National Volatile Organic Compound Emission Standards for Automobile Refinish Coatings

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 59

[AD-FRL-5463-6]

RIN 2060-AE35

National Volatile Organic Compound Emission Standards for

Automobile Refinish Coatings

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule and notice of public hearing.

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SUMMARY: The EPA proposes standards to reduce emissions of volatile

organic compounds (VOC) from the use of automobile refinish coatings.

The proposed standards are in the first phase of implementation of the

portion of the Clean Air Act (Act) that requires the Administrator to

control VOC emissions from certain categories of consumer and

commercial products.

Exposure to ozone is associated with a wide variety of human health

effects, agricultural crop loss, and damage to forests and ecosystems.

As required by section 183(e) of the Act, the Administrator conducted a

study to determine the potential of consumer and commercial products to

contribute to ozone levels that violate the National Ambient Air

Quality Standards (NAAQS) for ozone. Because the automobile refinish

coatings category is a significant source of VOC emissions, the EPA is

proposing standards to reduce emissions from this source.

DATES: Comments. Comments must be received on or before July 1, 1996.

Public Hearing. A public hearing will be held, if requested. If

anyone contacts the EPA requesting to speak at a public hearing by May

21, 1996, a public hearing will be held on May 30, 1996, beginning at

9:00 a.m.

Request to Speak at Hearing. Persons wishing to present oral

testimony must contact Ms. Marguerite Thweatt at the EPA by May 21,

1996.

ADDRESSES: Comments. Comments should be submitted (in duplicate) to:

Air and Radiation Docket and Information Center (6102), Attention:

Docket No. A-95-18, U.S. Environmental Protection Agency, 401 M Street,

SW, Washington, DC 20460.

Public Hearing. Persons interested in attending the hearing should

notify Ms. Marguerite Thweatt, (919) 541-5607, to verify that a hearing

will occur and for notification of the location of the meeting.

Request to Speak at Hearing. To present oral testimony contact Ms.

Thweatt at the following address: Organic Chemicals Group (MD-13), U.S.

Environmental Protection Agency, Research Triangle Park, North Carolina

27711, telephone number (919) 541-5607, FAX number (919) 541-3470.

Docket. Docket No. A-95-18, containing supporting information used

in developing the proposed standards, is available for public

inspection and copying between 8:30 a.m. and 3:30 p.m., Monday through

Friday, at the EPA's Air and Radiation Docket and Information Center,

Waterside Mall, Room M-1500, 1st Floor, 401 M Street, SW, Washington,

DC 20460, telephone (202) 260-7548, FAX (202) 260-4400. The proposed

regulatory text and other materials related to this rulemaking are

available for review in the docket. A reasonable fee may be charged for

copying.

Background Information Document. The background information

document (BID) supporting the proposed standards may be obtained from

the docket or

[[Page 19006]]

from the U.S. EPA Library (MD-35), Research Triangle Park, North

Carolina 27711, telephone number (919) 541-2777. Please refer to

``Automobile Refinish Coatings--Background Information for Proposed

Standards,'' EPA-453/D-95-005a.

FOR FURTHER INFORMATION CONTACT: For information concerning the

proposed standards, contact Mr. Mark Morris at (919) 541-5416, Organic

Chemicals Group, Emission Standards Division (MD-13), U.S.

Environmental Protection Agency, Research Triangle Park, North Carolina

27711.

SUPPLEMENTARY INFORMATION: The regulatory text of the proposed rule is

not included in this Federal Register notice, but is available in

Docket No. A-95-18 (see ADDRESSES for information about the docket).

The proposed regulatory language is also available on one of the EPA's

Technology Transfer Network (TTN) electronic bulletin boards. The TTN

provides information and technology exchange in various areas of air

pollution control. The service is free, except for the cost of a phone

call. Dial (919) 541-5742 for up to a 14,400 bits per second (bps)

modem. If more information on the TTN is needed, call the help desk at

(919) 541-5384.

The information presented in this preamble is organized as follows:

I. Background

A. Clean Air Act Requirements

B. Legislative Authority

C. Regulatory Background

D. Supporting Documentation for the Proposed Standards

II. Summary of Proposed Standards

A. Applicability of the Standards

B. Regulated Entities

C. Standards

D. Compliance Requirements

E. Labeling Requirements

F. Reporting

G. Variance

H. Test Methods

III. Summary of Impacts

A. Environmental Impacts

B. Energy Impacts

C. Cost and Economic Impacts

D. Cost-Effectiveness

IV. Rationale

A. Applicability

B. Selection of BAC

C. Selection of Regulatory Format

D. Labeling Requirements

E. Selection of Reporting Requirements

F. Variance

G. Test Methods

H. Solicitation of Comments

V. Administrative Requirements

A. Public Hearing

B. Executive Order 12866

C. Paperwork Reduction Act

D. Regulatory Flexibility Act

E. Unfunded Mandates Reform Act

I. Background

A. Clean Air Act Requirements

Exposure to ground-level ozone is associated with a wide variety of

human health effects, agricultural crop loss, and damage to forests and

ecosystems. The most thoroughly studied health effects of exposure to

ozone at elevated levels during periods of moderate to strenuous

exercise are the impairment of normal functioning of the lungs,

symptomatic effects, and reduction in the ability to engage in

activities that require various levels of physical exertion. Typical

symptoms associated with acute (1 to 3 hour) exposure to ozone at

levels of 0.12 ppm or higher under heavy exercise or 0.16 ppm or higher

under moderate exercise include cough, chest pain, nausea, shortness of

breath, and throat irritation.

Ground-level ozone, which is a major component of ``smog,'' is

formed in the atmosphere by reactions of VOC and oxides of nitrogen

(NOX) in the presence of sunlight. In order to reduce ground-level

ozone levels, emissions of VOC and NOX must be reduced.

