Control of Air Pollution From New Motor Vehicles and New Motor Vehicle Engines: Voluntary Standards for Light-Duty Vehicles
Federal RegisterOct 10, 1995
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SUMMARY: Today EPA is proposing regulations to establish a National Low
Emission Vehicle (National LEV) program. Under these regulations, auto
manufacturers would be able to volunteer to comply with more stringent
tailpipe standards for cars and light-duty trucks. Once a manufacturer
opted into the program, the standards would be enforced in the same
manner as any other federal motor vehicle pollution control
requirement. EPA is proposing that this program would relieve the 13
states in the Northeastern part of the country (the Ozone Transport
Region or OTR) of the December, 1994, regulatory obligation to adopt
their own motor vehicle programs. Today's NPRM also proposes to
harmonize federal and California motor vehicle standards and test
procedures to enable manufacturers to design and test vehicles to one
set of standards nationwide.
This NPRM is another step in an on-going process to achieve cleaner
air in the OTR. The OTR States submitted a petition in February, 1993,
requesting EPA to require all states in the OTR to adopt the more
stringent California motor vehicle program. Since then, under EPA's
leadership, the OTR States, auto manufacturers, environmental groups,
fuel providers and other interested parties have worked together with
EPA to develop a program that is agreeable to all parties, achieves
equivalent or better emission reductions from motor vehicles in the OTR
(compared to state-by-state adoption of the California program),
reduces pollution nationwide, and does so in a cost-effective manner.
If National LEV is implemented, it will demonstrate how cooperative,
partnership efforts can produce a smarter, cheaper program that reduces
regulatory burden while increasing protection of the environment and
public health.
DATES: Written comments on this NPRM must be submitted by November 9,
1995. Please direct all correspondence to the address specified below.
EPA will hold a public hearing on this NPRM on November 1, 1995 if one
is requested by October 20, 1995. The public hearing, if requested,
would begin at 9:00 a.m. and continue until 4:30 p.m. or until all
commenters have the opportunity to testify.
ADDRESSES: Interested parties may submit written comments (in
triplicate if possible) to Public Docket No. A-95-26, at: Air Docket
Section, U.S. Environmental Protection Agency, 401 M Street SW,
Washington, DC 20460 (Telephone 202-260-7548; FAX 202-260-4000).
Materials relevant to this proposed rulemaking have been placed in
Docket No. A-95-26. The docket is located at the above address in Room
M-1500, Waterside Mall, and may be inspected weekdays between 8:30 a.m.
and 5:30 p.m. A reasonable fee may be charged by EPA for copying docket
materials.
Members of the public may call the contact person indicated below
to find out whether a hearing will be held and, if so, the exact
location. Requests for a public hearing should be directed to the
contact person indicated below. The hearing, if requested, will be held
in Washington, DC.
FOR FURTHER INFORMATION CONTACT: Michael Shields, Office of Mobile
Sources, U.S. Environmental Protection Agency, 401 M Street SW,
Washington, DC 20460. Telephone (202) 260-7757. FAX (202) 260-6011.
SUPPLEMENTARY INFORMATION:
I. Obtaining Electronic Copies of the Regulatory Language
Electronic copies (on 3.5'' diskettes) of the proposed regulatory
language may be obtained free of charge by visiting, calling, or
writing the Environmental Protection Agency, Certification Division,
2565 Plymouth Road, Ann Arbor, MI 48105, (313) 668-4384. Refer to
Docket A-95-26. A copy is available for inspection in the docket (see
Addresses).
The proposed regulatory language is also available electronically
on the Technology Transfer Network (TTN). TTN is an electronic bulletin
board system (BBS) operated by EPA's Office of Air Quality Planning and
Standards. Users are able to access and download TTN files on their
first call. The steps required to access information on this rulemaking
are listed below. The service is free, except for the cost of the phone
call.
TTN BBS: 919-541-5742 (1,200-14,400 bps, no parity, eight data bits,
one stop bit)
Voice help: 919-541-5384
Internet address: TELNET ttnbbs.rtpnc.epa.gov
Off-line: Mondays from 8:00-12:00 Noon ET
1. Technology Transfer Network Top Menu: GATEWAY TO TTN TECHNICAL
AREAS (Bulletin Boards) (Command: T)
2. TTN TECHNICAL INFORMATION AREAS: OMS--Mobile Sources Information
(Command: M)
3. OMS BBS === MAIN MENU FILE TRANSFERS: Other OMS Documents
(Command: O)
At this stage, the system will list all available files in this
area. To download a file, select a transfer protocol that will match
the terminal software on your computer, then set your own software to
receive the file using that same protocol. If unfamiliar with handling
compressed (that is, ZIP'd) files, go to the TTN top menu, System
Utilities (Command: 1) for information and the necessary program to
download in order to unZIP the files of interest after downloading to
your computer. After getting the files you want onto your computer, you
can quit TTN BBS with the oodbye command.
II. Outline and List of Acronyms
A. Outline
This proposed rule preamble is organized into the following
sections:
I. Obtaining Electronic Copies of the Regulatory Language
II. Outline and List of Acronyms
A. Outline
B. List of Acronyms
III. Introduction and Background
A. Introduction
B. Benefits of National LEV Program
C. Background
1. Current Federal Motor Vehicle Emissions Control Program
2. California Low-Emission Vehicle Program
3. OTC LEV Decision
4. Public Process
D. National LEV Program
1. Agreement--A Necessary Predicate for the National LEV Program
2. Description of National LEV Program
IV. Provisions of National LEV Program
A. Program Structure
1. Opt-In to National LEV and In Effect Finding
2. Opt-Out From National LEV
a. Conditions Allowing Opt-Out
(1) Changes to Stable Standards
(2) OTC States' Failure to Meet or Keep Their Commitments
b. Effective Date of Opt-Out
3. Duration of Program
B. Voluntary Tailpipe and Related Standards and Phase-In
1. Emission Standards for Categories of National LEV Vehicles
a. Certification Standards
b. In-Use Standards
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2. Non-Methane Organic Gases (NMOG) Fleet Average Standards
3. Fleet Average NMOG Credit Program
4. Five Percent Cap on Sale of Tier I Vehicles and TLEVs
5. Tailpipe Emissions Testing
a. California Phase II Reformulated Gasoline
b. NMOG vs. NMHC
6. On-Board Diagnostics Systems Requirements
7. Fuel Provisions and Reactivity Adjustment Factors
8. Hybrid Electric Vehicles (HEVs)
C. Low Volume and Small Volume Manufacturers
D. Legal Authority
E. Enforceability and Prohibited Acts
V. National LEV Deemed to Satisfy OTC LEV SIP Obligation
A. Acceptable LEV-Equivalent Program
1. Criteria for Finding Acceptable LEV-Equivalent Program
2. Application of Criteria to Voluntary Program
a. Emissions Reduction Equivalence Determination
b. Enforceability
c. Opportunities for Technology
B. Finding LEV-Equivalent Program in Effect
VI. Other Applicable Federal Requirements and Harmonization With
California Requirements
A. Introduction
B. Harmonization of Federal and California Standards and
Requirements
1. On-Board Refueling Vapor Recovery
2. Evaporative Emissions
3. Certification Short Test (CST)
4. Federal Test Procedure Revisions
5. High Altitude
C. Federal Compliance Requirements
1. Selective Enforcement Auditing and Quality Audit Programs
2. Imports
3. In-Use and Warranty Requirements
VII. Effective Date
VIII. Public Participation
A. Comments and the Public Docket
B. Public Hearing
IX. Administrative Requirements
A. Administrative Designation
B. Regulatory Flexibility Act
C. Unfunded Mandates Reform Act
D. Reporting and Recordkeeping Requirements
B. List of Acronyms
AAMA: American Automobile Manufacturers Association
AQL: Acceptable Quality Level
ATV(s): Advanced Technology Vehicle(s)
CAA: Clean Air Act
CAAA: Clean Air Act Amendments
CALLEV: California Low Emission Vehicle Program
CARB: California Air Resources Board
CFR: Code of Federal Regulations
CFV: Clean Fuel Vehicle
CO: Carbon Monoxide
CST: Certification Short Test
EPA: U.S. Environmental Protection Agency
EPAct: Energy Policy Act
FID: Flame Ionization Detector
FR: Federal Register
FTP: Federal Test Procedure
GVWR: Gross Vehicle Weight Rating
HC: Hydrocarbon
HCHO: Formaldehyde
HEV(s): Hybrid Electric Vehicle(s)
HLDT(s): Heavy Light-Duty Truck(s)
ICI(s): Independent Commercial Importer(s)
I/M: Inspection and Maintenance
LDT(s): Light-Duty Truck(s)
LDV(s): Light-Duty Vehicle(s)
LEV(s): Low Emission Vehicle(s)
LLDT(s): Light Light-Duty Truck(s)
LVW: Loaded Vehicle Weight
MIL: Malfunction Indicator Light
MY: Model Year
NAAQS: National Ambient Air Quality Standards
National LEV: National Low Emission Vehicle
NLEV: National Low Emission Vehicle
NMHC: Non-methane Hydrocarbons
NMOG: Non-methane Organic Gases
NOX: Oxides of Nitrogen
NPRM: Notice of Proposed Rulemaking
OBD: On-Board Diagnostics
OBD II: On-Board Diagnostics Requirements
OEM(s): Original Engine Manufacturer(s)
ORVR: On-Board Refueling Vapor Recovery
OTC: Ozone Transport Commission
OTC LEV: Ozone Transport Commission Low Emission Vehicle
OTR: Ozone Transport Region
PM: Particulate Matter
RAF(s): Reactivity Adjustment Factor(s)
RIA: Regulatory Impact Analysis
RVP: Reid Vapor Pressure
SEA: Selective Enforcement Audit
SFTP: Supplemental Federal Test Procedure
SIP: State Implementation Plan
THC: Total Hydrocarbon
TLEV(s): Transitional Low Emission Vehicle(s)
ULEV(s): Ultra Low Emission Vehicle(s)
VOC(s): Volatile Organic Compounds
ZEV(s): Zero Emission Vehicle(s)
III. Introduction and Background
Today EPA is proposing regulations for the National Low Emission
Vehicle (LEV) program--EPA believes this is a cleaner, smarter, cheaper
pollution control program for new motor vehicles. Under the program,
auto manufacturers would have the option of agreeing to comply with
tighter tailpipe emission standards--standards that EPA does not have
authority to impose now. Once manufacturers committed to the program,
the standards would be enforceable--just as all other federal motor
vehicle standards are enforceable. Manufacturers have indicated that
they would be willing to volunteer to meet these tighter standards if
EPA and the states in the northeastern part of the country (the OTR
States) are willing to agree to a program that meets certain
conditions, including providing manufacturers with regulatory
stability, recognizing that establishing advanced technology vehicles
in the Northeast is a shared responsibility (rather than the sole
responsibility of auto manufacturers), and reducing regulatory burden
by harmonizing federal and California motor vehicle standards.
The National LEV proposal is another step in an unprecedented,
cooperative effort by the Ozone Transport Commission (OTC) States, auto
manufacturers, environmentalists, fuel providers, EPA and other
interested parties to improve air quality. The OTC States and
environmentalists provided the opportunity for this cooperative effort
by pushing for adoption of the California LEV program throughout the
Ozone Transport Region (OTR). Under EPA's leadership, the states, auto
manufacturers, environmentalists and other interested parties then
embarked on a process that was marked by extensive public
participation, a willingness to work with each other and to solve
problems jointly, and the development of trust between the various
participants. This working relationship is particularly remarkable
given the adversarial and litigious nature of the interactions between
the parties in the recent past. EPA applauds the efforts of these
parties, particularly the leadership shown by the OTC States and the
auto manufacturers.
Given statutory constraints, National LEV will be implemented only
if it is agreed to by the OTC States and the auto manufacturers. EPA
does not have authority to force either side to sign up to the program.
Although the OTR States and the automobile industry have reached
agreement on many aspects of a 49-state program, agreement has not yet
been reached on all issues. However, because EPA believes agreement is
close, and to allow National LEV to be implemented promptly once an
agreement is reached, EPA today is proposing regulations that would
provide the regulatory framework for the National LEV program.
National LEV benefits the environment by reducing air pollution
nationwide. This program is designed to address air pollution problems
and will produce public health and environmental benefits both inside
and outside the OTR. This should assist states outside the OTR that
were considering adopting the California program in meeting their
obligations under the Clean Air Act (CAA).
EPA has determined that the National LEV program will result in
emissions reductions in the Northeast OTR that are equivalent to or
better than the emissions reductions that would be achieved by state-
by-state adoption of the California LEV program (including Zero
Emission Vehicle (ZEV) mandates). Thus, EPA is proposing that National
LEV would relieve the OTR States of
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their regulatory obligation to adopt and implement a state motor
vehicle program. This obligation arose when the OTR States had
requested that EPA require all the OTR States to adopt the more
stringent California Low Emission Vehicle (LEV) program, and EPA
granted the request in December, 1994, based on the finding that the
region needed the emission reductions to achieve and maintain the ozone
National Ambient Air Quality Standards (NAAQS). Not only will National
LEV provide emissions reductions benefits to the OTC States, it will
reduce states' costs of providing their citizens with healthy air by
avoiding the costs of state programs that duplicated each others' and
EPA's efforts.
National LEV would also provide important relief from certain
regulatory requirements to the auto manufacturers. Rather than having a
fleet of California vehicles that are designed and tested to California
standards and a fleet of federal vehicles that are designed and tested
to different federal standards, in most instances manufacturers will
have harmonized standards that will allow them to sell most vehicles
nationwide. Not only will this reduce testing and design costs, it
should allow more efficient distribution and marketing of vehicles
nationwide.
The cooperative nature of the program by itself should provide
environmental benefits sooner and in a way that greatly reduces
regulatory transaction costs from what would otherwise be the case.
Focusing energy on implementing the program the parties helped jointly
design will be a better use of resources than continued fighting over
whether any program should be implemented at all.
A. Introduction
In this document, EPA is proposing a voluntary, National Low
Emission Motor Vehicle (National LEV) program. The National LEV program
would include a set of motor vehicle emission standards that would
significantly reduce emissions of ozone-producing pollutants from new
motor vehicles. The program would include a manufacturer fleet average
standard for non-methane organic gases (NMOG) applicable in the
Northeast OTR states \1\ beginning in model year 1997, and applicable
nationwide (except for California) beginning in model year 2001.
Manufacturers would not be required to meet the standards in this
program unless they choose to opt into the program. However, if a
manufacturer were to opt into the program and EPA were to find that the
program was in effect, then the manufacturer would be bound by the
program's requirements. A manufacturer could opt out of the program in
certain limited circumstances.
\1\ The OTR is made up of: Maine, New Hampshire, Vermont,
Massachusetts, Connecticut, Rhode Island, New York, New Jersey,
Pennsylvania, Delaware, Maryland, the District of Columbia, and the
part of Virginia that is within the Consolidated Metropolitan
Statistical Area that includes the District of Columbia
(collectively OTR or OTC States).
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In this notice, EPA is also proposing that the National LEV program
would relieve OTR States of an existing regulatory requirement. On
December 19, 1994, EPA approved a petition submitted by the Northeast
Ozone Transport Commission (OTC) to require OTR States to adopt the
California Low Emission Vehicle (LEV) program (which it called the
Ozone Transport Commission's Low Emission Vehicle (OTC LEV)
program).\2\ EPA found that the reduction of emissions from new motor
vehicles throughout the OTR is necessary to mitigate the effects of air
pollution transport in the region, and to bring ozone nonattainment
areas in the OTR into attainment (including maintenance) by the dates
specified in the Clean Air Act, as amended in 1990 (CAA, or the Act).
60 FR 4712 (January 24, 1995) (OTC LEV decision). Under the OTC's
recommended program, all new motor vehicles sold in the OTR beginning
in model year 1999 would be required to be certified by the California
Air Resources Board (CARB) to any one of the California motor vehicle
emissions standards (i.e., California Tier 1, Transitional Low-Emission
Vehicle (TLEV), LEV, Ultra Low-Emission Vehicle (ULEV), or ZEV).
