in paragraph (b)(3)
of this section, and agree with the report to EPA.
(4) Obtain the refiner's or importer's representation as to the
portion of the deficit under paragraph (f)(3) of this section that was
resolved with credits, the portion that was resolved with allotments in
2005 only or that was carried forward as a deficit under Sec. 80.205,
and agree with the report to EPA (refineries subject to standards under
Sec. 80.240 cannot carry deficits forward).
(g) Credits required for GPA gasoline. The following attest
procedures shall be completed in 2004 through 2006 for a refinery or
importer that produces gasoline subject to the geographic phase-in area
standards under Sec. 80.216:
(1) Obtain the annual average sulfur level for the refinery's or
importer's GPA gasoline from paragraph (b)(3) of this section.
(2) If the value in paragraph (g)(1) of this section is greater
than the refinery's or importer's baseline plus 30 ppm under
Sec. 80.216, as determined in paragraph (a) of this section or 150 ppm,
whichever is less, compute and report as a finding the difference
between the annual average sulfur level and the baseline level plus 30
ppm, or 150 ppm, whichever is less.
(3) Compute and report as a finding the total sulfur credits and/or
allotments required by multiplying the value in paragraph (g)(2) of
this section times the volume of GPA gasoline from paragraph (b)(3) of
this section.
(4) Obtain the refiner's or importer's representation as to the
portion of the deficit under paragraph (g)(3) of this section that was
resolved with credits, or the portion that was resolved with allotments
in 2004 or 2005 only (compliance deficits for GPA gasoline cannot be
carried forward.
(h) Credit expiration. The following attest procedures shall be
completed for a refinery or importer that possesses credits during an
averaging period:
(1) Obtain a list of all credits in the refiner's or importer's
possession at any time during the year being reviewed, identified by
the year of creation of the credits.
(2) If the year being reviewed is 2006 and thereafter, except in
the case of gasoline produced for use in the GPA and gasoline produced
by small refiners, determine whether any credits identified in
paragraph (h)(1) of this section or Type A sulfur allotments created
under paragraph (i) of this section and converted to credits were
created before 2004, and if so, report as a finding this number of
expired credits.
(3) If the year being reviewed is 2008 and thereafter, determine
whether any credits identified in paragraph (h)(1) of this section or
Type B sulfur allotments created under paragraph (i) of this section
and converted to credits were created more than 5 years before the year
being reviewed, and if so, report as a finding this number of expired
credits (for example, unused credits created during the 2004 averaging
period expire at the end of the 2009 averaging period).
(i) Optional credit and allotment generation in 2003. The following
requirements apply to any refinery that generates credits and
allotments in 2003 under Sec. 80.275(a):
(1) Obtain a written representation from the company representative
stating the refinery produces gasoline from crude oil.
(2) Obtain the refinery baseline value from paragraph (b)(1) of
this section, the annual volume from paragraph (b)(2) of this section
and the annual average sulfur level from paragraph (b)(4) of this
section.
(3) Based on the annual sulfur level and refinery baseline,
determine which equation under Sec. 80.275(a)(2) applies.
(4) Using the applicable equations under Sec. 80.275(a)(2),
recalculate the sulfur allotments, by type, and credits and report as a
finding.
(j) Credit reconciliation. The following attest procedures shall be
completed each year credits were in the refiner's or importer's
possession at any time during the year:
(1) Obtain the credits remaining or the credit deficit from the
previous year from the refiner's or importer's report to EPA for the
previous year.
(2) Compute and report as a finding the net credits remaining at
the conclusion of the year being reviewed by totaling:
(i) Credits remaining from the previous year; plus
(ii) Credits generated under paragraphs (c), (d) and (i) of this
section; plus
[[Page 6847]]
(iii) Allotments generated under paragraph (i) of this section
which are converted to credits; plus
(iv) Credits purchased under paragraph (e) of this section; minus
(v) Credits sold under paragraph (e) of this section; minus
(vi) Credits used under paragraphs (f) and (g) of this section;
minus
(vii) Credits expiring under paragraph (h) of this section; minus
(viii) Credit deficit from the previous year.
(3) Agree the credits remaining or the credit deficit at the
conclusion of the year being reviewed with the report to EPA.
(4) If the refinery or importer had a credit deficit for both the
previous year and the year being reviewed, report this fact as a
finding.
(k) Sulfur allotments in 2004 and 2005. The following requirements
apply to any refinery or importer that is subject to corporate pool
average standards under Sec. 80.195:
(1) Corporate pool average. (i) Obtain the annual average sulfur
level for the refiner or importer from the sulfur report filed with EPA
for all gasoline subject to corporate pool standards (all gasoline
produced and imported, except that if 50% or greater of the gasoline
volume was GPA gasoline the refiner or importer is not subject to the
corporate pool average).
(ii) Compute and report as a finding the company's gasoline volume
subject to corporate pool standards and average sulfur level for
gasoline subject to corporate pool standards, and agree with the values
reported to EPA.
(2) Allotment generation. (i) For 2004, if the corporate pool
average is less than 120 ppm, compute and report as a finding the
number and type of sulfur allotments generated in accordance with the
applicable provisions under Sec. 80.275(b).
(ii) For 2005, if the corporate pool average is less than 90 ppm,
compute and report as a finding the number and type of sulfur
allotments generated in accordance with the applicable provisions under
Sec. 80.275(b).
(iii) If the refiner or importer produced and imported 50% or more
of its gasoline for GPA use in 2004 or 2005, no allotments can be
generated in that year.
(3) Allotment purchases and sales. (i) Obtain contracts or other
documents for all allotments transferred to another company during the
year being reviewed; compute and report as a finding the number of
allotments represented in these documents as being transferred away;
and agree with the report to EPA.
(ii) Obtain contracts or other documents for all allotments
received during the year being reviewed; compute and report as a
finding the number of allotments represented in these documents as
being received; and agree with the report to EPA.
(4) Allotments required. (i) For 2004, if the corporate pool
average is greater than 120 ppm, compute and report as a finding the
number of allotments required by multiplying the amount the corporate
pool average is above 120 ppm times the corporate pool volume, and
agree with the report to EPA.
(ii) For 2005, if the corporate pool average is greater than 90
ppm, compute and report as a finding the number of allotments required
by multiplying the amount the corporate pool average is above 90 ppm
times the corporate pool volume, and agree with the report to EPA.
(iii) Obtain the number of allotments used to meet standards for
GPA gasoline determined in paragraph (g) of this section.
(5) Allotment reconciliation. (i) Compute and report as a finding
the net allotments remaining at the conclusion of the year being
reviewed by totaling allotments:
(A) Generated under paragraphs (i)(4) and (k)(2) of this section;
plus
(B) Purchased under paragraph (k)(3) of this section; minus
(C) Sold under paragraph (k)(3) of this section; minus
(D) Used under paragraph (k)(4) of this section for demonstrating
compliance with the corporate pool average.
(ii) Report as a finding any allotments generated in 2003 or 2004
that are used to meet the corporate pool standards in 2005 that were
not reduced to 50% of their original value.
(iii) If the company's net allotments remaining are less than zero,
report this fact as a finding.
PART 85--CONTROL OF AIR POLLUTION FROM MOBILE SOURCES
5. The authority citation for part 85 continues to read as follows:
Authority: 42 U.S.C. 7521, 7522, 7524, 7525, 7541, 7542,
7601(a).
6. Section 85.1515 is amended by:
a. redesignating the existing paragraph (c) as paragraph (c)(1),
b. adding new paragraphs (c)(2), (c)(3), (c)(5), (c)(6) and (c)(7),
and adding and reserving paragraph (c)(4), and
c. revising paragraph (d).
The revisions and additions read as follows:
Sec. 85.1515 Emission standards and test procedures applicable to
imported nonconforming motor vehicles and motor vehicle engines.
* * * * *
(c)(1) * * *
(2)(i) The provisions of paragraph (c)(1) of this section
notwithstanding, nonconforming light-duty vehicles and light light-duty
trucks (LDV/LLDTs) modified in model years 2004, 2005 or 2006 must meet
the FTP exhaust emission standards of bin 9 in Tables S04-1 and S04-2
in 40 CFR 86.1811-04 and the evaporative emission standards for light-
duty vehicles and light light-duty trucks specified in 40 CFR 86.1811-
04(e)(5).
(ii) Nonconforming LDT3s and LDT4s (HLDTs) and medium-duty
passenger vehicles (MDPVs) modified in model years 2004 through 2006
must meet the FTP exhaust emission standards of bin 10 in Tables S04-1
and S04-2 in 40 CFR 86.1811-04 and the applicable evaporative standards
specified in 40 CFR 86.1811-04(e)(5). For 2004 model year HLDTs and
MDPVs where modifications commence on the first vehicle of a test group
before December 21, 2003, this requirement does not apply to the 2004
model year. ICIs opting to bring all of their 2004 model year HLDTs and
MDPVs into compliance with the exhaust emission standards of bin 10 in
Tables S04-1 and S04-2 in 40 CFR 86.1811-04, may use the optional
higher NMOG values for their 2004-2006 model year LDT2s and 2004-2008
LDT4s.
(iii) Nonconforming LDT3s and LDT4s (HLDTs) and medium-duty
passenger vehicles (MDPVs) modified in model years 2007 and 2008 must
meet the FTP exhaust emission standards of bin 8 in Tables S04-1 and
S04-2 in 40 CFR 86.1811-04 and the applicable evaporative standards
specified in 40 CFR 86.1811-04(e)(5).
(iv) Nonconforming LDV/LLDTs modified in model years 2007 and later
and nonconfoming HLDTs and MDPVs modified in model years 2009 and later
must meet the FTP exhaust emission standards of bin 5 in Tables S04-1
and S04-2 of 40 CFR 86.1811-04, and the evaporative standards specified
in 40 CFR 86.1811(e)(1) through (e)(4).
(v) ICIs are exempt from the Tier 2 and the interim non-Tier 2
phase-in intermediate percentage requirements for exhaust, evaporative
and refueling emissions described in 40 CFR 86.1811-04.
(3)(i) As an option to the requirements of paragraph (c)(2) of this
section, independent commercial importers may elect to meet lower bins
in Tables S04-1 and S04-2 of 40 CFR 86.1811-04 than
[[Page 6848]]
specified in paragraph (c)(2) of this section and bank or sell credits
as permitted in 40 CFR 86.1860-04 and 40 CFR 86.1861-04. An ICI may not
meet higher bins in Tables S04-1 and S04-2 of 40 CFR 86.1811-04 than
specified in paragraph (c)(2) of this section unless it demonstrates to
the Administrator at the time of certification that it has obtained
appropriate and sufficient NOX credits from another
manufacturer, or has generated them in a previous model year or in the
current model year and not transferred them to another manufacturer or
used them to address other vehicles as permitted in 40 CFR 86.1860-04
and 40 CFR 86.1861-04.
(ii) Where an ICI desires to obtain a certificate of conformity
using a bin higher than specified in paragraph (c)(2) of this section,
but does not have sufficient credits to cover vehicles produced under
such certificate, the Administrator may issue such certificate if the
ICI has also obtained a certificate of conformity for vehicles
certified using a bin lower than that required under paragraph (c)(2)
of this section. The ICI may then produce vehicles to the higher bin
only to the extent that it has generated sufficient credits from
vehicles certified to the lower bin during the same model year.
(4) [Reserved]
(5) Except for the situation where an ICI desires to bank, sell or
use NOX credits as described in paragraph (c)(3) of this
section, the requirements of 40 CFR 86.1811-04 related to fleet average
NOX standards and requirements to comply with such standards
do not apply to vehicles modified under this subpart.
(6) ICIs using bins higher than those specified in paragraph (c)(2)
of this section must monitor their production so that they do not
produce more vehicles certified to the standards of such bins than
their available credits can cover. ICIs must not have a credit deficit
at the end of a model year and are not permitted to use the deficit
carryforward provisions provided in 40 CFR 86.1860-04(e).
(7) The Administrator may condition the certificates of conformity
issued to ICIs as necessary to ensure that vehicles subject to
paragraph (c) of this section comply with the appropriate average
NOX standard for each model year.
(d) Except as provided in paragraph (c) of this section, ICI's must
not participate in emission-related programs for emissions averaging,
banking and trading, or nonconformance penalties.
* * * * *
PART 86--CONTROL OF EMISSIONS FROM NEW AND IN-USE HIGHWAY VEHICLES
AND ENGINES
7. The authority citation for part 86 continues to read as follows:
Authority: 42 U.S.C. 7401-7671q.
8. In Sec. 86.1 the table in paragraph (b)(4) is amended by
revising the entry for ``California Regulatory Requirements Applicable
to the `LEV II' Program'' in alphabetical order and by revising the
entry for ``California Regulatory Requirements Applicable to the
National Low Emission Vehicle Program, October 1996'', to read as
follows:
Sec. 86.1 Reference materials.
* * * * *
(b) * * *
(4) * * *
------------------------------------------------------------------------
Document No. and name 40 CFR part 86 reference
------------------------------------------------------------------------
California Regulatory Requirements
Applicable to the ``LEV II'' Program,
including:.
1. California Exhaust Emission 86.1806-01; 86.1811-04; 86.1844-
Standards and Test Procedures for 01.
2003 and Subsequent Model Zero-
Emission Vehicles and 2001 and
Subsequent Model Hybrid Electric
Vehicles, in the Passenger Car,
Light-duty Truck and Medium-duty
Vehicle Classes. August 5, 1999.
2. California Non-Methane Organic 86.1803-01; 86.1810-01; 86.1811-
Gas Test Procedures. August 5, 04.
1999.
California Regulatory Requirements 86.113-004; 86.612-97; 86.1012-
Applicable to the National Low 97; 86.1702-99; 86.1708-99;
Emission Vehicle Program, October 86.1709-99; 86.1717-99;
1996. 86.1735-99; 86.1771-99;
86.1775-99; 86.1776-99;
86.1777-99; Appendix XVI;
Appendix XVII.
------------------------------------------------------------------------
* * * * *
Subpart A--General Provisions for Emission Regulations for 1977 and
Later Model Year New Light-Duty Vehicles, Light-Duty Trucks and
Heavy-Duty Engines, and for 1985 and Later Model Year New Gasoline-
Fueled, Natural Gas-Fueled, Liquefied Petroleum Gas-Fueled and
Methanol-Fueled Heavy-Duty Vehicles
9. Section 86.004-11 is amended by adding paragraph (e) to read as
follows:
Sec. 86.004-11 Emission standards for 2004 and later model year diesel
heavy-duty engines and vehicles.
* * * * *
(e) The standards described in this section do not apply to diesel-
fueled medium-duty passenger vehicles (MDPVs) that are subject to
regulation under subpart S of this part, except as specified in subpart
S of this part. The standards described in this section also do not
apply to diesel engines used in such MDPVs, except as specified in the
regulations in subpart S of this part. The term ``medium-duty passenger
vehicle'' is defined in Sec. 86.1803.
10. Section 86.099-10 is amended by adding paragraph (e) to read as
follows:
Sec. 86.099-10 Emission standards for 1999 and later model year Otto-
cycle heavy-duty engines and vehicles.
* * * * *
(e) The standards described in this section do not apply to Otto-
cycle medium-duty passenger vehicles (MDPVs) that are subject to
regulation under subpart S of this part, except as specified in subpart
S of this part. The standards described in this section also do not
apply to Otto-cycle engines used in such MDPVs, except as specified in
subpart S of this part. The term ``medium-duty passenger vehicle'' is
defined in Sec. 86.1803.
10a. The heading of Subpart B is revised to read as follows:
Subpart B--Emission Regulations for 1977 and Later Model Year New
Light-duty Vehicles, New Light-duty Trucks and New Medium-Duty
Passenger Vehicles; Test Procedures
11. Section 86.113-04 is added to read as follows:
Sec. 86.113-04 Fuel specifications.
This section includes text that specifies requirements that differ
from Sec. 86.113-94. Where a paragraph in Sec. 86.113-94 is identical
and applicable to this section, this will be indicated by specifying
the corresponding paragraph
[[Page 6849]]
and the statement ``[Reserved]. For guidance see Sec. 86.113-94.''.
(a) Gasoline fuel. (1) Gasoline having the following specifications
will be used by the Administrator in exhaust and evaporative emission
testing of petroleum-fueled Otto-cycle vehicles, except that the
Administrator will not use gasoline having a sulfur specification
higher than 0.0045 weight percent. Gasoline having the following
specification or substantially equivalent specifications approved by
the Administrator, must be used by the manufacturer in exhaust and
evaporative testing except that octane specifications do not apply:
------------------------------------------------------------------------
ASTM test method
Item No. Value
------------------------------------------------------------------------
Octane, Research, Min........... D 2699............. 93
Sensitivity, Min................ ................. 7.5
Lead (organic), max. g/U.S. gal. D 3237............. 0.050 (0.013)
(g/liter).
Distillation Range: D 86..............
IBP1:deg. F (deg. C)........ ................. 75-95 (23.9-35)
10 pct. point: deg.F (deg.C) ................. 120-135 (48.9-
57.2)
50 pct. point: deg.F. ................. 200-230 (93.3-
(deg.C). 110)
90 pct. point: deg.F (deg.C) ................. 300-325 (148.9-
162.8)
EP, max: deg.F (deg.C)...... ................. 415 (212.8)
Sulfur, weight pct.............. D 1266............. 0.0015-0.008
Phosphorous, max. g/U.S. gal (g/ D 3231............. 0.005 (0.0013)
liter).
RVP 2,3......................... D 3231............. 8.7-9.2 (60.0-
63.4)
Hydrocarbon composition: D 1319.............
Olefins, max. pct........... ................. 10
Aromatics, max, pct......... ................. 35
Saturates................... ................. Remainder
------------------------------------------------------------------------
\1\ For testing at altitudes above 1,219 m (4000 feet), the specified
range is 75-105 deg. F (23.9-40.6 deg. C).
\2\ For testing which is unrelated to evaporative emission control, the
specified range is 8.0-9.2 psi (55.2-63.4 kPa).
\3\ For testing at altitudes above 1,219 m (4000 feet), the specified
range is 7.6-8.0 psi (52-55 kPa).