Section 183(e) of the Act requires the Administrator to study and

report to Congress on emissions of VOC into the ambient air from

consumer and commercial products and their potential to contribute to

ozone nonattainment levels. In addition, section 183(e) requires the

Administrator to list those categories of consumer and commercial

products that account for at least 80 percent of the VOC emissions, on

a reactivity-adjusted basis, in ozone nonattainment areas and establish

priorities for their regulation. The list is to be divided into four

groups, with one group regulated every 2 years until all four groups

are regulated.

The EPA submitted the Report to Congress on March 15, 1995, and on

this same date established the priority list for future regulation of

the consumer and commercial products that account for 80 percent of VOC

emissions, on a reactivity-adjusted basis, in nonattainment areas

(published on March 23, 1995, at 56 FR 15264). Automobile refinish

coatings are in the first group of products to be regulated by March

1997. This listing and prioritization are not final Agency actions, and

EPA requests comment on the placement of automobile refinish coatings

on the list and the priority assigned to these coatings. Further

details about the study and the listing are available in the March 23,

1995, Federal Register.

B. Legislative Authority

Section 183(e) of the Act gives the EPA the authority to establish

national standards to reduce VOC emissions from automobile refinish

coatings. According to the Act, regulations developed under this

section shall require best available controls (BAC). Best available

controls are defined in section 183(e)(1)(A) as follows:

The term ``best available controls'' means the degree of

emissions reduction that the Administrator determines, on the basis

of technological and economic feasibility, health, environmental,

and energy impacts, is achievable through the application of the

most effective equipment, measures, processes, methods, systems, or

techniques, including chemical reformulation, product or feedstock

substitution, repackaging, and directions for use, consumption,

storage, or disposal.

Section IV.B describes the EPA's determination of BAC for the proposed

regulation.

The EPA could satisfy the requirements of section 183(e) by issuing

Control Techniques Guidelines (CTG) instead of a national rule for

automobile refinish coatings.

Section 183(e)(3)(C) states:

For any consumer or commercial product the Administrator may

issue control techniques guidelines under this Act in lieu of

regulations required under subparagraph (A) if the administrator

determines that such guidance will be substantially as effective as

regulations in reducing emissions of volatile organic compounds

which contribute to ozone levels in areas which violate the national

ambient air quality standard for ozone.

In many cases, CTG's can be effective regulatory approaches to reduce

emissions of VOC in nonattainment areas--with the advantage of not

imposing control costs on attainment areas, where VOC emissions

reductions may be less beneficial. On the other hand, rules based on

CTG's may impose requirements and costs in nonattainment areas that are

beyond those of a national rule. For example, State automobile refinish

rules require recordkeeping by body shops, while the national rule does

not.

The EPA can also use other systems of regulation. According to

section 183(e)(4), EPA can consider ``any system or systems of

regulation as the Administrator deems appropriate, including

requirements for registration and labeling, self-monitoring and

reporting, prohibitions, limitations, or economic incentives (including

marketable permits and auctions of emissions rights) concerning the

manufacture, processing, distribution, use, consumption or disposal of

the

[[Page 19007]]

product.'' The EPA solicits comments on alternative approaches to

regulation in section IV.H.

C. Regulatory Background

Automobile refinish coatings are included under the definition of

consumer and commercial products since the definition under section

183(e) of the Act specifically includes paints, coatings, and solvents.

Section 183(e) of the Act requires that the first group of consumer and

commercial products (i.e., those with highest priority for regulation)

be regulated within 2 years after publication of the regulatory

schedule. As mentioned previously, automobile refinish coatings are in

the first group of consumer and commercial products to be regulated.

The regulation is required by March 1997. The criteria which contribute

to the prioritization of automobile refinish coatings in the first

group of consumer and commercial products to be regulated include the

availability of alternatives, the cost-effectiveness of controls, and

the VOC emissions in ozone nonattainment areas. Further details about

the criteria used to prioritize consumer and commercial product

categories for regulation are available in the Report to Congress.

Automobile refinish coating regulations are in place or under

development in a number of States. For the companies that market

automobile refinish coatings nationwide, trying to fulfill the

differing requirements of State rules has created administrative,

technical, and marketing problems. A Federal rule is expected to

provide some degree of consistency, predictability, and administrative

ease for the industry.

In addition, State representatives have recommended that the EPA

develop and implement nationwide Federal control measures to enhance

enforceability and conserve State resources.

D. Supporting Documentation for the Proposed Standards

The automobile refinish coating background information document

(BID) (EPA publication number EPA-453/D-95-005a) contains supporting

documentation for this proposal. It contains a product category

description, an industry profile, a discussion of control measures and

their associated costs, and a description of the expected emissions

reductions. Other supporting information for this proposed regulation

includes existing State regulations, meeting summaries, and the report

to Congress on consumer and commercial products. This information is

contained in the docket and is available to the public as described

above.

II. Summary of Proposed Standards

The proposed standards are summarized below. The rationale for the

regulatory decisions made in developing these standards is provided in

section IV.

A. Applicability of the Standards

The provisions of this proposed rule apply to automobile refinish

coatings that are manufactured or imported for sale or distribution in

the United States.

The proposed standards do not apply to the following automobile

refinish coatings:

(1) Coatings manufactured exclusively for sale outside the United

States;

(2) Coatings manufactured or imported before the compliance date of

the rule;

(3) Coatings manufactured for use by original equipment

manufacturers for assembly-line coating operations; and

(4) Coatings supplied in nonrefillable aerosol containers.

