Sales Volume Limit Provisions for Small-Volume Manufacturers Certification of Clean-Fuel and Conventional Vehicle Conversions and Related Provisions

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 85, 86, and 88

[AMS-FRL-5347-2]

RIN 2060-AF87

Sales Volume Limit Provisions for Small-Volume Manufacturers

Certification of Clean-Fuel and Conventional Vehicle Conversions and

Related Provisions

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: On September 21, 1994, EPA published a final rule establishing

emission standards for natural gas- and liquified petroleum gas-fueled

vehicles and engines (``Gaseous Fuels Rule''). On September 30, 1994,

EPA published the final rule establishing emission standards for clean-

fuel vehicles (CFVs) and engines and requirements for CFV conversions

(``CFV Standards Rule''). Included in each rule were provisions

intended to extend the applicability of the existing vehicle sales

volume limit under EPA's Small-Volume Manufacturers (SVM) certification

program (10,000 vehicles) to aftermarket vehicle converters. In the

case of the Gaseous Fuels Rule, the existing 10,000-vehicle volume

limit was promulgated for aftermarket conversions as a final rule. In

the case of the CFV Standards Rule, the 10,000 vehicle limit was

presented as a direct final rule, to become final only in the absence

of adverse comment.

Since adverse comments were received within the allotted time, the

vehicle limit provision is not effective, and EPA is removing this

provision elsewhere in today's Federal Register. In its place, this

action proposes to establish the basic 10,000 vehicle/engine total

annual sales eligibility limit for vehicle converters seeking CFV

certification under the Small-Volume Manufacturers provisions. In

addition, EPA proposes to implement a short-term mechanism which would

allow converters of alternative fuel vehicles to petition EPA for an

increase in the allowable volume limit when the nature of their

business operations are substantially different than that of original

equipment manufacturers.

To encourage the production of Inherently-Low Emission Vehicles

(ILEVs), this action also proposes to allow additional options for

external ILEV label dimensions. In this action, EPA is also proposing

to amend two California Pilot Program (CPP) requirements: the method

for determining a manufacturer's CFV sales quota and the method for

administering CPP credits. Finally, this proposal includes several

additional technical amendments to the regulations issued under Clean

Fuel Fleet Program and California Pilot Program final rules (40 CFR

part 86, subparts A and N, and 40 CFR part 88, subparts A, B, and C).

In the Final Rules section of this Federal Register, EPA is finalizing

these technical amendments to the Clean Fuel Fleet Program and

California Pilot Program as a direct final rule without prior proposal

because the Agency views these technical amendments as noncontroversial

and anticipates no adverse comments. A detailed description of these

technical amendments is set forth in the direct final rule. If no

adverse comments are received in response to that direct final rule, no

further activity is contemplated in relation to the technical

amendments in this proposed rule. If EPA receives adverse comments, the

affected portions of the direct final rule will be withdrawn and all

public comments received will be addressed in a subsequent final rule

based on this proposed rule. EPA will not institute a second comment

period on this proposed rule.

This proposal would reduce the regulatory burden for industry

(especially the aftermarket conversion industry), and it is highly

accommodating to their concerns. In addition, this proposal would

clarify and streamline existing regulations for certifiers and

purchasers of clean-fuel and/or alternative fuel vehicles.

DATES: Comments on this proposal will be accepted until February 2,

1996. Additional information on the procedure for submitting comments

can be found under ``Public Participation'' in the SUPPLEMENTARY

INFORMATION section.

ADDRESSES: Interested parties may submit written comments in response

to this action (in duplicate if possible) to Public Docket Nos. A-92-30

and A-92-14 for conversion provisions and Public Docket No. A-92-69 for

CPP provisions, at: Air Docket Section, U.S. Environmental Protection

Agency, Attention: Docket Nos. A-92-30, A-92-14, or A-92-69, First

Floor, Waterside Mall, Room M-1500, 401 M Street SW., Washington, DC

20460. A copy of the comments should also be sent to Mr. Bryan Manning

(SRPB-12), U.S. EPA, Regulation Development and Support Division, 2565

Plymouth Road, Ann Arbor, MI 48105.

Materials relevant to this action have been placed in Docket Nos.