Manufacturers could choose any mix of California-certified vehicles to
comply with annual fleet average NMOG standards, which become
increasingly stringent over time. Pursuant to the OTC recommendation,
individual states in the OTR would be permitted (but not required) to
adopt the ZEV mandate. See 60 FR 4712, 4724 (January 24, 1995).
\2\ Under the OTC LEV decision, the States also have the option
of submitting a ``shortfall'' SIP, as described in Section III.C.3.
See 60 FR at 4730.
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EPA is proposing that National LEV is an acceptable alternative to
OTC LEV.\3\ National LEV would be an enforceable program that would
achieve reductions in new motor vehicle emissions that are at least
equivalent to the reductions that would be achieved through
implementation of the OTC LEV program. Therefore, if EPA finds that the
National LEV program is in effect, OTC States would not be required to
adopt the OTC LEV program to meet the State Implementation Plan (SIP)
call EPA issued in the OTC LEV decision.
\3\ In today's notice, EPA is proposing the criteria that must
be met for an alternative program to qualify as an acceptable LEV-
equivalent.
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EPA provided numerous opportunities for public participation in the
decision-making process leading to OTC LEV and National LEV, as
described more fully in Section C.4. EPA established a subcommittee of
the Clean Air Act Advisory Committee, pursuant to the Federal Advisory
Committee Act, to evaluate issues relating to obtaining reductions in
emissions from motor vehicles in the OTR. The Subcommittee has also
served as a public forum to discuss voluntary, 49-state motor vehicle
standards, and provided comments to EPA regarding today's proposal.
B. Benefits of National LEV Program
The national motor vehicle emissions control program proposed today
represents a significant step towards the goal of reducing smog in
heavily populated urban areas, both in the northeastern United States
and in the rest of the country. The National LEV program would also
achieve reductions in emissions of other pollutants, including
particulate matter (PM), and formaldehyde (HCHO).
Ground-level ozone, the principal harmful component in smog, is
produced by a complex set of chemical reactions involving volatile
organic compounds (VOCs) and oxides of nitrogen (NOX) in the
presence of sunlight. Ground-level ozone causes health problems,
including damaging lung tissue, reducing lung function, and sensitizing
the lungs to other irritants. Scientific evidence indicates that the
ambient levels of ozone affect healthy adults and children, as well as
people with impaired respiratory systems, such as asthmatics. A
reduction in lung function during periods of moderate exercise has been
found following exposure to ozone for 6 to 7 hours at concentrations at
or near the current standard. This decrease in lung function may be
accompanied by symptoms such as chest pain, coughing, nausea, and
pulmonary congestion. Studies, to date, indicate that the acute health
effects of exposure to ozone at the level of the current national
standard (such as coughing, chest pain, and shortness of breath) are
reversible in most people when the exposure stops. However, the extent
of such reversibility depends on factors such as the length of exposure
and individual activity level. With repeated exposure to ozone over
time, many of these symptoms attentuate but some indicators of cell
damage suggest continued lung inflamation. Ground-
[[Page 52737]]
level ozone is also responsible for significant agricultural crop yield
losses each year. Studies also indicate that the current ambient levels
of ozone are responsible for damage to both terrestrial and aquatic
ecosystems, including acidification of surface waters, reduction in
fish populations, damage to forests and wildlife, soil degradation, and
reduced visibility.
The National LEV program would result in significant environmental
and public health benefits nationwide. There are 57 ozone nonattainment
areas in the U.S. outside the OTR and California, including several
areas classified as ``serious'' or ``severe'' for ozone. Houston and
the upper Midwest, in particular, experience high levels of ground-
level ozone pollution. The implementation of the National LEV program
nationwide in 2001 will advance the goal of emissions reductions in
those areas as well. A vehicle certified to the National LEV standards
would, over its lifetime, emit 400 pounds less pollution than a Tier 1
vehicle. Implementation of National LEV is expected to achieve
nationwide reductions of NOX emissions of 400 tons/day in 2005 and
1200 tons/day in 2015, and nationwide reductions in NMOG emissions of
279 tons/day in 2005 and 778 tons/day in 2015.
In evaluating the OTC petition, EPA analyzed the level of emissions
reductions that are needed throughout the OTR to attain (or maintain)
the national ambient air quality standard for ozone, given the serious
transport issue. The primary NAAQS for various pollutants, including
ozone, are set by EPA on the basis of air quality criteria and allowing
an adequate margin of safety, at a level that the Agency determines is
necessary to protect public health. EPA concluded, based on its
analysis in the context of the OTC LEV decision, that NOX
reductions of 50 to 75% from 1990 levels from every portion of the OTR
lying to the south, southwest, west, and northwest of each serious or
severe OTR nonattainment area, and VOC reductions of 50 to 75% from the
portion of the OTR in or near (and upwind of) each serious and severe
OTR nonattainment area, are necessary to bring each such nonattainment
area into attainment by the applicable date.
Motor vehicles are a significant contributor to smog because of
their emissions of VOCs and NOX. EPA has projected that, without a
program that achieves reductions in the northeastern United States
equivalent to those achieved by OTC LEV, on-highway vehicles will
account for approximately 38% of NOX emissions and 22% of
anthropogenic VOC emissions in 2005. More stringent motor vehicle
standards outside the OTR, such as those proposed today, will help the
OTR achieve necessary reductions (in addition to the benefits produced
in those states outside the OTR). EPA estimated that migration into the
OTR of non-LEV vehicles would result in a 16 ton/day increase in VOC
emissions and a 28 ton/day increase in NOX emissions in 2005
compared to EPA's estimates of highway vehicle emissions in the OTR
under the OTC LEV program. The National LEV program, when implemented
nationwide in 2001, would greatly reduce this migration effect.
As described in the OTC LEV decision, EPA's modelling analyses
support the conclusion that no combination of potentially broadly
practicable control measures in the OTR would be sufficient to achieve
the necessary level of emissions reductions without more stringent new
motor vehicle emission standards. Thus, EPA determined that all of the
emissions reductions in the OTR associated with implementing the OTC
LEV program, or a LEV-equivalent program, are necessary.
EPA has determined that the National LEV program proposed today
would provide at least equivalent emissions reductions in the OTR as
would OTC LEV, and do so in a more efficient and cost-effective manner.
The National LEV program would result in equal or greater reductions in
emissions of VOCs and NOX in the OTR for two reasons. First, the
National LEV program would provide for the introduction of transitional
low emission vehicles (TLEVs) in the OTR in 1997, two years earlier
than would be required under the OTC LEV program. Also, since the
National LEV program would apply nationwide (except for California) in
2001, vehicles purchased outside the OTR that move into the region
would be up to 70% cleaner than incoming vehicles (i.e., Tier 1
vehicles) would be under the OTC LEV program.
The National LEV program is also expected to achieve pollution
reduction benefits from motor vehicles beyond those associated with
ozone pollution. Under National LEV, motor vehicles across the nation
will also be required to meet emissions standards for PM and
formaldehyde (HCHO) that are more stringent than the comparable federal
Tier 1 standards. All states, not just those in the OTR, will realize
air quality benefits from implementation of these standards.
The National LEV program will require light-duty diesel motor
vehicles and light-duty diesel trucks to meet standards for emissions
of particulate matter that are more stringent than the comparable Tier
1 standards. Particulate matter (PM) is the generic term for a broad
class of chemically and physically diverse substances that exist as
discrete particles over a wide range of sizes. PM emissions have been
associated with numerous serious health effects, including upper and
lower respiratory illnesses such as pneumonia, chronic obstructive
pulmonary disease, chronic bronchitis, aggravation of the respiratory
system in children with preexisting illnesses, and premature mortality
in sensitive individuals (such as those with cardiovascular diseases).
In addition, studies have shown that PM emissions episodes can result
in a short-term decrease in lung function in small children. PM
emissions also contribute to impairment of visibility, acidic
deposition, and potential modification of the climate.
As discussed more fully in the RIA for this rulemaking, EPA's
modelling shows that implementation of the National LEV program will
result in a 28.6 ton/day effective PM-10 (particulates less than 10
microns in diameter) emissions reduction in 2005 (compared to expected
PM emissions in a situation where current Tier 1 standards apply
outside the OTC and OTC LEV is implemented within the OTC).
Furthermore, in western areas with a PM pollution problem caused by
nitrates (such as Denver), the NOX reductions achieved by the
National LEV program would provide additional PM emissions benefits.
The National LEV program also includes standards for formaldehyde
emissions from motor vehicles, unlike the current federal Tier 1
standards, which do not regulate emissions of formaldehyde.4 In
April 1993, pursuant to Sec. 202(l) of the CAA, EPA released its
assessment of the need for controlling emissions of toxic air
pollutants from motor vehicles and motor vehicle fuels (EPA Motor
Vehicle-Related Air Toxics Study). This study focused on the
carcinogenic risk associated with such emissions, and discussed the
health effects of the following specific toxic air pollutants: benzene,
formaldehyde, 1,3-butadiene, acetaldehyde, and selected metals and
motor vehicle-related pollutants identified as hazardous air pollutants
in Sec. 112(b) of the CAA. Interested readers should refer to this EPA
study for more information
[[Page 52738]]
regarding the health effects of toxic motor-vehicle-related air
pollutants.
\4\ If EPA promulgates standards for emissions of toxic air
pollutants from new motor vehicles, including benzene and
formaldehyde standards, pursuant to Section 202(l) of the Clean Air
Act, those standards would apply to vehicles certified under the
National LEV program.
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EPA has classified benzene as a Group A known human carcinogen,
based on studies on workers showing that long-term exposure to high
levels of benzene causes cancer. Exposure to benzene emissions has also
been associated with non-cancer health effects, including blood
disorders, adverse effects on the immune system, and damage to
reproductive organs. EPA has classified formaldehyde as a probable
human carcinogen, based on animal studies showing that long-term
exposure to and inhalation of formaldehyde is associated with certain
types of tumors. In addition, exposure to formaldehyde is associated
with non-cancer health effects, including irritation of the eyes, nose,
throat, and lower airway at low levels of exposure, and adverse effects
on the liver and kidneys. As discussed more fully in the RIA for this
rulemaking, EPA's modelling demonstrates that implementation of the
National LEV program will result in reduced emissions of benzene
(reduction of 7 tons/day) and formaldehyde (4 tons/day) nationwide in
2005.
EPA believes that the National LEV program is particularly
promising because it would provide these nationwide health and
environmental benefits while reducing some aspects of the auto
manufacturers' regulatory burden and compliance costs. Currently,
manufacturers design, test and produce two different types of vehicles
(California and federal), each of which must meet different standards
according to different test procedures. One of the goals of the
National LEV program is to use a single test procedure and standard for
each particular type of emission control requirement. Because of this
harmonization with California's program,5 implementation of the
National LEV program will streamline the process for certifying a
vehicle for sale, reduce auto manufacturers' design and testing costs,
and provide other efficiencies in the marketing of automobiles.6
\5\ In addition to using the same tailpipe standards as
California, this notice also proposes several changes to EPA
standards and test procedures that will further harmonize the
federal and California motor vehicle emission control programs. EPA
expects that the California Air Resources Board will reassess its
regulations shortly in order to further this harmonization.
Even if National LEV becomes effective, California will continue
to have its own program. Manufacturers could decide to sell some
vehicles (such as ULEVs or ZEVs) in California (or California and
the OTR), but not nationwide.
\6\ EPA recently received a letter from the Government of
Canada, indicating that government's interest in adopting national
motor vehicle emissions standards that are the same as those
contained in any national low emission vehicle program adopted in
the United States. Such harmonization of motor vehicle emission
control standards in the United States and Canada would provide even
greater efficiencies to the auto manufacturers, and would broaden
the geographical range of the emissions benefits of such a program,
including the specific benefit of reduced downwind pollution
transport.
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EPA also believes the National LEV program would be a preferable
alternative to OTC LEV because it will use fewer regulatory,
legislative and litigation resources than would OTC LEV since the
implementation of the National LEV program would be premised on
agreement reached by the OTR States, the auto manufacturers, and EPA.
The OTR States, the auto manufacturers, and EPA, with input from
environmental and public health groups, and other interested parties,
have made significant efforts that resulted in a broad outline for a
viable, cost-effective national low-emission vehicle program. EPA
believes that cooperation among the various interested parties is the
best way to achieve significant emissions reductions and to design a
practical, enforceable, and efficient program. It allows the OTR
States, EPA, auto manufacturers, other affected industry groups,
environmental groups and other interested parties to spend resources
making the program work instead of fighting each other on a state-by-
state basis over adoption of OTC LEV. The National LEV program is a
promising example of cooperation among state governments, the
automobile manufacturers, public health and environmental groups, and
the federal government, towards the goal of cleaner air in the
northeast U.S. and the rest of the country.
EPA has also analyzed the costs of the National LEV program based
on currently available information. The most recent detailed assessment
of the cost of LEVs was produced by the California Air Resources Board
(CARB) in 1994. CARB estimated the incremental cost of $114 per car for
LEVs only in California. EPA believes that the incremental cost for
National LEV will be considerably less expensive than the CARB estimate
for a variety of reasons. First, automotive pollution control
technology has advanced since CARB made its estimate. For example,
Honda recently announced the introduction of new LEV technology that
will add little or no cost to vehicles. Second, the national LEV
program includes numerous provisions to harmonize federal and
California motor vehicle requirements. The resulting cost-savings for
auto manufacturers (in areas such as vehicle design, certification
testing, mechanic training and inventory control) will be significant
and offset at least a portion of the LEV production tests. Third, the
nationwide production of LEVs will result in economics of scale for the
manufacturers. Finally, auto industry experience has consistently
demonstrated rapid price decreases in successive model years for newly-
introduced technology. Analysis discussed in the RIA yields an annual
incremental cost estimate compared to current regulatory obligations of
$700 million for the national LEV program, although EPA believes these
costs would actually be lower, as discussed above. The total
expenditure for new cars in the United States in 1993 was approximately
$225 billion.
C. Background
To provide a context for, and background to, the program proposed
in today's notice, it is necessary to discuss briefly the federal and
California motor vehicle programs and the circumstances leading to
EPA's OTC LEV decision. As described more fully below, EPA provided
extensive and numerous opportunities for public involvement in that
decision and in developing the framework for a national voluntary low
emission vehicle program.
1. Current Federal Motor Vehicle Emissions Control Program
The Clean Air Act prohibits the introduction into commerce of a new
motor vehicle that is not covered by a certificate of conformity issued
by EPA. To obtain such a certificate for a vehicle or engine family,
manufacturers must demonstrate compliance with all federal emissions
control standards and requirements that apply to new motor vehicles for
that class or category of vehicles for the relevant model year.
Emissions standards for model year (MY) 1994 new light-duty vehicles
(LDVs) and light-duty trucks (LDTs) are codified at 40 CFR 86.094-8 and
86.094-9. EPA's current standards for control of exhaust emissions of
non-methane hydrocarbon (NMHC), NOX, CO, and PM from new light-
duty vehicles and new light-duty trucks were established in June 1991,
and became effective beginning in model year 1994. See 56 FR 25724
(June 5, 1991).
The current standards (hereinafter ``Tier 1 standards'') are
applicable for the full useful life of the vehicle. Manufacturers must
certify new motor vehicles and engines to the Tier 1 standards using
the Federal Test Procedure. In model year 1996 and thereafter, all LDVs
and LDTs must
[[Page 52739]]
comply with the Tier 1 standards. Under section 207 of the Act,
manufacturers must warrant the emissions performance of their new,
certified motor vehicles for a portion of the vehicle's full useful
life. EPA enforces the Tier 1 standards through its Selective
Enforcement Audit program (assembly line testing) and through in-use
compliance testing and recall programs.