(2) For light-duty vehicles, light-duty trucks and medium-duty
passenger vehicles certified for 50 state sale, and for Tier 2 and
interim non-Tier 2 vehicles whose certification is carried over from
the NLEV program or carried across from the California LEV I program,
``California Phase 2'' gasoline having the specifications listed in the
table in this section may be used in exhaust emission testing as an
option to the specifications in paragraph (a)(1) of this section. If a
manufacturer elects to utilize this option, the manufacturer must
conduct exhaust emission testing with gasoline having the
specifications listed in the table in this paragraph (a)(2) and in the
case of interim non-Tier 2 LDV/Ts and interim non-Tier 2 MDPVs whose
certification is carried over from the NLEV program or carried across
from California LEV I program certification the Administrator must also
conduct exhaust emission testing with gasoline having the
specifications listed in the table in this paragraph (a)(2) . However,
the Administrator may use or require the use of test fuel meeting the
specifications in paragraph (a)(1) of this section for certification
confirmatory testing, selective enforcement auditing and in-use testing
for all other vehicles. All fuel property test methods for this fuel
are contained in Chapter 4 of the California Regulatory Requirements
Applicable to the National Low Emission Vehicle Program (October,
1996). These requirements are incorporated by reference (see
Sec. 86.1). The table follows:
------------------------------------------------------------------------
Fuel property Limit
------------------------------------------------------------------------
Octane, (R+M)/2 (min).............. 91
Sensitivity (min).................. 7.5
Lead, g/gal (max) (No lead added).. 0-0.01
Distillation range, deg.F.........
10 pct. point,..................... 130-150
50 pct. point,..................... 200-210
90 pct. point,..................... 290-300
EP, maximum........................ 390
Residue, vol% (max)................ 2.0
Sulfur, ppm by wt.................. 15-40, except that administrator
may use and approve for use, lower
ranges where such ranges are
consistent with current California
requirements.
Phosphorous, g/gal (max)........... 0.005
RVP, psi........................... 6.7-7.0
Olefins, vol%...................... 4.0-6.0
Total aromatic hydrocarbons (vol%). 22-25
Benzene, vol%...................... 0.8-1.0
Multi-substituted alkyl Aromatic 12-14
hydrocarbons, vol%.
MTBE, vol %........................ 10.8-11.2
Additives:......................... See chapter 4 of the California
Regulatory Requirements Applicable
to the National Low Emission
Vehicle Program (October, 1996).
These procedures are incorporated
by reference (see Sec. 86.1).
[[Page 6850]]
Copper corrosion................... No. 1.
Gum, washed, mg/100 ml (max)....... 3.0
Oxidation stability, minutes (min). 1000
Specific gravity................... No limit; report to purchaser
required.
Heat of combustion................. No limit; report to purchaser
required.
Carbon, wt%........................ No limit; report to purchaser
required.
Hydrogen, wt%...................... No limit; report to purchaser
required.
------------------------------------------------------------------------
(3)(i) Unless otherwise approved by the Administrator, unleaded
gasoline representative of commercial gasoline that will be generally
available through retail outlets must be used in service accumulation.
For model years 2004 and later, and unless otherwise approved by the
Administrator, this gasoline must have a minimum sulfur content of 15
ppm. Unless otherwise approved by the Administrator, where the vehicle
is to be used for evaporative emission durability demonstration, such
fuel must contain ethanol as required by Sec. 86.1824-01(a)(2)(iii).
Leaded gasoline must not be used in service accumulation.
(ii) Unless otherwise approved by the Administrator, the octane
rating of the gasoline used must be no higher than 1.0 Retail octane
number above the lowest octane rating that meets the fuel grade the
manufacturer will recommend to the ultimate purchaser for the relevant
production vehicles. If the manufacturer recommends a Retail octane
number rather than a fuel grade, then the octane rating of the service
accumulation gasoline can be no higher than 1.0 Retail octane number
above the recommended Retail octane number. The service accumulation
gasoline must also have a minimum sensitivity of 7.5 octane numbers,
where sensitivity is defined as the Research octane number minus the
Motor octane number.
(iii) The Reid Vapor Pressure of the gasoline used must be
characteristic of the motor fuel used during the season in which the
service accumulation takes place.
(4) The specification range of the gasoline to be used under this
paragraph (a) must be reported in accordance with Secs. 86.094-21(b)(3)
and 86.1844-01.
(b) through (g) [Reserved]. For guidance see Sec. 86.113-94.
12. Section 86.129-00 is amended by adding a new paragraph
(f)(1)(ii)(C) to read as follows:
Sec. 86.129-00 Road load power, test weight, and inertia weight class
determination.
* * * * *
(f)* * *
(1)* * *
(ii)* * *
(C) Regardless of other requirements in this section relating to
the testing of HLDTs, for Tier 2 HLDTs, the test weight basis for FTP
and SFTP testing (both US06 and SC03), if applicable, is the vehicle
curb weight plus 300 pounds. For MDPVs certified to standards in bin 11
in Tables S04-1 and 2 in Sec. 86.1811-04, the test weight basis must be
adjusted loaded vehicle weight (ALVW) as defined in this part.
* * * * *
12.a. The heading of Subpart C is revised to read as follows:
Subpart C--Emission Regulations for 1994 and Later Model Year
Gasoline-Fueled New Light-Duty Vehicles, New Light-Duty Trucks and
New Medium-Duty Passenger Vehicles; Cold Temperature Test
Procedures
13. Section 86.213-04 is added to read as follows:
Sec. 86.213-04 Fuel specifications.
Gasoline having the following specifications will be used by the
Administrator except that the Administrator will not use gasoline
having a sulfur specification higher than 0.0045 weight percent.
Gasoline having the specifications set forth in the table in this
section, or substantially equivalent specifications approved by the
Administrator, may be used by the manufacturer except that the octane
specification does not apply. In lieu of using gasoline having these
specifications, the manufacturer may, for certification testing, use
gasoline having the specifications specified in Sec. 86.113-04 provided
the cold CO emissions are not decreased. Documentation showing that
cold CO emissions are not decreased must be maintained by the
manufacturer and must be made available to the Administrator upon
request. The table listing the cold CO fuel specifications described in
the text in this section follows:
Table--Cold CO Fuel Specifications
----------------------------------------------------------------------------------------------------------------
Cold CO low octane value Cold CO high octane \1\
Item ASTM test or range value or range
----------------------------------------------------------------------------------------------------------------
(RON+MON)/2, min.................. D 2699 87.8.3 92.30.5
Sensitivity, min.................. D 2699 7.5 7.5
Distillation range:...............
IBP, deg.F...................... D 86 76-96 76-96
10% point, deg.F................ D 86 98-118 105-125
50% point, deg.F................ D 86 179-214 195-225
90% point, deg.F................ D 86 316-346 316-346
EP, max, deg.F.................. D 86 413 413
Sulfur, wt. %..................... D 3120 0.0015-0.008 0.0015-0.008
Phosphorous, g/U.S gal, max....... D 3231 0.005 0.005
Lead, g/gal, max.................. 0.01 0.01
RVP, psi.......................... D 4953 11.5.3 11.5.3
Hydrocarbon composition........... D 1319
Olefins, vol. pct............... 12.55.0 10.05.0
Aromatics, vol. pct............. 26.44.0 32.04.0
Saturates....................... Remainder Remainder.
----------------------------------------------------------------------------------------------------------------
\1\ Gasoline having these specifications may be used for vehicles which are designed for the use of high-octane
premium fuel.
[[Page 6851]]
Subpart R--General Provisions for the Voluntary National Low
Emission Vehicle Program for Light-Duty Vehicles and Light-Duty
Trucks
14. Section 86.1701-99 is amended by adding paragraph (f) to read
as follows:
Sec. 86.1701-99 General applicability.
* * * * *
(f) The provisions of this subpart are not applicable to 2004 or
later model year vehicles, except where specific references to
provisions of this subpart are made in conjunction with provisions
applicable to such vehicles.
14.a. The title of subpart S is revised to read as follows:
Subpart S--General Compliance Provisions for Control of Air
Pollution From New and In-use Light-Duty Vehicles, Light-Duty
Trucks and Medium Duty Passenger Vehicles
15. Section 86.1801-01 is amended by:
a. revising the first sentence of paragraph (a),
b. adding one sentence to the end of paragraph (c)(1),
c. revising the first sentence of paragraph (e), and
d. adding paragraphs (f), (g) and (h).
These revisions and additions read as follows:
Sec. 86.1801-01 Applicability.
(a) Except as otherwise indicated, the provisions of this subpart
apply to new 2001 and later model year Otto-cycle and diesel cycle
light-duty vehicles, light-duty trucks and medium-duty passenger
vehicles, including multi-fueled, alternative fueled, hybrid electric,
and zero emission vehicles. * * *
* * * * *
(c) * * * (1) * * * A 2004 or later model year heavy-duty vehicle
optionally certified as a light-duty truck under this provision must
comply with all provisions applicable to MDPVs including exhaust and
evaporative emission standards, test procedures, on-board diagnostics,
refueling standards, phase-in requirements and fleet average standards
under 40 CFR Part 85 and this part.
* * * * *
(e) National Low Emission Vehicle Program for light-duty vehicles
and light light-duty trucks. A manufacturer may elect to certify 2001-
2003 model year light-duty vehicles and light light-duty trucks (LDV/
LLDTs) to the provisions of the National Low Emission Vehicle Program
contained in Subpart R of this part. * * *
(f) ``Early'' Tier 2 LDVs, LDTs and MDPVs. Any LDV/LLDT which is
certified to Tier 2 FTP exhaust standards prior to the 2004 model year,
or any HLDT or MDPV which is certified to the Tier 2 FTP exhaust
standards prior to the 2008 model year, to utilize alternate phase-in
schedules and/or for purposes of generating and banking Tier 2
NOX credits, must comply with all the exhaust emission
requirements applicable to Tier 2 LDV/LLDTs or HLDT/ MDPVs, as
applicable, under this subpart.
(g) Interim non-Tier 2 LDVs, LDTs and MDPVs. Model year 2004-2008
LDVs, LDTs and MDPVs, that do not comply with the Tier 2 FTP exhaust
emission requirements (interim non-Tier 2 LDV/LLDTs and interim non-
Tier 2 HLDT/MDPVs) as permitted under the phase-in requirements of
Sec. 86.1811-04(k) must comply with all applicable interim non-Tier 2
exhaust emission requirements contained in this subpart, including FTP
exhaust emission requirements for all interim non-Tier 2 LDV/LLDTs and
HLDT/MDPVs found at Sec. 86.1811-04(l). Additional emission bins and
separate fleet average NOX emission standards and other
provisions are provided for interim non-Tier 2 LDV/LLDTs, and interim
non-Tier 2 HLDT/MDPVs.
(h) Applicablity of provisions of this subpart to LDVs, LDTs and
MDPVs. Numerous sections in this subpart provide requirements or
procedures applicable to a ``vehicle'' or ``vehicles''. Unless
otherwise specified or otherwise determined by the Administrator, the
term ``vehicle'' or ``vehicles'' in those provisions apply equally to
LDVs, LDTs and MDPVs.
16. Section 86.1803-01 is amended by adding the following
definitions in alphabetical order to read as follows:
Sec. 86.1803-01 Definitions.
* * * * *
Bin or emission bin means a set of emission standards applicable to
exhaust pollutants measured on the Federal Test Procedure (FTP). A bin
is equivalent to a horizontal row of FTP standards in Tables S04-1 and
S04-2 shown in this subpart. Manufacturers are generally free to choose
the bin of standards that will apply to a certain test group of
vehicles, provided that on a sales weighted average of those bins, all
of their vehicles meet a specified fleet average standard for a
particular pollutant.
* * * * *
CalLEV II or California LEV II refers to California's second phase
of its low emission vehicle (LEV) program. This program was adopted at
the hearing of the California Air Resources Board held on November 5,
1998 and became effective on November 27, 1999.
* * * * *
Fleet average NOX standard means, for light-duty
vehicles, light-duty trucks and medium-duty passenger vehicles, a
NOX standard imposed over an individual manufacturer's total
U.S. sales (or a fraction of total U.S. sales during phase-in years),
as `U.S. sales'' is defined in this subpart, of a given model year.
Manufacturers determine their compliance with such a standard by
averaging, on a sales weighted basis, the individual NOX
standards they choose for the fleet of light-duty vehicles, light-duty
trucks and medium-duty passenger vehicles they sell of that model year.
* * * * *
Interim non-Tier 2 vehicle, interim non-Tier 2 LDV/LLDT, interim
non-Tier 2 HLDT/MDPV, or interim vehicle refer to 2004 or later model
year light-duty vehicles, light-duty trucks or MDPVs, or a specific
combination thereof, not certified to Tier 2 FTP exhaust emission
standards during the Tier 2 phase-in period. Model year 2004 HLDTs
belonging to test groups whose model year commences before December 21,
2003, are not interim non-Tier 2 HLDTs unless their manufacturer
chooses to comply with the interim requirements applicable to HLDTs for
all of its 2004 model year HLDTs as permitted in this subpart.
Similarly 2004 model year heavy-duty vehicles whose model year
commences before December 21, 2003, are not interim non-Tier 2 MDPVs
unless their manufacturer chooses to comply with the interim
requirements applicable to MDPVs for all of its 2004 model year MDPVs
as permitted in this subpart. The terms interim non-Tier 2 vehicle,
interim non-Tier 2 LDV, interim non-Tier 2 LDT, interim non-Tier 2
HLDT, interim non-Tier 2 MDPV, etc. have the same meaning without the
words ``non-Tier 2''.
* * * * *
LDV/T means light-duty vehicles and light-duty trucks collectively,
without regard to category.
* * * * *
Medium-duty passenger vehicle (MDPV) means any heavy-duty vehicle
[[Page 6852]]
(as defined in this subpart) with a gross vehicle weight rating (GVWR)
of less than 10,000 pounds that is designed primarily for the
transportation of persons. The MDPV definition does not include any
vehicle which:
(1) Is an ``incomplete truck'' as defined in this subpart; or
(2) Has a seating capacity of more than 12 persons; or
(3) Is designed for more than 9 persons in seating rearward of the
driver's seat; or
(4) Is equipped with an open cargo area (for example, a pick-up
truck box or bed) of 72.0 inches in interior length or more. A covered
box not readily accessible from the passenger compartment will be
considered an open cargo area for purposes of this definition.
* * * * *
Non-methane organic gases (NMOG) means the sum of oxygenated and
non-oxygenated hydrocarbons contained in a gas sample as measured in
accordance with the California Non-Methane Organic Gas Test Procedures.
These requirements are incorporated by reference (see Sec. 86.1)
* * * * *
Periodically regenerating trap oxidizer system means a trap
oxidizer that utilizes, during normal driving conditions, an automated
regeneration mode for cleaning the trap, the operation of which can be
easily detected.
* * * * *
Point of first sale means the location where the completed vehicle
is first purchased. This term is synonymous with final product purchase
location. The point of first sale may be a retail customer, dealer,
distributor, fleet operator, broker, secondary manufacturer, or any
other entity which purchases a vehicle from a manufacturer. In cases
where the end user purchases the completed vehicle directly from the
manufacturer, the end user is the point of first sale.
* * * * *
Round, rounded or rounding means, unless otherwise specified, that
numbers will be rounded according to ASTM-E29-93a, which is
incorporated by reference in this part pursuant to Sec. 86.1.
* * * * *
Tier 2 HLDT/MDPV means any heavy light-duty truck or medium-duty
passenger vehicle, including HEVs and ZEVs, of the 2008 or later model
year certified to comply with the Tier 2 FTP exhaust standards
contained in Sec. 86.1811-04 including the 0.07 g/mi fleet average
NOX standard. The term Tier 2 HLDT/MDPV also includes any
heavy light-duty truck or medium-duty passenger vehicle, of any model
year, which is certified to Tier 2 FTP exhaust standards for purposes
of generating or banking early NOX credits for averaging
under Tier 2 requirements, or utilizing alternate phase-in schedules,
as allowed in this subpart.
Tier 2 LDV/LLDT means any light-duty vehicle or light light-duty
truck, including HEVs and ZEVs, of the 2004 or later model year
certified to comply with the Tier 2 FTP exhaust standards contained in
Sec. 86.1811-04 including the 0.07 g/mi fleet average NOX
standard. The term Tier 2 LDV/LLDT also includes any light-duty vehicle
or light light-duty truck, of any model year, which is certified to
Tier 2 FTP exhaust standards for purposes of generating or banking
early NOX credits for averaging under Tier 2 requirements,
or utilizing alternate phase-in schedules as allowed in this subpart.
Tier 2 standards means those FTP exhaust emission standards
including the 0.07 g/mi full useful life fleet average NOX
standard, applicable to new light-duty vehicles and light light-duty
trucks that begin a phase-in in the 2004 model year, and those exhaust
emission standards including the 0.07 g/mi full useful life fleet
average NOX standard, applicable to heavy light-duty trucks
and medium-duty passenger vehicles that begin a phase-in in the 2008
model year. These standards are found in Sec. 86.1811-04 of this
subpart.
Tier 2 vehicle means any vehicle certified to comply with the Tier
2 FTP exhaust standards contained in Sec. 86.1811-04 including the 0.07
g/mi fleet average NOX standard.
* * * * *
U.S. sales means, unless otherwise specified, sales in any state of
the United States except for California or a state that has adopted
California motor vehicle standards for that model year pursuant to
section 177 of the Clean Air Act. This definition applies only to those
regulatory requirements addressing Tier 2 and interim non-Tier 2
vehicles.
* * * * *
17. Section 86.1804-01 is amended by adding the following acronyms
and abbreviations, in alphabetical order, to read as follows:
Sec. 86.1804-01 Acronyms and abbreviations.
* * * * *
HCHO--Formaldehyde.
HEV--Hybrid electric vehicle.
* * * * *
HLDT--Heavy light-duty truck. Includes only those trucks over
6000 pounds GVWR (LDT3s and LDT4s).
HLDT/MDPV--Heavy light-duty trucks and medium-duty passenger
vehicles.
* * * * *
LDV/LLDT--Light-duty vehicles and light light-duty trucks.
Includes only those trucks rated at 6000 pounds GVWR or less (LDT1s
and LDT2s).
LDV/T--Light-duty vehicles and light-duty trucks. This term is
used collectively to include, or to show that a provision applies
to, all light-duty vehicles and all categories of light-duty trucks,
i.e.
LDT1, LDT2, LDT3 and LDT4.
LEV--Low Emission Vehicle.
* * * * *
MDPV--Medium-duty passenger vehicle.
* * * * *
NLEV--Refers to the National Low Emission Vehicle Program.
Regulations governing this program are found at subpart R of this
part.
* * * * *
NMOG--Non-methane organic gases.
* * * * *
RAF--Reactivity adjustment factor.
* * * * *
SULEV--Super Ultra Low Emission Vehicle.
* * * * *
TLEV--Transitional Low Emission Vehicle.
* * * * *
ULEV--Ultra Low Emission Vehicle.
* * * * *
ZEV--Zero Emission Vehicle.
18. Section 86.1805-04 is added to read as follows:
Sec. 86.1805-04 Useful life.