B. Regulated Entities

Regulated entities are defined under section 183(e) to include

manufacturers, processors, wholesale distributors, and importers. This

proposed rule limits the VOC contents of coatings manufactured or

imported for use in this country. Since the distribution of coatings

has no effect on whether compliant coatings are used, distributors are

not regulated entities under this proposed rule.

C. Standards

Coatings subject to this proposed rule shall comply with the VOC

content standards listed in table 1. If a coating is marketed under

more than one of the listed coating categories, the coating shall

comply with the lowest applicable VOC content standard.

Table 1.--VOC Content Standards for Automobile Refinish Coatings

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Coating Category VOC Contenta (grams/liter)

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Pretreatment Wash Primer.................. 780

Primer/Primer Surfacer.................... 575

Primer Sealer............................. 550

Single/2 Stage Topcoats................... 600

Topcoats of 3 or more stages.............. 625

Specialty Coatingsb....................... 840

------------------------------------------------------------------------

aVOC content means the amount of VOC in a coating that has been prepared

for application according to the manufacturer's mixing instructions,

excluding water and exempt compounds.

bSpecialty coatings include adhesion promoters, anti-glare/safety

coatings, bright metal trim repair coatings, elastomeric materials,

impact-resistant coatings, rubberized asphaltic underbody coatings,

uniform finish blenders, and weld-through primers.

D. Compliance Requirements

The compliance date of the rule is 4 months after the promulgation

date of the rule.

E. Labeling Requirements

Containers of all subject coatings must bear labels or lids that

include the date of manufacture of the contents or a code indicating

the date of manufacture.

F. Reporting

Manufacturers and importers of coatings subject to the proposed

standards must file an initial report. The initial report must be

submitted by the compliance date or within 180 days after becoming

subject to the rule, whichever is later. The initial report must

include the following information:

(1) The name and mailing address of the manufacturer or importer.

(2) In cases where codes are used to represent the date of

manufacture, the manufacturer or importer shall submit an explanation

of each date code to the Administrator. An explanation of any new date

codes shall be filed with the Administrator no later than 30 days after

it is first introduced into commerce.

G. Variance

The proposed rule allows manufacturers and importers of automobile

refinish coatings to submit a written application to the Administrator

requesting a variance if, for reasons beyond their reasonable control,

they cannot comply with the requirements of the proposed rule. The

application must include the following information:

(1) The specific grounds for which the variance is sought;

(2) The proposed date(s) by which compliance with the provisions of

the rule will be achieved; and

(3) A compliance report reasonably detailing the method(s) by which

compliance will be achieved.

Upon receipt of the variance application, the Administrator will

hold a public hearing to determine whether, under what conditions, and

to what extent, a variance from the requirements of the proposed rule

is necessary and will be permitted.

The Administrator may grant a variance if the following criteria

are met:

(1) By complying with the proposed rule, the applicant would bear

unreasonable economic hardship;

(2) The public benefit of avoiding hardship to the applicant

outweighs the public interest in any increased emissions or air

contaminants that would result from issuing the variance; and

[[Page 19008]]

(3) The proposed compliance schedule can be reasonably implemented,

and compliance will be achieved as expeditiously as possible.

The approved variance order will designate a final compliance date

and a condition that specifies increments of progress necessary to

assure timely compliance. A variance shall end immediately upon the

failure (of the party to whom the variance was granted) to comply with

any term or condition of the variance.

H. Test Methods

For purposes of determining compliance with this rule, the VOC

content of each coating product manufactured or imported must be

determined using EPA's Reference Method 24--``Determination of Volatile

Matter Content, Water Content, Density, Volume Solids, and Weight

Solids of Surface Coatings,'' found in 40 CFR part 60, appendix A.

Analysis of waterborne coating VOC content determined by Reference

Method 24 must be adjusted as described in section 4.4 of Reference

Method 24.

The Administrator may approve, on a case-by-case basis, alternative

methods of determining the VOC content of coatings if they are

demonstrated to the Administrator's satisfaction to provide results

equivalent to those obtained using Reference Method 24.

III. Summary of Impacts

A. Environmental Impacts

This section will discuss the incremental increase or decrease in

air pollution, water pollution, and solid waste generation that would

result from implementing the proposed standards.

1. Air Pollution Impacts

The proposed standards would reduce nationwide emissions of VOC

from the use of automobile refinish coatings by an estimated 32,500 Mg

(35,800 tons) in 1996. These reductions are compared to 1995 baseline

emissions estimates. Since many regulated VOC species are also on the

list of hazardous air pollutants (HAP) in section 112 of the Act, the

proposed rule is expected to reduce some HAP emissions from the use of

automobile refinish coatings.

2. Water and Solid Waste

There are no adverse solid waste impacts anticipated from

compliance with this rule. It is not expected that the disposal of

coatings as solid waste will increase as a result of this rule. In

fact, because the compliant (higher solids) coatings are more

concentrated, fewer containers will require disposal when the same

volume of solids is applied.

In cases where conversion from solventborne to waterborne coatings

is the method used to achieve compliance, an increase in wastewater

discharge may occur if waste waterborne coatings are discharged to

publicly owned treatment works.

B. Energy Impacts

There are no adverse energy impacts anticipated from compliance

with this rule. Compliant coatings will not require different

application equipment and no add-on controls are required.

C. Cost and Economic Impacts

The total cost of this rule includes coating manufacturer process

modification costs, and costs for training coating manufacturer

representatives, distributors, and body shop personnel. The EPA

believes that coatings that meet the VOC content limits of this

proposed rule do not have longer drying times than conventional

coatings; therefore, the EPA has not included costs for lost

productivity in this rule. The EPA requests comments and data regarding

the drying times of coatings compliant with this proposed rule, and any

information that indicates that there may be costs due to losses in

productivity. The annual cost of this rule is 4.5 million dollars, or

about $140 per megagram of VOC emissions reductions.