The current federal motor vehicle emission control program also
includes other standards and requirements that apply to new motor
vehicles, such as evaporative emissions, cold temperature CO, on-board
refueling vapor recovery, and on-board diagnostic equipment. The
program proposed by EPA in today's action would continue to require new
motor vehicles to comply with these requirements, but also proposes
revisions to them to achieve greater harmonization with comparable
California standards and requirements.
2. California Low Emission Vehicle Program
Section 209 of the Clean Air Act generally preempts states from
adopting and enforcing standards relating to emissions from new motor
vehicles and new motor vehicle engines.7 However, the Act provides
two exceptions. One allows EPA to waive preemption for the State of
California, permitting that state to adopt and enforce its own motor
vehicle emissions control program.8 The second exception allows
states other than California to adopt and enforce California's
standards, if certain specified conditions are met.9
\7\ 42 U.S.C. 7543(a).
\8\ 42 U.S.C. 7543(b).
\9\ Clean Air Act section 177; 42 U.S.C. 7507.
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In 1990, California adopted the Low Emissions Vehicle (LEV)
program, containing three basic components. First, manufacturers must
certify new motor vehicles to one of the following five emissions
categories, each characterized by an increasingly stringent set of
emission standards: California Tier 1, Transitional Low Emission
Vehicles (TLEVs), Low Emission Vehicles (LEVs), Ultra Low Emission
Vehicles (ULEVs), and Zero Emission Vehicles (ZEVs). Second,
manufacturers must comply with an overall NMOG fleet average standard.
This requirement began in model year 1994 and becomes more stringent
over time. The third element is a ZEV production mandate, which
requires manufacturers to include a certain percentage of ZEVs each
year in their light-duty vehicle fleet for sale in California. The ZEV
mandate begins in model year 1998, when 2% of the light-duty fleet must
be ZEVs, and increases to 10% in model year 2003 and beyond. EPA
granted California a waiver of preemption for its LEV program in
January 1993. See 58 FR 4166 (January 13, 1993).
The States of New York, Massachusetts, and Connecticut, all of
which are members of the OTR, have adopted all or portions of the
California LEV program pursuant to Section 177 of the Act.
Massachusetts is currently implementing its LEV program, and New York
is initiating implementation with model year 1996. Connecticut has also
adopted the California LEV program. The automobile manufacturers have
challenged the New York and Massachusetts LEV programs in federal
court. Recent district and appellate court decisions have upheld the
New York and Massachusetts LEV programs.10
\10\ American Automobile Manufacturers Association (AAMA) v.
Commissioner, Massachusetts Department of Environmental Protection,
31 F.3d 18 (1st Cir. 1994); Motor Vehicle Manufacturers Association
v. New York State Department of Environmental Conservation, 17 F.3d
521 (2nd Cir. 1994); MVMA v. NYSDEC, No. 92-CV-869 (D. Mass. Oct.
24, 1994); and AAMA v. Greenbaum, No. 93-10799-MA (D. Mass. Oct. 27,
1993).
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3. OTC LEV Decision
A summary of the OTC LEV decision is provided here. Interested
parties are referred to the OTC LEV decision Supplementary Notice of
Proposed Rulemaking, and Notice of Final Rulemaking for additional
information. 59 FR 48664 (September 22, 1994); and 60 FR 4712 (January
24, 1995).
In February, 1994, the OTC formally recommended, pursuant to
section 184(c) of the CAA, that EPA require all OTR States to adopt an
OTC LEV program in their State Implementation Plans (SIPs). The OTC LEV
program recommended by the OTC would require that, beginning in model
year 1999, all new light-duty vehicles and light-duty trucks sold or
otherwise introduced into commerce in the OTR be certified to
California LEV program standards. In addition, manufacturers would be
required to meet California's NMOG fleet average standard for such
vehicles. The OTC recommended that member states be allowed, but not
required, to adopt California's ZEV mandate, unless EPA determined that
the Clean Air Act required a state to adopt the ZEV mandate in order to
adopt the NMOG average part of the LEV program. In addition, the OTC
stated that it expected EPA to evaluate alternatives to OTC LEV.
On December 19, 1994, EPA approved the OTC recommendation. EPA
found that the emissions reductions resulting from OTC LEV or a LEV-
equivalent program are necessary for ozone nonattainment areas in the
OTR to achieve attainment (and maintenance) by the applicable deadline,
and that the OTC LEV program is consistent with the Clean Air Act. 60
FR 4712 (January 24, 1995). Based on that approval, EPA issued to each
OTC State a finding that its SIP is substantially inadequate to meet
certain requirements insofar as the SIP would not currently achieve
those necessary emissions reductions. The States are required to submit
a SIP revision on or before February 15, 1996, to cure this inadequacy.
In the OTC LEV decision, EPA found that states could satisfy the
finding of SIP inadequacy by adopting OTC LEV, or by submitting a
``shortfall'' SIP.11 The SIP inadequacy would also be satisfied if
EPA were to determine through rulemaking that a federal 49-state motor
vehicle emission control program was an acceptable LEV-equivalent
program, and found that such program was in effect. Thus, if EPA were
to find that auto manufacturers had opted into a LEV-equivalent federal
motor vehicle emissions control program that is deemed acceptable by
EPA through rulemaking action, then states would be relieved of the
obligation under the OTC LEV decision to adopt the OTC LEV program in
their SIPs.
\11\ As described in the OTC LEV decision, a ``shortfall'' SIP
program must contain adopted measures that make up the shortfall
between (1) the emission reductions necessary to prevent adverse
consequences on downwind nonattainment, as determined by EPA in the
OTC LEV decision, and (2) the emission reductions that would be
achieved by the measures mandated by the Clean Air Act and
potentially broadly applicable measures, as identified by EPA in the
OTC LEV decision. See 60 FR at 4730.
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4. Public Process
Given the serious and complicated issues raised by the OTC petition
and the broad ramifications of these issues, EPA employed a public
process designed to achieve quick resolution and to provide maximum
opportunity for public participation in the decisionmaking process.
Following receipt of the OTC petition, EPA published a notice of
proposed rulemaking (NPRM) that detailed the Agency's analytic
framework for a decision on the OTC's recommendation, identified the
central issues EPA was considering, and proposed in the alternative to
approve, disapprove, or partially approve and disapprove the
recommendation. See 59 FR 21720 (April 26, 1994).
[[Page 52740]]
Following publication of the NPRM, EPA held a series of public
``roundtable'' meetings, in addition to a public hearing on the notice.
These roundtable meetings were designed to provide specific, detailed
analyses of the relevant issues through interactive discussion among
the various interested parties and members of the public, including
states, environmental and public health groups, automobile
manufacturers, and representatives from other industries in the OTR.
These discussions produced promising advances towards development of a
49-state motor vehicle emissions control program as an alternative to
the OTC LEV program. Interested parties should refer to the NPRM and
the Supplemental Notice of Proposed Rulemaking (SNPRM) for more
information. 59 FR 48664 (September 22, 1994). The written public
comments on the OTC LEV NPRM and SNPRM, and EPA's responses, are in the
public docket for the OTC LEV decision (Docket no. A-94-11).
The public interest in the OTC LEV decision process, and especially
in the development of a 49-state motor vehicle emissions control
program, prompted EPA to establish the Subcommittee on Mobile Source
Emissions and Air Quality in the Northeastern States (hereinafter ``the
Subcommittee'') of the Clean Air Act Advisory Committee in accordance
with the Federal Advisory Committee Act. The Subcommittee was charged
with evaluating the issues related to the petition and providing a
public forum to discuss alternative motor vehicle standards that could
apply in all states, except California. The Subcommittee members
represent the spectrum of interests potentially affected by the OTC
petition and any alternative programs. These interests include state
and local governments within and outside the OTR, public health and
environmental groups, automobile manufacturers and dealers, utilities,
fuel providers, alternative fuel vehicle proponents and labor. In
addition, the Subcommittee formed four working groups that allowed
additional participants to focus on specific issues implicated by a 49-
state motor vehicle emissions control program, including fuels,
enforcement, incentives for the development of advanced technology
vehicles, and emissions trading. The Subcommittee and the workgroups
met frequently from September through November 1994. Possible program
elements for this NPRM were discussed with the Subcommittee and
Committee in June, 1995.
D. National LEV Program
1. Agreement--A Necessary Predicate for the National LEV Program
The National LEV program would be a voluntary program that could
not be implemented without the agreement of the auto manufacturers and
the OTC States. EPA cannot require the auto manufacturers to meet the
National LEV exhaust standards, absent the manufacturers' consent,
because Section 202(b)(1)(C) of the Clean Air Act prevents EPA from
mandating new exhaust standards applicable before model year 2004. The
auto manufacturers have said that they will not agree to be bound by
the National LEV program unless the OTC States accept National LEV as
an alternative to OTC LEV. EPA does not have authority to require the
OTC States to accept the National LEV program. Thus, National LEV is
dependent upon the auto manufacturers and the OTC States voluntarily
committing to the program.
The OTC States and auto manufacturers are negotiating a voluntary,
49-state low emission motor vehicle program that would include
committing to National LEV and to the introduction of advanced
technology vehicles in the OTR. It is envisioned that, if an agreement
is reached, it will be memorialized in a Memorandum of Understanding
(MOU) to be signed by all OTR States and all auto manufacturers with
sales in the United States. The National LEV program, which is the
subject of today's notice, would be finalized as EPA regulations. The
Advanced Technology Vehicle (ATV) component (which is discussed in more
detail in Section V.A.2.c below) would be a separate agreement between
the OTC States and auto manufacturers that would be contained in an
attachment to the MOU. Although the OTC States and auto manufacturers
have not yet reached final agreement, EPA believes it is appropriate to
propose the National LEV program at this time. First, consensus has
been reached on many of the elements to be proposed for the National
LEV program. Where consensus has not been reached, EPA is soliciting
comment on a broad range of issues and options raised by the proposed
program, so that the Agency can resolve issues, in light of comments
received on this notice, following signature of the MOU by the OTC
States and the auto manufacturers. States and manufacturers are
encouraged to provide comments on today's notice. Second, EPA does not
want implementation of the MOU and the National LEV program to be
delayed unnecessarily. The OTC States' obligations to submit OTC LEV
SIP revisions on February 16,1996, creates a need for the OTC States to
know soon whether the National LEV program will come into being.
Although several important issues are still under discussion, EPA
understands that one of the primary unresolved issues between the OTC
States and the auto manufacturers centers on the ZEV mandates that have
been adopted or could be adopted in the future. EPA believes that this
is a decision that must be left up to each individual OTC State. As EPA
stated in the OTC LEV decision, 60 FR at 4724, states have the right to
decide whether to adopt a ZEV mandate pursuant to Section 177 of the
Clean Air Act, 42 U.S.C Sec. 7507. EPA also believes that states have
the right to decide to use other innovative approaches to increase the
use of ZEVs and other advances in motor vehicle technology in their
states. For example, states may develop programs such as cooperative
efforts and other measures to advance infrastructure development and
increase consumer demand for advanced technology vehicles to be used in
conjunction with mandates measures or as stand alone programs. EPA
understands that negotiations are continuing on this issue.
EPA also understands that another key area with important
unresolved issues between the OTC States and the auto manufacturers is
the area of state commitments. Specifically, full implementation of
National LEV is premised on agreement on the content and form of state
commitments regarding adoption or retention of a section 177 program
that does not allow compliance with National LEV as a full alternative
to compliance with the state program. Absent such an agreement, States
retain their full rights under section 177.
EPA is hopeful that an agreement will be reached soon because of
the many benefits of the National LEV program to the nation as a whole,
the OTC States and the auto manufacturers. A set of uniform, more
stringent standards that apply in 49 states is a more environmentally
beneficial and economically efficient approach to achieving emissions
reductions from new motor vehicles than a ``patchwork'' of California
standards in some states and federal standards in others. The National
LEV program would achieve at least the same level of emissions
reductions in the OTR as would the OTC LEV program. The introduction of
low emission vehicles nationwide would help alleviate pollution
transport problems in the OTC and in other states and would eliminate
concerns about
[[Page 52741]]
non-LEV vehicles being introduced into the OTR from states outside the
region that have not adopted the California LEV program (CAL LEV). In
addition, a 49-state program would impose less administrative burden on
the OTC States and other states than would state-by-state adoption and
enforcement of CAL LEV. Finally, it is beneficial to focus on
implementation of a 49-state program that is supported by the OTC
States, the auto manufacturers, and EPA, rather than expending
resources litigating the OTC LEV decision and each OTC State's adoption
of a LEV program.
2. Description of National LEV Program
In today's notice, EPA is proposing a set of national voluntary
emissions standards (the National LEV program) to control emissions of
ozone-forming pollutants from certain new motor vehicles. Under EPA's
proposal, the program would apply to new light-duty vehicles (LDVs) and
new light-duty trucks (LDTs) sold in the OTR beginning in model year
1997, and would expand to apply to all new LDVs and LDTs in the nation
(except California) in model year 2001. Manufacturers that choose to
opt into the National LEV program would be subject to this alternative
set of federal exhaust emission standards in lieu of the federal Tier 1
exhaust emission standards. The National LEV program would require
manufacturers to certify LDVs and LDTs to one of the following
certification categories: Tier 1, TLEV, LEV, ULEV, or ZEV. Each
certification category contains tailpipe emission standards for NMOG,
CO, NOX, HCHO, and PM.
The National LEV program would also require manufacturers to
produce and deliver for sale a combination of vehicles that complies
with an annual fleet average NMOG value. The National LEV program would
require the implementation of an increasingly stringent NMOG fleet
average standard in the OTR for light-duty vehicles and light-duty
trucks from model years 1997 to 2001. Beginning with model year 2001,
manufacturers would be required to comply with a nationwide NMOG fleet
average standard for LDVs and LDTs sold outside the OTR (except
California) that is equivalent to a 100% LEV fleet. An averaging,
banking and trading program comparable to California's could be used in
meeting the NMOG fleet average requirements. In addition, manufacturers
would be required to install on-board diagnostic systems that comply
with California's On-board Diagnostics Requirement (OBD II) regulations
on all National LEV vehicles.
As part of EPA's effort to reinvent environmental regulations by
reducing regulatory burden without sacrificing environmental benefits,
EPA is also proposing changes to harmonize federal and California
standards and test procedures. Vehicles in the proposed National LEV
program would continue to be required to comply with all other federal
requirements applicable to LDVs and LDTs for the appropriate model
year, including emissions standards and requirements, test procedures,
and compliance and enforcement provisions. EPA is committed to working
with CARB to harmonize federal and California standards and test
procedures to the extent possible. Thus, today's action proposes
changes designed to harmonize certain federal and California standards
and test procedures. This should reduce the regulatory burden on
manufacturers by facilitating the design, certification, and production
of the same vehicles to meet both the National LEV and the California
LEV program requirements.
Once manufacturers have voluntarily opted into the National LEV
program and the program becomes effective, manufacturers will be bound
by the provisions of the program. National LEV standards would be
enforced in the same manner as any other federal motor vehicle
standard. Manufacturers would have the ability to opt out of the
program only in certain limited circumstances: (1) if any OTC State
does not meet or keep the commitments it agrees it will make regarding
adoption of OTC LEV or ZEV mandates; or (2) if, over manufacturer
objections, EPA makes certain specified requirements more stringent,
except as needed to harmonize with corresponding California
requirements.
IV. Provisions of National LEV Program
The proposed regulations establish a voluntary federal program of
more stringent tailpipe emission standards for light-duty vehicles and
light-duty trucks. As proposed, National LEV would include a set of new
tailpipe emission standards and related requirements, which for most
vehicles would effectively replace the otherwise applicable Tier 1
tailpipe standards and would not change for the duration of the
program. The proposed National LEV standards and requirements would
include: (1) tailpipe emissions standards for NMOG, NOX, CO, HCHO,
and PM; (2) fleet average NMOG values; (3) allowance for the use of
California reformulated gasoline II as test fuel for the tailpipe
standards; (4) California on-board diagnostic system requirements (OBD
II); (5) averaging, banking and trading provisions; and (6) low volume
manufacturer provisions.