A-92-30 and A-92-14 or A-92-69 by EPA. The docket is located at the

above address and may be inspected from 8:00 a.m. to 5:30 p.m. on

weekdays. EPA may charge a reasonable fee for copying docket materials.

FOR FURTHER INFORMATION CONTACT: Mr. Bryan Manning (SRPB-12), U.S. EPA,

Regulation Development and Support Division, 2565 Plymouth Road, Ann

Arbor, MI 48105, Telephone: (313) 741-7832; FAX: 313-741-7816.

SUPPLEMENTARY INFORMATION:

I. Introduction

A. Accessing Electronic Copies of Rulemaking Documents through the

Technology Transfer Network Bulletin Board System (TTNBBS)

A copy of this action is available through TTNBBS under OMS,

Rulemaking and Reporting, Alternative Fuels, Clean Fuel Fleets. TTNBBS

is available 24 hours a day, 7 days a week except Monday morning from

8-12 EST, when the system is down for maintenance and backup. For help

in accessing the system, call the systems operator at 919-541-5384 in

Research Triangle Park, North Carolina, during normal business hours

EST.

B. Background

1. The Small-Volume Manufacturers (SVM) Certification Program.

As is shown in 40 CFR 86.094-14, the Small-Volume Manufacturers

(SVM) certification program exempts entities seeking a Certificate of

Conformity with total annual vehicle/engine sales less than 10,000 from

EPA's full certification program. Specifically, the SVM provisions

relieve such entities from some elements otherwise required to

demonstrate the durability of emissions over the life of the vehicle.

Instead of accumulating mileage on actual prototype vehicles, the SVM

program in some cases permits the use of EPA-assigned values for

emission deterioration. This can be of significant economic benefit to

entities manufacturing or converting relatively few vehicles.

In the Gaseous Fuels (59 FR 48472) and the CFV Standards (59 FR

50042) rules, EPA intended to apply the SVM program to aftermarket

converters in the same way the Agency has applied it to manufacturers

of complete ``original equipment'' vehicles (OEMs), including the sales

volume limit of 10,000 annual sales. Discussions of EPA's perspective

on this regulatory provision were presented in Section II, Part B of

the CFV Emission Standards Final Rule (See

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59 FR 50063-50064; September 30, 1994) and Section III.I. of the

Gaseous Fuels Final Rule (See 59 FR 48486; September 21, 1994).

2. Comments and EPA Responses.

In response to the SVM program volume limit provisions of the CFV

Standards Final Rule and the Gaseous Fuels Final Rule, EPA received

comments from the Natural Gas Vehicle Coalition (NGVC) objecting to an

annual sales volume limit of 10,000 vehicles applying to converters

seeking to certify under the provisions for small volume manufacturers.

NGVC's primary comments were based on the concept that, in general, the

nature and the economics of the conversion business is fundamentally

different than the nature and economics of the OEM industry.

Specifically, NGVC stated that the sale price of the respective

products are very different. The OEM sells a complete vehicle, usually

for well over $10,000. By comparison, an aftermarket converter begins

with existing vehicles and adds new fueling technology, using equipment

that typically costs around $1500, according to NGVC. From an economic

perspective, this difference means that an OEM producing a certain

number of vehicles will generally have more ability to absorb

certification costs than a converter producing a similar number of

vehicles. This is because the OEM could usually allocate part of the

certification cost to each vehicle with less relative impact on the

overall sale price than can a converter selling only the add-on

equipment and installation.

NGVC requested the limit under the SVM provisions be raised to

30,000 for alternative fuel converters. This higher limit, NGVC

believes, would remove the incentive for converters to limit sales to

10,000 or less in order to qualify for the SVM program (i.e., 10,000

sales volume limit is a detriment to the sales of alternative fuel

conversions). NGVC's suggested 30,000 volume limit is based on their

expectation that, within the next few years, a typical conversion

system manufacturer will wish to offer certified kits for between 15

and 30 engine families, and average sales are likely to be 1,000 to

2,000 per engine family. According to NGVC's estimates of certification

costs, the added cost of durability testing for engine families

certified under the basic (non-SVM) program could double the total

development and certification costs. NGVC believes that as sales of

certified kits grow beyond 30,000, sales of the more popular engine

families can be expected to reach 4,000 to 5,000 per engine family. At

this level of sales, NGVC believes that the per-vehicle cost of full

certification would become more reasonable.