If the manufacturer and distributor costs are completely passed on

as a coating price increase, the price of coatings is estimated to

increase less than 10 cents per gallon (less than 0.2 percent). If the

total cost of the rule is passed on as an increase in the price of a

refinish job, the price is estimated to increase less than 30 cents per

job (less than 0.05 percent).

D. Cost-Effectiveness

The EPA often compares the relative cost of different measures for

controlling a pollutant by calculating the ``cost-effectiveness'' of

the measures. Using EPA's traditional calculation methodology, the

cost-effectiveness of a regulation that applies nationwide is based on

a comparison of national costs and nationwide emission reductions. This

comparison is expressed as the cost per megagram (or ton) of emissions

reduced. Using cost and emission reduction figures presented earlier in

this section of the preamble, the nationwide cost-effectiveness of the

proposed regulation is $140/Mg ($130/ton).

Alternative ways to calculate a measure of the ``cost-

effectiveness'' of the regulation have been suggested by others. One

alternative would be to calculate cost-effectiveness on the basis of

the nationwide cost of the regulation ($4.5 million for the proposed

regulation) and the VOC reduction achieved in ozone nonattainment

areas. The stated rationale for this approach is that cost-

effectiveness measures should be designed in a way that best represents

the objective of the regulatory action. In this case, for example, a

major objective, though not the only objective, of these regulations is

the control of ozone formation in nonattainment areas. By establishing

nationwide standards, the cost of achieving emission reductions in

ozone nonattainment areas during the ozone seasons requires nationwide

expenditures during all seasons of the year, including expenditures

year-round in areas currently in attainment with the current standard.

These nationwide emission reductions--including emission reductions

outside of nonattainment areas and out of the ozone season--may or may

not contribute to efforts to limit ozone in nonattainment areas,

depending on whether they participate in ozone transport from one area

to another. One example of the application of this method is presented

in a December 21, 1993, draft Regulatory Impact Analysis developed by

the EPA's Office of Mobile Sources (OMS) in which control of emissions

from refueling of light duty vehicles (i.e., onboard refueling vapor

recovery, or ORVR) could viably be applied either nationwide or in

nonattainment areas alone. In this example, regional regulation

represented an important alternative to national regulation. The OMS

calculated cost-effectiveness using (1) nationwide costs and nationwide

emission reductions, as well as (2) nationwide costs and the emission

reductions achieved in nonattainment areas.

Emissions from automobile refinish coatings used in nonattainment

areas have been estimated. On a nonattainment area basis, the cost-

effectiveness of the proposed automobile refinish coatings rule would

be $300/Mg ($280/ton). A similar calculation could be done to account

for the seasonality of ozone formation.

While such an approach offers a measure of the cost of emission

reductions in nonattainment areas, EPA sees significant drawbacks to

this approach. First, cost-effectiveness figures would no longer

provide a consistent basis for comparison of the relative cost of

different control measures or regulations considered at different

points in time. Because the number and location of nonattainment areas

changes frequently, the initial

[[Page 19009]]

calculation of the cost-effectiveness of a rule would depend upon when

it was issued. The EPA believes it is important that cost-effectiveness

be calculated in a consistent manner that allows for valid comparisons.

Also, introducing new methodology would tend to make new control

measures appear superficially to be less cost-effective than measures

utilized in the past, simply because of a change in well-established

terminology.

Second, this alternative approach attributes all costs of the rule

to emission reductions achieved in nonattainment areas and no cost to

emission reductions achieved in attainment areas. By not including

emission reductions in attainment areas, the methodology assumes that

emission reductions in areas which attain the NAAQS for ozone have no

value. In fact, attainment areas often contribute to pollution problems

in nonattainment areas through the transport of emissions downwind.

Also, emission reductions in attainment areas help to maintain clean

air as the economy grows and new pollution sources come into existence.

Furthermore, measures to reduce emissions of VOC often reduce emissions

of toxic air pollutants.

Another alternative that has been suggested would be to calculate

not only the emission reductions but also the cost if the requirements

applied only in ozone nonattainment areas, perhaps through issuance of

a Control Techniques Guideline (CTG). The EPA has not estimated the

cost of using a CTG to regulate only those products sold for use in

ozone nonattainment areas.

The EPA is planning to review internally the generic question of

the alternative approach to measuring costs against emission

reductions. The results of this review are not available for

incorporation into this rulemaking. Therefore, the EPA requests

comments on the traditional and alternative methods discussed above to

characterize the cost-effectiveness of this and other Section 183(e)

regulations.

V. Rationale

The following sections explain the rationale for selecting the

proposed standards.

A. Applicability

This proposed rule applies to automobile refinish coatings that are

manufactured or imported for sale or distribution in the United States.

Coatings that are currently used for automobile refinishing are also

used outside the automobile refinish industry. In fact, some of these

coatings are not labeled specifically as automobile refinish coatings,

but are labeled generally as primers, basecoats, etc. This proposed

rule applies only to those coatings that are marketed as automobile

refinish coatings. Therefore, coating manufacturers define which of

their coatings are automobile refinish coatings by the way they market

them. All coatings marketed as automobile refinish coatings are subject

to this proposed rule; all other coatings are not.

Automobile refinish coatings were determined to be a significant

source of VOC emissions in nonattainment areas and were designated for

regulation under the authority of section 183(e) of the Act. The

proposed standards do not apply to some types of coatings. There are

exemptions for exported coatings, coatings manufactured or imported

before the compliance date, coatings that are sold in nonrefillable

aerosol containers, and coatings that are manufactured for use by

original equipment manufacturers (OEM's) for assembly-line coating

operations.