In general, the National LEV standards and related requirements are
patterned after California's more stringent tailpipe standards and NMOG
fleet averages. As National LEV is voluntary, manufacturers would only
have to comply with the National LEV standards if they chose to opt
into the program. Once they have opted in, however, emissions
equivalency and enforceability would be ensured by making continued
compliance with the standards mandatory. Opt-out would be limited to
certain triggering conditions which, if they occurred, would change the
basic presumptions upon which the manufacturers opted into the program.
Such conditions would be a change in one of the designated ``Stable
Standards'' (as discussed below), or an OTC State's failure to meet or
keep its commitment regarding adoption of a state motor vehicle program
under section 177.
Any manufacturer that opts into the National LEV program would be
fully subject to its requirements. Barring one of the limited and
unlikely events that would allow manufacturers to opt out of the
program, manufacturers would be required to meet the National LEV
standards and requirements for all of the model years covered by the
program. A manufacturer that failed to meet these requirements would be
subject to the same enforcement measures as exist for mandatory federal
programs.12 Once manufacturers opted into National LEV, they would
find administration and enforcement of its requirements
indistinguishable from a traditional federal motor vehicle emissions
program.
\12\ EPA would promulgate the voluntary standards under the
authority of CAA sections 202 and 301.
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National LEV tailpipe emissions standards and related requirements
would apply to manufacturers beginning in model year 1997, in the OTR,
and extending at least through model year 2003. Manufacturers that opt
into the program prior to model year 1997 would have to comply with the
specified tailpipe emissions and related standards beginning in 1997
for light-duty vehicles and light-duty trucks offered for sale in the
OTR, and beginning in 2001 for those same vehicle categories offered
for sale in the rest of the country, except California. Any
manufacturer that opts into the program after model year 1996 would
have to comply with the standards beginning in the first model year
after the model year in which that
[[Page 52742]]
manufacturer opted in.13 The National LEV standards would continue
to apply through model year 2003 or until the first model year for
which manufacturers must meet federal standards promulgated under CAA
Sec. 202(i) (``Tier II'' standards) that are at least as stringent as
the National LEV standards, if certain conditions are met. By statute,
EPA could not promulgate Tier II standards applicable before model year
2004, so the National LEV standards would apply at least through model
year 2003.
\13\ EPA is also taking comment on whether, if National LEV were
not found to be in effect until after model year 1997 had already
begun, manufacturers should still comply with National LEV standards
for the 1997 model year.
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While manufacturers may opt into the voluntary tailpipe and other
standards described above, other federal standards and requirements in
the federal motor vehicle control program remain mandatory. EPA is
proposing various changes to these other applicable federal motor
vehicle standards, which are designed to harmonize them with the
California standards. EPA expects these changes to reduce the burden on
manufacturers of dual compliance while retaining current levels of
emissions control. These standards would remain mandatory federal
standards, however, and are discussed in section VI below.
A. Program Structure
This section discusses basic structural elements of the National
LEV program: the process and timing for manufacturers to opt into the
program and for EPA to find that the program is ``in effect;'' the
conditions allowing, process for and ramifications of a manufacturer's
decision to opt out of the program; and the duration of the program.
1. Opt-in to National LEV and In Effect Finding
The opt-in provisions are designed to provide a simple mechanism
that allows EPA to determine readily when a manufacturer has opted in
and become legally subject to the National LEV program requirements.
EPA is proposing that a motor vehicle manufacturer would opt into the
program by submitting a written notification that unambiguously and
unconditionally states that the manufacturer is opting into the
program, subject only to the condition that EPA subsequently find the
program to be in effect by a certain date for purposes of satisfying
the SIP call issued in the OTC LEV decision. The notification would
also state that the manufacturer would not challenge EPA's authority to
establish and enforce the National LEV program.14 The proposed
regulations specify language that manufacturers would have to include
in the statement. The statement would have to be signed by a person or
entity within the corporation with authority to bind the corporation to
its choice. EPA requests comment on whether the regulations should
specifically identify the person or entity with such authority by title
or other means, and if so, who or what would have such authority. The
opt-in would become binding upon EPA's receipt of the statement, except
that if the Administrator fails to sign a finding that the program is
in effect within 60 days of signature of the final National LEV rule,
manufacturers could withdraw conditional opt-ins. EPA is proposing that
the ``in effect'' finding would not require further rulemaking if all
auto manufacturers with sales in the United States opted in.
\14\ EPA is requesting comment on whether, in light of potential
changes in requirements for agency analyses prior to rulemaking,
manufacturers should also include a commitment not to petition the
Agency for any additional analyses of or revisions to the program,
once it becomes effective.
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EPA is requesting comment on whether it should establish time
limits for EPA to determine whether National LEV is in effect for
purposes of satisfying the OTC LEV SIP call. Early determination of the
status of National LEV is needed so manufacturers can plan their
production accordingly and the OTC States will have sufficient time to
cure the SIP inadequacy if National LEV does not come into effect. The
proposed regulations require EPA to make a finding on whether the
National LEV program is in effect within 60 days of signature of the
final National LEV regulations. (If signature is the start of the time
period for opt-in, EPA would provide directly affected parties actual
notice and make copies of the final rule available within a week of
signature.) Alternatively, EPA could establish a longer or shorter
period to make the finding, or key the time period off of publication,
instead of signature, of the final rule. On a longer timeframe, one
option would be for the regulations to set a deadline for an in effect
finding based on the agreed date for OTC States to submit their
commitments regarding adoption or retention of CAA section 177
programs.
EPA is also taking comment on whether it should establish a time
limit for manufacturers to opt in. While EPA is not proposing an
absolute deadline, the regulations commit the Agency to consider opt-in
notifications received within 45 days of signature of the final rule.
EPA is also taking comment on the following issues: Should the National
LEV regulations require manufacturers to opt in by a specific date, and
if so, by what date? Should the date be triggered by publication or
signature of the final rule? How long should manufacturers have to opt-
in? A short period (30-60 days) would give states and manufacturers
certainty about their obligations, but a longer period (90-120 days)
might be necessary to get requisite corporate sign-off. Should a
specific date be set (e.g. December 31, 1995) so that OTC States will
know prior to the start of state legislative sessions whether adoption
of OTC LEV is necessary to cure the SIP inadequacy. In addition, EPA is
requesting comment on whether manufacturers should be able to make
their opt-ins conditional upon any other factors such as a condition
that OTC States have made certain commitments regarding adoption or
retention of section 177 programs by a given date.
2. Opt-Out From National LEV
For the National LEV program to be useful and beneficial, it must
continue in effect for a substantial period of time stretching into the
next decade. States seek certainty regarding emissions benefits over
time, while motor vehicle manufacturers seek certainty regarding
emission standards to plan future production. The opt-out provisions
are structured to support the goal of program stability.
Once manufacturers have voluntarily chosen to opt into the program,
EPA is proposing that they could opt out of the program only under a
few specified circumstances, or ``offramps.'' As proposed, these
offramps are limited to: (1) EPA modification of certain specified
standards or requirements over the manufacturers' objection; or (2) an
OTC State's failure to meet or keep its commitment regarding adoption
or retention of a state motor vehicle program under section 177.
If a manufacturer were to opt out of the National LEV program, when
that opt-out became effective the manufacturer would become subject to
all standards that would apply if National LEV did not exist. The
federal Tier 1 tailpipe emissions and related standards would apply, as
would any state standards promulgated under section 177, regardless of
whether those standards allowed the alternative of compliance with
National LEV.
a. Conditions Allowing Opt-Out
(1) Changes to Stable Standards
EPA is proposing that certain specified standards and other
requirements be classified as ``Stable
[[Page 52743]]
Standards.'' With certain exceptions, any changes to the Stable
Standards applicable to vehicles produced for model years covered by
the National LEV rule would allow the auto manufacturers to opt out of
the National LEV program. The types of changes to the Stable Standards
that would not allow a manufacturer to opt out are changes that would
harmonize comparable federal and California standards, changes that do
not make a standard more stringent, and changes made without vehicle
manufacturers' objections.
The Agency believes that the appropriate Stable Standards fall into
two categories: (1) those core standards, procedures, and requirements
of the National LEV program that manufacturers would not have to meet
but for their voluntary commitment to comply with that program, and (2)
certain additional standards and requirements where the technical
indicators or the timing of candidate revisions make it unlikely EPA
would act under its discretionary authority to increase program
stringency. In balance, EPA believes that the low risk that EPA will
act to increase stringency in these areas does not make the program
unstable, while it gives the manufacturers greater clarity and
certainty about their obligations once they have entered into the
program, and the program is more stable as a result. The two categories
of proposed Stable Standards will be discussed separately.
A manufacturer that voluntarily chooses to be bound by standards
more stringent than EPA could impose (such as in the proposed National
LEV standards) should, in all fairness, only be required to comply with
future changes to these standards if it so chooses. If EPA does not
have authority to impose more stringent requirements, EPA does not
believe it would be appropriate for it to have unilateral authority to
change such requirements. Therefore, to protect the reasonable
expectations manufacturers will hold when they opt into the voluntary
standards of the National LEV program, it is reasonable to allow
manufacturers to opt out if there are changes in these voluntary
standards.
Consistent with this principle, EPA proposes that the first
category of Stable Standards includes the following core National LEV
program elements: [1] the TLEV, LEV, ULEV and ZEV tailpipe emission
standards (i.e., the ``LEV standards''); [2] use of the Federal Test
Procedure (FTP), including California phase II gasoline, for
determining compliance with the LEV standards; [3] the NMOG fleet
average standards; [4] banking and trading provisions used to meet the
NMOG average or the five percent cap on sales of TLEVs and Tier 1
vehicles in the OTR from model year 2001 on; and [5] requirements for
on-board diagnostics systems that meet California's OBD phase II
requirements.
Inclusion of the numerical standards in this category of Stable
Standards is justified because the LEV standards and the NMOG fleet
average standards (together with the associated banking and trading
provisions) are more stringent than current federal Tier 1 tailpipe
emission standards; the benefits associated with this greater
stringency are the foundation on which both the OTC LEV and National
LEV programs were built. The basis for including the OBD II
requirements in the first category of Stable Standards is the greater
stringency of California OBD II in the key areas of catalyst
deterioration, engine misfire, and evaporative emission system leak
detection.
The Agency proposes to include the FTP and the test fuel in the
Stable Standards because they are necessary to determine compliance
with the numerical standards. The Agency is conducting a parallel
effort to review the FTP as required by Section 206(h) of the Clean Air
Act, which has implications for the Stable Standards. On February 7,
1995, EPA published a notice proposing certain modifications to the
``conventional'' FTP, the addition of a new ``supplemental'' FTP (or
SFTP) incorporating ``off-cycle'' driving conditions (driving not
covered by the conventional FTP driving cycle), and new ``off-cycle''
emission standards (60 FR 7404). The proposal reflected an
unprecedented level of resources and input by the vehicle manufacturers
and the California Air Resources Board. The Agency is currently
evaluating comments on the February proposal and anticipates taking
final action to revise the FTP in October, 1995. EPA believes that CARB
will take consistent and coordinated action shortly thereafter.
EPA believes that the appropriate test procedure for use in
determining compliance of National LEV vehicles with the LEV standards
(and thus, for inclusion as a Stable Standard) is the conventional FTP
as modified by the imminent final revised FTP rulemaking. The Agency's
understanding is that the vehicle manufacturers acknowledge and support
this viewpoint. Thus, today's EPA proposal places the FTP among the
Stable Standards, but with the clear exception that any modifications
to the conventional FTP made under the statutory obligation of 42
U.S.C. Sec. 7525(h) will not trigger an offramp opportunity for the
vehicle manufacturers. Subsequent modifications to the conventional FTP
executed under EPA's discretionary authority would afford the
manufacturers an off-ramp, subject to the conditions stated elsewhere
in this notice.
The final revised FTP rule may also include ``off-cycle'' emission
standards or a Supplemental FTP. The Agency is proposing to include the
off-cycle standards and SFTP in the set of Stable Standards, but in the
second category of such standards, to be discussed next.
In addition to the core Stable Standards just described, EPA is
proposing a second category of non-core Stable Standards consisting of
the following elements of the federal motor vehicle emission control
program: [1] any ``off-cycle'' emission standards, associated test
procedures and implementation schedules promulgated by EPA under
Section 206(h) of the Clean Air Act; [2] the existing federal program
for control of on-board refueling vapor recovery (ORVR), including the
test procedures, test fuel, standards, and implementation schedules;
[3] the existing cold temperature carbon monoxide (Cold CO) program
effective through model year 2000, including the Cold CO test
procedure, test fuel, and standards; and [4] the existing federal
evaporative emissions control program, including the emissions
standards, test procedures, and implementation schedules. The Agency
has independent authority to impose or modify these standards and
requirements. Nevertheless, EPA believes it is appropriate to include
them as Stable Standards. This would provide increased certainty for
manufacturers that they can produce a single version of each vehicle
nationwide to comply with all applicable requirements. This increased
certainty should provide manufacturers added incentive to opt into the
National LEV program without making the program unstable. In reaching
this conclusion, EPA evaluated each program element on a case-by-case
basis, both for the timing of potential future action to revise that
program element and for the technical framework that might prompt EPA
into such action.
As noted previously, EPA anticipates final action to promulgate
off-cycle emission standards and an associated procedure by October 31,
1995. If adopted, this proposal would add a significant new set of
tailpipe emission requirements, phased in over model years 1998 through
2001. Conforming vehicles, which could serve as the basis for
evaluating the sufficiency of EPA's final off-cycle requirements, will
not
[[Page 52744]]
penetrate the fleet in significant numbers until the end of the
proposed National LEV program period. The Agency has no technical basis
at this time to conclude that an identified source of off-cycle
emissions will go unregulated as a consequence of the final off-cycle
rule. In the limited case where some form of high-impact, unregulated
off-cycle emissions behavior were to be subsequently identified, EPA
could still choose to promulgate new off-cycle regulations; the
leadtime required for promulgation of new rules might push the first
year of feasible implementation for such revisions past the period of
the National LEV rule. Even if an earlier rule seemed practical, EPA
could nonetheless choose to proceed, recognizing the possibility that
such action might prompt manufacturers to opt out of the National LEV
program.
The Agency anticipates that CARB will act in the near future to
finalize its own off-cycle requirements, consistent with EPA's actions
except for the stringency of the off-cycle standards. EPA's
understanding is that the vehicle manufacturers have volunteered to
meet whatever off-cycle FTP requirements California adopts, even if
they are of greater stringency than the federal requirements. On this
basis, EPA would propose to amend the first (core) category of Stable
Standards to include the new CARB off-cycle requirements, justified on
the basis that the vehicle manufacturers would be volunteering to meet
more stringent standards as part of the National LEV program.
The situation with the federal On-board Refueling Vapor Recovery
(ORVR) program is similar to the off-cycle standards and procedures,
except that this rule has been finalized (59 FR 16262). The ORVR phase-
in for LDVs begins in model year 1998 and ends for LDTs in model year
2003, so the availability of technical information from conforming in-
use vehicles will likewise occur, at best, near the end of the National
LEV program. Agency staff finalized the recent ORVR rule based on the
best currently available technical information, and with no indication
of significant technical shortcomings or unregulated refueling
emissions that would foreshadow the need for imminent, more stringent
ORVR rulemaking.
For Cold CO, EPA has a statutory obligation to revisit the Cold CO
standard under Section 202(j) of the Clean Air Act, and to make
changes, if necessary, effective with model year 2001. Given the
stringency of current standards, progress in reducing CO levels, and
the leadtime required for promulgating new rules, EPA does not believe
it will be necessary to revisit the Cold CO standard prior to the
statutorily mandated time, at which point, Cold CO would no longer be
included as a Stable Standard.