(a) Except as required under paragraph (b) of this section or
permitted under paragraphs (d), (e) and (f) of this section, the full
useful life for all LDVs, LDT1s and LDT2s is a period of use of 10
years or 120,000 miles, whichever occurs first. For all HLDTs and
MDPVs, full useful life is a period of 11 years or 120,000 miles,
whichever occurs first. This full useful life applies to all exhaust,
evaporative and refueling emission requirements except for standards
which are specified to only be applicable at the time of certification.
(b) Manufacturers may elect to optionally certify a test group to
the Tier 2 exhaust emission standards for 150,000 miles to gain
additional NOX credits, as permitted in Sec. 86.1860-04(g),
or to opt out of intermediate life standards as permitted in
Sec. 86.1811-04(c). In such cases, useful life is a period of use of 15
years or 150,000 miles, whichever occurs first, for all exhaust,
evaporative and refueling emission requirements except for cold CO
standards and standards which are applicable only at the time of
certification.
(c) Where intermediate useful life exhaust emission standards are
[[Page 6853]]
applicable, such standards are applicable for five years or 50,000
miles, whichever occurs first.
(d) Where cold CO standards are applicable, the useful life
requirement for compliance with the cold CO standard only, is 5 years
or 50,000 miles, whichever occurs first.
(e) Where LDVs, LDT1s and LDT2s of the 2003 or earlier model years
are certified to Tier 2 exhaust emission standards for purposes of
generating early Tier 2 NOX credits, manufacturers may
certify those vehicles to full useful lives of 100,000 miles in lieu of
the otherwise required 120,000 mile full useful lives, as provided
under Sec. 86.1861-04(c)(4).
(f) For interim non-Tier 2 LDV/LLDTs, the useful life requirement
for exhaust, evaporative and refueling emissions is 10 years or 100,000
miles, whichever occurs first.
19. Section 86.1806-01 is amended by:
a. revising paragraph (a);
b. adding paragraph (b)(8);
c. redesignating the text of paragraph (d) after the paragraph
heading as (d)(1); and
d. adding paragraph (d)(2).
The revisions and additions read as follows:
Sec. 86.1806-01 On-board diagnostics.
(a)(1) Except as provided by paragraph (a)(2) of this section, all
light-duty vehicles, light-duty trucks and MDPVs must be equipped with
an onboard diagnostic (OBD) system capable of monitoring, for each
vehicle's useful life, all emission-related powertrain systems or
components. All systems and components required to be monitored by
these regulations must be evaluated periodically, but no less
frequently than once per Urban Dynamometer Driving Schedule as defined
in Appendix I, paragraph (a), of this part, or similar trip as approved
by the Administrator.
(2) Diesel fueled chassis-certified MDPVs and engine-certified
diesel engines used in MDPVs, are subject to the requirements of this
section only if the exhaust emission certification of the applicable
test group is being carried across from a California configuration to
which California OBD-II requirements are applicable.
(b) * * *
(8) For Tier 2 and interim non-Tier 2 hybrid electric vehicles
(HEVs) only. Unless added to HEVs in compliance with other requirements
of this section, or unless otherwise approved by the Administrator:
(i) The manufacturer must equip each HEV with a maintenance
indicator consisting of a light that must activate automatically by
illuminating the first time the minimum performance level is observed
for each battery system component. Possible battery system components
requiring monitoring are: battery water level, temperature control,
pressure control, and other parameters critical for determining battery
condition.
(ii) The manufacturer must equip ``off-vehicle charge capable
HEVs'' with a useful life indicator for the battery system consisting
of a light that must illuminate the first time the battery system is
unable to achieve an all-electric operating range (starting from a full
state-of-charge) which is at least 75 percent of the range determined
for the vehicle in the Urban Driving Schedule portion of the All-
Electric Range Test (see the California Exhaust Emission Standards and
Test Procedures for 2003 and Subsequent Model Zero-Emission Vehicles,
and 2001 and Subsequent Model Hybrid Electric Vehicles, in the
Passenger Car, Light-Duty Truck and Medium-Duty Vehicle Classes. These
requirements are incorporated by reference (see Sec. 86.1).
(iii) The manufacturer must equip each HEV with a separate odometer
or other device subject to the approval of the Administrator that can
accurately measure the mileage accumulation on the engines used in
these vehicles.
* * * * *
(d) MIL illumination. (1) * * *
(2)(i) For interim non-Tier 2 and Tier 2 LDV/LLDTs and HLDT/MDPVs,
vehicles produced through the 2007 model year, upon a manufacturer's
written request, EPA will consider allowing the use of an on-board
diagnostic system during the certification process, that functions
properly on low-sulfur gasoline, but indicates sulfur-induced passes
when exposed to high sulfur gasoline.
(ii) For interim non-Tier 2 and Tier 2 LDV/LLDTs and HLDT/MDPVs, if
vehicles produced through the 2007 model year exhibit illuminations of
the emission control diagnostic system malfunction indicator light due
to high sulfur gasoline, EPA will consider, upon a manufacturer's
written request, allowing modifications to such vehicles on a case-by-
case basis so as to eliminate the sulfur induced illumination.
* * * * *
20. Section 86.1807-01 is amended by revising paragraph (a)(3)(vi)
to read as follows:
Sec. 86.1807-01 Vehicle labeling.
(a) * * *
(3) * * *
(vi) The exhaust emission standards to which the test group is
certified, and for test groups having different in-use standards, the
corresponding exhaust emission standards that the test group must meet
in use. In lieu of this requirement, manufacturers may use the
standardized test group name designated by EPA;
* * * * *
21. Section 86.1809-01 is amended by adding paragraph (e) to read
as follows:
Sec. 86.1809-01 Prohibition of defeat devices.
* * * * *
(e) For each test group of Tier 2 LDV/LLDTs and HLDT/MDPVs and
interim non-Tier 2 LDV/LLDTs and HLDT/MDPVs the manufacturer must
submit, with the Part II certification application, an engineering
evaluation demonstrating to the satisfaction of the Administrator that
a discontinuity in emissions of non-methane organic gases, carbon
monoxide, oxides of nitrogen and formaldehyde measured on the Federal
Test Procedure (subpart B of this part) does not occur in the
temperature range of 20 to 86 degrees F. For diesel vehicles, the
engineering evaluation must also include particulate emissions.
22. Section 86.1810-01 is amended by:
a. adding two new sentences to the end of the introductory text;
b. adding one new sentence to the end of paragraph (f);
c. adding a new sentence to the end of paragraph (i)(6); and
d. adding new paragraphs (i)(13), (i)(14), (o) and (p).
The additions read as follows:
Sec. 86.1810-01 General standards; increase in emissions; unsafe
conditions; waivers.
* * * For Tier 2 and interim non-Tier 2 vehicles, this section
also applies to hybrid electric vehicles and zero emission vehicles.
Unless otherwise specified, requirements and provisions of this subpart
applicable to methanol fueled vehicles are also applicable to Tier 2
and interim non-Tier 2 ethanol fueled vehicles.
* * * * *
(f) * * * Interim non-Tier 2 LDV/Ts may be certified to applicable
Tier 1 exhaust emission standards at high altitude as set forth in
Secs. 86.1811-01, 86.1812-01, 86.1813-01, 86.1814-02 and 86.1815-02.
Requirements to meet emission standards at high altitude are optional
for interim non-Tier 2 MDPVs.
* * * * *
(i) * * *
(6) * * * For Tier 2 and interim non-Tier 2 vehicles, this
provision does not
[[Page 6854]]
apply to enrichment that occurs upon cold start, warm-up conditions and
rapid-throttle motion conditions (``tip-in'' or ``tip-out''
conditions).
* * * * *
(13) A/C-on specific calibrations. (i) For Tier 2 and interim non-
Tier 2 vehicles, A/C-on specific calibrations (e.g. air to fuel ratio,
spark timing, and exhaust gas recirculation), may be used which differ
from A/C-off calibrations for given engine operating conditions (e.g.,
engine speed, manifold pressure, coolant temperature, air charge
temperature, and any other parameters).
(ii) Such calibrations must not unnecessarily reduce the
NMHC+NOX emission control effectiveness during A/C-on
operation when the vehicle is operated under conditions which may
reasonably be expected to be encountered during normal operation and
use.
(iii) If reductions in control system NMHC+NOX
effectiveness do occur as a result of such calibrations, the
manufacturer must, in the Application for Certification, specify the
circumstances under which such reductions do occur, and the reason for
the use of such calibrations resulting in such reductions in control
system effectiveness.
(iv) A/C-on specific ``open-loop'' or ``commanded enrichment'' air-
fuel enrichment strategies (as defined below), which differ from A/C-
off ``open-loop'' or ``commanded enrichment'' air-fuel enrichment
strategies, may not be used, with the following exceptions: Cold-start
and warm-up conditions, or, subject to Administrator approval,
conditions requiring the protection of the vehicle, occupants, engine,
or emission control hardware. Other than these exceptions, such
strategies which are invoked based on manifold pressure, engine speed,
throttle position, or other engine parameters must use the same engine
parameter criteria for the invoking of this air-fuel enrichment
strategy and the same degree of enrichment regardless of whether the A/
C is on or off. ``Open-loop'' or ``commanded'' air-fuel enrichment
strategy is defined as enrichment of the air to fuel ratio beyond
stoichiometry for the purposes of increasing engine power output and
the protection of engine or emissions control hardware. However,
``closed-loop biasing,'' defined as small changes in the air-fuel ratio
for the purposes of optimizing vehicle emissions or driveability, must
not be considered an ``open-loop'' or ``commanded'' air-fuel enrichment
strategy. In addition, ``transient'' air-fuel enrichment strategy (or
``tip-in'' and ``tip-out'' enrichment), defined as the temporary use of
an air-fuel ratio rich of stoichiometry at the beginning or duration of
rapid throttle motion, must not be considered an ``open-loop'' or
``commanded'' air-fuel enrichment strategy.
(14) ``Lean-on-cruise'' calibration strategies. (i) For Tier 2 and
interim non-Tier 2 vehicles, the manufacturer must state in the
Application for Certification whether any ``lean-on-cruise'' strategies
are incorporated into the vehicle design. A ``lean-on-cruise'' air-fuel
calibration strategy is defined as the use of an air-fuel ratio
significantly greater than stoichiometry, during non-deceleration
conditions at speeds above 40 mph. ``Lean-on-cruise'' air-fuel
calibration strategies must not be employed during vehicle operation in
normal driving conditions, including A/C usage, unless at least one of
the following conditions is met:
(A) Such strategies are substantially employed during the FTP or
SFTP;
(B) Such strategies are demonstrated not to significantly reduce
vehicle NMHC+NOX emission control effectiveness over the
operating conditions in which they are employed; or
(C) Such strategies are demonstrated to be necessary to protect the
vehicle occupants, engine, or emission control hardware.
(ii) If the manufacturer proposes to use a ``lean-on-cruise''
calibration strategy, the manufacturer must specify the circumstances
under which such a calibration would be used, and the reason or reasons
for the proposed use of such a calibration.
* * * * *
(o) Unless otherwise approved by the Administrator, manufacturers
must measure NMOG emissions in accordance with the California Non-
Methane Organic Gas Test Procedures. These procedures are incorporated
by reference (see Sec. 86.1).
(p) For gasoline and diesel-fueled Tier 2 and interim non-Tier 2
vehicles, manufacturers may measure non-methane hydrocarbons (NMHC) in
lieu of NMOG. Manufacturers must multiply NMHC measurements from
gasoline vehicles by an adjustment factor of 1.04 before comparing with
the NMOG standard to determine compliance with that standard.
Manufacturers may use other factors to adjust NMHC results to more
properly represent NMOG results. Such factors must be based upon
comparative testing of NMOG and NMHC emissions and be approved in
advance by the Administrator.
23. Section 86.1811-01 is amended by adding a sentence to the end
of the introductory text to read as follows:
Sec. 86.1811-01 Emission standards for light-duty vehicles.
* * * This section does not apply to 2004 and later model year
vehicles, except as specifically referenced by Sec. 86.1811-04.
* * * * *
24. Section 86.1811-04 is added to read as follows:
Sec. 86.1811-04 Emission standards for light-duty vehicles, light-duty
trucks and medium-duty passenger vehicles.
(a) Applicability. (1) This section contains regulations
implementing emission standards for all LDVs, LDTs and MDPVs. This
section applies to 2004 and later model year LDVs, LDTs and MDPVs
fueled by gasoline, diesel, methanol, ethanol, natural gas and
liquefied petroleum gas fuels, except as noted. Additionally, this
section contains provisions applicable to hybrid electric vehicles
(HEVs) and zero emission vehicles (ZEVs). Multi-fueled vehicles must
comply with all requirements established for each consumed fuel.
(2) This section also applies to LDVs, LDTs and MDPVs of model
years prior to 2004, when manufacturers certify such vehicles to Tier 2
exhaust emission requirements to utilize alternate phase-in schedules,
as allowed under paragraph (k)(6) of this section, and/or to earn early
NOX credits for use in complying with the Tier 2 fleet
average NOX standard which takes effect in the 2004 model
year for LDV/LLDTs and 2008 for HLDT/MDPVs.
(3) Except where otherwise specified, this section applies instead
of Secs. 86.1811-01, 86.1812-01, 86.1813-01, 86.1814-01, 86.1814-02,
86.1815-01, and 86.1815-02.
(4) Except where otherwise specified, the provisions of this
section apply equally to LDVs and all categories of LDTs, and to all
MDPVs. Numerous provisions are applicable equally to HLDTs and MDPVs,
as reflected by the term HLDT/MDPV. Numerous provisions apply equally
to LDVs and LLDTs as reflected by the term LDV/LLDT.
(5) The exhaust emission standards and evaporative emission
standards of this section apply equally to certification and in-use
LDVs, LDTs and MDPVs, unless otherwise specified.
(b) Test weight. (1) Except as required in paragraphs (b)(2) and
(b)(4) of this section, or permitted under paragraph (b)(3) of this
section, emission testing of all LDVs, LDTs and MDPVs to
[[Page 6855]]
determine compliance with any exhaust or evaporative emission standard
set forth in this Part must be on a loaded vehicle weight (LVW) basis,
as that term is defined in this subpart.
(2) Interim non-Tier 2 HLDTs tested to Tier 1 SFTP standards, must
be tested on an adjusted loaded vehicle weight (ALVW) basis, as that
term is defined in this subpart, during the SC03 element of the SFTP.
(3) Except as required in paragraphs (b)(2) and (b)(4) of this
section, interim non-Tier 2 HLDT/MDPVs may be tested on an ALVW basis
or an LVW basis to demonstrate compliance with any exhaust or
evaporative emission standard set forth in this Part.
(4) MDPVs certified to bin 11 standards from Tables S04-1 and -2
must be tested on an ALVW basis to demonstrate compliance with any
exhaust emission standard set forth in this part.
(c) Tier 2 FTP exhaust emission standards. Exhaust emissions from
Tier 2 vehicles must not exceed the standards in Table S04-1 of this
section at full useful life when tested over the Federal Test Procedure
(FTP) described in subpart B of this part. Exhaust emissions from Tier
2 vehicles must not exceed the standards in Table S04-2 of this section
at intermediate useful life, if applicable, when tested over the FTP.
(1) For a given test group a manufacturer desires to certify to
operate only on one fuel, the manufacturer must select a set of
standards from the same bin (line or row) in Table S04-1 of this
section for non-methane organic gases (NMOG), carbon monoxide (CO),
oxides of nitrogen (NOX), formaldehyde (HCHO) and
particulate matter (PM). The manufacturer must certify the test group
to meet those standards, subject to all the applicable provisions of
this subpart. The manufacturer must also certify the test group to meet
the intermediate useful life standards (if any) in Table S04-2 of this
section having the same EPA bin reference number as the chosen full
useful life standards.
(2) For a given test group of flexible-fueled, bi-fuel or dual fuel
vehicles when operated on the alcohol or gaseous fuel they are designed
to use, manufacturers must select a bin of standards from Table S04-1
of this section and the corresponding bin in Table S04-2, if any. When
these flexible-fueled, bi-fuel or dual fuel vehicles are certified to
operate on gasoline or diesel fuel, the manufacturer may choose to
comply with the next numerically higher applicable NMOG standard, if
any, above the bin which contains the standards selected for
certification on the gaseous or alcohol fuel.
(3)(i) For a given test group of flexible-fueled, bi-fuel or dual
fuel vehicles certified to bin 10 in Table S04-1, when operated on the
alcohol or gaseous fuel they are designed to use, manufacturers may
choose to comply with a NMOG standard of 0.230 for LDV/LLDTs or 0.280
g/mi for HLDT/MDPVs at full useful life and corresponding intermediate
life standards of 0.160 g/mi and 0.195 g/mi, respectively.
(ii) For a given test group of flexible-fueled, bi-fuel or dual
fuel vehicles certified to bin 8 in Table S04-1, when operated on the
alcohol or gaseous fuel they are designed to use, manufacturers may
choose to comply with a NMOG standard of 0.156 g/mi for LDV/LLDTs and
0.180 for HLDT/MDPVs at full useful life and corresponding intermediate
life standards of 0.125 g/mi and 0.140 g/mi, respectively.
(4)(i) For bins where intermediate life standards are applicable, a
manufacturer may elect not to comply with such standards. Except as
permitted in paragraph (c)(4)(iv) of this section, the manufacturer
must certify such vehicles to a useful life of 15 years or 150,000
miles, whichever occurs first, for LDV/LLDTs and HLDT/MDPVs.
(ii) A manufacturer electing not to comply with intermediate life
standards, as permitted in paragraph (c)(4)(i) of this section, may not
generate additional NOX credits as described under
Sec. 86.1860-04 (g), except as permitted in paragraph (c)(4)(iii) of
this section.
(iii) For bins where intermediate life standards are not
applicable, or are specified to be optional by paragraph (c)(4)(iv) of
this section, a manufacturer may generate additional NOX
credits subject to the provisions in Sec. 86.1860-04 (g).
(iv) For diesel vehicles certified to bin 10, intermediate life
standards are optional regardless of whether the manufacturer certifies
the test group to a full useful life of 120,000 miles or 150,000 miles.
(5) In a given model year, an individual vehicle may not be
included in both the Tier 2 program and an interim program.