NGVC also expressed concerns about other aspects of EPA's full

certification program as they apply to conversions. They commented that

certification on an engine family-by-family basis should be replaced by

a grouping of engine families, since certification costs for low-

production families are high on a per-vehicle basis. Second, NGVC

presented their view that durability testing of conversion prototypes

is duplicative of the OEM durability testing that would have already

been done on the base vehicle.

EPA has considered each of these comments and proposes provisions

in today's action which we believe addresses each concern. In general,

EPA believes that there is and will continue to be a useful role for

certified alternative fuel conversions in environmental and energy

policy in the coming years. Further, EPA understands NGVC's argument

that the economic nature of the conversion business differs

substantially from that of the OEM business and that certification

costs, whether under full certification or not, will tend to be

relatively more burdensome for converters than for OEMs. Thus, in many

cases, EPA believes that equity in terms of economic burden for

certification for converters as compared to OEMs may warrant different

treatment under the certification protocols for the two types of

business activity.

However, the justification provided by NGVC for the specific sales

volume limit of 30,000 lacked sufficient data and analysis to prove or

disprove the appropriateness of any specific sales level. The cost of

certification per vehicle is a function of whether relief from some

certification protocols is available and the number of vehicles

produced under a certificate. These variable factors exist in the

context of the likely variety of business situations of future

converters, some of which will be better able to recover additional

costs from their customers than others. All of these factors will

affect the level of sales at which the certification burden for an

individual converter might become low enough to approach that of a

typical OEM SVM. EPA is thus not prepared at this time to propose a

specific volume limit for all converters beyond the existing 10,000

unit limit.

Regarding the comments relating to the burden of the broader

certification process, EPA is also proposing in today's action to

reduce certification burden for converters by providing flexibility in

the regulations for determining deterioration factors. (See section

II.B. for further description of this proposed action.) In addition,

EPA is acting administratively, independent of this action, to provide

additional flexibility to gaseous-fueled converters for determining

their deterioration factors. EPA recently assigned deterioration

factors for vehicles converted to operate on gaseous fuels.1

Manufacturers may use mathematically derived assigned deterioration

factors or generate their own deterioration factors using an

abbreviated durability protocol (shortened-durability test of only

25,000 miles of operation). EPA believes that these temporary measures

would greatly reduce the effort and expense required by this emerging

industry.

\1\ The assigned deterioration factors and the abbreviated

durability protocol are expected to be specified in a ``Dear

Manufacturer'' letter that would be available in docket A-92-14 and

A-92-30 and on TTNBBS.

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II. Description of Action

A. Sales Volume Limit Provisions

Today's proposal is presented in two parts. First, to be consistent

with the SVM provisions for OEM's and conventional conversions, EPA

proposes to establish the 10,000 vehicle/engine sales volume limit for

CFV converters under the small volume manufacturers provisions.

In addition, EPA proposes to make a waiver process available to

alternative fuel vehicle converters which provides the opportunity for

a converter to petition EPA to permit the use of SVM certification

provisions at annual sales levels of 10,000 and above. This provision

would be available for manufacturers converting vehicles/engines which

meet 40 CFR 85 requirements (conventional conversions) and for those

converting vehicles which meet 40 CFR 88 requirements (CFV

conversions). Converters would need to demonstrate the need for a

higher limit based on, but not limited to, data such as company sales

projections and cost analysis or other information indicating that

certification costs on a per-vehicle basis will be substantially

greater than those for an OEM vehicle manufacturer. An analysis

indicating why the specific volume limit requested is appropriate would

also be necessary. In no case could the limit for any manufacturer

exceed 30,000 total units. Converters would have to apply for a new

waiver each model year.

EPA is proposing that this waiver process be available for a period

of 5 years, through model year (MY) 2000. However, EPA also asks

comment on whether a longer time period is more

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appropriate, and if so, what period of time and why.

EPA believes that having the petition process end by a specific

date is necessary since the future conversion market is uncertain. This

provision is most critical during the next several years as the

alternate fuel vehicle conversion industry begins business in earnest

in response to CAA, Energy Policy Act, and other alternative fuel fleet

and vehicle programs at the state and local levels. With the

anticipated sales growth in the industry as a whole and for the

individual certifiers of conversions, the ability to recover

certification costs increases over time. Conversely, since the

difference in business activity and economics between converters and

OEMs will not totally disappear with time, a longer term petition

process may provide greater parity in certification cost between

converters and OEMs. In any event, since certification costs tend to be

relatively more burdensome for converters than for OEMs and EPA

believes in equity in terms of economic burden for certification, the

proposed petition process would only apply to aftermarket conversions

and not producers of complete OEM vehicles.