The final set of requirements proposed for inclusion in the second
category of Stable Standards is the federal evaporative emissions
control program, modified to specify California test fuel and test
temperature as explained in Section VI.B.2. Final evaporative emission
regulations were promulgated by EPA on March 24, 1993 (58 FR 16002). A
direct final rule promulgating a set of technical amendments to that
rule (including amendments designed to harmonize federal and CARB
evaporative emissions requirements) was published on August 23, 1995
(60 FR 43880). Based on the March 1993 rule, the first new conforming
vehicles have already been certified for model year 1996, and phase-in
of the requirements will be completed in model year 1999. As with the
ORVR final rule, EPA believes that the March 1993 evaporative emissions
final rule, together with the recently published technical amendments,
represents the best technical information available and an appropriate
level of stringency for the federal requirements, and that short-term
actions to increase the stringency of these requirements are not
necessary.
With the proposed Stable Standards, EPA cannot and does not propose
to forego any mandatory rulemaking activity, nor even to preclude
discretionary activity, related to the listed program elements. Rather,
EPA is proposing that if it takes discretionary action to increase the
stringency of certain program elements and the change does not
harmonize federal with California requirements, the manufacturers may
take discretionary action to remove themselves from the voluntary
program. The Agency believes that changes to the proposed Stable
Standards applicable to the model years of the National LEV program are
likely to be technical amendments that do not impact program
stringency, actions to harmonize with California, or actions where the
vehicle manufacturers agree with EPA's judgment that the change is
appropriate. Thus, EPA finds it unlikely that the proposed Stable
Standards would trigger an opportunity for manufacturers to opt out of
the program or create instability in the program.
EPA seeks comment on whether each proposed Stable Standard is
appropriate or whether one or more proposed Stable Standards should not
be included as such. If EPA were likely to change a Stable Standard,
then the National LEV program would probably be unstable and it would
be difficult to find that OTC States did not need to adopt OTC LEV as a
backstop. Thus, EPA also seeks comment on whether the proposed Stable
Standards are justifiably considered stable on a technical basis.
Changes to those portions of the existing requirements not cited in
the above itemization of the proposed Stable Standards (and the
parallel list incorporated in Section 86.1705 of the proposed National
LEV regulations) would not trigger an off-ramp opportunity for the
manufacturers. For example, EPA believes it must have the option to
guarantee attainment of the stringency of the requirements already in
force (as opposed to increasing the stringency of those requirements)
without providing manufacturers the opportunity to opt out of the
National LEV program. Thus, the Agency believes that the emissions
durability program and defeat device requirements, which are designed
to ensure that vehicles actually comply with the emissions standards
over their useful life, should not be included in the Stable Standards.
The importance of achieving the predicted stringency for elements
of the program is particularly important where the standards or
procedures have been newly promulgated. The Agency must have the
ability to modify the durability program to detect deterioration or
component durability shortcomings of new designs introduced by
manufacturers to meet these new requirements, and to prevent devices
that intentionally circumvent the intended emissions targeted by those
new requirements. In the evaporative emissions area, for example, EPA
noted in the March 1993 final rule that it could not yet anticipate the
penetration of pressurized fuel tank designs in response to the new
evaporative requirements; such systems present the possibility of
failure modes in the evaporative control system that would be most
efficiently addressed not through emissions recalls, but through
changes to the component durability program. Such changes would not
allow manufacturers to opt out of National LEV.
EPA is proposing that it could make the following types of changes
to the Stable Standards without providing an opportunity for auto
manufacturers to opt out of the program: changes to harmonize the
federal standards with the comparable then-current California standard,
changes that do not increase stringency, and changes to which
manufacturers do not object. If manufacturers need changes to existing
[[Page 52745]]
regulations because of minor problems that arise during implementation,
EPA could correct those problems either because the technical amendment
would not affect stringency or because manufacturers did not object to
the change. EPA also takes comment on whether the ability to make the
specified types of changes would minimize some of the possible
drawbacks of specifying non-core requirements as Stable Standards. For
example, if it were determined later that additional environmental
benefits could be achieved at minimal cost by modifying the ``off-
cycle'' FTP standards for TLEVs, LEVs or ULEVs, EPA could add those
environmental benefits to National LEV provided that California changed
its regulations.
EPA is also taking comment on whether other types of changes should
not provide an opportunity to opt out of the program, particularly if
non-core standards are specified as Stable Standards. For example,
rather than trying to determine whether stringency is affected by
technical amendments necessary to make the implementation-related
adjustments inevitably needed in a new regulatory program (if, for
example, adjustments are needed for the recently promulgated ORVR
regulations), perhaps EPA should be able to make any type of change for
the first year or two that a new regulatory obligation is in effect.
Another option might be to exclude specific program sub-elements from
the Stable Standards because the Agency might subsequently conclude
there are compelling reasons for EPA to increase the stringency of
those sub-elements in the model years of the National LEV program. If
the sub-elements were part of the broader list of Stable Standards,
such action might destablize the program by allowing manufacturers to
opt out. The Agency solicits comments on whether the proposed list of
Stable Standards includes any such program sub-elements and whether EPA
should act in a final National LEV rule to except them from the Stable
Standards.
(2) OTC States' Failure to Meet or Keep Their Commitments
The second condition allowing manufacturers to opt out is a failure
of any OTC State to meet its commitment (as finally agreed upon by the
OTC States and auto manufacturers) regarding adoption or retention of a
section 177 program that does not allow compliance with National LEV as
a full alternative to compliance with the state program. The
manufacturers and the states have not yet reached agreement on the
exact content and form of such a state commitment. Details that have
yet to be resolved concern what the OTC States will commit to do
regarding adoption or retention of section 177 programs (both LEV and
ZEV requirements) and the timing of any agreed upon actions. Possible
instruments for such state commitments include a commitment in a SIP
revision, a consent decree, a legislative resolution, a letter from the
State Attorney General, an Executive Order from the Governor, signature
of an MOU with the manufacturers, or any package of several of these
instruments. Since National LEV is intended to provide an alternative
to OTC LEV, manufacturers should not be bound to stay in the National
LEV program if an OTC state requires them to comply with a section 177
program contrary to the terms of the final agreement. This offramp not
only gives manufacturers recourse if a state does not fulfill its part
of the bargain, but also encourages states to fulfill their commitments
by setting a serious penalty for failure. EPA will provide further
notice on state commitments when more information is available.
b. Effective Date of Opt-Out
To opt out of the program, a manufacturer would follow the same
notification procedure used to opt in, additionally specifying the
condition allowing opt-out. EPA is proposing that manufacturers would
have to decide whether to exercise their option to opt out within 60
days of the occurrence of the condition triggering opt-out. This would
provide greater program stability by ensuring that if no manufacturer
takes an available opt-out within a certain period of time, that option
expires and the program will continue, barring another offramp being
triggered. EPA requests comment on whether an amount of time to allow
for exercise of an opt-out option should be specified and, if so, what
the length of time should be.
An opt-out would not become effective if, within 60 days of receipt
of the opt-out statement, the Administrator were to find that the
condition cited by the manufacturer had not actually occurred. Then, if
a dispute between a manufacturer and EPA over the existence of a
condition allowing opt-out had to be settled through litigation, EPA
could continue to enforce the National LEV program while a court was in
the process of resolving the dispute.
Unless EPA were to find that the opt-out condition had not
occurred, the effective date of an opt-out would depend on the
condition authorizing the opt-out. The effective date of the opt-out
would determine when the manufacturer would no longer have to comply
with the National LEV program and instead would become subject to
Federal Tier 1 tailpipe emissions and related standards and state
section 177 programs. EPA is considering three major factors in
determining when opt-outs should become effective. The first factor is
the burden that different effective dates place on manufacturers, in
terms of complying with emissions standards. A second factor is the
effect of different opt-out dates on emissions reductions. Third, EPA
will consider the extent to which different effective dates provide
program stability by providing disincentives for EPA or the OTC States
to trigger an offramp.
If EPA were to modify one of the specified Stable Standards or
requirements over the objection of a manufacturer, EPA is proposing
that opt-out would be effective for the first model year to which the
modified standard applied. Similarly, if after promulgation of the
final rule an OTC State were to adopt a state motor vehicle program
under section 177 in a way that violated a commitment it made, opt-out
would be effective for the first model year to which the state
regulations applied. EPA believes this approach achieves the best
balance between preservation of emissions reductions and minimization
of burden on manufacturers. This approach would ensure that there is no
loss of emissions reductions before the condition triggering an opt-out
actually imposed a compliance burden on the manufacturers. Also,
depending upon the effective date of the regulatory change made by EPA
or the state, delaying opt-out until that date may provide some
additional time for states without backstops in place to adopt section
177 programs.\15\ Yet this approach avoids placing any additional
burden on the manufacturers because as soon as manufacturers would need
to comply with the changed standard or the section 177 program, they
would no longer have to comply with National LEV. While this approach
does not provide an additional deterrent to triggering an offramp, EPA
believes the dissolution of the program and need to adopt and/or
implement section 177 programs is a very significant deterrent.
\15\ ``Backstops'' refers to OTC LEV programs that have been
adopted by states but do not become effective as long as National
LEV is in effect.
---------------------------------------------------------------------------
EPA is also requesting comment on a range of alternative approaches
to establishing the effective date of opt-outs that are allowed by an
EPA change to Stable Standards or an OTC State failure to keep its
commitment regarding a section 177 program. On one
[[Page 52746]]
end of the spectrum, opt-out could become effective immediately upon
trigger of the offramp. At the other end, EPA could make opt-out
effective only when all states had ample time to adopt OTC LEV, or even
had actually adopted OTC LEV. Another alternative would be to make opt-
out effective beginning in the first model year following the calendar
year in which EPA or the state acted, regardless of when the changed
federal or state standards would apply. While this approach would
result in higher emissions, this loss of emissions reductions from all
states without backstops would provide a greater disincentive for
either EPA or the OTR States to change the requirements. Still another
alternative would be to make opt-out effective for the first model year
three years after the calendar year in which EPA or the state acted, or
the first model year to which the changed regulations applied,
whichever is sooner. This approach could give most states without
backstops sufficient time to adopt OTC LEV and thereby provide greater
assurance that emissions reductions would not be lost. The Agency
requests comment on these or related approaches.
3. Duration of Program
If manufacturers do not opt out of the program, the proposed
regulations set an end date for the National LEV program that is tied
to the date of EPA's promulgation of future standards. EPA is also
taking comment on alternative end dates.
Under the proposed regulations, National LEV standards would remain
in place at least through model year 2003 and possibly through model
year 2006. If, by December 15, 2000, EPA has signed a final rule
establishing new, mandatory tailpipe standards at least as stringent as
National LEV that become effective in model year 2004, 2005 or 2006,
then National LEV would remain in effect until those new standards
became effective. If EPA did not issue regulations meeting those
conditions, then National LEV would end in model year 2003. In that
event, manufacturers would be required to meet federal Tier 1 standards
starting in model year 2004 in any state where they were not required
to meet California or OTC LEV standards.
The OTC States and auto manufacturers have expressed support for
this option. They believe it is important to have certainty regarding
new federal standards sooner rather than later. This would enable
manufacturers to design and plan future production and give states time
to adopt OTC or California LEV if EPA did not act by the specified
date. The OTC States and auto manufacturers believe that imposing a
hammer (i.e., return to Tier 1 standards nationwide in model year 2004)
will force EPA to act in the specified timeframe to give the parties
the certainty they feel they need.
EPA is also taking comment on having the National LEV program
extend until the first model year in which manufacturers must meet new,
mandatory tailpipe standards at least as stringent as National LEV.
This would not provide the incentive for EPA to issue such standards in
the specified time period, but it would avoid the confusion and
environmental harm that would occur if the nation were to go backwards
from National LEV to Tier 1 standards in model year 2004. EPA also
questions whether it is appropriate or necessary to address in this
rulemaking the rulemaking schedule for Tier II standards, given that
Congress has addressed this in section 202(i)(3) of the Clean Air Act,
42 U.S.C. Sec. 7521(i)(3).
B. Voluntary Tailpipe and Related Standards and Phase-In
1. Emission Standards for Categories of National LEV Vehicles
The exhaust emission standards being proposed today for vehicle
categories in the National LEV program are closely patterned after the
California LEV emission standards. The proposed National LEV standards
would apply to light-duty vehicles (LDVs), and the category of light-
duty trucks under 6000 lbs Gross Vehicle Weight Rating (GVWR) (i.e.,
light light-duty trucks (LLDTs)).16 Vehicles not in these
categories would continue to be certified and tested under applicable
federal regulations. Under the provisions of the proposed voluntary
program, once in the program, manufacturers would have to certify all
LDVs and LLDTs to one of five ``vehicle emission categories,'' each of
which has a unique set of emission standards. The least stringent set
of standards that vehicles could be certified to is the current set of
federal Tier 1 tailpipe standards. The Tier 1 standards include
standards for exhaust emissions of NMHC, CO, NOX, and PM.
\16\ The federal definitions of ``light-duty vehicle'' and
``light light-duty truck'' (40 CFR Sec. 86.094-2) correspond to the
California definitions of ``passenger car'' and ``light-duty
truck,'' respectively. In addition, both the federal and California
regulations divide the truck emission standards into two categories
based on identical loaded vehicle weights. Thus, California emission
standards can be applied directly to the corresponding federal
vehicle certification categories.
---------------------------------------------------------------------------
The remaining four sets of standards are as follows, in order of
increasing stringency: TLEVs, LEVs, ULEVs, and ZEVs. Each of these four
vehicle emission categories contains emission standards for NMOG, CO,
NOX, HCHO, and PM.
For the reason stated below, EPA is proposing that the following
federal Tier 1 standards apply to National LEV vehicles, in addition to
the California exhaust emission standards described above: total
hydrocarbon (THC) standard, 50,000-mile PM standard, and 100,000-mile
PM standard for non-diesel vehicles. The CAA requires that, beginning
in MY 1996, 100% of a manufacturer's fleet of vehicles complies with
the federal Tier 1 emissions standards. It is clear that a vehicle
certified to California TLEV, LEV, ULEV, or ZEV standards will meet the
applicable Tier 1 emission standards for NMHC, CO, and NOX.
However, the California program does not contain a THC emissions
standard or a 50,000-mile PM standard, and the California 100,000-mile
PM standard applies only to diesel vehicles.
Therefore, the California 100,000-mile PM standards, as adopted in
the National LEV program, would apply to diesel vehicles only. Non-
diesel vehicles covered by the National LEV program would be required
to meet the Tier 1 100,000-mile PM emissions standard. In addition, all
National LEV program vehicles would be required to meet the federal
Tier 1 50,000-mile PM standard, and the federal Tier 1 THC emissions
standard, since there are no comparable California standards.
The National LEV program would require compliance with these
exhaust emissions standards, as well as compliance with a fleet average
NMOG standard, which would be phased from MY 1997 through MY 2001. The
program would initially apply to all vehicles produced and offered for
sale in the OTR, beginning with MY 1997. Beginning in MY 2001, the
program would apply to all vehicles produced and offered for sale in
the rest of the nation (excluding California). Manufacturers would be
allowed, but not required, to produce and offer for sale TLEVs, LEVs,
ULEVs, and ZEVs outside the OTR prior to model year 2001.
The National LEV program would require manufacturers to comply with
a fleet average NMOG standard, by producing and delivering for sale a
combination of vehicle emission categories that, when averaged on a
sales-weighted basis, meets a fleet average NMOG value for each model
year that becomes increasingly stringent
[[Page 52747]]
through MY 2001 in the OTR. After MY 2000, a manufacturer would also
have to meet the average NMOG standard for its fleet of LDVs and LLDTs
sold in states outside the OTR (excluding California). Only vehicles
subject to the National LEV program sold in the OTR would be counted
towards a manufacturer's fleet average NMOG calculation during the MY
1997-2001 phase-in period. The fleet average NMOG standards are
described more fully in Section III.B.3 below.
a. Certification Standards
The proposed voluntary program would establish emission standards
with a structure similar to current federal Tier 1 regulations, in that
there would be separate emission standards for LDVs and for LDTs.