(6) Tables S04-1 and S04-2 follow:
Table S04-1.--Tier 2 and Interim Non-Tier 2 Full Useful Life Exhaust Mass Emission Standards
[Grams per mile]
----------------------------------------------------------------------------------------------------------------
Bin No. NOX NMOG CO HCHO PM Notes
----------------------------------------------------------------------------------------------------------------
11.............................. 0.9 0.280 7.3 0.032 0.12 a, c
10.............................. 0.6 0.156/0.230 4.2/6.4 0.018/0.027 0.08 a, b, d
9............................... 0.3 0.090/0.180 4.2 0.018 0.06 a, b, e
8............................... 0.20 0.125/0.156 4.2 0.018 0.02 b, f
7............................... 0.15 0.090 4.2 0.018 0.02
6............................... 0.10 0.090 4.2 0.018 0.01
5............................... 0.07 0.090 4.2 0.018 0.01
4............................... 0.04 0.070 2.1 0.011 0.01
3............................... 0.03 0.055 2.1 0.011 0.01
2............................... 0.02 0.010 2.1 0.004 0.01
1............................... 0.00 0.000 0.0 0.000 0.00
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ This bin and its corresponding intermediate life bin are deleted at end of 2006 model year (end of 2008
model year for HLDTs and MDPVs).
\b\ Higher NMOG, CO and HCHO values apply for HLDTs and MDPVs only.
\c\ This bin is only for MDPVs.
\d\ Optional NMOG standard of 0.280 g/mi applies for qualifying LDT4s and qualifying MDPVs only.
\e\ Optional NMOG standard of 0.130 g/mi applies for qualifying LDT2s only.
\f\ Higher NMOG standard deleted at end of 2008 model year.
[[Page 6856]]
Table S04-2.--Tier 2 and Interim Non-Tier 2 Intermediate Useful Life (50,000 Mile) Exhaust Mass Emission
Standards
[grams per mile]
----------------------------------------------------------------------------------------------------------------
Bin No. NOX NMOG CO HCHO PM Notes
----------------------------------------------------------------------------------------------------------------
11.............................. 0.6 0.195 5.0 0.022 a c f h
10.............................. 0.4 0.125/0.160 3.4/4.4 0.015/0.018 ........... a b d f g
h
9............................... 0.2 0.075/0.140 3.4 0.015 ........... a b c f h
8............................... 0.14 0.100/0.125 3.4 0.015 ........... b f h i
7............................... 0.11 0.075 3.4 0.015 ........... f h
6............................... 0.08 0.075 3.4 0.015 ........... f h
5............................... 0.05 0.075 3.4 0.015 ........... f h
----------------------------------------------------------------------------------------------------------------
Notes:
a This bin deleted at end of 2006 model year (end of 2008 model year for HLDTs and MDPVs ).
b Higher NMOG, CO and HCHO values apply for HLDTs and MDPVs only.
c This bin is only for MDPVs.
d Optional NMOG standard of 0.195 g/mi applies for qualifying LDT4s and qualifying MDPVs only.
e Optional NMOG standard of 0.100 g/mi applies for qualifying LDT2s only.
f The full useful life PM standards from Table S04-1 also apply at intermediate useful life.
g Intermediate life standards of this bin are optional for diesels.
h Intermediate life standards are optional for vehicles certified to a useful life of 150,000 miles.
i Higher NMOG standard deleted at end of 2008 model year.
(d) Fleet average NOX Standards. (1)(i) For a given
individual model year's sales of Tier 2 vehicles, including model years
during the phase-in years of the Tier 2 standards, manufacturers must
comply with a fleet average oxides of nitrogen (NOX)
standard of 0.07 grams per mile. The manufacturer must calculate its
fleet average NOX emission level(s) as described in
Sec. 86.1860-04. Up through and including model year 2008,
manufacturers must calculate separate fleet average NOX
emission levels for LDV/LLDTs and for HLDT/MDPVs as described in
Sec. 86.1860-04.
(ii) During a phase-in year, the manufacturer must comply with the
0.07 g/mi fleet average standard for the required phase-in percentage
for that year as specified in paragraph (k)(1) of this section, or for
the alternate phase-in percentage as permitted under paragraph (k)(6)
of this section.
(2) For Early Tier 2 LDV/LLDTs. For model years prior to 2004,
where the manufacturer desires to bank early Tier 2 NOX
credits as permitted under Sec. 86.1861(c), the manufacturer must
comply with a fleet average standard of 0.07 grams per mile for its
Tier 2 LDV/LLDTs. Manufacturers must determine compliance with the
NOX fleet average standard according to regulations in
Sec. 86.1860-04 of this subpart.
(3) For Early Tier 2 HLDT/MDPVs. For model years prior to 2008,
where the manufacturer desires to bank early Tier 2 NOX
credits as permitted under Sec. 86.1861(c), the manufacturer must
comply with a fleet average standard of 0.07 grams per mile for its
Tier 2 HLDT/MDPVs. Manufacturers must determine compliance with the
NOX fleet average standard according to regulations in
Sec. 86.1860-04.
(e) Evaporative emission standards. Consistent with the phase-in
requirements in paragraph (k) of this section, evaporative emissions
from gasoline-fueled, natural gas-fueled, liquefied petroleum gas-
fueled, ethanol-fueled and methanol-fueled vehicles must not exceed the
standards in this paragraph. The standards apply equally to
certification and in-use vehicles, except that the spitback standard
applies only to newly assembled vehicles.
(1) Diurnal-plus-hot soak evaporative hydrocarbon standards.
Hydrocarbons for LDV/LLDTs, HLDTs and MDPVs must not exceed the diurnal
plus hot soak standards shown in Table S04-3 for the full three diurnal
test sequence and for the supplemental two diurnal test sequence. Table
S04-3 follows:
Table S04-3.--Light-Duty Diurnal Plus Hot Soak Evaporative Emission
Standards
[grams per test]
------------------------------------------------------------------------
Supplemental
3 day 2 day
Vehicle category diurnal+hot diurnal+hot
soak soak
------------------------------------------------------------------------
LDV/LLDTs.................................... 0.95 1.2
HLDTs........................................ 1.2 1.5
MDPVs........................................ 1.4 1.75
------------------------------------------------------------------------
(2) Running loss standard. Hydrocarbons for LDVs, LDTs and MDPVs
measured on the running loss test must not exceed 0.05 grams per mile.
(3) Refueling emission standards. Refueling emissions must not
exceed the following standards:
(i) For gasoline-fueled, diesel-fueled and methanol-fueled LDVs,
LDTs and MDPVs: 0.20 grams hydrocarbon per gallon (0.053 grams per
liter) of fuel dispensed.
(ii) For liquefied petroleum gas-fueled LDV, LDTs and MDPVs: 0.15
grams hydrocarbon per gallon (0.04 grams per liter) of fuel dispensed.
(iii) Refueling standards for HLDTs are subject to the phase-in
requirements found in Sec. 86.1810-01(k). MDPVs must also comply with
the phase-in requirement in Sec. 86.1810-01(k) and must be grouped with
HLDTs to determine phase-in compliance.
(4) Spitback standards. For gasoline and methanol fueled LDV/Ts and
MDPVs, hydrocarbons measured on the fuel dispensing spitback test must
not exceed 1.0 grams hydrocarbon (carbon if methanol-fueled) per test.
(5) Evaporative emission requirements for interim vehicles. (i)
LDV/Ts not certified to meet the evaporative emission standards in this
paragraph (e) as permitted under the phase-in schedule of paragraph (k)
of this section, must meet applicable evaporative emission standards in
Secs. 86.1811-01, 86.1812-01, 86.1813-01, 86.1814-02 or 86.1815-02
except that all LDV/Ts must meet the refueling emission standards in
paragraph (e)(3) of this section.
(ii) MDPVs not certified to meet the evaporative emission standards
in this paragraph (e) as permitted under the phase-in schedule of
paragraph (k) of this section, must meet applicable evaporative
emission standards for heavy-duty vehicles in Sec. 86.099-10.
(6) In cases where applicable California emission standards are as
stringent or more stringent than applicable standards specified under
this paragraph (e), the Administrator may accept data indicating
compliance with California standards to
[[Page 6857]]
demonstrate compliance for certification purposes with the standards
required under this paragraph (e). The Administrator may require
manufacturers to provide comparative test data to show that a vehicle
meeting California standards under California test conditions and
procedures will also meet the standards under this paragraph (e) when
tested under test conditions and procedures in this Part 86.
(f) Supplemental exhaust emission standards for LDV/Ts. (1)
Supplemental exhaust emission standards are applicable to gasoline and
diesel-fueled LDV/Ts but are not applicable to MDPVs, alternative
fueled LDV/Ts, or flexible fueled LDV/Ts when operated on a fuel other
than gasoline or diesel. Except as otherwise specified in this
paragraph (f), manufacturers must comply with 4000 mile and full useful
life SFTP standards as determined in this paragraph (f). The 4000 mile
SFTP standards must be taken from Table S04-4 and the full life SFTP
standards must be calculated using the formula in paragraph (f)(2) of
this section. Table S04-4 follows:
Table S04-4.--4000 Mile SFTP Standards for Tier 2 and Interim Non-Tier 2 LDVs and LDTs
----------------------------------------------------------------------------------------------------------------
US06 SC03
---------------------------------------------------
NMHC+NOX (g/ NMHC+NOX (g/
mi) CO (g/mi) mi) CO (g/mi)
----------------------------------------------------------------------------------------------------------------
LDV/LDT1.................................................... 0.14 8.0 0.20 2.7
LDT2........................................................ 0.25 10.5 0.27 3.5
LDT3........................................................ 0.4 10.5 0.31 3.5
LDT4........................................................ 0.6 11.8 0.44 4.0
----------------------------------------------------------------------------------------------------------------
(2)(i) Manufacturers must calculate their applicable full useful
life SFTP standards for NMHC+NOX, PM and for CO, if using
the weighted CO standard. If not using the weighted CO standard,
manufacturers may use the full useful life standalone Tier 1 standards
for US06 and SC03. To calculate the applicable full useful life
weighted NMHC+NOX, PM and CO standards, manufacturers must
use the following formula and values from Table S04-1 in paragraph (c)
of this section and values from Tables S04-5 and S04-6 which follow:
SFTP Standard = SFTP Standard1 - [0.35 x (FTP
Standard1--Current FTP Standard)]
Where:
SFTP Standard = Applicable full life weighted SFTP standard for
NMHC+NOX, PM or CO. This standard must be rounded to two
decimal places.
SFTP Standard1 = Applicable full life Tier 1 SFTP standard
for NMHC+NOX or CO from Table S04-5. For PM only, use FTP
Standard1 for SFTP Standard1.
FTP Standard1 = Applicable full life Tier 1 FTP standard
from Table S04-6 in this paragraph (f). For the Tier 1
NMHC+NOX standard, add the applicable NMHC and NOx
standards.
Current FTP Standard = Applicable full life FTP standard from Table
S04-1 in paragraph (c) of this section. For the current
NMHC+NOX standard, add the NMOG and NOX standards
from the applicable bin.
Table S04-5.--Tier 1 Full Useful Life SFTP Standards
----------------------------------------------------------------------------------------------------------------
NMHC + NOX CO (g/mi)b, c
Vehicle category (weighted g/ -----------------------------------------------
mi)a, c US06 SC03 Weighted
----------------------------------------------------------------------------------------------------------------
LDV/LDT1........................................ 0.91 (0.65) 11.1 (9.0) 3.7 (3.0) 4.2 (3.4)
LDT2............................................ 1.37 (1.02) 14.6 (11.6) 4.9 (3.9) 5.5 (4.4)
LDT3............................................ 1.44 16.9 5.6 6.4
LDT4............................................ 2.09 19.3 6.4 7.3
----------------------------------------------------------------------------------------------------------------
a Weighting for NMHC+NOX and optional weighting for CO is 0.35x(FTP) +0.28x(US06)+0.37x(SC03).
b CO standards are stand alone for US06 and SC03 with option for a weighted standard.
c Intermediate life standards are shown in parentheses for diesel LDV/LLDTs opting to calculate intermediate
life SFTP standards in lieu of 4,000 mile SFTP standards as permitted under paragraph (f)(6) of this section.
Table S04-6.--Tier 1 Full Useful Life FTP Standards (g/mi)
----------------------------------------------------------------------------------------------------------------
Vehicle category NMHC a NOXa CO a PM
----------------------------------------------------------------------------------------------------------------
LDV/LDT1........................................ 0.31 (0.25) 0.6 (0.4) 4.2 (3.4) 0.10
LDT2............................................ 0.40 (0.32) 0.97(0.7) 5.5 (4.4) 0.10
LDT3............................................ 0.46 0.98 6.4 0.10
LDT4............................................ 0.56 1.53 7.3 0.12
----------------------------------------------------------------------------------------------------------------
a Intermediate life standards are shown in parentheses for diesel LDV/LLDTs opting to calculate intermediate
life SFTP standards in lieu of 4,000 mile SFTP standards as permitted under paragraph (f)(6)of this section.
(ii)(A) Manufacturers must determine compliance with
NMHC+NOX, CO and PM weighted SFTP standards calculated in
paragraph (f)(2)(i) of this section by weighting their emission results
as follows:
0.35 x (FTP)+0.28 x (US06)+0.37 x (SC03).
(B) The results of the calculation in paragraph (f)(2)(ii)(A) of
this section must be rounded to one more decimal place than the
applicable standard calculated in paragraph (f)(2)(i) of this section
and then compared with that standard.
[[Page 6858]]
(3) For interim non-Tier 2 gasoline, diesel and flexible-fueled
LDT3s and LDT4s, manufacturers may, alternatively, meet the gasoline-
fueled vehicle SFTP standards found in Secs. 86.1814-02 and 86.1815-02,
respectively.
(4) Interim non-Tier 2 gasoline, diesel and flexible-fueled LDV/
LLDTs certified to bin 10 FTP exhaust emission standards from Table
S04-1 in paragraph (c) of this section may meet the gasoline Tier 1
SFTP requirements found at Sec. 86.1811-01(b).
(5) SFTP standards for PM are not applicable to interim non-Tier 2
LDV/Ts. For Tier 2 LDV/Ts, the 4000 mile PM standard is equal to the
full life PM standard calculated under paragraph (f)(2) of this
section. The requirements of this paragraph (f)(5) also apply to Tier 2
flexible fuel vehicles when operated on gasoline or diesel fuel. (See
regulations in Sec. 86.1829-01(b)(1)(iii)(B) regarding data submittal
for PM results for gasoline vehicles.)
(6)(i) In lieu of complying with 4000 mile SFTP standards described
in this paragraph, diesel LDV/LLDTs through model year 2006, may comply
instead with intermediate life SFTP standards derived from Tier 1
intermediate life SFTP standards for gasoline vehicles.
(ii) To calculate intermediate life SFTP standards, substitute
intermediate life Tier 1 FTP and SFTP values from Tables S04-5 and S04-
6 in this paragraph (f), as appropriate, for the full life values in
the equation in paragraph (f)(2)(i) of this section. Substitute the
applicable intermediate life standards for the full life current FTP
standard. If there is no applicable intermediate life standard use the
full life current FTP standard.
(iii) A manufacturer of diesel LDV/LLDTs must declare which option
it will use (4,000 mile or intermediate life standards) in Part I of
its certification application.
(g) Cold temperature exhaust emission standards. These standards
are applicable only to gasoline fueled LDV/Ts and MDPVs. For cold
temperature exhaust emission standards, a useful life of 50,000 miles
applies.
(1) For LDVs and LDT1s, the standard is 10.0 grams per mile CO.
(2) For LDT2s, LDT3s and LDT4s, and MDPVs the standard is 12.5
grams per mile CO.
(3) These standards do not apply to interim non-Tier 2 MDPVs.
(h) Certification short test exhaust emission standards.
Certification short test emissions from all gasoline-fueled otto cycle
LDV/Ts and MDPVs must not exceed the following standards:
(1) Hydrocarbons: 100 ppm as hexane, for certification and SEA
testing; 220 ppm as hexane, for in-use testing.
(2) Carbon monoxide: 0.5% for certification and SEA testing; 1.2%
for in-use testing.
(3) These standards do not apply to interim non-Tier 2 MDPVs.
(i) Idle CO standards and references to such standards in this
subpart, do not apply to any 2004 or later model year LDV, LDT, or MDPV
or to any LDV, LDT or MDPV certified to Tier 2 standards before model
year 2004 for purposes of generating early NOX credits or
meeting the requirements of an alternative phase-in schedule that
begins prior to the 2004 model year.
(j) Highway NOX exhaust emission standard. The maximum
projected NOX emissions measured on the federal Highway Fuel
Economy Test in 40 CFR part 600, subpart B, must not be greater than
1.33 times the applicable FTP NOX standard to which the
manufacturer certifies the test group. Both the projected emissions and
the product of the NOX standard and 1.33 must be rounded to
the nearest 0.01 g/mi before being compared. This standard is not
applicable to MDPVs.
(k) Phase-in of the Tier 2 FTP exhaust and evaporative
requirements; small volume manufacturer flexibilities. (1)
Manufacturers must comply with the phase-in requirements in Tables S04-
7 and S04-8 of this paragraph (k) for the Tier 2 FTP exhaust emission
requirements specified in paragraph (c) of this section. Separate
phase-in schedules are provided for LDV/LLDTs and for HLDT/MDPVs. These
requirements specify the minimum percentage of the manufacturer's LDV/
LLDT and HLDT/MDPV U.S. sales, by model year, that must meet the Tier 2
requirements, including the applicable fleet average standard, for
their full useful lives. As the terms LDV/LLDT and HLDT/MDVP imply,
LDVs and LLDTs must be grouped together to determine compliance with
these phase-in requirements and HLDTs and MDPVs must also be grouped
together to determine compliance with these phase-in requirements.
Tables S04-7 and S04-8 follow:
Table S04-7.--Phase-in Percentages for LDV/LLDT Tier 2 Requirements
------------------------------------------------------------------------
Percentage
of LDV/LLDTs
Model year that must
meet tier 2
requirements
------------------------------------------------------------------------
2004...................................................... 25
2005...................................................... 50
2006...................................................... 75
2007 and subsequent....................................... 100
------------------------------------------------------------------------
Table S04-8.--Phase-in Percentages for HLDT/MDPV Tier 2 Requirements
------------------------------------------------------------------------
Percentage of
HLDT/MDPVs
ModeL year that must meet
tier 2
requirements
------------------------------------------------------------------------
2008.................................................... 50
2009 and subsequent..................................... 100
------------------------------------------------------------------------
(2) Manufacturers must also comply with the phase-in requirements
in Tables S04-7 and S04-8 of this paragraph (k) for the evaporative
emission requirements contained in paragraph (e) of this section.
(3) Manufacturers may opt to use different LDV/LLDTs and HLDT/MDPVs
to meet the phase-in requirements for evaporative emissions and FTP
exhaust emissions, provided that the manufacturer meets the minimum
applicable phase-in requirements in Table S04-7 and Table S04-8 of this
paragraph (k) for both FTP exhaust and evaporative emissions. A LDV,
LDT or MDPV counted toward compliance with any phase-in requirement for
FTP exhaust or evaporative standards, must comply with all applicable
Tier 2 exhaust requirements or all applicable evaporative requirements,
respectively, described in this section.