B. Technical Amendments to the Clean Fuel Fleet Program and California

Pilot Program

The technical amendments to the Clean Fuel Fleet Program and

California Pilot Program that EPA considers to be noncontroversial will

be finalized as a direct final rule (entitled, ``Requirements for

Determining Assigned Deterioration Factors for Alternative Fuel

Vehicles, Amendments to Labelling Requirements for Inherently Low-

Emission Vehicles, and Related Provisions'') in the final rules section

of today's Federal Register. These technical amendments pertain to 40

CFR part 86, subparts A and N, and 40 CFR part 88, subparts A, B, and

C. See the information provided in the direct final rule for a detailed

description of these technical amendments.

III. Environmental and Economic Impacts

The nature of today's proposed approach to the sales volume limit

for the Small-Volume Manufacturers certification program is such that

no impact on air quality should result. Given that there are no

converters which have received a certificate as yet, it appears

unlikely that any such entity will approach the 10,000 vehicle level

for a few years. If and when that does occur, the result of a

successful petition by a converter to increase the SVM sales volume

limit will not seriously compromise EPA's confidence that certified

emission levels are being met in use. The SVM provisions, while

providing some relief in the requirements for durability demonstration,

still do require an assessment of durability. While some loss of

control could theoretically occur if the reduced durability

demonstration were in serious error, the Agency does not believe that

this is likely to be common and in any event the numbers of vehicles

involved is not large in comparison to conventional vehicle production.

Today's proposed action may have a substantial economic benefit for

converters. Depending on the sales level, the result of a successful

petition by a converter to increase the SVM sales volume limit and thus

be exempt from durability testing, could cut in half an engine family's

development and certification costs.

For the relaxed ILEV labelling requirements, EPA believes that if

the smaller but distinctive ILEV labels are used on an ILEV, they would

still be able to be clearly identified by law enforcement officials.

EPA expects that these changes would help encourage manufacturers to

develop and produce ILEVs, which would in turn have a positive

environmental impact relative to conventional vehicles.

With these proposed changes to the CPP program, EPA would ease the

certification burden for manufacturers with no effect on air quality.

This result would occur because the same number of vehicles will be

sold under the CPP industry-wide; only the relative allocations among

manufacturers might change.

In today's proposal, EPA would reduce the regulatory burden on

industry without effecting air quality. EPA believes this proposal is

highly accommodating to industry's concerns.

IV. Public Participation

EPA desires full public participation in arriving at its final

decisions, and therefore solicits comments on all aspects of today's

proposal. Wherever applicable, full supporting data and detailed

analysis should be submitted to allow EPA to make maximum use of the

comments. Commenters are especially encouraged to provide specific

suggestions for any changes to any aspect of the regulations that they

believe need to be modified or improved. All comments should be

directed to EPA Air Docket, Docket No. A-92-30 and A-92-14 for the

conversion provisions and Docket No. A-92-69 for the CPP provisions

(See ADDRESSES). The official comment period will last for 30 days

following publication of today's proposal.

Commenters desiring to submit proprietary information for

consideration should clearly distinguish such information from other

comments to the greatest possible extent, and clearly label it

``Confidential Business Information.'' Submissions containing such

proprietary information should be sent directly to the contact person

listed above, and not to the public docket, to ensure that proprietary

information is not inadvertently placed in the docket.

Information covered by such a claim of confidentiality will be

disclosed by EPA only to the extent allowed and by the procedures set

forth in 40 CFR part 2. If no claim of confidentiality accompanies the

submission when it is received by EPA, it may be made available to the

public without further notice to the commenter.

V. Statutory Authority

The statutory authority for this action is granted by Sections 202,

203, 206, 207, 241, 242, 243, 244, 245, 246, 247, 249, and 301(a) of

the Clean Air Act.