Current federal regulations divide the LDT vehicle category into two
subcategories, each of which is further divided into subcategories.
Light light-duty trucks (LLDTs) are those LDTs less than or equal to
6000 lbs GVWR, and heavy light-duty trucks (HLDTs) are those LDTs
greater than 6000 lbs but less than or equal to 8500 lbs GVWR. The
National LEV program proposes standards only for the LLDTs, therefore
the HLDT category would continue to be certified to the applicable Tier
1 standards. Emission standards proposed today that apply to LLDTs are
divided into two sets. One set, which is identical to the standards for
LDVs, would apply to LLDTs up through 3750 lbs loaded vehicle weight
(LVW), and another slightly less stringent set would apply to LLDTs
between 3750 and 5750 lbs LVW. Also consistent with current federal and
California regulations, separate sets of standards are proposed for the
vehicle's intermediate useful life (5 years or 50,000 miles, whichever
occurs first) and full useful life (10 years or 100,000 miles,
whichever occurs first).
As noted above, there would be five vehicle emission categories for
vehicles under the voluntary program, ranging in stringency from the
current federal Tier 1 vehicles to ZEVs. The Tier 1 standards have
already been codified in the current federal regulations with a phase-
in schedule that requires 100 percent of production of LDVs and LLDTs
to meet the Tier 1 standards by the 1996 model year. The proposed TLEV,
LEV, ULEV and ZEV certification standards for LDVs and LLDTs up through
3750 lbs LVW are shown in Table 1 and those proposed for LLDTs from
3750 to 5750 lbs LVW are shown in Table 2. As noted above, the National
LEV particulate standards would apply only to diesel vehicles.
Table 1.--Intermediate and Full Useful Life Standards (g/mi) for Light-Duty Vehicles and Light Light-Duty Trucks
to 3750 lbs LVW
----------------------------------------------------------------------------------------------------------------
PM
Vehicle useful life (miles) Vehicle emission category NMOG CO NOX HCHO (diesel
only)
----------------------------------------------------------------------------------------------------------------
50,000...................... TLEV....................... 0.125 3.4 0.4 0.015 .........
LEV........................ 0.075 3.4 0.2 0.015 .........
ULEV....................... 0.040 1.7 0.2 0.008 .........
100,000..................... TLEV....................... 0.156 4.2 0.6 0.018 0.08
LEV........................ 0.090 4.2 0.3 0.018 0.08
ULEV....................... 0.055 2.1 0.3 0.011 0.04
----------------------------------------------------------------------------------------------------------------
Table 2.--Intermediate and Full Useful Life Standards (g/mi) for Light Light-Duty Trucks From 3751 lbs LVW to
5750 lbs LVW
----------------------------------------------------------------------------------------------------------------
PM
Vehicle useful life (miles) Vehicle emission category NMOG CO NOX HCHO (diesel
only)
----------------------------------------------------------------------------------------------------------------
50,000...................... TLEV....................... 0.160 4.4 0.7 0.018 .........
LEV........................ 0.100 4.4 0.4 0.018 .........
ULEV....................... 0.050 2.2 0.4 0.009 .........
100,000..................... TLEV....................... 0.200 5.5 0.9 0.023 0.08
LEV........................ 0.130 5.5 0.5 0.023 0.08
ULEV....................... 0.070 2.8 0.5 0.013 0.04
----------------------------------------------------------------------------------------------------------------
The proposed voluntary standards also include two-tiered NMOG
standards for flexible-fuel and dual-fuel vehicles, based on
California's approach to standards for these vehicle types.\17\
Flexible- and dual-fuel vehicles would have to certify both on the
alternative fuel and on gasoline. When certifying on an alternative
fuel, these vehicles would have to meet the intermediate and full
useful life emission standards for TLEVs, LEVs or ULEVs laid out above.
Consistent with California's methodology, the measured NMOG mass
emissions would be adjusted by a Reactivity Adjustment Factor (RAF) for
the given type of alternative fuel before being compared to the
applicable emission standard. Determination of the applicable RAF is
discussed later in section III.B.5.
\17\ Flexible-fuel vehicles are those that can operate on either
of two different fuels or any combination of those fuels, while
dual-fuel vehicles can operate on either of two different fuels but
not on combinations of those fuels.
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When certifying on gasoline, flexible-fuel and dual-fuel vehicles
would have to meet the next higher (less stringent) category of NMOG
standards than the standards the vehicle certified to on an alternative
fuel. However, the vehicle would have to meet all other standards
(NOX, CO, etc.) when operated on gasoline that it certified to on
an alternative fuel. For example, a flexible-fuel vehicle that
certified to ULEV standards on an alternative fuel would have to
certify to the LEV NMOG standard and ULEV CO, NOX, PM, and HCHO
standards when operated on gasoline. The same principle would hold true
for determining applicable in-use standards for flexible-fuel and dual-
fuel vehicles. This would allow manufacturers to optimize the emission
control system for the alternative fuel rather than for gasoline.
Consistent with California, for purposes of the NMOG fleet average
standard discussed below, such vehicles would be included based on
their NMOG certification levels on the alternative fuel. There is,
however, no requirement that such vehicles
[[Page 52748]]
operate on alternative fuels in-use, except as is already provided for
in the clean fuel fleet program.
b. In-Use Standards
The proposed National LEV program explicitly adopts California's
intermediate in-use standards, including intermediate in-use compliance
standards for LEVs and ULEVs for the 1997 and 1998 model years that are
less stringent than the certification standards for such vehicles.\18\
These less stringent standards apply for this short period after
introduction of the certification standards to allow manufacturers to
gain in-use experience with vehicles certified to LEV or ULEV
standards. Starting with the 1999 model year, vehicles must comply in-
use with the certification standards described above. Because
California is in the midst of transition to a LEV program, a straight
carryover of their in-use approach implies adoption of less stringent
in-use standards for LEVs and ULEVs through the 1998 model year. These
standards apply to the intermediate useful life of the vehicles;
compliance with in-use standards beyond the intermediate useful life is
not required for LEVs and ULEVs through the 1998 model year. The in-use
standards for vehicles certified under the voluntary National LEV
program would apply to vehicles sold both within and outside the OTR.
The applicable in-use standards for TLEVs would be equivalent to the
intermediate and full useful life certification standards starting with
the 1997 model year, whereas for LEVs and ULEVs the certification
standards would not apply in-use until after the 1998 model year. The
proposed intermediate in-use standards for LDVs and LLDTs to 3750 lbs
LVW are shown in Table 3 and the proposed intermediate in-use standards
for LLDTs from 3751 to 5750 lbs LVW are shown in Table 4.
\18\ California's less stringent in-use standards for TLEVs
expired after the 1995 model year. TLEVs must therefore meet
certification levels (intermediate and full useful life) in-use at
the start of the proposed National LEV program.
Table 3.--Intermediate Useful Life in-use Standards (g/mi) for Light-
Duty Vehicles and Light Light-Duty Trucks to 3750 lbs LVW
------------------------------------------------------------------------
NMOG (g/ CO (g/ NOX (g/ HCHO
Vehicle emission category mi) mi) mi) (mg/mi)
------------------------------------------------------------------------
LEV................................... 0.100 3.4 0.3 0.015
ULEV.................................. 0.058 2.6 0.3 0.012
------------------------------------------------------------------------
Table 4.--Intermediate Useful Life in-use Standards (g/mi) for Light
Light-Duty Trucks From 3751 lbs LVW to 5750 lbs LVW
------------------------------------------------------------------------
NMOG (g/ CO (g/ NOX (g/ HCHO
Vehicle emission category mi) mi) mi) (mg/mi)
------------------------------------------------------------------------
LEV................................... 0.128 4.4 0.5 0.018
ULEV.................................. 0.075 3.3 0.5 0.014
------------------------------------------------------------------------
2. Non-Methane Organic Gases (NMOG) Fleet Average Standards
As stated earlier, the proposed voluntary program would also
require manufacturers to meet an increasingly stringent fleet average
NMOG standard. The fleet average NMOG standards and schedule for LDVs
and LLDTs in the OTR are shown in Table 5. The fleet average NMOG
values shown in the table would apply, on a manufacturer-by-
manufacturer basis, to vehicles sold in the OTR from MY 1997 until the
end of the National LEV program. The NMOG values would also become
applicable to vehicles sold in every state outside the OTR, except
California, beginning with the 2001 model year. (Low volume
manufacturers, as defined in this proposal, would be exempt until model
year 2001, as discussed more fully in Section III.D below.)
Table 5.--Fleet Average NMOG Exhaust Emission Requirements (g/mi) for
LDV and LLDT Sold in the OTR
------------------------------------------------------------------------
Fleet
Vehicle type Model year Average
NMOG
------------------------------------------------------------------------
LDV and LLDT (0-3750 LVW)..... 1997.......................... 0.200
1998.......................... 0.200
1999.......................... 0.148
2000.......................... 0.095
2001 and later................ 0.075
LLDT (3751-5750 LVW).......... 1997.......................... 0.256
1998.......................... 0.256
1999.......................... 0.190
2000.......................... 0.124
2001 and later................ 0.100
------------------------------------------------------------------------
The decreasing fleet average values were derived by multiplying
certification emissions levels for various categories of vehicles by
achievable implementation rates for each vehicle category. The NMOG
values specified are equivalent to the production of 40% TLEVs in MYs
1997-1998, 40% TLEVs and 30% LEVs in MY 1999, 40% TLEVs and 60% LEVs in
MY 2000, and 100% LEVs in MY 2001. Manufacturers will be required to
meet separate NMOG averages for each of the two vehicle groupings shown
in Table 5, i.e., a fleet average will be calculated both for LDVs and
LLDTs from 0-3750 LVW and also for LLDTs from 3751-5750 LVW. Also, as
discussed below, beginning in MY 2001, manufacturers will have to meet
separate NMOG averages for two regions: states within the OTR and
states (except California) outside the OTR.
Manufacturers would be able to comply with the fleet average NMOG
standards by producing and delivering for sale any combination of
vehicles certified to the Tier 1, TLEV, LEV, ULEV, or ZEV levels such
that the overall LDV and LLDT fleet met the required fleet average
values. A sales-weighted fleet average would be calculated based on the
intermediate useful life (5 years, 50,000 mile) certification NMOG
standards of the vehicle categories. A manufacturer would multiply the
NMOG emission standard for each certification category by the number of
that type of vehicle that the manufacturer produced and delivered for
sale, add these products to the Hybrid Electric Vehicle (HEV)
contribution factor (discussed in section IV.C.8), and then divide by
the total number of vehicles produced and delivered for sale by the
manufacturer.
Because vehicles sold to locations in California and other
countries, including Canada and Mexico, are excluded from the National
LEV program, and because fleet average NMOG calculations are based on
regional limits described in the following section, manufacturers are
required to obtain data on the location of vehicle sales to demonstrate
accurate fleet average NMOG calculations. However, to ease the burden
on manufacturers of tracking vehicles to the end user, manufacturers
need only track vehicles to the location where the completed vehicle or
truck is purchased, otherwise known as the point of first retail sale.
In most cases, this will be the sale from the manufacturer to the
dealer. In cases where the end user purchases the completed vehicle
directly from the manufacturer, the location of the end user is the
point of first retail sale. Vehicle sales data pertaining to vehicles
already shipped to a point of first retail sale is also known as first
delivery information.
An additional proposed limitation on the vehicles manufacturers may
include in their fleet average NMOG calculations involves those
vehicles sold in the OTR to meet the requirements of the Energy Policy
Act (EPAct). EPA is including this proposal at the request of the OTC
states and auto
[[Page 52749]]
manufacturers. As proposed, manufacturers would not include in their
National LEV fleet calculations any alternative-fueled vehicles that
have been purchased by OTR State governments pursuant to EPAct
guidelines if the governments have reported their purchases of those
vehicles to the respective manufacturers no later than February 1 of
the calendar year following the end of a given model year. Reporting
should consist of a letter from the government official responsible for
the EPAct purchases to the manufacturer representative listed in that
manufacturer' s application for certification. Failure of the
government entities to report this data correctly would allow the
manufacturers to include these vehicles in their fleet average NMOG
requirements. EPA is taking comment on the method and timing for these
government reports. EPA is also taking comment on whether Federal
government EPAct purchases should also be excluded from manufacturers'
NMOG fleet average calculations, whether it is feasible for information
on Federal purchases to be reported to manufacturers, and if so,
through what mechanism.
3. Fleet Average NMOG Credit Program
As part of this voluntary program, EPA is proposing to allow
manufacturers to use a market-based approach to the fleet average NMOG
requirements for LDVs and LLDTs through averaging, banking, and trading
NMOG credits and debits. This would provide an incentive for early
emission reductions and allow manufacturers greater flexibility in
meeting the overall fleet average targets. Thus, manufacturers would
produce the same level of emissions reductions at less cost. Both this
overall approach and most of the specifics of program implementation
are modelled on California's trading program.19
\19\ The National LEV regulations would not preclude generation
of excess credits under National LEV for use in broader trading
programs if such programs are developed in the future. Excess
credits would be those credits left after a manufacturer met the
NMOG average.
---------------------------------------------------------------------------
Fleet average NMOG credits and debits would be calculated in the
same manner as under the California regulations. Credits and debits
would be calculated in units of g/mi as the difference between the
required fleet average NMOG and the fleet average NMOG achieved by the
manufacturer, multiplied by the total number of vehicles the
manufacturer produced in a given model year and delivered for sale in
the applicable regions, including ZEVs and HEVs. A manufacturer would
generate credits in a given year if its fleet average NMOG value was
lower than the fleet average NMOG requirement for that model year.
Debits would be incurred when a manufacturer achieved a fleet average
NMOG above the NMOG required for that model year. A manufacturer's
balance for the model year would equal the sum of the credits earned
and debits incurred.
As under the California regulations, the separate fleet average
NMOG standards for the two different vehicle classes would require that
manufacturers make separate fleet average NMOG value calculations for
each class. Class A represents the LDVs and LDTs 0-3750 lbs. LVW, and
Class B represents the LDTs 3751-5750 lbs. LVW. However, once
calculated, fleet average credits and debits are not specific to these
classes.
EPA is also proposing to include geographic limits on both
calculation of fleet average NMOG values and offset of debits with
credits. Prior to MY 2001, the fleet average NMOG standard would apply
only to vehicles produced and delivered for sale within the OTR. To
ensure that the voluntary program continues to produce emissions
reductions comparable to those that would be achieved by OTC LEV in the
OTR, from MY 2001 on, credit and debit averaging would be conducted in
two separate regions: the OTR and the remaining 37 States, excluding
both California and the OTR.20 The NMOG average, credits, and
debits for a regional fleet would be based on vehicles produced and
delivered for sale in each region, and each regional fleet average
would have to meet the applicable NMOG standard independently.
\20\ For administrative convenience, EPA is proposing to include
the entire state of Virginia in the OTR trading region, even though
only northern Virginia is in the OTR. EPA is taking comment on
whether only the portion of Virginia in the OTR should be included
in the OTR trading region.
---------------------------------------------------------------------------
Therefore, manufacturers would be required to calculate four
separate fleet average NMOG values for four separate averaging sets:
Class A in the OTR, Class A in the 37 States, Class B in the OTR, and
Class B in the 37 States. Each manufacturer would have a separate
balance for each of the two regions, which would be calculated by
summing all of the manufacturers' credits and debits within that
region.21 Only credits remaining after calculating the
manufacturer's balance for the region would be available for trading
and they could be traded only in that region.
\21\ Credits or debits earned or incurred in the National LEV
program would not be interchangeable with credits or debits earned
or incurred in California because the National LEV and California
LEV programs are separate.