The purpose of section 183(e) of the Act is to control VOC

emissions that contribute to ozone nonattainment in the United States.

Because exported coatings do not contribute to VOC emissions in the

United States, and because EPA has no legal or factual basis to impose

VOC control measures outside the United States, coatings manufactured

for the explicit purpose of export, and which are in fact exported, are

exempt from the requirements of the proposed rule.

An exemption for coatings sold in nonrefillable aerosol containers

is included in the proposed rule because the EPA is developing a

separate VOC regulation for these coatings under section 183(e)

authority.

Coatings that are manufactured for use by OEM's for assembly-line

coating operations are exempt from this proposed rule because such

coatings are significantly different than refinish coatings; OEM's are

covered by standards promulgated under section 111 of the Act, and will

be covered by standards promulgated under section 112 of the Act.

Each coating manufacturer produces coating components, such as

hardeners, reducers, additives, etc., necessary for the preparation of

a ``ready-to-spray'' coating. Some coating manufacturers also produce

components for use in the coatings of other manufacturers; some

companies do not produce coatings at all, but produce only coating

components for use in the coatings of other manufacturers. Although

preparing a coating using only the components and suggested mixing

ratio of one manufacturer may yield a compliant coating, preparing a

coating with the components of several manufacturers may not. To be

effective, this proposed rule may need to apply to all coating

components; that is, if a coating component manufacturer suggests that

a coating component may be used for automobile refinishing, and if its

suggested use would result in the preparation of a noncompliant

coating, then the coating component manufacturer would be out of

compliance with the rule. Until recently the EPA was not aware of the

extent to which coating users combined the components of multiple

manufacturers. As a result, the EPA has not sufficiently examined how

to enforce this proposed rule if its applicability were expanded to

include all automobile refinish coating components, or the impacts that

the rule would have on the manufacturers who would become affected by

the rule if its applicability were expanded. The EPA has, therefore,

limited applicability to coating manufacturers in this proposed rule,

but is soliciting comments on whether to expand the applicability.

Based on information received during the comment period, the EPA may

expand the applicability in the promulgated rule.

The EPA is aware that the VOC content standards of this proposed

rule would likely prohibit the manufacture or import of lacquer

coatings. Lacquers are no longer used on new vehicles, and are mainly

used by antique car restorers; therefore, the demand for lacquers is

small and is likely to decrease. Although other coatings are compatible

with lacquers and may be used to refinish an existing lacquer finish,

some colors available in lacquer are not available in other coatings.

Since the production of lacquer topcoats is small and not likely to

increase, and since they may be necessary to fill a niche in automobile

refinishing, the EPA is considering exempting lacquer topcoats from the

proposed rule. Although lacquer topcoat use is not likely to increase,

an exemption would not prevent it. Therefore, the EPA is also

considering whether to include lacquer topcoats in the specialty

coating category (described in section IV.B.) and limit their

production to a small percentage of total automobile refinish coating

production. The EPA solicits comments on these issues in section IV.H.;

based on information received during the public comment period, the EPA

may, in the promulgated rule, either exempt lacquer topcoats, or

[[Page 19010]]

categorize them as specialty coatings and limit their production.

B. Selection of BAC

The primary factors considered in determining best available

controls (BAC) were technological and economic feasibility, and

environmental impacts. Other impacts, such as nonair environmental

impacts (solid waste and water) and energy impacts, are expected to be

minimal. Health impacts are expected to parallel environmental impacts

in terms of directional benefit (i.e., as environment improves, health

improves). The EPA relied on existing State and local automobile

refinish rules, coating product information, and input from the

automobile refinish industry to determine the availability and

technological and economic feasibility of coatings.

The BAC selection process involves both the selection of coating

categories and the determination of VOC content limits for those

categories. These components are linked in a determination of what

degree of emissions reduction represents BAC. Decisions to subdivide a

given category into more specific ``subcategories'' can be a direct

consequence of the VOC content levels under consideration. For example,

pretreatment wash primers etch bare metal surfaces to provide adhesion

of the coating to the metal. According to coating product information

there are no pretreatment wash primers that have VOC content levels as

low as other primers. Therefore, a subcategory was created for this

primer, along with a VOC content level different from the general

primer category. Similarly, a subcategory was created for topcoats of

three (or more) stages because coating information indicates that there

are no such coatings with VOC content levels as low as those of other

topcoats.

``Specialty coatings'' that serve specific functions and that

either do not belong in other coating categories or are not available

at the VOC content limits of those categories are included in a

separate category. This category includes coatings that are designed

for a specific use, and coatings of other categories that are modified

by changing the components of the coating. In this proposed rule, all

coatings that the EPA considers specialty coatings are defined. It may

not be possible to determine all of the specialty coatings that may be

needed in the future as new OEM coatings are developed; therefore, an

open-ended definition of specialty coatings is desirable. However, such

a definition could be abused by simply renaming existing coatings as

specialty coatings. Even with a closed definition, the specialty

coating category may have undesirable effects. For example, an

elastomeric coating is a specialty coating. Some flexible topcoats,

which are considered elastomeric coatings, are prepared simply by

adding a flexible hardener in place of the normal hardener. In this

case, the specialty coating category would allow topcoats to be used

that exceed the VOC content standard for topcoats.

Limiting the production of specialty coatings to a small percentage

of total automobile refinish coating production may be effective in

minimizing the problems associated with this category. However, as

mentioned above, some specialty coatings are just modifications of

other coatings, and it is unclear what the EPA would be limiting.