(4) LDVs, LDTs and MDPVs not certified to meet the Tier 2 FTP
exhaust requirements during model years 2004-2008, as allowed under
this subpart, are subject to the provisions of paragraph (l) of this
section.
(5) Provisions for small volume manufacturers (i) Small volume
manufacturers, as defined in this part, are exempt from the Tier 2 LDV/
LLDT exhaust and evaporative emissions phase-in requirements for model
years 2004, 2005 and 2006 in Table S04-7 of this paragraph (k), but
must comply with the 100% requirement for the 2007 and later model
years for exhaust and evaporative emissions. If not complying with Tier
2 requirements during 2004, 2005 and 2006, small volume
[[Page 6859]]
manufacturers must comply with the requirements for interim non-Tier 2
LDV/LLDTs.
(ii) Small volume manufacturers, as defined in this part, are
exempt from the HLDT/MDPV exhaust and evaporative phase-in requirement
for model year 2008 in Table S04-8 of this section but must comply with
the 100% requirement for the 2009 model year. Small volume
manufacturers are also exempt from the HLDT/MDPV interim fleet average
NOX standard (0.20 g/mi) and its phase-in for the 2004, 2005
and 2006 model years.
(iii) Small volume manufacturers must comply with the FTP exhaust
emission standards from Tables S04-1 and 2 of paragraph (c) of this
section for all HLDT/MDPVs of model years 2004 and later, except that
2004 model year HLDTs may comply with Tier 1 exhaust emission standards
subject to the provisions of paragraph (l)(2)(vii) of this section, and
2004 model year MDPVs may comply with heavy-duty vehicle standards
subject to the provisions of paragraph (l)(2)(viii) of this section.
Small volume manufacturers must also comply with the 0.20 g/mi fleet
average NOX standard for 2007 and 2008 model year HLDT/
MDPVs; the Tier 2 0.07 g/mi fleet average NOX standard for
the 2009 and later model year HLDT/MDPVs; and the evaporative emission
standards in Table S04-3 of this section for the 2009 and later model
years.
(6)(i) A manufacturer may elect an alternate phase-in schedule that
results in 100% phase-in for LDV/LLDTs by 2007. Alternate phase-in
schedules must produce a sum of at least 250% when the percentages of
LDV/LLDTs certified to Tier 2 requirements for each model year from
2001 through 2007 are summed. As an example, a 10/25/50/65/100 percent
phase-in that began in 2003 would have a sum of 250 percent and would
be acceptable. However, a 10/25/40/70/100 percent phase-in that began
the same year would have a sum of 245 percent and would not be
acceptable.
(ii) A manufacturer electing this option for LDV/LLDTs may
calculate its compliance with the evaporative standards in paragraph
(e)(1) of this section separately from its compliance with Tier 2
exhaust standards, provided that the phase-in schedules for each
separately produce a sum of at least 250 percent when calculated as
described in paragraph (k)(6)(i) of this section. A vehicle counted
towards compliance with any phase-in requirement for the Tier 2 exhaust
standards or the evaporative standards in paragraph (e)(1) of this
section, must comply with all applicable Tier 2 exhaust standards or
all evaporative standards, as applicable, described in this section.
(iii) In addition to the requirements of paragraphs (k)(6)(i) and
(ii) of this section, except as permitted in paragraph (k)(6)(vii) of
this section, a manufacturer of LDV/LLDTs electing to use an alternate
phase-in schedule for compliance with the Tier 2 exhaust standards or
the evaporative standards in paragraph (e)(1) of this section must
ensure that the sum of the percentages of vehicles from model years
2001 through 2004, meeting such exhaust or evaporative standards, as
applicable, is at least 25%.
(iv) A manufacturer may elect an alternate phase-in schedule that
results in 100% phase-in for HLDT/MDPVs by 2009. The requirements of
paragraphs (k)(6)(i) through (k)(6)(ii) of this section apply, except
that for HLDT/MDPVs, the calculation described in paragraphs (k)(6)(i)
and (k)(6)(ii) of this section may cover model years 2001 through 2009
and must produce a sum of at least 150%.
(v) A manufacturer electing to use any alternate phase-in schedule
permitted under this section must provide in its Application for
Certification for the first year in which it intends to use such a
schedule, and in each succeeding year during the phase-in, the intended
phase-in percentages for that model year and the remaining phase-in
years along with the intended final sum of those percentages as
described in this paragraph (k)(6). This information may be included
with the information required under Sec. 86.1844-01(d)(13). In its year
end annual reports, as required under Sec. 86.1844-01(e)(4) the
manufacturer must include sufficient information so that the
Administrator can verify compliance with the alternative phase-in
schedule established under paragraph (k)(6) of this section.
(vi) Under an alternate phase-in schedule, the projected phase-in
percentage is not binding for a given model year, provided the sums of
the actual phase-in percentages that occur meet the appropriate total
sums as required in paragraph (k)(6) of this section, and provided that
100% actual compliance is reached for the appropriate model year,
either 2007 or 2009, as described in paragraph (k)(6) of this section.
(vii) A manufacturer unable to meet the 25% requirement in
paragraph (k)(6)(iii) of this section, must:
(A) Ensure that the sum of the percentages of vehicles for model
years 2001 through 2004, meeting such exhaust or evaporative standards,
as applicable, is at least 20%.
(B) Subtract that sum of percentages for model years 2001 through
2004 from 25%, and multiply the unrounded result by 2.
(C) Round the product from paragraph (k)(6)(vii)(B) of this section
to the nearest 0.1% and add that to 50%. That sum becomes the required
phase-in percentage for the 2005 model year.
(D) Comply with the phase-in percentage for the 2005 model year
determined in paragraph (k)(6)(vii)(C) of this section.
(E) Comply with a minimum phase-in percentage for the 2006 model
year determined by the following equation:
minimum phase-in percentage for 2006 = [75% - (2005api -
2005rpi)]
Where:
2005rpi = the required phase-in for the 2005 model year as
determined in paragraph (k)(6)(vii)(C) of this section; and
2005api = the manufacturer's actual phase-in quantity for
the 2005 model year.
(7)(i) Sales percentages for the purpose of determining compliance
with the phase-in of the Tier 2 requirements and the phase-in of the
evaporative standards in paragraph (e)(1) of this section, must be
based upon projected U.S. sales of LDV/LLDTs and HLDT/MDPVs of the
applicable model year by the manufacturer to the point of first sale.
Such sales percentages must be rounded to the nearest one tenth of a
percent, and must not include vehicles and trucks projected to be sold
to points of first sale in California or a state that has adopted
California requirements for that model year as permitted under section
177 of the Act.
(ii) Alternatively, the manufacturer may petition the Administrator
to allow actual volume produced for U.S. sales to be used in lieu of
projected U.S. sales for purposes of determining compliance with the
phase-in percentage requirements under this section. The manufacturer
must submit its petition within 30 days of the end of the model year to
the Vehicle Programs and Compliance Division. For EPA to approve the
use of actual volume produced for U.S. sales, the manufacturer must
establish to the satisfaction of the Administrator, that actual
production volume is functionally equivalent to actual sales volume of
LDV/LLDTs and HLDT/MDPVs sold in states other than California and
states that have adopted California standards.
(iii) Manufacturers must submit information showing compliance with
all phase-in requirements of this section
[[Page 6860]]
with its Part I application as required by Sec. 86.1844(d)(13).
(l) FTP exhaust standards for interim non-Tier 2 vehicles.--(1) FTP
exhaust emission standards for interim non-Tier 2 LDV/LLDTs. (i) LDV/
LLDTs that are not used to meet the Tier 2 phase-in requirements
including the Tier 2 fleet average NOX requirement during
the Tier 2 phase-in period (model years 2004-2006) must comply with the
full useful life FTP exhaust emission standards listed in Table S04-1
of paragraph (c) of this section and the corresponding intermediate
useful life standards, if any, in Table S04-2 of paragraph (c) of this
section. Manufacturers may choose the bin of full useful life standards
to which they certify a test group of vehicles, subject to the
requirements in paragraph (l)(3)(i) of this section. In a given model
year, an individual vehicle may not be used to comply with both the
Tier 2 fleet average NOX standard and the applicable interim
fleet average NOX standard although vehicles from the same
test group may be separated and the vehicles counted toward compliance
with either program.
(ii) The provisions of paragraphs (c) (1), (2) and (3) of this
section apply to flexible-fueled, dual fuel and multi-fuel interim non-
Tier 2 LDV/LLDTs.
(iii) Only manufacturers that comply with the applicable FTP
standards in Tables S04-1 and 2 of paragraph (c) of this section for
all of their 2004 model year HLDTs and declare their intention to
comply with the 2004 model year 25% phase-in requirement to the 0.20 g/
mi interim fleet average NOX standard for HLDTs (or HLDT/
MDPVs) described in this paragraph (l) may use the optional higher NMOG
values for interim LDT2s certified to bin 9 standards that are shown in
Tables S04-1 and 2. Manufacturers must declare their intention to
comply with the full 2004 model year 25% phase-in requirement in Part I
of their HLDT or their HLDT/MDPV, as applicable, certification
applications.
(iv) The provisions of paragraph (c)(4) of this section apply to
interim non-Tier 2 vehicles.
(2) FTP exhaust emission standards for interim non-Tier 2 HLDTs and
interim non-Tier 2 MDPVs. (i) Except as permitted under paragraphs
(l)(2) (vii) and (viii) of this section, HLDTs and MDPVs of model years
2004-2008 that are not used to meet the Tier 2 FTP phase-in
requirements including the Tier 2 fleet average NOX
requirement must comply with the full useful life FTP exhaust emission
standards listed in Table S04-1 of paragraph (c) of this section and,
the corresponding intermediate useful life standards, if any, in Table
S04-2 of paragraph (c) of this section. Manufacturers may choose the
bin of full useful life standards to which they certify a test group of
vehicles, subject to the requirements in paragraph (l)(3)(ii) of this
section.
(ii) Except as permitted under paragraphs (l)(2) (vii) and (viii)
of this section, HLDTs and MDPVs of model years 2004-2008 that are not
used to meet the Tier 2 FTP phase-in requirements including the Tier 2
fleet average NOX requirement must comply with the fleet
average NOX standard described in paragraph (l)(3)(ii) of
this section subject to the phase-in schedule in paragraph (l)(2)(iv)
of this section, i.e. 25 percent of the HLDT and MDPVs must meet the
fleet average standard of 0.20 g/mi in 2004, 50 percent in 2005, and so
on.
(iii) Manufacturers may choose the bin of full useful life
standards and corresponding intermediate life standards to which they
certify test groups of HLDTs and MDPVs, subject to the requirements in
paragraph (l)(3)(ii) of this section. Manufacturers may include HLDT/
MDPVs in the interim program that are not used to meet the Tier 2 fleet
average NOX standard or the phase-in percentage requirements
in the Tier 2 program or to generate Tier 2 NOX credits. In
a given model year, an individual vehicle may not be used to comply
with both the Tier 2 fleet average NOX standard and the
applicable interim fleet average NOX standard although
vehicles from the same test group may be separated and the vehicles
counted toward compliance with either program.
(iv) Phase-in schedule for interim non-Tier 2 HLDT/MDPVs. Table
S04-9 of this paragraph (l) specifies the minimum percentage of the
manufacturer's interim non-Tier 2 HLDT/MDPV U.S. sales, by model year,
that must comply with the fleet average NOX standard
described in paragraph (l)(3)(ii) of this section. Table S04-9 follows:
Table S04-9.--Phase-in Percentages for Compliance With Interim Non-Tier
2 Fleet Average NOX Standard for HLDT/MDPVs
------------------------------------------------------------------------
Percentage of
non-tier 2
HLDT/MDPVs
that must meet
Model year interim non-
tier 2 fleet
average NOX
standard
------------------------------------------------------------------------
2004.................................................... 25
2005.................................................... 50
2006.................................................... 75
2007 and 2008........................................... 100
------------------------------------------------------------------------
(v)(A) A manufacturer may elect an alternate phase-in schedule,
beginning as early as the 2001 model year, that results in 100%
compliance by 2007 with the fleet average NOX standard for
interim non-Tier 2 HLDT/MDPVs described in paragraph (l)(3)(ii) of this
section. The requirements of paragraph (k)(6) of this section apply to
the selection of an alternate phase-in schedule.
(B) If a manufacturer elects not to bring all of its HLDT/MDPVs
into compliance with the interim requirements in 2004 as permitted
under paragraphs (l)(2)(vii) and
(viii) of this section, it may still use an alternate phase-in
schedule to attain 100% compliance with the interim fleet average
NOX standard for HLDT/MDPVs, but the sum of phase-in
percentages it must meet will be 225% rather than 250%. If the
manufacturer commences its 2004 model year on or after December 21,
2003, for any HLDT/MDPVs, the manufacturer must increase the 225% by
the fraction of its 2004 model year HLDT/MDPVs whose model year
commenced on or after that date and which were brought into compliance
with the 0.20 g/mi corporate average NOX standard as
required under paragraph (l)(2)(ix) of this section. The manufacturer
must ensure that the sum of the percentages of vehicles up through
model year 2005 complying with the interim fleet average NOX
standard is at least 50%.
(vi) The provisions of paragraphs (c) (1), (2) and (3) of this
section apply to flexible-fueled, dual fuel and multi-fuel interim non-
Tier 2 HLDT/MDPVs.
(vii) For 2004 model year HLDT test groups whose model year
commences before December 21, 2003, the manufacturer may exempt such
HLDTs from compliance with any requirements applicable to interim non-
Tier 2 HLDTs, and such HLDTs must be produced in accordance with
standards and requirements in Secs. 86.1814-02 and Secs. 86.1815-02.
Such HLDTs must also meet the refueling emission standards
[[Page 6861]]
contained in paragraph (e)(3) of this section.
(viii) For 2004 model year heavy-duty vehicles whose model year
commences before December 21, 2003, the manufacturer may exempt such
vehicles from compliance with any requirements applicable to interim
non-Tier 2 MDPVs. Exempted vehicles will not be considered MDPVs and
must be produced in accordance with standards and requirements in
Sec. 86.099-10. Exempted vehicles are also exempted from refueling
emission standards.
(ix) For 2004 model year HLDT and MDPV test groups whose model year
commences on or after December 21, 2003, the manufacturer must comply
with all interim non-Tier 2 requirements in this section.
(A) All such vehicles, but not more than 25% of the manufacturer's
total sales of 2004 model year HLDT/MDPVs must meet the interim non-
Tier 2 fleet average NOX standard as described in paragraph
(l)(3)(ii) of this section.
(B) All such vehicles but not more than 40% of the manufacturer's
2004 model year HLDT/MDPVs must comply with the refueling requirements
in paragraph (e)(3) of this section.
(x) Only those manufacturers that comply with the interim non-Tier
2 FTP standards for all of their 2004 model year HLDTs and declare
their intention to comply with the 2004 model year 25% phase-in
requirement to the fleet average interim NOX standard for
HLDTs or HLDT/MDPVs of 0.20 g/mi described in paragraph (l) of this
section may use the optional higher NMOG values for interim LDT4s
certified to bin 10 standards that are shown in Tables S04-1 and 2 of
paragraph (c) of this section. Manufacturers must declare their
intention to comply with the 2004 model year 25% phase-in requirement
in Part I of their HLDT certification applications.
(xi) Only those manufacturers that comply with the interim non-Tier
2 FTP standards for all of their 2004 model year MDPVs, and declare
their intention to comply with the 2004 model year 25% phase-in
requirement to the fleet average interim NOX standard for
MDPVs or HLDT/MDPVs of 0.20 g/mi described in paragraph (l) of this
section may:
(A) Use the exhaust emission standards of bin 11 in Tables S04-1
and S04-2 of paragraph (c) in this section for MDPVs through model year
2008;
(B) For diesel-fueled vehicles, certify the engines in such
vehicles, through model year 2007, to provisions in this part 86
applicable to diesel-fueled heavy-duty engines of the appropriate model
year. Such diesel fueled vehicles must not be included in any count or
determination of compliance with the phase-in requirements applicable
to interim non-Tier 2 MDPVs; and
(C) Use the optional higher NMOG values for interim LDT4s certified
to bin 10 standards that are shown in Tables S04-1 and 2.
(xii) Manufacturers electing to comply with the provisions of
paragraph (l)(2)(xi) of this section must declare their intention to
comply with the 2004 model year 25% phase-in requirement to the fleet
average interim NOX standard for MDPVs or HLDT/MDPVs of 0.20
g/mi in Part I of their MDPV certification applications.
(xiii) Where diesel-fueled heavy-duty engines are used as permitted
under paragraph (l)(2)(xi)(B) of this section, such engines must be
treated as a separate averaging set--MDPV HDDEs-- under the averaging,
banking and trading provisions applicable to heavy-duty diesel engines.
Only NOX credits generated by engine-certified diesel
engines that are used in other MDPVs can be applied to these engines.
Manufacturers wishing to average, bank or trade credits for MDPV HDDEs
must comply with the requirements in this paragraph and with all
requirements applicable to heavy-duty engine averaging, banking and
trading in this part.
(3) Fleet average NOX standards for interim non-Tier 2
LDV/Ts and MDPVs. (i) Manufacturers must comply with a fleet average
full useful life NOX standard for their interim non-Tier 2
LDV/LLDTs, on an annual basis, of 0.30 grams per mile.
(ii) Manufacturers must comply with a fleet average full useful
life NOX standard for their interim non-Tier 2 HLDT/MDPVs,
excluding those HLDTs and MDPVs not yet covered by the phase-in
requirement described in paragraph (l)(2)(ii) of this section, on an
annual basis, of 0.20 grams per mile.
(iii) Manufacturers must determine their compliance with these
interim fleet average NOX standards for each model year by
separately computing the sales weighted average NOX level of
all interim non-Tier 2 LDV/LLDTs and all interim non-Tier 2 HLDT/MDPVs
(excluding those not yet phased in as described in paragraph (l)(2)(ii)
of this section), using the methodology in Sec. 86.1860.
(iv) Manufacturers may generate, bank, average, trade and use
interim non-Tier 2 NOX credits based on their NOX
fleet average as determined under paragraph (l)(3)(iii) of this
section. Unless waived or modified by the Administrator, the provisions
of Sec. 86.1861 of this part apply to the generation, banking,
averaging, trading and use of credits generated by interim non-Tier 2
vehicles. NOX credits generated by interim non-Tier 2
vehicles are not subject to any discount except as required by
Sec. 86.1861-04(e).