---------------------------------------------------------------------------
As under the California regulations, the proposed National LEV
standards provide that manufacturers may incur a debit balance in a
given region and model year, but the manufacturer must equalize any
emission debits by the end of the following model year. Manufacturers
would be able to offset debits by (1) using credits generated by that
manufacturer in a previous year (discounted if appropriate), (2)
earning an equal amount of emission credits the year after incurring
the debit, or (3) presenting to EPA an equal amount of credits acquired
from another manufacturer. However, a manufacturer would have to use
any available banked credits to offset debits in the year those debits
were generated, rather than carrying over to the next model year both
credits and debits for the same region. The cause of action for failure
to equalize debits would be deemed to accrue at the end of the time
period for equalizing debits.
The voluntary standards would also incorporate the California
approach for discounting unused credits over time. Discounting helps to
protect the equivalency of credits earned and used in different years,
to account for less stringent in-use requirements, and to prevent
excessive accumulation. Over time, vehicles are likely to improve in
their durability and performance due to a longer development period and
experience gained from prior model years. Thus, emission reductions
from earlier vehicles may be less than those from the same type of
vehicle later on. Under the proposed regulations, unused credits that
are available at the end of the second, third and fourth model year
after the model year in which the credits were generated would be
discounted to 50%, 25%, and 0% of the original value of the credits,
respectively. For example, if a manufacturer generated 200 credits in
MY 1997, those credits would retain their full value in MY 1998.
However, in MY 1999, the credits would be discounted by 50%, so the
manufacturer would hold only 100 credits. In MY 2000, the manufacturer
would hold 50 credits, and in MY 2001, the credits would have no value.
EPA is proposing to allow manufacturers to generate credits in the
37 States prior to model year 2001 for use in the 37 States. This would
provide manufacturers added flexibility. However, EPA is concerned
about the possibility that this might generate windfall credits.
Windfall credits are credits that are generated without real emission
reductions being made by the manufacturer because the manufacturer
[[Page 52750]]
would have made those production choices regardless of the incentive of
earning credits. Given that such credits do not represent emission
reduction benefits over the status quo, they should not be used to
offset later deficits. EPA requests comment on these issues.
Compliance for vehicles subject to the fleet average NMOG standards
proposed in this regulation will be evaluated in two ways. First,
compliance of an individual vehicle with its certified NMOG tailpipe
emissions levels would be determined and enforced in the same manner as
compliance with any other emission standard. Each vehicle must meet its
certified emission standards as determined and enforced through
certification, Selective Enforcement Audit, in-use testing, and, for
certain vehicles, testing performed under some California assembly-line
and in-use testing programs. Second, manufacturers must show that they
meet the applicable NMOG fleet average standards. Manufacturers could
either report a fleet average NMOG level meeting the applicable fleet
average NMOG standard or present to EPA enough credits to offset any
debits by the end of the model year following the model year in which
the debits were incurred.
The proposed fleet average NMOG credit program would be implemented
and enforced through the certificate of conformity, which the
manufacturer would be required to obtain under proposed section
86.1721-97 for all vehicles prior to their introduction into commerce.
The certificate for each vehicle would be conditioned on each vehicle
meeting the applicable National LEV tailpipe and related emission
standards, and on the manufacturer demonstrating compliance with the
applicable NMOG fleet average standard. If a manufacturer failed to
meet both of these conditions, the vehicles causing the NMOG fleet
average violation would be considered not covered by the certificate
applicable to the engine family. EPA could then assess penalties on an
individual vehicle basis for sale of vehicles not covered by a
certificate.
If debits are not equalized within the specified time period, EPA
would calculate the number of noncomplying vehicles by dividing the
total amount of debits for the model year by the fleet average NMOG
requirement applicable for the model year and averaging set in which
the debits were first incurred. In the case where both averaging sets
are in debit, any applicable credits would first be split between the
sets. Then, noncompliance calculations would begin using the revised
debit values. Each noncomplying vehicle would be deemed to be in
violation of the conditions of its certificate. EPA would determine
these vehicles by designating vehicles in those engine families with
the highest certification NMOG emission values first and continuing
until a number of vehicles equal to the calculated number of
noncomplying vehicles as determined above is reached. EPA may void ab
initio the certificates of conformity for nonconforming vehicles.
If the Agency determines that an enforcement action is appropriate,
EPA would have some discretion in choosing the appropriate penalties.
The sale of vehicles not covered by a certificate is a violation under
CAA section 203(a). Civil penalties in the amount up to $25,000 per
vehicle are possible under section 205 of the Act. The applicable
penalties are listed in section 205(a) of the Act. The Agency would
consider appropriate mitigating factors.
EPA is taking comment on an additional enforcement requirement
associated with this trading program. Specifically, if a manufacturer
failed to equalize emission debits by the end of the year following the
year the debits were generated, that manufacturer would not only be
responsible for any of the appropriate penalties as discussed above,
but would also be required to make up the debit balance, which
represents emissions exceedances. Under the California program, once
penalties are imposed for holding debits, those debits are wiped out
and the manufacturer's credit balance returns to zero. However,
requiring debits to be made up, notwithstanding penalties, would ensure
that the environment is not harmed by an exceedance. EPA requests
comment on whether making up emissions exceedances should be required
automatically, whether EPA should have discretion to require that
exceedances be made up, or whether emissions exceedances should not be
required to be made up.
When credits are transferred between manufacturers, EPA proposes to
make both the provider and receiver of credits potentially liable for
any credit shortfall resulting from the trade, except in cases where
fraud is involved. The certificates of both parties issued for vehicles
involved in the violating trading transaction could be void ab initio
if the manufacturers fleet average NMOG values exceed the federal
standard as a result of the credits shortfall. This proposal differs
from California's fleet average NMOG program, which focuses only on the
party reporting a shortfall, reflecting California's confidence in the
validity of reported credits. However, holding both parties potentially
liable provides the same manufacturer accountability that is
incorporated in the other federal mobile source credit programs. Such a
policy would provide additional incentive for credit providers and
receivers to take the necessary steps to ensure the integrity of the
transactions, and to place contractual liability on the appropriate
party. EPA is also taking comment on limiting potential liability in
the same manner as California's program does.
Manufacturers would be required to prepare an annual report after
the end of each model year to demonstrate compliance with the
applicable fleet average NMOG standards. The report would have to be
submitted no later than May 1 of the calendar year following the end of
the given model year. Manufacturers would also be required to report
any credit transactions for the year as part of the annual report.
However, EPA is also taking comment on a modified approach to reporting
credit transactions, which would require parties to report a trade
within 30 days of the transaction. The California program requires
immediate reporting of trades, but EPA believes a 30 day reporting
period would be more practical. The purpose of a 30 day reporting
requirement would be to allow a purchaser to contact EPA and verify
that credits had not already been traded.
The integrity of the proposed fleet average NMOG credit program
depends on accurate recordkeeping and reporting by manufacturers and
effective tracking and auditing by EPA. If a manufacturer fails to
maintain the required records, EPA could void the certificates for the
affected vehicles ab initio. If a manufacturer violates reporting
requirements, the manufacturer could be subject to penalties of up to
$25,000 per day, as authorized by section 205 of the Clean Air Act.
EPA intends to develop an electronic reporting mechanism that is
similar to California's format. The format for reporting fleet average
NMOG data will be detailed in a Dear Manufacturer letter from EPA after
the final regulations have been published.
4. Five Percent Cap on Sale of Tier 1 Vehicles and TLEVs
Today's proposal includes a limit on the number of Tier 1 vehicles
and TLEVs produced and offered for sale in the OTR. Specifically,
beginning in the 2001 model year, manufacturers would be able to offer
Tier 1 vehicles or TLEVs for sale in the OTR only if the same engine
families are certified and offered for sale in California in the same
model
[[Page 52751]]
year. Additionally, the number of these vehicles would be limited on an
industry-wide basis to 5% of the total number of new motor vehicles
produced and offered for sale under the National LEV program in that
model year in the OTR. This 5% cap would be administered and enforced
using a credit trading system, which would allow manufacturers to
redistribute the compliance burden between different manufacturers and
over time, and thereby achieve industry-wide compliance at the least
cost. The purpose of limiting the sales of Tier 1 vehicles and TLEVs is
to give the OTR States additional assurance that the National LEV
program will produce NOX emissions reductions equivalent to those
that would flow from the OTC LEV program.
The concern about the equivalency of NOX emissions arises from
the use of a fleet average NMOG standard. Manufacturers may meet the
standard by producing and delivering for sale any combination of
categories of vehicles resulting in a complying sales-weighted fleet
average NMOG value. While this ensures that the fleet as a whole will
meet a given NMOG value, it does not guarantee that the fleet will meet
any particular average NOX value. NOX standards for the
different certification categories do not vary in the same manner as
the NMOG standards. While Tier 1 vehicles, TLEVs, LEVs and ULEVs all
have different NMOG standards, Tier 1 vehicles and TLEVs have NOX
standards of 0.4 g/mi, and LEVs and ULEVs have NOX standards of
0.2 g/mi. As a result, a fleet of Tier 1 vehicles, TLEVs, and ULEVs
could have higher NOX emissions than a fleet of LEVs, even if the
two fleets had the same NMOG average. The NOX emissions from Tier
1 vehicles and TLEVs, which are higher than from LEVs, would not be
offset by lower NOX emissions from ULEVs, which are the same as
from LEVs.
Both National LEV and OTC LEV have the potential to produce a range
of total NOX emissions, depending on the vehicle mix chosen by the
manufacturers. However, some parties have raised a concern that
National LEV would present a greater potential for higher NOX
emissions than would OTC LEV. This is because the lower final NMOG
average standard under OTC LEV may make it more difficult for
manufacturers to produce and offset the sale of Tier 1 vehicles or
TLEVs with ULEVs in the later years of the program.
EPA does not believe the effect of the lower NMOG standard under
OTC LEV is likely to be sufficient to affect the NOX equivalency
of the two programs. Based on the manufacturers' production
projections, EPA believes that the number of Tier 1 vehicles and TLEVs
produced after 2001 will be extremely low under either program,
yielding an insignificant difference in NOX emissions compared to
a fleet without those categories of vehicles.
Nevertheless, the OTC States and auto manufacturers have
recommended the 5% cap provision to address the concern over NOX
emissions, and EPA is proposing to include this recommendation in the
National LEV rule. Limiting sales of Tier 1 vehicles and TLEVs to those
engine families that are concurrently offered for sale in California
encourages the same sales mix under National LEV and OTC LEV,
preserving the relative emissions levels. Setting an industry-wide 5%
cap on the number of Tier 1 vehicles and TLEVs produced and offered for
sale under National LEV limits the exposure to increased NOX
emissions on an absolute basis.
EPA analyses indicate that if manufacturers took full advantage of
the 5% cap (i.e. they sold 5% Tier 1 vehicles every year), the
passenger car and light-duty truck portion of the OTR emissions
inventory in 2005 would increase by less than one half of one percent,
which is not enough to change the conclusion that the National LEV
program is equivalent to the OTC LEV program in the OTR.
EPA is taking comment on exempting low volume manufacturers, as
defined in section IV.D, from meeting the 5% cap. EPA recognizes that
these manufacturers may lack the flexibility in their product line that
would allow them to adjust the makeup of their fleet to meet this
requirement. EPA believes that the potential contribution of increased
NOX emissions from these manufacturers would be insignificant. EPA
wishes to take comment on this proposed provision, including whether
additional or no categories of manufacturers should be exempted from
the 5% cap.
EPA proposes to implement the 5% cap through a market-based banking
and trading program. This program could be structured in a number of
different ways, four of which are described below. EPA is not at this
time proposing regulatory language for any of these approaches, but is
requesting comment on the preferable way to structure a 5% cap trading
program through any of the described or other possible approaches.
The two basic types of trading systems that could be applied here
are a credit and debit system, as used for the NMOG average, and an
allowance trading system, similar to that established under Title IV of
the Act for control of acid rain. In a credit and debit system,
manufacturers generate credits or debits for vehicles according to
whether their production is above or below a specified individual
threshold number of vehicles. Thus, all reallocation of credits or
debits (representing production quantities) is done through trading. In
an allowance based system, the production limit is represented by a
pool of allowances, each entitling the holder to produce a certain
quantity of limited vehicles. The pool of allowances is distributed
among the manufacturers on some equitable basis, producing individual
limits, and manufacturers may conduct further adjustments in
allocations through the market.
The structure of a trading system to implement the proposed 5% cap
on Tier 1 vehicles and TLEVs is further complicated because the real
target of the limitation is industry-wide production, not an individual
5% cap on each manufacturer's production. The first two approaches
described below are the credit and debit approach and the allowance
approach, both of these modified to ensure that enforcement would
target only exceedances of the industry-wide 5% cap. The third approach
is a straight allowance trading system, while the fourth is a straight
allowance trading system with delayed implementation, linked to
exceedance of the industry-wide 5% cap. Each of the described
approaches would calculate vehicle production based on a manufacturer's
entire National LEV fleet (passenger cars and LDTs 0-5750 lbs LVW), and
calculations would only include vehicles delivered to a point of first
retail sale in the OTR. None of these approaches would allow
manufacturers to generate credits before the 2001 model year, although
EPA is taking comment on whether early banking would be appropriate
under any of these approaches.
Under the credit and debit approach, a manufacturer would generate
credits or debits based upon the number of Tier 1 vehicles or TLEVs it
produced and offered for sale in the OTR above or below a number equal
to 5% of the total number of National LEV vehicles the manufacturer
produced and offered for sale in the OTR. Credits and debits would be
calculated in units of number of vehicles. As under the fleet average
NMOG trading program, unused credits would be discounted over time.
In the instance where a debit situation arose, a manufacturer would
have to equalize any debits by the end of the following model year.
Offset of debits would be accomplished either through
[[Page 52752]]
earning an equal amount of credits in the model year after incurring
the debit, or presenting to EPA an equal amount of credits acquired
from another manufacturer. Credits and debits would not be generated
until the end of the model year, but manufacturers would then have an
opportunity to trade these credits prior to reporting annual totals as
part of the annual compliance report due in May of each year.
This approach would be modified to target industry-wide exceedances
or over-compliance, rather than individual limits. A manufacturer could
only carry over to the next model year and would only be responsible
for in the next model year, a balance of credits or debits that had
been offset to account for credits or debits generated industry-wide.
If EPA determines that the 5% industry-wide cap provision has been
exceeded, then for enforcement purposes, a specific manufacturer's
responsibility to make up debits in the next model year would be
calculated based on that manufacturer's proportional responsibility for
the industry-wide exceedance. Similarly, a manufacturer could only
carry over to the next model year its proportionate share of the total
credits generated industry-wide, after offset by any outstanding debits
industry-wide.
Enforcement of exceedances would work in the following manner. An
individual manufacturer's debits would be calculated based on the
number of Tier 1 vehicles and TLEVs that the manufacturer produced and
offered for sale in the OTR above a number equal to 5% of the total
number of vehicles in that manufacturer's National LEV fleet produced
and offered for sale in the OTR, plus any outstanding debits and minus
any credits held. EPA would identify the industry-wide level of
exceedance by determining the total number of Tier 1 vehicles and TLEVs
produced and offered for sale in the OTR in excess of 5% of the OTR
National LEV fleet (accounting for outstanding credits and debits),
which would equal the sum of all individual manufacturers' credits and
debits. Then, each manufacturer with debits would be responsible for a
pro-rated share of the industry-wide exceedance calculated in the step
above. This pro-rated share would be based on a manufacturer's number
of debits relative to the total number of debits held by all
manufacturers. For example, if the industry-wide production is 10,000,
the industry-wide cap would be 500 Tier 1 vehicles and TLEVs. If the
total number of Tier 1 vehicles and TLEVs produced and delivered for
sale is 700, there are 200 net debits industry-wide. Assuming
Manufacturers A, B, and C held 100, 200, and 300 debits, respectively,
then A's pro-rated responsibility would be 100/600*200, or 33 debits,
B's would be 200/600*200 or 67 debits, and C's would be 300/600*200, or
100 debits. This approach preserves the intent of the 5% cap by taking
into account the industry-wide extent of any exceedance of the cap,
rather than focusing on an individual manufacturer's exceedance, which
may be partially offset elsewhere. However, this approach does entail a
complicated enforcement scheme and may create some manufacturer
uncertainty regarding the possible extent of their individual levels of
liability in the event of an exceedance.