Limiting specialty coating production to a percentage of total

production would adversely affect manufacturers that are mainly in the

specialty coating business. The EPA is considering limiting the

production of specialty coatings, and is soliciting comments on how to

determine such limits and how they can be made enforceable. Based on

information received during the public comment period, the EPA may

include specialty coating production limits in the promulgated rule.

The process of determining BAC began with the examination of State

and local automobile refinish rules. The EPA focused on existing

coating categories and their associated VOC standards in State and

local rules to determine which categories and VOC content limits might

constitute the degree of emissions reduction that represents BAC.

Specifically, California rules were analyzed because California has

been regulating automobile refinish coatings for several years and

generally has the most stringent VOC standards in the country.

The VOC limits of California rules are typically met with

waterborne coatings. Coating manufacturers have stated that they would

need to modify their production facilities to supply the entire country

with waterborne coatings. Such modifications reportedly include the

replacement of carbon steel equipment with corrosion-resistant

materials. Although not usually necessary in the relatively dry climate

of California, in some geographic areas of the country waterborne

coatings would likely require forced drying with supplemental heating

equipment (such as heated spray booths or infrared heating lamps)

because of their longer drying times.

In geographic areas without existing automobile refinish rules,

solventborne coatings are typically used that have relatively high VOC

content levels; these coatings are sometimes referred to as

``conventional'' coatings. Conventional coatings are typically fast-

drying and, therefore, do not need to be force-dried. There is not a

continuous spectrum of coating VOC content levels; coatings with the

lowest VOC content levels (such as waterborne coatings) were developed

to comply with State and local rules. Conventional coatings (that have

the highest VOC content levels) were developed to satisfy the demand

for fast-drying coatings that are easy to use. However, between these

extremes there exist coatings that have VOC content levels that are

lower than those of conventional coatings, that are not significantly

harder to use or slower to dry than conventional coatings, and that do

not require the forced drying or extensive coating manufacturer process

modifications of the coatings with the lowest VOC content levels. The

VOC content limits that are being proposed as BAC in this proposed rule

are based on such ``medium-solids'' coatings.

The EPA considered proposing a VOC content standard of 550 grams

per liter for primers and primer surfacers. Coating product information

indicates that coatings at this level are available. However, primers

at this level are not tintable according to the information available

to the EPA. Tintable primers are available with a VOC content of 575

grams per liter. When tintable primers are used, less topcoat needs to

be applied because the tint of the primer assists in achieving the

final color desired. Since less topcoat is used when tintable primers

are used, and since the VOC content of topcoats are generally higher

than 550 grams per liter, VOC emissions reductions are expected to be

equal or greater when tintable primers are used. The EPA is therefore

proposing a 575 grams per liter standard for primers and primer

surfacers. Comments on the proposed standard for primers and primer

surfacers are solicited in section IV.H.

Since most of the nation uses conventional coatings, these coatings

provide a reference point from which to assess technological and

economic feasibility. The emissions reductions and cost impacts of

regulatory alternatives considered by the EPA are given in table 2.

[[Page 19011]]

Table 2.--Impacts of Regulatory Alternatives

----------------------------------------------------------------------------------------------------------------

Emissions Capital Annual Cost Incremental cost

Regulatory alternative reductions * costs 10 costs 10 effectiveness $/ effectiveness $/

Mg/yr \6\ $ \6\ $ Mg Mg

----------------------------------------------------------------------------------------------------------------

BAC................................... 32,500 32 5 140 ................

Beyond BAC............................ 36,800 240 34 930 6900

----------------------------------------------------------------------------------------------------------------

* Baseline emissions are 88,500 Mg/yr.

As previously mentioned, medium-solids coatings do not need to be

force-dried, and the process modifications of coating manufacturing

facilities necessary to produce such coatings nationwide are less

extensive than those needed to produce waterborne coatings. The capital

cost associated with the use of medium-solids coatings is about 4.5

million dollars; about 60% of the cost is for the training of coating

manufacturer and distributor representatives and shop personnel in the

use of lower-VOC coatings. The cost effectiveness of using medium-

solids coatings is about $140 per megagram; the incremental emissions

reductions that would be achieved by going beyond (or lower than) the

VOC content limits of medium-solids coatings would cost about $6900 per

megagram. Most of this cost (60%) is from the purchase by body shops of

additional heating equipment necessary to speed the drying of the

coatings to avoid losses in productivity. Because of these high

incremental costs, the EPA selected the VOC content limits in Table 1

as BAC.

C. Selection of Regulatory Format

In contrast to traditionally regulated stationary sources that emit

VOC at a specific fixed location (e.g., a manufacturing plant), VOC

from automobile refinish coatings are emitted wherever the products are

used. For this reason, regulating at the manufacturer and importer

level is the most efficient and least burdensome method of regulating

the VOC content of coatings, and would ultimately impact the VOC

content of automobile refinish coatings at the distributor and end user

level.

The framework EPA chose to implement BAC is VOC content standards.

Coatings manufactured or imported on or after the effective date must

comply with the VOC content standards. The EPA will continue to gather

data with which to evaluate the potential for further emissions

reductions or alternate frameworks for implementing BAC such as

economic incentive-type approaches.

D. Labeling Requirements

The proposed regulation requires that containers for all subject

coatings display on the label or lid the date of manufacture or a code

indicating the date of manufacture. This information allows enforcement

personnel to determine whether a coating was manufactured before or

after the compliance date.

E. Selection of Reporting Requirements

The EPA evaluated what reported information would be sufficient to

ensure compliance with VOC standards within the proposed rule. The

reporting requirements proposed are necessary to allow determination of

compliance, and the EPA believes they do not represent an undue burden

on manufacturers or importers of automobile refinish coatings.