(m) NMOG standards for diesel, flexible fueled and dual-fueled LDV/
Ts and MDPVs. (1) For diesel fueled LDV/Ts and MDPVs, the term ``NMOG''
in both the Tier 2 and interim non-Tier 2 standards means non-methane
hydrocarbons.
(2) Flexible-fueled and dual-fuel Tier 2 and interim non-Tier 2
vehicles must be certified to NMOG exhaust emission standards both for
operation on gasoline and on any alternate fuel they are designed to
use. Manufacturers may measure NMHC in lieu of NMOG when flexible-
fueled and dual-fuel vehicles are operated on gasoline, subject to the
requirements of Sec. 86.1810(p).
(n) Hybrid electric vehicle (HEV) and Zero Emission Vehicle (ZEV)
requirements. For FTP and SFTP exhaust emissions, and unless otherwise
approved by the Administrator, manufacturers must measure emissions
from all HEVs and ZEVs according to the requirements and test
procedures found in the document entitled California Exhaust Emission
Standards and Test Procedures for 2003 and Subsequent Model Zero-
Emission Vehicles and 2001 and Subsequent Model Hybrid Electric
Vehicles, in the Passenger Car, Light-duty Truck and Medium-duty
Vehicle Classes. This document is incorporated by reference (see
Sec. 86.1) . Requirements and procedures in this document that are
relevant only to complying with the California ZEV mandate, computing
partial and full ZEV allowance credits, or generating and using ZEV
credits, are not relevant to the federal program and may be
disregarded. Discussion in that document relevant to fleet average NMOG
standards and NMOG credits may also be disregarded.
(o) NMOG measurement. (1) Manufacturers must measure NMOG emissions
in accordance with Part G of the California Non-Methane Organic Gas
Test Procedures. These requirements are incorporated by reference (see
Sec. 86.1).
(2) Manufacturers must not apply reactivity adjustment factors
(RAFs) to NMOG measurements. See Sec. 86.1841.
(p) In-use standards. (1) Table S04-10 of this paragraph (p)
contains in-use emission standards applicable only to vehicles
certified to the bins shown in the table. These standards apply to in-
use testing performed by the manufacturer pursuant to regulations at
Secs. 86.1845-01, 86.1845-04 and 86.1846-01 and to in-use testing
[[Page 6862]]
performed by EPA. These standards do not apply to certification or
Selective Enforcement Auditing.
(2) These standards apply only to LDV/LLDTs produced up through the
2008 model year, and HLDT/MDPVs produced up through the 2010 model
year. These standards are subject to other limitations described in
paragraph (p)(3) of this section.
(3) For the first model year and also for the next model year after
that, in which a test group of vehicles is certified to a bin of
standards to which it has not previously been certified, the standards
in Table S04-10 of this paragraph (p) apply for purposes of in-use
testing only. The standards apply equally to all LDV/Ts and MDPVs
subject to the model year limitation in paragraph (p)(2) of this
section. Table S04-10 follows:
Table S04-10--In-use Compliance Standards (g/mi)
[Certification standards shown for reference purposes]
--------------------------------------------------------------------------------------------------------------------------------------------------------
NOX
Bin number Durability period (miles) NOX In-use certification NMOG In-use NMOG certification
--------------------------------------------------------------------------------------------------------------------------------------------------------
5................................... 50,000 0.07 0.05 n/a................... 0.075
5................................... 120,000 0.10 0.07 n/a................... 0.090
4................................... 120,000 0.06 0.04 n/a................... 0.070
3................................... 120,000 0.05 0.03 0.09.................. 0.055
2................................... 120,000 0.03 0.02 0.02.................. 0.010
--------------------------------------------------------------------------------------------------------------------------------------------------------
(4) For diesel vehicles certified to bin 10, separate in-use
standards apply for NOX and PM emissions. These standards
are determined by multiplying the applicable NOX and PM
certification standards by factors of 1.2 and 1.35, respectively, and
then rounding the result to one more decimal place than contained in
the certification standard. The resultant standards do not apply for
certification or selective enforcement auditing.
(q) Hardship provision for small volume manufacturers. (1) A small
volume manufacturer may apply for relief from any applicable final
phase-in model year contained in this section. Relief will only be
available to defer required compliance with a completely new set of
standards, a fleet average NOX standard, and/or evaporative
emission standard for 100% of affected vehicles for one model year.
Thus, a small volume manufacturer that obtains relief may:
(i) Defer 100% compliance with the fleet average NOX
standard for interim LDV/LLDTs (0.30 g/mi) until 2005;
(ii) Defer 100% compliance with the evaporative emission standards
and/or fleet average NOX standard for Tier 2 LDV/LLDTs (0.07
g/mi) until 2008;
(iii) Defer 100% compliance with the requirements that interim
HLDTs and MDPVs comply with applicable emission standards shown in
Tables S04-1 and S04-2, until 2005;
(iv) Defer 100% compliance with the fleet average NOX
standard for interim HLDT/MDPVs (0.20 g/mi) until 2008; and
(v) Defer 100% compliance with the the evaporative emission
standards and/or fleet average NOX standard for Tier 2 HLDT/
MDPVs (0.07 g/mi) until 2010.
(2) Applications for relief must be in writing and must:
(i) Be submitted before the earliest date of noncompliance;
(ii) Include evidence that the manufacturer will incur severe
economic hardship if relief is not granted;
(iii) Include evidence that the noncompliance will occur despite
the best efforts of the manufacturer to comply; and
(iv) Include evidence that the manufacturer has made every
reasonable effort to purchase credits to address the noncompliance,
where applicable.
(r) NMOG standard adjustment for direct ozone reducing devices. (1)
A manufacturer may obtain NMOG credit for use in certifying to the
exhaust NMOG standards listed in paragraph (c) of this section and for
use in complying with the in-use standards of paragraph (p) of this
section, where applicable. This credit effectively allows the
manufacturer to increase the exhaust NMOG emission standards listed in
these paragraphs by the amount of the applicable credit. For example,
if the applicable NMOG credit was 0.01 g/mi, and the vehicle was being
certified in Bin 5, as described in Table S04-1 of paragraph (c) of
this section, exhaust NMOG emissions must be no greater than 0.10 g/mi,
as opposed to the normal NMOG certification standard of 0.09 g/mi in
Bin 5.
(2) The NMOG credit must be determined through a two-step process.
(i) The first step must determine the ozone reduction potential of
the direct ozone reducing device, the ozone reduction potential of
exhaust NMOG reductions beyond Bin 5 of the Tier 2 standards, and the
ratio of the two methods of reducing ambient ozone levels. The
requirements for this step are described in paragraph (r)(3) of this
section.
(ii) The second step must demonstrate and certify the relevant
performance characteristics of the specific ozone reducing device. The
requirements for this step are described in paragraph (r)(4) of this
section.
(3) The ozone reduction potential of the direct ozone reducing
device and the ozone reduction potential of exhaust NMOG reductions
beyond Bin 5 of the Tier 2 standards must be estimated using procedures
which are approved by the Administrator in advance. At a minimum:
(i) The modeling must utilize an urban airshed model using up-to-
date chemical and meteorological simulation techniques;
(ii) Four local areas must be modeled: New York City, Chicago,
Atlanta and Houston;
(iii) The ozone episodes to be modeled must meet the selection
criteria established by EPA for State ozone SIPs;
(iv) Photochemical and dispersion modeling must follow that used by
EPA to project the ozone impacts of this rule, or its equivalent;
(v) Emission projections must be made for calendar year 2007 and be
consistent with those used by EPA in support of this final rule, or
reflect updates approved by EPA;
(vi) Baseline emissions (emissions prior to use of the direct ozone
reducing device or the VOC emission reductions) must include the
benefits of the Tier 2 emission and sulfur standards; as well as all
other emission controls assumed in EPA's ozone modeling of the benefits
of the Tier 2 and sulfur standards, as described in the Final
Regulatory Impact Analysis to the Tier 2 and Sulfur Rule;
(vii) The ozone benefit of the direct ozone reducing device must
assume a radiator area of 0.29 square meters, an air flow velocity
through the radiator of 40% of vehicle speed, and an ozone reduction
efficiency of 80%, or other
[[Page 6863]]
values as approved by the Administrator;
(viii) The ozone level of the air entering the direct ozone
reducing device must be assumed to be 40% less than that existing in
the grid cell where the vehicle is located;
(ix) The ozone benefit of VOC emission reductions must be modeled
by assuming that all Tier 2 LDVs, LDTs and MDPVs meet an exhaust NMOG
standard of 0.055 g/mi or lower instead of a 0.09 g/mi NMOG standard;
(x) The ozone reducing device must be assumed to be present on all
of the Tier 2 LDVs, LDTs and MDPVs modeled as meeting the more
stringent NMOG standard described in paragraph (r)(3)(ix) of this
section;
(xi) The relationship between changes in exhaust NMOG emission
standards and in-use VOC emissions must be determined sufficiently far
in the future to ensure that the change in ozone being modeled is
sufficiently large to allow comparison with the impact of the ozone
reducing device;
(xii) LDV, LDT and MDPV emissions must be modeled using the updated
Tier 2 emission model developed by EPA as part of the Tier 2 rulemaking
(available from EPA upon request) or MOBILE6, once this model is
available;
(xiii) The ozone benefit of the direct ozone reducing device must
be the reduction in the peak one-hour ozone level anywhere in the
modeled region on the day when ozone is at its highest;
(xiv) The NMOG credit in each local area must be the reduction in
peak one hour ozone associated with use of the direct ozone reducing
device divided by the reduction in peak one hour ozone associated with
the more stringent exhaust NMOG emission standard multiplied by the
reduction the exhaust NMOG standard (in g/mi) modeled in paragraph
(r)(3)(ix) of this section; and
(xv) The NMOG credit applicable to the generic direct ozone
reducing device modeled in paragraph (r)(3)(vii) of this section must
be determined by arithmetically averaging the NMOG credit determined in
paragraph (r)(3)(xiv) of this section for each of the four local areas.
(4) The manufacturer must submit data, using procedures which have
been approved by the Administrator in advance, that demonstrate the
following aspects of the device being certified:
(i) The air flowrate through the device as a function of vehicle
speed;
(ii) The ozone reduction efficiency of the device over the useful
life of the vehicle for a range of vehicle speeds and ozone levels;
(iii) The method through which the onboard diagnostic system will
detect improper performance.
(5) The NMOG credit for the specific application of this technology
tested under the provisions of paragraph (r)(4) of this section is the
four-area NMOG credit determined in paragraph (r)(3)(xv) of this
section scaled based on the performance of the specific application
tested under the provisions of paragraph (r)(4) of this section
relative to those assumed in paragraph (r)(3)(vii) of this section.
This scaling must assume a linear relationship between the NMOG credit
and three aspects of the direct ozone reducing device: radiator area,
average air flow through the radiator relative to vehicle speed, and
ozone reduction efficiency and the NMOG credit. The NMOG credit must be
rounded to the nearest 0.001 g/mi. For example, if the NMOG credit
determined in paragraph (r)(3)(xv) of this section was 0.01 g/mi and
the specific direct ozone reducing device being certified had an area
of 0.20 square meters, an air flow velocity of 30% of vehicle speed and
an ozone reducing efficiency of 70%, and the generic ozone reducing
device simulated in the ozone model under paragraph (r)(3)(vii) of this
section had an area of 0.29 square meters, an air flow velocity of 40%
of vehicle speed and an ozone reducing efficiency of 80%, the NMOG
credit applicable to the specific device being certified would be:
0.01 g/mi * (0.20/0.29) * (30%/40%) * 70%/80%) = 0.005
25. Section 86.1812-01 is amended by adding a sentence to the end
of the introductory text to read as follows:
Sec. 86.1812-01 Emission standards for light-duty trucks 1.
* * * This section does not apply to 2004 and later model year
vehicles, except as specifically referenced by Sec. 86.1811-04.
* * * * *
26. Section 86.1813-01 is amended by adding a sentence to the end
of the introductory text to read as follows:
Sec. 86.1813-01 Emission standards for light-duty trucks 2.
* * * This section does not apply to 2004 and later model year
vehicles, except as specifically referenced by Sec. 86.1811-04.
* * * * *
27. Section 86.1814-02 is amended by adding a sentence to the end
of the introductory text to read as follows:
Sec. 86.1814-02 Emission standards for light-duty trucks 3.
* * * This section does not apply to 2004 and later model year
vehicles, except as specifically referenced by Sec. 86.1811-04.
* * * * *
Sec. 86.1814-04 [Removed]
28. Section 86.1814-04 is removed.
29. Section 86.1815-02 is amended by adding a sentence to the end
of the introductory text to read as follows:
Sec. 86.1815-02 Emission standards for light-duty trucks 4.
* * * This section does not apply to 2004 and later model year
vehicles, except as specifically referenced by Sec. 86.1811-04.
* * * * *
Sec. 86.1815-04 [Removed]
30. Section 86.1815-04 is removed.
31. Section 86.1824-01 is amended by revising the first sentence of
the introductory text and adding paragraphs (a)(2)(iii), (a)(2)(iv) and
(a)(2)(v) to read as follows:
Sec. 86.1824-01 Durability demonstration procedures for evaporative
emissions.
This section applies to gasoline-, methanol-, liquefied petroleum
gas-, and natural gas-fueled LDV/Ts and MDPVs. * * *
(a) * * *
(2) * * *
(iii) For gasoline fueled vehicles certified to meet the
evaporative emission standards set forth in Sec. 86.1811-04(e)(1), any
service accumulation method for evaporative emissions must employ
gasoline fuel for the entire service accumulation period which contains
ethanol in, at least, the highest concentration permissible in gasoline
under federal law and that is commercially available in any state in
the United States. Unless otherwise approved by the Administrator, the
manufacturer must determine the appropriate ethanol concentration by
selecting the highest legal concentration commercially available during
the calendar year before the one in which the manufacturer begins its
service accumulation. The manufacturer must also provide information
acceptable to the Administrator to indicate that the service
accumulation method is of sufficient design, duration and severity to
stabilize the permeability of all non-metallic fuel and evaporative
system components to the service accumulation fuel constituents.
(iv) For flexible-fueled, dual-fueled, multi-fueled, ethanol-fueled
and methanol-fueled vehicles certified to
[[Page 6864]]
meet the evaporative emission standards set forth in Sec. 86.1811-
04(e)(1), any service accumulation method must employ fuel for the
entire service accumulation period which the vehicle is designed to use
and which the Administrator determines will have the greatest impact
upon the permeability of evaporative and fuel system components. The
manufacturer must also provide information acceptable to the
Administrator to indicate that the service accumulation method is of
sufficient design, duration and severity to stabilize the permeability
of all non-metallic fuel and evaporative system components to service
accumulation fuel constituents.
(v) A manufacturer may use other methods, based upon good
engineering judgment, to meet the requirements of paragraphs (a)(2)
(iii) and (iv) of this section, as applicable. These methods must be
approved in advance by the Administrator and meet the objectives of
paragraphs (a)(2) (iii) and (iv) of this section, as applicable: to
provide assurance that the permeability of all non-metallic fuel and
evaporative system components will not lead to evaporative emission
standard exceedance under sustained exposure to commercially available
alcohol-containing fuels for the useful life of the vehicle.
* * * * *
32. Section 86.1827-01 is amended by adding paragraph (e) to read
as follows:
Sec. 86.1827-01 Test group determination.
* * * * *
(e) Unless otherwise approved by the Administrator, a manufacturer
of hybrid electric vehicles must create separate test groups based on
both the type of battery technology employed by the HEV and upon
features most related to their exhaust emission characteristics.
33. Section 86.1829-01 is amended by adding paragraphs
(b)(1)(iii)(E) and (d) to read as follows:
Sec. 86.1829-01 Durability and emission testing requirements; waivers.
* * * * *
(b) * * * (1) * * *
(iii) * * *
(E) In lieu of testing a gasoline or diesel fueled Tier 2 or
interim non-Tier 2 vehicle for formaldehyde emissions when such
vehicles are certified based upon NMHC emissions, a manufacturer may
provide a statement in its application for certification that such
vehicles comply with the applicable standards. Such a statement must be
based on previous emission tests, development tests, or other
appropriate information.
* * * * *
(d)(1) Beginning in the 2004 model year, the exhaust emissions must
be measured from all LDV/T exhaust emission data vehicles tested in
accordance with the federal Highway Fuel Economy Test (HWFET; 40 CFR
part 600, subpart B). The oxides of nitrogen emissions measured during
such tests must be multiplied by the oxides of nitrogen deterioration
factor computed in accordance with Sec. 86.1823-01 and subsequent model
year provisions, and then rounded and compared with the applicable
emission standard in Sec. 86.1811-04. All data obtained from the
testing required under this paragraph (d) must be reported in
accordance with the procedures for reporting other exhaust emission
data required under this subpart.
(2) In the event that one or more emission data vehicles fail the
applicable HWFET standard in Sec. 86.1811-04, the manufacturer may
submit to the Administrator engineering data or other evidence showing
that the system is capable of complying with the standard. If the
Administrator finds, on the basis of an engineering evaluation, that
the system can comply with the HWFET standard, he or she may accept the
information supplied by the manufacturer in lieu of the test data.
(3) The provisions of paragraphs (d)(1) and (d)(2) of this section
do not apply to MDPVs.
34. Section 86.1837-01 is amended by designating the existing text
as paragraph (a) and by adding paragraph (b) to read as follows:
Sec. 86.1837-01 Rounding of emission measurements.
* * * * *
(b) Fleet average NOX value calculations, where
applicable, must be rounded before comparing with the applicable fleet
average standard and calculating credits generated or needed as
follows: manufacturers must round to the same number of significant
figures that are contained in the quantity of vehicles in the
denominator of the equation used to compute the fleet average
NOX emissions, but to no less than one more decimal place
than that of the applicable fleet average standard.
35. Section 86.1838-01 is amended by revising paragraphs (b)(1)(i)
and (c)(2)(iii) to read as follows:
Sec. 86.1838-01 Small volume manufacturer certification procedures.
* * * * *
(b) * * *
(1) * * *
(i) The optional small-volume manufacturers certification
procedures apply to LDV/Ts and MDPVs produced by manufacturers with
U.S. sales, including all vehicles and engines imported under
provisions of 40 CFR 85.1505 and 85.1509 (for the model year in which
certification is sought) of fewer than 15,000 units (LDV/Ts, MDPVs,
heavy-duty vehicles and heavy-duty engines combined).
* * * * *
(c) * * *
(2) * * *
(iii) The provisions of Sec. 86.1845-01(c)(2) and Sec. 86.1845-
04(c)(2) that require one vehicle of each test group during high
mileage in-use verification testing to have a minimum odometer mileage
of 75 percent of the full useful life mileage for Tier 1 and NLEV LDV/
Ts, or 90,000 (or 105,000) miles for Tier 2 and interim non-Tier 2
vehicles, do not apply.