VI. Administrative Designation and Regulatory Analysis

Under Executive Order 12866 (58 FR 51735 (October 4, 1993)), the

Agency must determine whether this regulatory action is ``significant''

and therefore subject to Office of Management and 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 Executive Order 12866, EPA believes that

this proposal is not a ``significant regulatory action'' within the

meaning of the Executive Order. This proposal provides greater

flexibility for converters seeking to certify under the small volume

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manufacturers provisions, thus eliminating some of the certification

burden for nearly all converters. ILEV labelling requirements have been

proposed to be relaxed, reducing some of the certification burden for

certifiers of alternative fuel vehicles. Today's proposal also reduces

the certification burden for manufactures required to produce CFVs

under the CPP, by providing more flexibility in CFV production planning

and credit reporting.

VII. Compliance with Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) of 1980 requires federal

agencies to examine the effects of federal regulations and to identify

significant adverse impacts on a substantial number of small entities.

Because the RFA does not provide concrete definitions of ``small

entity'', ``significant impact'', or ``substantial number'', EPA has

established guidelines setting the standards to be used in evaluating

impacts on small businesses.2 Section 604 of the Regulatory

Flexibility Act requires EPA to prepare a Regulatory Flexibility

Analysis when the Agency determines that there is a significant adverse

impact on a substantial number of small entities.

\2\ U.S. Environmental Protection Agency Memorandum to

Assistant Administrators, ``Compliance With the Regulatory

Flexibility Act'', EPA Office of Policy, Planning, and Evaluation,

1984. In addition, U.S. Environmental Protection Agency, Memorandum

to Assistant Administrators, ``Agency's Revised Guidelines for

Implementing the Regulatory Flexibility Act'', EPA Office of Policy,

Planning, and Evaluation, 1992.

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Today's proposal will allow many if not all converters to certify

their conversions under the small volume certification provisions. EPA

has evaluated the effects of today's proposed regulation and the

Administrator of EPA certifies that there would not be an adverse

impact on a substantial number of small entities; in fact, most small

converters will experience an economic benefit. Therefore, a Regulatory

Flexibility Analysis has not been performed for this rule.

VIII. Unfunded Mandates

Under section 202 of the Unfunded Mandates Reform Act of 1995

(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA

must prepare a written statement to accompany any proposed or final

rule where the estimated costs to State, local, or tribal governments,

or to the private sector will be $100 million or more in any one year.

Under section 205, EPA must select the most cost-effective and least

burdensome alternative that achieves the objective of the rule and that

is consistent with statutory requirements. Section 203 requires EPA to

establish a plan for informing and advising any small governments that

may be significantly and uniquely impacted by the rule.

EPA estimates that the costs to State, local, or tribal

governments, or the private sector, from this proposal would be less

than $100 million. EPA has determined that this proposal would reduce

the regulatory burden imposed on certifiers of clean-fuel and/or

alternative fuel vehicles (especially converters of such vehicles). EPA

has determined that an unfunded mandates statement therefore is

unnecessary.

IX. Paperwork Reduction Act

The information collection requirements for converters in this

proposed rule have been submitted for approval to the Office of

Management and Budget (OMB) under the Paper Reduction Act, 44 U.S.C.

3501 et seq. An Information Collection Request (ICR) document has been

prepared by EPA (ICR No. 783.34) and a copy may be obtained from Sandy

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

Protection Agency (2136); 401 M St., S.W.; Washington, DC 20460 or by

calling (202) 260-2740.

Today's proposal does not add any mandatory information collection

requirements for converters or any other entity, but EPA has prepared

an Information Collection Request document for this proposal since the

collection of information would be needed for some converters to obtain

or retain the benefit of SVM certification (collection of information

required to obtain or retain a benefit). (Under section 301(a) of the

Clean Air Act, the Administrator has the general authority ``... to

prescribe such regulations as are necessary to carry out his functions

under this Act.) For aftermarket converters who choose to petition EPA

to be included under the SVM provisions at a higher sales volume, basic

data on the projected sales, cost of certification, and why the

specific volume limit requested is appropriate would need to be

included in the petition to demonstrate economic hardship of the

current sales volume limit. This ICR would be an amendment to the base

Certification Program ICR, and the same confidentiality provisions in

the base Certification Program ICR would apply to this ICR as well.