Compliance with this rule will be determined by periodic random testing

(EPA Reference Method 24, described below). Therefore, beyond the

initial report, which serves to identify all manufacturers and

importers of automobile refinish coatings, there are no reporting

provisions in this rule (except for reports explaining any new date

codes and for variances).

F. Variance

The proposed rule includes a variance provision whereby

manufacturers and importers of subject automobile refinish coatings may

apply to the Administrator for a temporary variance from compliance

with the standards. A variance will be granted if the applicant

demonstrates that compliance would result in economic hardship, and

that granting the variance would better serve the public interest than

would requiring continuous compliance under the conditions of economic

hardship. The EPA intends for this provision to allow manufacturers and

importers some flexibility in responding to unforeseen circumstances

that may cause additional, unanticipated compliance burden. The EPA

recognizes that certain interruptions in the availability of raw

materials and or manufacturing processes may affect the manufacturer's

or importer's ability to continuously comply with the standards. In

particular, the EPA anticipates that this variance provision will help

to mitigate impacts to small manufacturers. Small manufacturers are

likely to have fewer research and development resources, and,

therefore, will benefit from the allowed variance.

G. Test Methods

Under the proposed provisions, compliance with the VOC content

standards is based on the EPA's Reference Method 24. This test method

represents the EPA's approved protocol for determining the VOC content

of coatings and is EPA's standard test method for determining the VOC

content of coatings.

Standard language allowing use of alternative methods of

determining VOC content subject to the Administrator's approval is also

included in the proposed rule.

H. Solicitation of Comments

The Administrator welcomes comments from interested persons on any

aspect of the proposed rule, and on any statement in the preamble or

the referenced supporting documents. The proposed rule was developed on

the basis of information available to the EPA. The Administrator is

specifically requesting factual information that may support either the

approach taken in the proposed standards or an alternate approach.

The EPA is requesting specific comments and data on several aspects

of the proposed rule: (1) Alternative approaches to regulation; (2)

expanding the applicability of the rule to include all automobile

refinish coating components; (3) limiting production of lacquer

topcoats, or exempting lacquer topcoats from the rule; (4) determining

and enforcing specialty coating production limits; and (5) the

technical and economic feasibility of VOC content levels that are

higher or lower than the 575 grams/liter standard for primers and

primer surfacers.

The EPA anticipates promulgating this rule on an expedited

schedule. This will benefit States for which VOC reductions from

automobile refinish coating are critical to their 15 percent rate-of-

progress plans, and help minimize the patchwork of individual State

automobile refinish coating rules across the country.

[[Page 19012]]

Comments submitted to the Administrator should contain specific

proposals and supporting data to allow the EPA to fully evaluate the

comments. Recommended changes to any of the VOC content standards

presented in this proposal should include sufficient information for

the EPA to evaluate the technological and economic feasibility

associated with such changes. Applicable dates and addresses for the

submission of comments are included at the beginning of this preamble.

VI. Administrative Requirements

A. Public Hearing

A public hearing will be held, if requested, to provide opportunity

for interested persons to make oral presentations regarding the

proposed regulation in accordance with section 307(d)(5) of the Act.

Persons wishing to make oral presentation on the proposed regulation

for automobile refinish coatings should contact the EPA at the address

given in the ADDRESSES section of this preamble. Oral presentations

will be limited to 15 minutes each. Any member of the public may file a

written statement before, during, or within 30 days after the hearing.

Written statements should be addressed to the Air Docket Section at the

address given in the ADDRESSES section of this preamble and should

refer to Docket No. A-95-18.

A verbatim transcript of the hearing and written statements will be

available for inspection and copying during normal business hours at

the EPA's Air Docket Section in Washington, DC (see ADDRESSES section

of the preamble).

B. Executive Order 12866

Under Executive Order 12866, the Agency must determine whether a

regulatory action is ``significant'' and therefore subject to Office of

Management Budget (OMB) review and the requirements of the Executive

Order. The Order defines ``significant regulatory action'' as one that

is likely to result in a rule that may:

(1) Have an annual effect on the economy of $100 million or more,

or adversely affect in a material way the economy, a sector of the

economy, productivity, competition, jobs, the environment, public

health or safety, or State, local, or tribal governments or

communities;

(2) Create a serious inconsistency or otherwise interfere with an

action taken or planned by another agency;

(3) Materially alter the budgetary impact of entitlements, grants,

user fees, or loan programs or the rights and obligations of recipients

thereof; or

(4) Raise novel legal or policy issues arising out of legal

mandates, the President's priorities, or the principles set forth in

the Executive Order.

Pursuant to the terms of the Executive Order, the OMB has notified

the EPA that it considers this a ``significant regulatory action''

within the meaning of the Executive Order. The EPA submitted this

action to the OMB for review. Any written comments from the OMB to the

EPA and any written EPA response to those comments will be included in

Docket No. A-95-18, listed at the beginning of this notice under

ADDRESSES.

C. Paperwork Reduction Act

The information collection requirements in this proposed rule have

been submitted for approval to the Office of Management and Budget

(OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. An

Information Collection Request (ICR) document has been prepared by EPA

(ICR No. __) and a copy may be obtained from Sandy Farmer, OPPE

Regulatory Information Division; U.S. Environmental Protection Agency

(2136); 401 M Street, S.W.; Washington, DC 20460, or by calling (202)

260-2740.

Pursuant to Section 183(e) of the Act, the proposed rule regulates

VOC emissions from automobile refinish coatings. The only information

collection requirements of the proposed rule are for labeling and

reporting. To determine whether a coating is manufactured before or

after the compliance date of the rule, the date of manufacture, or code

representing the date, must appear on the coating container. Coating

manufacturers currently include this information on coating containers.