Similarly, in a year the industry-wide cap is not exceeded, a
manufacturer would only be able to carry over credits that reflect the
manufacturer's share of total credits available industry-wide, after
offset by any outstanding debits. For example, if the industry-wide
number of vehicles produced and offered for sale in the OTR is 10,000,
the industry-wide cap would be 500 vehicles. If the total number of
Tier 1 vehicles and TLEVs produced and offered for sale, after
accounting for outstanding credits and debits is 400, there would be
100 credits available for carry-over. Assume Manufacturer A held 50
credits at the end of the model year, Manufacturer B held 100 credits,
and Manufacturer C held 50 debits. Thus, the total number of credits
produced is 150, and A's share of the available 100 credits would be
\50/150\, or \1/3\, or 33, while B's share of the available 100 credits
would be \100/150\, or \2/3\, or 67.
A variation on this approach would hold each manufacturer
responsible for all of its excess vehicles above an individual 5% cap,
whenever the industry-wide 5% cap is exceeded. Each manufacturer that
produced and offered for sale Tier 1 vehicles and TLEVs in excess of 5%
of its OTR fleet would be determined to be in violation for all of
those vehicles above the individual 5% cap. Enforcing this method would
be easier than the method described above. This approach would also
create an additional incentive for manufacturers to limit their
production of Tier 1 vehicles and TLEVs. However, it does operate
against the intent of the 5% cap by holding each individual
manufacturer to an individual 5% cap without taking into account the
offsetting effect of some manufacturers producing well below the 5%
cap.
Establishment of a revenue-neutral auction could facilitate credit
trading under a credit and debit approach. An auction could reduce
transaction costs by enabling buyers to identify a ready source of
credits, and could promote competitive pricing of credits. Credits for
an auction could be obtained in a number of ways. First, EPA could
automatically withhold for auction the following year any credits
generated in years that industry-wide sales were below the 5% cap, with
proceeds distributed to the generators on a pro rata basis.
Alternatively, EPA could withhold in this manner some set portion of
credits generated, perhaps between 10% and 50%, leaving the rest to be
traded or banked by the generating manufacturer. Finally, the auction
could offer for sale only credits voluntarily contributed by
manufacturers that preferred to sell their credits through the auction.
EPA requests comment on the option of establishing a revenue-neutral
auction and details of its operation, including the source of credits
offered for sale.
The main alternative to a credit and debit trading system is an
allowance based system. Under an allowance approach, each manufacturer
would have to hold allowances equal to the number of Tier 1 vehicles
and TLEVs that manufacturer produced and offered for sale in the OTR in
that model year. The total pool of allowances distributed among
manufacturers should equal 5% of the total number of National LEV
vehicles produced and offered for sale in the OTR each model year. EPA
would need to estimate this number beforehand, however, so it would be
an approximation of vehicles actually produced and offered for sale.
EPA requests comment on how to project the number of vehicles that
manufacturers will produce and offer for sale in a given model year.
One way is to average the last three years' worth of the number of
vehicles produced and offered for sale, and perhaps multiply this
average by some number to account for possible growth and variability
in market size. Over the past 20 years, vehicles sales quantities
nationwide have generally fluctuated less than 15% from year to year,
so EPA could choose some number between 0 and 15% as a growth factor.
The number of allowances available for distribution would be equal
to 5% of the projected quantity of vehicles produced and offered for
sale. EPA could distribute these allowances according to each
manufacturer's pro rata share of total Tier 1 vehicles and TLEVs
produced and offered for sale in the previous model year in the OTR.
For example, a manufacturer that produced and offered for sale 15% of
the total number of Tier 1 vehicles and TLEVs produced and offered for
sale in the
[[Page 52753]]
OTR in the previous model year would receive 15% of the allowances to
be allocated in the next model year.
At the end of the reporting period, each manufacturer would have to
submit to EPA a quantity of allowances equal to the number of Tier 1
vehicles and TLEVs that manufacturer produced and offered for sale in
the OTR in the previous model year. Manufacturers could trade
allowances among themselves to make up for shortfalls. A manufacturer
with insufficient allowances to cover vehicles would have to make up
the shortfall in the subsequent model year, or be subject to penalties.
Manufacturers could bank excess allowances for use in future years, but
the allowances would be discounted over time. The discount factor could
be the same as under the proposed NMOG trading system, or could be
modified to reflect different circumstances here.
This allowance-based approach could be modified to better relate
allowance quantities and enforcement procedures to the actual vehicle
production and exceedance of the industry-wide 5% cap in a given model
year. One possibility is to require EPA to adjust the allowance pool to
account for actual quantities of vehicles produced and offered for sale
at the end of a model year. Under this scenario, if EPA had projected
production below the number of vehicles that manufacturers actually
produced and offered for sale in the OTR in a given model year, and
hence allocated an insufficient number of allowances, EPA could
distribute the additional allowances on the same proportional basis as
it had used for the initial allocation for that year. EPA probably
would not readjust the allowance pool in model years where it had
projected higher than actual production because this would seriously
undermine certainty for individual manufacturers. However, the system
could be structured to require EPA to compensate for such excess
allocated allowances in calculating the following year's available
pool.
Another possible refinement of an allowance system would provide
that EPA would only enforce against individuals based on exceedance of
the actual industry-wide cap, not just individual allowance
allocations. Similar to the modified credit and debit approach
described above, an individual manufacturer's exceedance of its own
allowance allocation (after any trading) would not be a violation
unless the industry-wide 5% cap were also exceeded. In such a situation
where there is an individual exceedance but no industry-wide
exceedance, the exceeding individual manufacturers are essentially
implicitly using other manufacturer's excess allowances to offset their
own shortfalls. Thus, any provision for banking excess allowances would
have to account for the degree to which some apparently excess
allowances have already been implicitly applied against other
manufacturers' shortfalls. The number of excess allowances available
industry-wide, after offset by any shortfalls, could be redistributed
on a pro rata basis to all those manufacturers that held excess
allowances, just as under the credit and debit approach. Manufacturers
could bank allowances for use in future years only after offset.
Alternatively, instead of requiring a pro rata redistribution of
allowances, EPA could allow manufacturers to bank all excess
allowances, regardless of their implicit use to make up other
manufacturers' shortfalls, but then impose more substantial
depreciation of banked allowances. For example, EPA could impose a
depreciation system under which banked allowances would be worth 50% of
their value in the first year following the year in which they were
initially allocated, 25% of their value in the second year, and would
expire in the third year. This would be simpler to administer than a
pro rata redistribution, but would still protect against double
counting credits by providing automatic significant devaluation.
In a year where manufacturers exceed both individual allowance
allocations (after any trading) and the industry-wide 5% cap,
violations could be calculated based on exceedances of the industry-
wide cap. Individual exceedances could again be implicitly offset by
any available excess allowances held by other manufacturers. A
manufacturer would only be responsible for its pro rata share of the
industry-wide shortfall, which would equal the actual number of
vehicles produced above the actual 5% cap after accounting for
outstanding credits and debits. However, under an allowance based
system, as opposed to a credit and debit system, there is also the
possibility that the allowances allocated are not equal to 5% of the
actual number of vehicles produced and offered for sale. Thus, in a
year where EPA had overestimated projected production and the allowance
pool is greater than the actual 5% cap, EPA should not apply allowances
to offset shortfalls industry-wide if those allowances do not represent
actual over compliance in terms of vehicle production.
Under this modified allowance-based approach, allocation of
allowances provides substantial protection to manufacturers that will
generally produce and offer for sale more than 5% of their own OTR
fleets as Tier 1 vehicles and TLEVs. Such manufacturers would not have
to purchase sufficient credits every year to cover all of their excess
production. However, in any trading system that provides for end-of-
year adjustments relative to a 5% cap on actual levels of vehicles
produced and offered for sale in the previous year, manufacturers will
experience substantial uncertainty regarding what number of Tier 1
vehicles and TLEVs would actually result in an exceedance.
Manufacturers would be better able to project what production is
necessary for compliance if they have as much information as possible
regarding industry-wide production levels, and therefore the likely
level of exceedance or compliance industry-wide. One way to provide
such information would be to require manufacturers to report quarterly,
perhaps in the trade press, on the numbers of Tier 1 vehicles and TLEVs
and the total size of their fleets that they have produced and offered
for sale in the OTR up to that time. This information may be of
somewhat limited value, however, given substantial short term variation
in vehicle sales. EPA requests comment on means of providing
manufacturers more information to improve production and compliance
decisions.
Another possible approach to implementing a 5% cap trading system
is to establish a simple allowance-based system, in which EPA would
enforce against individual manufacturers with insufficient allowances,
regardless of the actual number of vehicles produced and offered for
sale in a given model year. The industry-wide 5% cap would be
incorporated in this approach through the initial calculation of
available allowances and the provision for trading allowances. However,
EPA would make no further adjustments to calculate industry-wide versus
individual compliance. This approach would greatly simplify
administration. It would also provide individual manufacturers
certainty regarding what numbers and mixes of vehicles they would need
to produce and offer for sale to avoid noncompliance, and it would
enhance their ability to protect themselves through banking allowances.
This would give manufacturers somewhat less leeway in compliance by not
providing for adjustment with industry-wide offsets or recalibration of
the available allowance pool based on actual production. Any such
additional
[[Page 52754]]
burden could be reduced by means such as making depreciation of banked
credits less rigorous or building in a greater safety factor for
increased production in projecting production and offer for sale and
calculating the initial allowance pool.
The final approach described here would be to promulgate
regulations setting up a straightforward allowance trading system, but
to delay its implementation until the year following a year in which
manufacturers have actually exceeded the industry-wide 5% cap. A credit
and debit approach could similarly be subject to trigger by an
industry-wide exceedance. This approach would avoid the substantial
administrative costs for EPA and transaction costs for the
manufacturers of implementing a trading program in years when it would
provide no environmental benefit, and perhaps avoid such costs
altogether. The prospect of having to implement a trading program would
also provide manufacturers a powerful incentive to avoid an exceedance
of the industry-wide cap. This approach would not give manufacturers
the opportunity to bank allowances in the early years of the program,
but EPA has no reason to believe it would be easier for manufacturers
to comply with the 5% cap in the early years, so this may not be a real
disadvantage. While a basic allowance approach would sacrifice some
precision in terms of meeting an actual 5% cap each year, as opposed to
EPA's projected 5% cap, the degree of precision sacrificed depends on
how much of a buffer for growth is built into the projection. If it
were critical that the manufacturers meet an actual 5% number every
year, the allowance pool could be calculated based on something less
than 5% of the projected number of vehicles produced and offered for
sale. Alternatively, if the greater concern is to ensure that the
allowance pool is not less than 5% of the actual number of vehicles
produced and offered for sale, EPA could apply a larger growth factor
in projecting production, such as assuming the fleet produced and
offered for sale will be 15% greater than the average of the previous
three years. EPA requests comment on all of these basic trading
approaches, details of their implementation, and any other variations.
Any of these approaches to the 5% cap trading program would be
implemented and enforced through the certificate of conformity, as
under the NMOG trading program. The certificate for each Tier 1 vehicle
and TLEV produced and offered for sale in the OTR in the 2001 and later
model years would be conditioned on demonstrating compliance with the
5% cap provisions, as well as any other applicable conditions imposed
under other sections of the National LEV program. If a manufacturer did
not equalize its debits or make up its allowance shortfall within the
required time period, then each noncomplying vehicle would be deemed to
be in violation of the certificate of conformity. The number of
noncomplying vehicles would correspond to the number of outstanding
debits or the quantity of the allowance shortfall, since both debits
and allowances are in units of vehicles. EPA would determine these
noncomplying vehicles by first designating Tier 1 vehicles and then
TLEVs and continuing until a number equal to the calculated number of
noncomplying vehicles as determined above is reached. EPA may void ab
initio the certificates of conformity. As with the fleet average NMOG
trading program, EPA would have some discretion in choosing the
appropriate penalties and would consider mitigating factors.
EPA proposes to apply the same liability for credit or allowance
transfers between manufacturers as is found in the fleet average NMOG
trading program. This would preserve the similarity of the programs and
reduce any potential confusion as to their operation.
Manufacturers would not be required to prepare an annual report
demonstrating compliance with the 5% cap provision because all relevant
data will be provided to EPA under the guidelines of the fleet average
NMOG program. However, manufacturers would still be required to
maintain accurate records and failure to do so could result in EPA
voiding ab initio the certificates of the affected vehicles and
imposing any other applicable penalties. As with the fleet average NMOG
trading program, manufacturers would be required to report annually to
EPA any credit or allowance transactions and the quantity of credits or
allowances traded.
5. Tailpipe Emissions Testing
a. California Phase II Reformulated Gasoline
The Agency is proposing to allow manufacturers the option to show
compliance with emission standards for TLEVs, LEVs and ULEVs using
Phase II gasoline (the same option allowed by California in
implementing its regulations). EPA believes it cannot allow the use of
California Phase II gasoline to demonstrate compliance with Tier 1
standards because that would not demonstrate compliance with the
mandatory federal standards. EPA takes comment on this issue.
California allows the use of Phase II gasoline on emission data
vehicles during official emission testing and, as a result, the OTC
States would be accepting certifications using Phase II gasoline under
OTC LEV.
The use of California Phase II reformulated gasoline has a direct
impact on the stringency of the proposed emission standards. Data
presented by California and others during the adoption of California's
standards shows that the use of Phase II gasoline will reduce vehicle
emission levels during exhaust and evaporative testing compared to
testing using Federal Certification Fuel.
EPA promulgated a federal reformulated gasoline program in February
1994 (59 FR 7716, February 16, 1994). However, California Phase II
gasoline is substantially different and will not be available
nationwide. Consequently, testing performed using Phase II gasoline may
not produce the same emission levels that will result in-use. The
Agency has little data to evaluate the difference in in-use emission
levels based on use of either federal reformulated gasoline or
California phase II gasoline, and specifically invites commenters to
supply data on this difference.
There are several good logistical reasons to use Phase II in the
National LEV program. Using the same certification fuel in the
California and federal programs will reduce the manufacturers' cost of
demonstrating compliance. If they adopted the California LEV program,
all the OTC States would use Phase II gasoline for emission compliance
in any event. Consequently there is no emissions effect of using Phase
II gasoline for certification demonstrations in OTC states.
EPA believes that the possible effect of using California Phase II
reformulated fuel as certification fuel would have little impact on the
overall benefits of the National LEV program and reflects a worthwhile
savings in compliance demonstration costs.
Although EPA is proposing to allow use of California Phase II
gasoline as the test fuel for certification, the Agency is not
proposing any regulatory changes governing the fuel that is actually
used in vehicles, nor is the Agency suggesting now that states adopt
new fuel requirements. In-use fuels is one of the issues that was
addressed by the Subcommittee. Prior to the June, 1995 Subcommittee
meeting, EPA discussed the issues with representatives of the
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auto industry, the oil industry and the OTC States, who agreed to the
following principles:
Adoption of the National LEV program does not impose
unique gasoline requirements on any State. Gasoline specified for use
by any State will have the same effect on the National LEV program as
on the OTC LEV program.
Testing is needed to evaluate the effects of non-
California gasoline on emissions control systems.
If testing results show a significant effect, EPA will
conduct a multi-party process to resolve the issue without adversely
affecting SIP credits or actual emission reductions when compared to
OTC LEV using fuels available in the OTR or imposing obligations on
manufacturers different from the obligations they would have had under
OTC LEV.
These principles were presented to the Subcommittee at its June,
1995 meeting. Because of some parties' continuing concerns, the Agency
intends to continue discussions on these issues with the relevant
parties during the public comment period.
One area where discussions have alrea
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