For this ICR, the projected annual average cost and hour burden

(reporting and recordkeeping) for respondents would be $4,800 and 80

hours, respectively for the five year period 1996 through 2000 model

year. For five respondents at five hours per response, the annual

average reporting burden would be 60 hours. This converter ICR does not

include capital and start-up costs, operation and maintenance costs,

and purchases of services costs for the following reasons: there is not

any testing burden associated with this ICR and prior to certification

the respondents would have collected the necessary information for

their own planning purposes. 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.

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, DC 20460; and

to the Office of Information and Regulatory Affairs, Office of

Management and Budget, 725 17th St., N.W., Washington, DC 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 Janaury 3, 1996, a comment to OMB is

best assured of having its full effect if OMB receives it by February

2, 1996. The final rule will respond to any OMB or public comments on

the information collection requirements contained in this proposal.

The information collection requirements of the Credit Program for

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California Pilot Test Program have been amended to reflect today's

relaxation of the credit reporting requirements. These amended

requirements have been approved by the Office of Management and Budget

(OMB) under the provisions of the Paperwork Reduction Act, 44 U.S.C.

3501 et seq., and have been assigned OMB control number 2060-0229. A

copy of the Information Collection Request document (ICR No. 1590) may

be obtained from Sandy Farmer, OPPE Regulatory Information Division,

U.S. Environmental Protection Agency (2136); 401 M St. S.W.;

Washington, DC 20460 or by calling (202) 260-2740.

Send comments regarding this collection of information to the

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

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

to the Office of Information and Regulatory Affairs, Office of

Management and Budget, 725 17th St., N.W., Washington, DC 20503, marked

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

correspondence.

List of Subjects

40 CFR Part 85

Environmental protection, Imports, Labeling, Motor vehicle

pollution, Reporting and recordkeeping requirements, Research,

Warranties.

40 CFR Part 86

Environmental protection, Administrative practice and procedures,

Confidential business information, Labeling, Motor vehicle pollution,

Reporting and recordkeeping requirements.

40 CFR Part 88

Environmental protection, Motor vehicle pollution, Reporting and

recordkeeping requirements.

Dated: November 27, 1995.

Carol M. Browner,

Administrator.

For the reasons set forth in the preamble, parts 85 and 88 of title

40 of the Code of Federal Regulations are proposed to be amended as

follows:

PART 85--[AMENDED]

1. The authority citation for part 85 is revised to read as

follows:

Authority: 42 U.S.C. 7507, 7521, 7522, 7524, 7525, 7541, 7542,

7543, 7547, 7601(a).

2. Section 85.501 of Subpart F is revised to read as follows:

Sec. 85.501 General applicability.

Sections 85.501 through 85.506 are applicable to aftermarket

conversion systems for which an enforcement exemption is sought from

the tampering prohibitions contained in section 203 of the Act.

3. Section 85.503 of subpart F is amended by revising paragraphs

(a) and (b)(1) to read as follows:

Sec. 85.503 Conditions of exemption.

(a) As a condition of receiving an enforcement exemption from the

tampering prohibitions contained in section 203 of the Act, an

aftermarket conversion certifier must certify the aftermarket

conversion system, using the applicable procedures in part 86 of this

chapter, and meeting the applicable standards and requirements in

Secs. 85.504, 85.505 and 85.506, and accept liability for in-use

performance of the aftermarket conversion system as outlined in this

part.

(b) * * *

(1) Install a conversion which has been certified as a new vehicle

or engine, using the applicable procedures in part 86 of this chapter,

and meeting the applicable standards and requirements in Secs. 85.504,

85.505 and 85.506; and

* * * * *

4. A new Sec. 85.506 is added to subpart F, to read as follows:

Sec. 85.506 Sales volume limit for the aftermarket conversion

certifier under the small-volume manufacturers certification program.

(a) The optional small-volume manufacturers certification

procedures as described in 40 CFR 86.092-14 apply to aftermarket

conversions assembled by aftermarket conversion certifiers with U.S.

sales of fewer than 10,000 units. An aftermarket conversion certifier

with sales greater than 10,000 per year may petition the Administrator

for permission to use the small-volume manufacturers certification

procedures for conversions certified on or before December 31, 2000.