The proposed rule requires all coating manufacturers to submit an

initial report containing their name and mailing address, and an

explanation of coating date codes, if codes are used to represent the

date of coating manufacture. Reporting beyond the initial report is

required only for the explanation of any new date codes used by coating

manufacturers, and for requests for variances. The information to be

reported is not of a sensitive nature.

The EPA estimated the cost and hour burden of the information

collection requirements of the proposed rule. Burden means the total

time, effort, or financial resources expended by persons to generate,

maintain, retain, or disclose or provide information to or for a

Federal agency. This includes the time needed to review instructions;

develop, acquire, install, and utilize technology and systems for the

purposes of collecting, validating, and verifying information,

processing and maintaining information, and disclosing and providing

information; adjust the existing ways to comply with any previously

applicable instructions and requirements; train personnel to be able to

respond to a collection of information; search data sources; complete

and review the collection of information; and transmit or otherwise

disclose the information.

The initial report must be submitted by all coating manufacturers.

Averaged over a 3 year period, EPA estimates that the initial report

will require 8 hours to complete, and will be submitted by 10

respondents annually. Beyond the initial report, EPA estimates that 3

respondents per year will spend 2 hours each reporting the explanations

of any new date codes used. The total annual cost of the reporting

requirements of the proposed rule is $3,200.

An agency may not conduct or sponsor, and a person is not required

to respond to a collection of information unless it displays a

currently valid OMB control number. The OMB control numbers for EPA's

regulations are listed in 40 CFR Part 9 and 48 CFR Chapter 15.

Comments are requested on the Agency's need for this information,

the accuracy of the provided burden estimates, and any suggested

methods for minimizing respondent burden, including through the use of

automated collection techniques. Send comments on the ICR to the

Director, OPPE Regulatory Information Division; U.S. Environmental

Protection Agency (2136); 401 M St., S.W.; Washington, D.C. 20460; and

to the Office of Information and Regulatory Affairs, Office of

Management and Budget, 725 17th St., N.W., Washington, D.C. 20503,

marked ``Attention: Desk Officer for EPA.'' Include the ICR number in

any correspondence. Since OMB is required to make a decision concerning

the ICR between 30 and 60 days after April 30, 1996, a comment to OMB

is best assured of having its full effect if OMB receives it by May 30,

1996. The final rule will respond to any OMB or public comments on the

information collection requirements contained in this proposal.

D. Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires EPA

to consider potential impacts of proposed regulations on small business

``entities.'' A regulatory flexibility analysis (RFA) is required if

preliminary analysis indicates ``a significant economic impact on a

substantial number of small entities.''

[[Page 19013]]

Shops in the autobody refinish industry are classified as small by

the U.S. Small Business Administration if the entity that owns the shop

has total sales of less than $3.5 million. Most individual shops are

small by this criterion if the owning entity has no other sales from

other shops. Therefore, an RFA was performed and is contained in the

docket for this proposed rule. Information on the size of manufacturers

and distributors impacted by this rule is not available, but some small

entities among manufacturers and distributors may also be affected.

Several industry trade associations, including the Automotive

Service Association (ASA) that represents body shops, and the

Automotive Service Industry Association (ASIA) that represents coating

distributors, have submitted comments and provided information during

the development of the national rule. Most of the members of these

associations are small businesses. The main concerns of these

associations deal with recordkeeping and VOC content limits. Some

members of ASA are already subject to State rules that contain VOC

content limits and recordkeeping at the body shop. The drying times of

some coatings compliant with State rules are significantly longer than

those of conventional coatings, which can result in losses in body shop

productivity. Some shops report that the recordkeeping required under

some rules is burdensome and time consuming.

The proposed national rule applies to automobile refinish coating

manufacturers and importers only, not to body shops or any other users

of the coatings. After the national rule is effective, only compliant

coatings will be available for purchase by coating users in this

country. Since the purpose of most State recordkeeping requirements is

to demonstrate that body shops are using compliant coatings, some

States may decide to remove such requirements from their rules after

the national rule is effective.

Coatings compliant with the proposed rule do not take significantly

longer to dry than conventional coatings; therefore, small shops will

be able to apply compliant coatings without purchasing additional

equipment.

E. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates Reform Act of 1995 (``Unfunded

Mandates Act'') (signed into law on March 22, 1995) requires that the

Agency prepare a budgetary impact statement to accompany any proposed

or final rule that includes a Federal mandate that may result in

expenditure by State, local, and tribal governments, in the aggregate,

or by the private sector, of $100 million or more in any one year.

Section 203 requires the Agency to establish a plan for obtaining input

from and informing, educating, and advising any small governments that

may be significantly or uniquely affected by the rule.

Under section 205 of the Unfunded Mandates Act, the Agency must

identify and consider a reasonable number of regulatory alternatives

before promulgating a rule for which a budgetary impact statement must

be prepared. The Agency must select from those alternatives the least

costly, most cost-effective, or least burdensome alternative that

achieves the objectives of the rule, unless the Agency explains why

this alternative is not selected or the selection of this alternative

is inconsistent with law.

Because the proposed rule is estimated to result in expenditure by

State, local, and tribal governments or the private sector of less than

$100 million in any one year, the Agency has not prepared a budgetary

impact statement or specifically addressed the selection of the least

costly, most cost-effective, or least burdensome alternative. Because

small governments will not be significantly or uniquely affected by

this rule, the Agency is not required to develop a plan with regard to

small governments.

List of Subjects in 40 CFR Part 59

Environmental protection, Air pollution control, Automobile

refinish coatings, Consumer and commercial products, Ozone, Volatile

organic compound.

Dated: April 19, 1996.

Carol M. Browner,

Administrator.

[FR Doc. 96-10381 Filed 4-29-96; 8:45 am]

BILLING CODE 6560-50-P