* * * * *
36. Section 86.1840-01 is amended by adding paragraphs (c) and (d)
to read as follows:
Sec. 86.1840-01 Special test procedures.
* * * * *
(c) Manufacturers of vehicles equipped with periodically
regenerating trap oxidizer systems must propose a procedure for testing
and certifying such vehicles including SFTP testing for the review and
approval of the Administrator. The manufacturer must submit its
proposal before it begins any service accumulation or emission testing.
The manufacturer must provide with its submittal, sufficient
documentation and data for the Administrator to fully evaluate the
operation of the trap oxidizer system and the proposed certification
and testing procedure.
(d) The provisions of paragraphs (a) and (b) of this section also
apply to MDPVs.
37. Section 86.1841-01 is amended by revising paragraph (a)(1)(iii)
and adding paragraph (e) to read as follows:
Sec. 86.1841-01 Compliance with emission standards for the purpose of
certification.
(a) * * *
(1) * * *
(iii) For the SFTP composite standard of NMHC+NOX, the
measured results of NMHC and NOX must each be adjusted by
their corresponding deterioration factors before the composite
NMHC+NOX certification level is calculated. Where the
applicable FTP exhaust hydrocarbon emission standard is an NMOG
standard, the applicable NMOG deterioration factor must be used in
place of the NMHC deterioration
[[Page 6865]]
factor, unless otherwise approved by the Administrator.
* * * * *
(e) Unless otherwise approved by the Administrator, manufacturers
must not use Reactivity Adjustment Factors (RAFs) in their calculation
of the certification levels of any pollutant, regardless of the fuel
used in the test vehicle.
38. Section 86.1844-01 is amended by adding new paragraphs (d)(15),
(d)(16), (e)(6) and (i) to read as follows:
Sec. 86.1844-01 Information requirements: Application for
certification and submittal of information upon request.
* * * * *
(d) * * *
(15) For HEVs, unless otherwise approved by the Administrator, the
information required by the ``California Exhaust Emission Standards and
Test Procedures for 2003 and Subsequent Model Zero-Emission Vehicles,
and 2001 and Subsequent Model Hybrid Electric Vehicles, in the
Passenger Car, Light-Duty Truck and Medium-duty Vehicle Classes'' must
be supplied. These procedures are incorporated by reference (see
Sec. 86.1).
(16) (i) For Tier 2 and interim non-Tier 2 vehicles beginning with
the 2004 model year, a statement indicating that the manufacturer has
conducted an engineering analysis of the complete exhaust system to
ensure that the exhaust system has been designed:
(A) To facilitate leak-free assembly, installation and operation
for the full useful life of the vehicle; and
(B) To facilitate that such repairs as might be necessary on a
properly maintained and used vehicle can be performed in such a manner
as to maintain leak-free operation, using tools commonly available in a
motor vehicle dealership or independent repair shop for the full useful
life of the vehicle.
(ii) The analysis must cover the exhaust system and all related and
attached components including the air injection system, if present,
from the engine block manifold gasket surface to a point sufficiently
past the last catalyst and oxygen sensor in the system to assure that
leaks beyond that point will not permit air to reach the oxygen sensor
or catalyst under normal operating conditions.
(iii) A ``leak-free'' system is one in which leakage is controlled
so that it will not lead to a failure of the certification exhaust
emission standards in-use.
(iv) The provisions of paragraphs (d)(16)(i) and (ii) do not apply
to vehicles whose certification is carried over from the NLEV program
or carried across from the Cal LEV I program.
(e) * * *
(6) The NMOG/NMHC and HCHO to NMHC ratios established according to
Sec. 86.1845-04.
* * * * *
(i) For exhaust emission testing for Tier 2 and interim non-Tier 2
vehicles, if approved by the Administrator in advance, manufacturers
may submit exhaust emission test data generated under California test
procedures to comply with any certification and in-use testing
requirements under this subpart. The Administrator may require
supporting information to establish that differences between California
and Federal exhaust testing procedures and fuels will not produce
significant differences in emission results. The Administrator may
require that in-use testing be performed using Federal test fuels as
specified in Sec. 86.113-04(a)(1).
39. Section 86.1845-04 is amended by:
a. revising paragraph (a),
b. revising paragraph (c)(2), and
c. adding paragraph (f).
The revisions and additions read as follows:
Sec. 86.1845-04 Manufacturer in-use verification testing requirements
(a) General requirements. (1) A manufacturer of LDVs, LDTs and/or
MDPVs must test, or cause to have tested, a specified number of LDVs,
LDTs and MDPVs. Such testing must be conducted in accordance with the
provisions of this section. For purposes of this section, the term
vehicle includes light-duty vehicles, light-duty trucks and medium-duty
vehicles.
(2) Unless otherwise approved by the Administrator, no emission
measurements made under the requirements of this section may be
adjusted by Reactivity Adjustment Factors (RAFs).
(3) Upon a manufacturer's written request, prior to in-use testing,
that presents information to EPA regarding pre-conditioning procedures
designed solely to remove the effects of high sulfur in gasoline from
vehicles produced through the 2007 model year, EPA will consider
allowing such procedures on a case-by-case basis. EPA's decision will
apply to manufacturer in-use testing conducted under this section and
to any in-use testing conducted by EPA.
* * * * *
(c) * * *
(2) Vehicle mileage:
(i) All test vehicles must have a minimum odometer mileage of
50,000 miles. At least one vehicle of each test group must have a
minimum odometer mileage of 75 percent of the full useful life mileage.
See Sec. 86.1838-01(c)(2) for small volume manufacturer mileage
requirements; or
(ii) For engine families certified for a useful life of 150,000
miles, at least one vehicle must have a minimum odometer mileage of
105,000 miles. See Sec. 86.1838-01(c)(2) for small volume manufacturer
mileage requirements.
* * * * *
(f)(1) A manufacturer may conduct in-use testing on a test group by
measuring NMHC exhaust emissions rather than NMOG exhaust emissions.
The measured NMHC exhaust emissions must be multiplied by the
adjustment factor used for certification of the test group, or another
adjustment factor acceptable to the Administrator, to determine the
equivalent NMOG exhaust emission values for the test vehicle. The
equivalent NMOG exhaust emission value must be used in place of the
measured NMOG exhaust emission value in determining the exhaust NMOG
results. The equivalent NMOG exhaust emission values must be compared
to the NMOG exhaust emission standard from the emission bin to which
the test group was certified.
(2) For flexible-fueled LDVs, LDTs and MDPVs certified to NMOG
standards, the manufacturer may request from the Administrator the use
of a methanol (M85) or ethanol (E85) NMOG exhaust emission to gasoline
NMHC exhaust emission ratio which must be established during
certification for each emission data vehicle for the applicable test
group. The results must be submitted to the Administrator in the Part
II application for certification. After approval by the Administrator,
the measured gasoline NMHC exhaust emissions must be multiplied by the
M85 or E85 NMOG to gasoline NMHC ratio submitted in the application for
certification for the test group to determine the equivalent NMOG
exhaust emission values for the test vehicle. The equivalent NMOG
exhaust emission value must be used in place of the measured NMOG
exhaust emission value in determining the exhaust NMOG results. The
equivalent NMOG exhaust emission values must be compared to the NMOG
exhaust emission standard from the vehicle emission standard bin to
which the test group was certified.
(3) If the manufacturer measures NMOG it must also measure and
report HCHO emissions. As an alternative to measuring the HCHO content,
if the manufacturer measures NMHC as permitted in paragraph (f)(1) of
this section, the Administrator may approve,
[[Page 6866]]
upon submission of supporting data by a manufacturer, the use of HCHO
to NMHC ratios. To request the use of HCHO to NMHC ratios, the
manufacturer must establish during certification testing the ratio of
measured HCHO exhaust emissions to measured NMHC exhaust emissions for
each emission data vehicle for the applicable test group. The results
must be submitted to the Administrator with the Part II application for
certification. Following approval of the application for certification,
the manufacturer may conduct in-use testing on the test group by
measuring NMHC exhaust emissions rather than HCHO exhaust emissions.
The measured NMHC exhaust emissions must be multiplied by the HCHO to
NMHC ratio submitted in the application for certification for the test
group to determine the equivalent HCHO exhaust emission values for the
test vehicle. The equivalent HCHO exhaust emission values must be
compared to the HCHO exhaust emission standard applicable to the test
group.
40. Section 86.1846-01 is amended by revising paragraph (a) to read
as follows:
Sec. 86.1846-01 Manufacturer in-use confirmatory testing requirements.
(a) General requirements. (1) A manufacturer of LDVs, LDTs and/or
MDPVs must test, or cause testing to be conducted, under this section
when the emission levels shown by a test group sample from testing
under Sec. 86.1845-01 exceeds the criteria specified in paragraph (b)
of this section. The testing required under this section applies
separately to each test group and at each test point (low and high
mileage) that meets the specified criteria. The testing requirements
apply separately for each model year starting with model year 2001.
(2) Except for vehicles certified under the NLEV provisions of
subpart R of this part or unless otherwise approved by the
Administrator, no emission measurements made under the requirements of
this section may be adjusted by Reactivity Adjustment Factors (RAFs).
(3) For purposes of this section, the term vehicle includes light-
duty vehicles, light-duty trucks and medium-duty vehicles.
(4) Upon a manufacturer's written request, prior to in-use testing,
that presents information to EPA regarding pre-conditioning procedures
designed solely to remove the effects of high sulfur in gasoline from
vehicles produced through the 2007 model year, EPA will consider
allowing such procedures on a case-by-case basis. EPA's decision will
apply to manufacturer in-use testing conducted under this section and
to any in-use testing conducted by EPA.
* * * * *
41. Section 86.1848-01 is amended by adding paragraph (c)(7) to
read as follows:
Sec. 86.1848-01 Certification.
* * * * *
(c) * * *
(7) For Tier 2 and interim non-Tier 2 vehicles, all certificates of
conformity issued are conditional upon compliance with all provisions
of Secs. 86.1811-04, 86.1860-04, 86.1861-04 and 86.1862-04 both during
and after model year production.
(i) Failure to meet the fleet average NOX requirements
of 0.07g/mi, 0.30 g/mi or 0.20 g/mi, as applicable, will be considered
to be a failure to satisfy the terms and conditions upon which the
certificate(s) was (were) issued and the vehicles sold in violation of
the fleet average NOX standard will not be covered by the
certificate(s).
(ii) Failure to comply fully with the prohibition against selling
credits that it has not generated or that are not available, as
specified in Sec. 86.1861-04, will be considered to be a failure to
satisfy the terms and conditions upon which the certificate(s) was
(were) issued and the vehicles sold in violation of this prohibition
will not be covered by the certificate(s).
(iii) Failure to comply fully with the phase-in requirements of
Sec. 86.1811-04, will be considered to be a failure to satisfy the
terms and conditions upon which the certificate(s) was (were) issued
and the vehicles sold which do not comply with Tier 2 or interim non-
Tier 2 requirements, up to the number needed to comply, will not be
covered by the certificate(s).
(iv) For paragraphs (c)(7)(i) through (iii) of this section:
(A) The manufacturer must bear the burden of establishing to the
satisfaction of the Administrator that the terms and conditions upon
which the certificate(s) was (were) issued were satisfied.
(B) For recall and warranty purposes, vehicles not covered by a
certificate of conformity will continue to be held to the standards
stated or referenced in the certificate that otherwise would have
applied to the vehicles.
* * * * *
42. Sections 86.1854 through 86.1859 are added and reserved.
43. Section 86.1860-04 is added to read as follows:
Sec. 86.1860-04 How to comply with the Tier 2 and interim non-Tier 2
fleet average NOX standards.
(a) The fleet average standards referred to in this section are the
corporate fleet average standards for FTP exhaust NOX
emissions set forth in: Sec. 86.1811-04(d) for Tier 2 LDV/Ts and MDPVs
(0.07 g/mi); Sec. 86.1811-04(l)(3) for interim non-Tier 2 LDV/LLDTs
(0.30 g/mi); and, Sec. 86.1811-04(l)(3) for interim non-Tier 2 HLDT/
MDPVs (0.20 g/mi). Unless otherwise indicated in this section, the
provisions of this section apply to all three corporate fleet average
standards, except that the interim non-Tier 2 fleet average
NOX standards do not apply to a manufacturer whose U.S. LDV/
T and MDPV sales are 100% Tier 2 LDV/Ts and MDPVs.
(b)(1) Each manufacturer must comply with the applicable fleet
average NOX standard, or standards, on a sales weighted
average basis, at the end of each model year, using the procedure
described in this section.
(2) During a phase-in year, the manufacturer must comply with the
applicable fleet average NOX standard for the required
phase-in percentage for that year as specified in Sec. 86.1811-
04(k)(1), or for the alternate phase-in percentage as permitted under
Sec. 86.1811-04(k)(6).
(c)(1)(i) Each manufacturer must separately compute the sales
weighted averages of the individual NOX emission standards
to which it certified all its Tier 2 vehicles, interim non-Tier 2 LDV/
LLDTs, and interim non-Tier 2 HLDT/MDPVs of a given model year as
described in Sec. 86.1804(l)(2).
(ii) For model years up to and including 2008, manufacturers must
compute separate NOX fleet averages for Tier 2 LDV/LLDTs and
Tier 2 HLDT/MDPVs.
(2)(i) For model years up to and including 2008, if a manufacturer
certifies its entire U.S. sales of Tier 2 or interim non-Tier 2 LDV/
LLDTs or interim non-Tier 2 HLDT/MDPVs, to full useful life bins having
NOX standards at or below the applicable fleet average
NOX standard, that manufacturer may elect not to compute a
fleet average NOX level for that category of vehicles. A
manufacturer making such an election must not generate NOX
credits for that category of vehicles for that model year.
(ii) For model years after 2008, if a manufacturer certifies its
entire U.S. sales of Tier 2 vehicles to full useful life bins having
NOX standards at or below 0.07 gpm, that manufacturer may
elect not to compute a fleet average NOX level for its Tier
2 vehicles. A manufacturer
[[Page 6867]]
making such an election must not generate NOX credits for
that model year.
(d) The sales weighted NOX fleet averages determined
pursuant to paragraph (c) of this section must be compared with the
applicable fleet average standard; 0.07 g/mi for NOX for
Tier 2 LDV/Ts and MDPVs, 0.30 g/mi for NOX for interim non-
Tier 2 LDV/LLDTs, and 0.20 g/mi for NOx for interim non-Tier 2 HLDT/
MDPVs. Each manufacturer must comply on an annual basis with the fleet
average standards by:
(1) Showing that its sales weighted average NOX
emissions of its LDV/LLDTs, HLDT/MDPVs or LDV/Ts, as applicable, are at
or below the applicable fleet average standard; or
(2) If the sales weighted average is not at or below the applicable
fleet average standard, by obtaining and applying sufficient Tier 2
NOX credits, interim non-Tier 2 LDV/LLDT NOX
credits or interim non-Tier 2 HLDT/MDPV NOX credits, as
appropriate, and as permitted under Sec. 86.1861-04.
(i) Manufacturers may not use NMOG credits generated under the NLEV
program in subpart R of this part to meet any Tier 2 or interim non-
Tier 2 NOX fleet average standard.
(ii) Tier 2 NOX credits may not be used to meet any
fleet average interim non-Tier 2 NOX standard except as
permitted by Sec. 86.1860-04(e)(1).
(iii) Interim non-Tier 2 NOX credits may not be used to
meet the Tier 2 fleet average NOX standard.
(iv) Interim non-Tier 2 NOX credits from HLDT/MDPVs may
not be used to meet the fleet average NOX standard for
interim non-Tier 2 LDV/LLDTs, and interim non-Tier 2 credits from LDV/
LLDTs may not be used to meet the fleet average NOX standard
for interim non-Tier 2 HLDT/MDPVs.
(e) (1) Manufacturers that cannot meet the requirements of
paragraph (d) of this section, may carry forward a credit deficit for
three model years, but must not carry such deficit into the fourth
year. When applying credits to reduce or eliminate a deficit under the
fleet average standard for interim LDV/LLDTs or interim HLDT/MDPVs,
that has been carried forward into a year subsequent to its generation,
a manufacturer may apply credits from Tier 2 LDV/LLDTs or Tier 2 HLDT/
MDPVs, respectively, as well as from the appropriate group of interim
vehicles. A manufacturer must not use interim credits to reduce or
eliminate any NOX credit deficit under the Tier 2 fleet
average standard.
(2) A manufacturer carrying a credit deficit into the third year
must generate or obtain credits to offset that deficit and apply them
to the deficit at a rate of 1.2:1, (i.e. deficits carried into the
third model year must be repaid with credits equal to 120 percent of
the deficit).
(3) A manufacturer must not bank credits for future model years or
trade credits to another manufacturer during a model year into which it
has carried a deficit.
(f) Computing fleet average NOX emissions. (1)
Manufacturers must separately compute these fleet NOX
averages using the equation contained in paragraph (f)(2) of this
section:
(i) Their Tier 2 LDV/LLDT and Tier 2 HLDT/MDPV fleet average
NOX emissions for each model year through 2008;
(ii) Their combined Tier 2 LDV/T and MDPV fleet average
NOX emissions for each model year after 2008;
(iii) Their interim non-Tier 2 LDV/LLDT fleet average
NOX emissions for each model year through 2006; and
(iv) Their interim non-Tier 2 HLDT/MDPV fleet average
NOX emissions for each model year through 2008.
(2) The equation for computing fleet average NOX
emissions is as follows:
[GRAPHIC] [TIFF OMITTED] TR10FE00.012
Where:
N = The number of vehicles sold in the applicable category that were
certified for each corresponding NOX emission bin. N must be
based on vehicles counted to the point of first sale.
Emission standard = The individual full useful life NOX
emission standard for each bin for which the manufacturer had sales.
(3) The results of the calculation in paragraph (f)(2) of this
section must be rounded as required by Sec. 86.1837-01.
(4) When approved in advance by the Administrator, the numerator in
the equation in paragraph (f)(2) of this section may be adjusted
downward by the product of the number of HEVs from each NOX
emission bin times a HEV NOX contribution factor determined
through mathematical estimation of the reduction in NOX
emissions over the test procedure used to certify the HEVs. The
reduction in NOX emissions must be determined using good
engineering judgement and reflect the relation in actual full useful
life NOX emissions to the full useful life NOX
standards for the certification bin applicable to the vehicles. The
Administrator may require that calculation of the HEV NOX
contribution factor include vehicle parameters such as vehicle weight,
portion of time during the test procedure that the HEV operates with
zero exhaust emissions, zero emission range, NOX emissions
from fuel-fired heaters and NOX emissions from electricity
production and storage.