(1) The aftermarket conversion certifier shall demonstrate to the

Administrator economic hardship of the 10,000 sales volume limit. At a

minimum, the aftermarket conversion certifier shall provide to the

Administrator the following data: company sales projections (by engine

family), cost analysis indicating that certification costs on a per-

vehicle basis will be substantially greater than those for an OEM

vehicle manufacturer (i.e., incremental cost of full durability testing

per vehicle), and an analysis indicating why the specific volume limit

requested is appropriate. The Administrator may require additional data

as he may deem necessary to demonstrate economic hardship of the 10,000

sales volume limit. The aftermarket conversion certifier must receive

approval from the Administrator on a case by case basis to waive the

10,000 sales volume limit, and the certifier shall apply for a new

waiver each model year. In no case shall the sales volume limit for any

petitioner exceed 30,000.

(2) For aftermarket conversions certified after December 31, 2000,

the 10,000 sales volume limit in 40 CFR 86.094-14(b)(1) shall apply.

(b) The sales volume limit provided in paragraph (a) of this

section shall apply to the aggregate total of all vehicles sold by a

given aftermarket conversion certifier at all of its installation

facilities without regard to the model year of the original vehicles

upon which the conversions are based. All vehicle sales will be

included in calculating the aftermarket conversion certifier's

aggregate total, including vehicle conversions performed under the

requirements of this part 85 and 40 CFR part 88 (clean-fuel vehicle

conversions), and all other vehicle conversions. Vehicle conversions

not covered by this part 85 will be counted if they occur within the

model year for which certification is sought.

PART 88-CLEAN-FUEL VEHICLES

5. The authority citation for Part 88 continues to read as follows:

Authority: 42 U.S.C. 7410, 7418, 7581, 7582, 7583, 7584, 7586,

7588, 7589, 7601(a).

6. Section 88.306-94 of subpart C is amended by revising paragraph

(b)(3) to read as follows:

Sec. 88.306-94 Requirements for a converted vehicle to qualify as a

clean-fuel fleet vehicle.

* * * * *

(b) * * *

(3) For the purpose of determining whether certification under the

Small-Volume Manufacturers Certification Program pursuant to the

requirements of 40 CFR 86.092-14 is permitted for the clean-fuel

vehicle aftermarket conversion certifier, the 10,000 sales volume limit

in 40 CFR 86.094-14(b)(1) shall apply. A clean-fuel vehicle aftermarket

conversion certifier with sales greater than 10,000 per year may

petition the Administrator for permission to use the small-volume

certification procedures for conversions certified on or before

December 31, 2000.

[[Page 145]]

(i) The clean-fuel vehicle aftermarket conversion certifier shall

demonstrate to the Administrator economic hardship of the 10,000 sales

volume limit. At a minimum, the clean-fuel vehicle aftermarket

conversion certifier shall provide to the Administrator the following

data: company sales projections (by engine family), cost analysis

indicating that certification costs on a per-vehicle basis will be

substantially greater than those for an OEM vehicle manufacturer (i.e.,

incremental cost of full durability testing per vehicle), and an

analysis indicating why the specific volume limit requested is

appropriate. The Administrator may require additional data as he may

deem necessary to demonstrate economic hardship of the 10,000 sales

volume limit. The clean-fuel vehicle aftermarket conversion certifier

must receive approval from the Administrator on a case by case basis to

waive the 10,000 sales volume limit, and the certifier shall apply for

a new waiver each model year. In no case shall the sales volume limit

for any petitioner exceed 30,000.

(ii) For clean-fuel vehicle aftermarket conversion configurations

certified after December 31, 2000, the 10,000 sales volume limit in 40

CFR 86.094-14(b)(1) shall apply.

(iii) The sales volume limit provided in paragraphs (b)(3)(i) and

(b)(3)(ii) of this section shall apply to the aggregate total of all

vehicles sold by a given clean-fuel vehicle aftermarket conversion

certifier at all of its installation facilities without regard to the

model year of the original vehicles upon which the conversion

configurations are based. All vehicle sales will be included in

calculating the clean-fuel vehicle aftermarket conversion certifier's

aggregate total, including vehicle conversions performed under the

requirements of this part 88, and all other vehicle conversions.

Vehicle conversions not covered by this part 88 will be counted if they

occur within the model year for which certification is sought.

* * * * *

[FR Doc. 96-104 Filed 1-2-96; 8:45 am]

BILLING CODE 6560-50-P