(g) Additional credits for vehicles certified to 150,000 mile
useful lives. (1) A manufacturer may certify any test group to an
optional useful life of 15 years or 150,000 miles, whichever occurs
first.
(2)(i) For any test group certified to the optional 15 year/150,000
mile useful life, the manufacturer may generate additional
NOX credits, except as prohibited in paragraph (g)(3) of
this section.
(ii) The manufacturer must calculate these extra NOX
credits, where permitted, by substituting an adjusted NOX
standard for the applicable NOX standard from the full
useful life certification bin when it calculates the applicable fleet
average NOX emissions by the procedure in paragraph (f) of
this section. The adjusted standard must be equal to the applicable
full useful life NOX standard multiplied by 0.85 and rounded
to the same number of decimal places as the applicable full useful life
NOX standard.
(3) A manufacturer electing not to comply with applicable
intermediate life standards as permitted under Sec. 86.1811-04(c)(4)
may not generate additional credits from vehicles certified to a useful
life of 15 years/150,000 miles; except that, for bins where such
intermediate life standards do not exist or are specifically deemed to
be optional in Sec. 86.1811-04(c)(4), the manufacturer may generate
additional
[[Page 6868]]
NOX credits from vehicles certified to a useful life of 15
years/150,000 miles.
(h) Additional credits for vehicles certified to low bins. A
manufacturer may obtain additional NOX credits by certifying
vehicles to bins 1 and/or 2 in model years from 2001 through 2005
subject to the following requirements:
(1) When computing the fleet average Tier 2 NOX
emissions using the formula in paragraph (f)(2) of this section, the
manufacturer may multiply the number (N) of vehicles certified to bins
1 and 2 by the applicable multiplier shown in Table S04-11. These
multipliers may not be used after model year 2005. The table follows:
Table S04-11--Multipliers for Additional Tier 2 NOX Credits for Bin 1
and 2 LDV/Ts.
------------------------------------------------------------------------
Bin Model year Multiplier
------------------------------------------------------------------------
2................................. 2001, 2002, 2003, 1.5
2004, 2005.
1................................. 2001, 2002, 2003, 2.0
2004, 2005.
------------------------------------------------------------------------
(2) [Reserved]
44. Section 86.1861-04 is added to read as follows:
Sec. 86.1861-04 How do the Tier 2 and interim non-Tier 2
NOX averaging, banking and trading programs work?
(a) General provisions for Tier 2 credits and debits. (1) A
manufacturer whose Tier 2 fleet average NOX emissions
exceeds the 0.07 g/mile standard must complete the calculation at
paragraph (b) of this section to determine the size of its
NOX credit deficit. A manufacturer whose Tier 2 fleet
average NOX emissions is less than or equal to the 0.07 g/
mile standard must complete the calculation in paragraph (b) of this
section if it desires to generate NOX credits. In either
case, the number of credits or debits determined in the calculation at
paragraph (b) of this section must be rounded to the nearest whole
number.
(2) Credits generated according to the calculation in paragraph
(b)(1) of this section may be banked for future use or traded to
another manufacturer.
(3) NOX credits are not subject to any discount or
expiration date except as required under the deficit carryforward
provisions of Sec. 86.1860-04(e)(2).
(4) If a manufacturer calculates that it has negative credits
(debits or a credit deficit) for a given model year, it must obtain
sufficient credits, as required under Sec. 86.1860-04(e)(2), from
vehicles produced by itself or another manufacturer in a model year no
later than the third model year following the model year for which it
calculated the credit deficit. (Example: if a manufacturer calculates
that it has a NOX credit deficit for the 2008 model year, it
must obtain sufficient NOX credits to offset that deficit
from its own production or that of other manufacturers' 2011 or earlier
model year vehicles.)
(5) A small volume manufacturer that has opted not to meet all
phase-in requirements as permitted under Sec. 86.1811-04(k)(5), must:
(i) Demonstrate compliance or obtain appropriate credits to comply
with the 0.30 g/mi. fleet average NOX standard for interim
LDV/LLDTs for 100% of its LDV/LLDTs in 2004, in order to carry forward
a credit deficit for later model year interim LDV/LLDTs; and
(ii) Demonstrate compliance or obtain appropriate credits to comply
with the 0.07 g/mi. fleet average NOX standard for 100% of
its LDV/LLDTs in 2007, in order to carry forward a credit deficit for
later model year Tier 2 LDV/LLDTs; and
(iii) Demonstrate compliance or obtain appropriate credits to
comply with the 0.20 g/mi. fleet average interim NOX
standard for 100% of its HLDT/MDPVs in 2007, in order to carry forward
a credit deficit for later model year interim HLDT/MDPVs.
(6)(i) Manufacturers may not use NOX credits to comply
with the NLEV requirements of subpart R of this part.
(ii) Manufacturers may not use NMOG credits generated by vehicles
certified to the NLEV requirements of subpart R of this part to comply
with any NOX requirements of this subpart.
(iii) Manufacturers may not use NOX credits generated by
interim non-Tier 2 vehicles to comply with the fleet average
NOX standard for Tier 2 vehicles.
(iv) Manufacturers may not use NOX credits generated by
Tier 2 vehicles to comply with any fleet average NOX
standard for interim non-Tier 2 vehicles, except as permitted under
Sec. 86.1860-04(e).
(v) Manufacturers may not use NOX credits generated by
interim non-Tier 2 LDV/LLDTs to comply with the fleet average
NOX standard for interim non-Tier 2 HLDT/MDPVs.
(vi) Manufacturers may not use NOX credits generated by
interim non-Tier 2 HLDT/MDPVs to comply with the fleet average
NOX standard for interim non-Tier 2 LDV/LLDTs.
(vii) Manufacturers may not use NOX credits generated by
Tier 2 LDV/LLDTs to comply with the Tier 2 NOX average
standard for HLDT/MDPVs before the 2009 model year.
(viii) Manufacturers may not use NOX credits generated
by Tier 2 HLDT/MDPVs to comply with the Tier 2 NOX average
standard for LDV/LLDTs before the 2009 model year.
(7) Manufacturers may bank Tier 2 NOX credits for later
use to meet the Tier 2 fleet average NOX standard or trade
them to another manufacturer. Credits are earned on the last day of the
model year. Before trading or carrying over credits to the next model
year, a manufacturer must apply available credits to offset any credit
deficit, where the deadline to offset that credit deficit has not yet
passed.
(8) There are no property rights associated with NOX
credits generated under this subpart. Credits are a limited
authorization to emit the designated amount of emissions. Nothing in
this Part or any other provision of law should be construed to limit
EPA's authority to terminate or limit this authorization through a
rulemaking.
(b) Calculating Tier 2 credits and debits. (1) Manufacturers that
achieve fleet average NOX values from the calculation in
Sec. 86.1860-04(f), lower than the applicable fleet average
NOX standard, may generate credits for a given model year,
in units of vehicle-g/mi NOX, determined in this equation:
[(Fleet Average NOX Standard)-(Manufacturer's Fleet Average
NOX Value)] + (Total number of Tier 2 Vehicles Sold,
Including ZEVs and HEVs)
Where: The number of Tier 2 vehicles sold is based on the point of
first sale and does not include vehicles sold in California or a state
that adopts, and has in effect for that model year, California emission
requirements.
(2) Where the result of the calculation in paragraph (b)(1) of this
section is a negative number, the manufacturer must generate negative
NOX credits (debits).
(c) Early banking. (1)(i) Manufacturers may certify LDV/LLDTs to
the Tier 2 FTP exhaust standards in Sec. 86.1811-04 for model years
2001-2003 in order to bank credits for use in the 2004 and later model
years. Such vehicles must also meet SFTP exhaust emission standards
specified in Sec. 86.1811-04.
(ii) Manufacturers may certify HLDT/MDPVs to the Tier 2 FTP exhaust
standards in Sec. 86.1811-04 for model years 2001-2007 in order to bank
credits for use in the 2008 and later model years. Such vehicles must
also meet applicable SFTP exhaust emission standards specified in
Sec. 86.1811-04.
(iii) This process is referred to as ``early banking'' and the
resultant credits are referred to as ''early credits''. In order to
bank early credits, a manufacturer must comply with all exhaust
emission standards and requirements applicable to Tier 2 LDV/LLDTs and/
or HLDT/MDPVs, as applicable, except as allowed under paragraph (c)(4)
of this section.
(2) To generate early credits, a manufacturer must separately
compute
[[Page 6869]]
the sales weighted NOX average of the LDV/LLDTs and HLDT/
MDPVs it certifies to the Tier 2 exhaust requirements and separately
compute credits using the calculations in this section and in
Sec. 86.1860-04.
(3) Early HLDT/MDPV credits may not be applied to LDV/LLDTs before
the 2009 model year. Early LDV/LLDT credits may not be applied to HLDT/
MDPVs before the 2009 model year.
(4) Manufacturers may generate early Tier 2 credits from LDVs,
LDT1s and LDT2s that are certified to a full useful life of 100,000
miles, provided that the credits are prorated by a multiplicative
factor of 0.833 (the quotient of 100,000/120,000). Where a manufacturer
has both 100,000 and 120,000 mile full useful life vehicles for which
it desires to bank early credits, it must compute the credits from each
group of vehicles separately and then add them together.
(5) Manufacturers may bank early credits for later use to meet the
Tier 2 fleet average NOX standard or trade them to another
manufacturer subject to the restriction in paragraph (c)(3) of this
section.
(6) Early credits must not be used to comply with the fleet average
NOX standards for interim non-Tier 2 vehicles.
(7) Nothing in this section prevents the use of the NMOG values of
2003 and earlier model year LDV/LLDTs from being used in calculations
of the NMOG fleet average and subsequent NMOG credit generation, under
subpart R of this part.
(d) Reporting and recordkeeping for Tier 2 NOX credits
including early credits. Each manufacturer must comply with the
reporting and recordkeeping requirements of Sec. 86.1862-04.
(e) Fleet average NOX debits. (1) Manufacturers must
offset any debits for a given model year by the fleet average
NOX reporting deadline for the third model year following
the model year in which the debits were generated as required in
Sec. 86.1860.04(e)(2). Manufacturers may offset debits by generating
credits or acquiring credits generated by another manufacturer.
(2)(i) Failure to meet the requirements of paragraphs (a) through
(d) of this section and of this paragraph (e), within the required
timeframe for offsetting debits will be considered to be a failure to
satisfy the conditions upon which the certificate(s) was issued and the
individual noncomplying vehicles not covered by the certificate must be
determined according to this section.
(ii) If debits are not offset within the specified time period, the
number of vehicles not meeting the fleet average NOX
standards and not covered by the certificate must be calculated by
dividing the total amount of debits for the model year by the fleet
average NOX standard applicable for the model year in which
the debits were first incurred.
(iii) EPA will determine the vehicles for which the condition on
the certificate was not satisfied by designating vehicles in those test
groups with the highest certification NOX emission values
first and continuing until a number of vehicles equal to the calculated
number of noncomplying vehicles as determined above is reached. If this
calculation determines that only a portion of vehicles in a test group
contribute to the debit situation, then EPA will designate actual
vehicles in that test group as not covered by the certificate, starting
with the last vehicle produced and counting backwards.
(3) If a manufacturer ceases production of LDV/Ts and MDPVs or is
purchased by, merges with or otherwise combines with another
manufacturer, the manufacturer continues to be responsible for
offsetting any debits outstanding within the required time period. Any
failure to offset the debits will be considered to be a violation of
paragraph (e)(1) of this section and may subject the manufacturer to an
enforcement action for sale of vehicles not covered by a certificate,
pursuant to paragraph (e)(2) of this section.
(4) For purposes of calculating the statute of limitations, a
violation of the requirements of paragraph (e)(1) of this section, a
failure to satisfy the conditions upon which a certificate(s) was
issued and hence a sale of vehicles not covered by the certificate, all
occur upon the expiration of the deadline for offsetting debits
specified in paragraph (e)(1) of this section.
(f) NOX credit transfers. (1) EPA may reject
NOX credit transfers if the involved manufacturers fail to
submit the credit transfer notification in the annual report.
(2) A manufacturer may not sell credits that are not available for
sale pursuant to the provisions in paragraphs (a)(2) and (a)(7) of this
section.
(3) In the event of a negative credit balance resulting from a
transaction, both the buyer and seller are liable, except in cases
involving fraud. EPA may void ab initio the certificates of conformity
of all engine families participating in such a trade.
(4)(i) If a manufacturer transfers a credit that it has not
generated pursuant to paragraph (b) of this section or acquired from
another party, the manufacturer will be considered to have generated a
debit in the model year that the manufacturer transferred the credit.
The manufacturer must offset such debits by the deadline for the annual
report for that same model year.
(ii) Failure to offset the debits within the required time period
will be considered a failure to satisfy the conditions upon which the
certificate(s) was issued and will be addressed pursuant to paragraph
(e) of this section.
(g) Interim non-Tier 2 NOX credits and debits; Interim
non-Tier 2 averaging, banking and trading. Interim non-Tier 2
NOX credits must be generated, calculated, tracked,
averaged, banked, traded, accounted for and reported upon separately
from Tier 2 credits. The provisions of this section applicable to Tier
2 NOX credits and debits and Tier 2 averaging banking and
trading are applicable to interim non-Tier 2 LDV/LLDTs and interim non-
Tier 2 HLDT/MDPVs with the following exceptions:
(1) Provisions for early banking under paragraph (c) of this
section do not apply.
(2) The fleet average NOX standard used for calculating
credits is 0.30 grams per mile for interim non-Tier 2 LDV/LLDTs and
0.20 g/mi for interim non-Tier 2 HLDT/MDPVs. (The interim non-Tier 2
NOX standard of 0.30 (or 0.20) g/mi replaces 0.07 in the
text and calculation in this section.)
(3) Interim non-Tier 2 NOX credit deficits may be
carried forward for three years subject to the requirements of
Sec. 86.1860-04(e).
45. Section 86.1862-04 is added to read as follows:
Sec. 86.1862-04 Maintenance of records and submittal of information
relevant to compliance with fleet average NOX standards.
(a) Maintenance of records. (1) The manufacturer producing any
light-duty vehicles and/or light-duty trucks subject to the provisions
in this subpart must establish, maintain, and retain the following
information in adequately organized and indexed records for each model
year:
(i) Model year;
(ii) Applicable fleet average NOX standard: 0.07g/mi for
Tier 2 LDV/Ts; 0.30 g/mi for interim non-Tier 2 LDV/LLDTs; or 0.20 g/mi
for interim non-Tier 2 HLDT/MDPVs;
(iii) Fleet average NOX value achieved; and
(iv) All values used in calculating the fleet average
NOX value achieved.
(2) The manufacturer producing any LDV/Ts or MDPVs subject to the
provisions in this subpart must establish, maintain, and retain the
following information in adequately organized and indexed records for
each LDV/T or MDPV subject to this subpart:
(i) Model year;
[[Page 6870]]
(ii) Applicable fleet average NOX standard;
(iii) EPA test group;
(iv) Assembly plant;
(v) Vehicle identification number;
(vi) NOX standard to which the LDV/T or MDPV is
certified; and
(vii) Information on the point of first sale, including the
purchaser, city, and state.
(3) The manufacturer must retain all records required to be
maintained under this section for a period of eight years from the due
date for the annual report. Records may be retained as hard copy or
reduced to microfilm, ADP diskettes, and so forth, depending on the
manufacturer's record retention procedure; provided, that in every case
all information contained in the hard copy is retained.
(4) Nothing in this section limits the Administrator's discretion
to require the manufacturer to retain additional records or submit
information not specifically required by this section.
(5) Pursuant to a request made by the Administrator, the
manufacturer must submit to the Administrator the information that the
manufacturer is required to retain.
(6) EPA may void ab initio a certificate of conformity for a
vehicle certified to emission standards as set forth or otherwise
referenced in this subpart for which the manufacturer fails to retain
the records required in this section or to provide such information to
the Administrator upon request.
(b) Reporting. (1) Each covered manufacturer must submit an annual
report. Except as provided in paragraph (b)(2) of this section, the
annual report must contain, for each applicable fleet average
NOX standard, the fleet average NOX value
achieved, all values required to calculate the NOX value,
the number of credits generated or debits incurred, and all the values
required to calculate the credits or debits. The annual report must
contain the resulting balance of credits or debits.
(2) When a manufacturer calculates compliance with the fleet
average NOX standard using the provisions in Sec. 86.1860-
04(c)(2), then the annual report must state that the manufacturer has
elected to use such provision and must contain the fleet average
NOX standard as the fleet average NOX value for
that model year.
(3) For each applicable fleet average NOX standard, the
annual report must also include documentation on all credit
transactions the manufacturer has engaged in since those included in
the last report. Information for each transaction must include:
(i) Name of credit provider;
(ii) Name of credit recipient;
(iii) Date the transfer occurred;
(iv) Quantity of credits transferred; and
(v) Model year in which the credits were earned.
(4) Unless a manufacturer reports the data required by this section
in the annual production report required under Sec. 86.1844-01(e) and
subsequent model year provisions, a manufacturer must submit an annual
report for each model year after production ends for all affected
vehicles and trucks produced by the manufacturer subject to the
provisions of this subpart and no later than May 1 of the calendar year
following the given model year. Annual reports must be submitted to:
Director, Vehicle Programs and Compliance Division, U.S. Environmental
Protection Agency, 2000 Traverwood, Ann Arbor, Michigan 48105.
(5) Failure by a manufacturer to submit the annual report in the
specified time period for all vehicles and trucks subject to the
provisions in this section is a violation of section 203(a)(1) of the
Clean Air Act for each subject vehicle and truck produced by that
manufacturer.
(6) If EPA or the manufacturer determines that a reporting error
occurred on an annual report previously submitted to EPA, the
manufacturer's credit or debit calculations will be recalculated. EPA
may void erroneous credits, unless transferred, and must adjust
erroneous debits. In the case of transferred erroneous credits, EPA
must adjust the selling manufacturer's credit or debit balance to
reflect the sale of such credits and any resulting generation of
debits.
(c) Notice of opportunity for hearing. Any voiding of the
certificate under paragraph (a)(6) of this section will be made only
after EPA has offered the manufacturer concerned an opportunity for a
hearing conducted in accordance with Sec. 86.614 for light-duty
vehicles or Sec. 86.1014 for light-duty trucks and, if a manufacturer
requests such a hearing, will be made only after an initial decision by
the Presiding Officer.
[FR Doc. 00-19 Filed 2-9-00; 8:45 am]
BILLING CODE 6560-50-P