Optional Certification Streamlining Procedures for Light-Duty Vehicles, Light-Duty Trucks, and Heavy-Duty Engines for Original Equipment Manufacturers and for Aftermarket Conversion Manufacturers; Notice of Proposed Rule

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 86

[AMS-FRL-6124-1]

Optional Certification Streamlining Procedures for Light-Duty

Vehicles, Light-Duty Trucks, and Heavy-Duty Engines for Original

Equipment Manufacturers and for Aftermarket Conversion Manufacturers;

Notice of Proposed Rule

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of proposed rule.

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SUMMARY: In today's action, EPA is proposing to amend the current

regulatory provisions regarding the certification of light-duty

vehicles, light-duty trucks, and heavy-duty engines that meet the

Clean-Fuel Vehicle (CFV) requirements. This proposed action would serve

to ease the burden of certification for manufacturers of CFVs. EPA is

also proposing to revise the definition for dedicated fuel systems to

include CFVs with limited ability to operate on a conventional fuel,

and is also proposing to amend current regulations to allow

manufacturers of CFVs to group certain engine families together for

certification purposes. In addition, EPA is proposing an exemption, for

MY 1999, 2000 and 2001, from certification fees for dedicated gaseous-

fueled vehicles and engines that certify to EPA's Tier 1 standards as

well as for all vehicles and engines that certify to EPA's CFV, Low-

Emission Vehicle (LEV), Ultra Low Emission Vehicle (ULEV), Inherently

Low Emission Vehicle (ILEV), or Zero Emission Vehicle (ZEV) emission

standards.

DATES: Any party who wishes to submit comments must do so by August 19,

1998 unless a hearing is requested. Any person can request EPA to hold

a public hearing on this action, but such request must be received by

August 19, 1998. If a hearing is requested, it will take place on

September 18, 1998, and interested parties will have an additional 30

days after the hearing (until October 19, 1998) to submit comments on

any information presented at the hearing. Because no hearing will

occur, absent a request for one, interested parties should contact

Clifford D. Tyree at the number listed below after August 19, 1998 to

determine whether a hearing will take place.

ADDRESSES: Written comments should be submitted (in duplicate if

possible) to: Air Docket Section (6102), Attention: Docket No. A-97-27,

U.S. Environmental Protection Agency, 401 M Street, SW, Washington,

D.C. 20460, or hand-delivered to the Air Docket at the above address,

in Room M-1500, Waterside Mall. A copy of written comments should also

be submitted to Clifford D. Tyree at the address below.

Materials relevant to this notice of proposed rule are contained in

Docket No. A-97-27, located at the Air Docket, 401 M Street SW,

Washington, DC 20460, and may be reviewed in Room M-1500 from 8:00 a.m.

until 5:30 p.m. on business days. As provided in 40 CFR Part 2, EPA may

charge a reasonable fee for photocopying docket materials.

FOR FURTHER INFORMATION CONTACT: Mr. Clifford Tyree, Project Manager,

U.S. EPA, National Vehicle and Fuel Emission Laboratory, Vehicle

Programs and Compliance Division, 2565 Plymouth Road, Ann Arbor, MI

48105-2425. Telephone: (734) 214-4310; FAX 734-214-4869. E-Mail,

[email protected].

SUPPLEMENTARY INFORMATION:

Regulated Entities

Entities potentially regulated by this notice of proposed

rulemaking are Original Equipment Manufacturers (OEMs) of Light-Duty

Vehicles, Light-Duty Trucks (LDTs), and Heavy-Duty Engine (HDEs)

manufacturers. In addition, aftermarket convertors of LDVs, LDTs, and

HDEs will also be regulated. Entities include:

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Examples of regulated

Category entities

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Auto industry of light-duty vehicles, Original Equipment

light-duty trucks, and heavy-duty engines. Manufacturers (OEMs) and

Aftermarket Converters.

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This table is not intended to be exhaustive, but rather provides a

guide for readers regarding entities likely to be regulated by this

proposed action. This table lists the types of entities that EPA is now

aware could potentially be regulated by this proposed action. Other

types of entities not listed in the table could also be regulated. If

you have questions regarding the applicability of this proposed action

to a particular product, consult the person listed in the preceding FOR

FURTHER INFORMATION CONTACT section.

Obtaining Electronic Copies of the Regulatory Documents

The preamble, regulatory and other related documents are also

available electronically from the EPA Internet Web site. This service

is free of charge, except for any cost you already incur for internet

connectivity. An electronic version is made available on the day of

publication on the primary Web site listed below. The EPA Office of

Mobile Sources also publishes Federal Register notices and related

documents on secondary Web site listed below.

1. http://www.epa.gov/docs/fedrgstr/EPA-AIR/(either select desired

date or use Search feature.)

2. http://www.epa.gov/OMSWWW/cff.htm

Please note that due to differences between the software used to

develop the document and the software into which the document may be

downloaded, changes in format, page length, etc. may occur.

I. Background 1

EPA's emissions standards and requirements for clean-fuel vehicles

(CFVs) are contained in 40 CFR Part 88. These regulations include

several sets of exhaust emissions standards for clean-fuel vehicles

(CFVs): Transitional Low-Emission Vehicle (TLEV) standards, Low-

Emission Vehicle (LEV) standards, Inherently Low-Emission Vehicle

(ILEV), Ultra Low-Emission Vehicle (ULEV) standards, and Zero-Emission

Vehicle (ZEV) standards. The regulations also apply all standards and

requirements in 40 CFR Part 86 to CFVs, except the Part 86 exhaust

emissions standards for those pollutants for which Part 88 establishes

standards. The CFV standards apply to all CFVs, including those that

operate on gaseous-fuels like compressed natural gas (CNG) and

liquefied petroleum gas (LPG).

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\1\ EPA has included in this notice a brief summary of the

aftermarket conversion requirements and the Clean-Fuel Fleet

program. Readers may consult EPA's current certification regulations

in 40 CFR Parts 86 and EPA's clean fuel vehicle regulations in 40

CFR part 88, as well as the following notices of final rulemaking:

Emissions Standards for Clean Fuel Vehicles and Engines (59 FR

50042, September 30, 1994) and Standards for Emissions from Natural

Gas-fueled and Liquefied Petroleum Gas-fueled Motor Vehicles and

Motor Vehicle Engines, and Certification Procedures for Aftermarket

Conversions (59 FR 48471, September 21, 1994), for additional

background information.

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Section 246 of the Clean Air Act, as amended in 1990 (``CAA'' or

``the Act''), requires states to adopt in their State Implementation

Plans (SIP) a Clean-fuel Fleet Program (CFFP) for certain ozone and

carbon monoxide nonattainment areas. The states' CFFPs must require

that fleet operators with central fueling capability shall include a

certain percentage of CFVs that meet LEV emissions standards in their

vehicle purchases each year, and shall operate such vehicles on clean

alternative-

[[Page 38768]]

fuels.2 EPA is aware that fleet operators subject to CFFP

requirements are concerned about sufficient availability of CFVs to

meet such requirements. For the 1997 model year, one light-duty

vehicle, two light-duty trucks, and five heavy-duty vehicle engine

families have been certified to federal CFV standards.

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\2\ A clean alternative fuel is defined as a fuel used in a

vehicle that meets the CFV standards when operating on such fuel.

See CAA Section 241(2).

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The EPA's Office of Mobile Sources recently adopted a one-year

delay in implementation of state CFFPs, due to concerns about

sufficient CFV availability to meet fleet operator

requirements.3

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\3\ 40 CFR 88.304-98, Direct Final Rule, 63 FR 20103, April 23,

1998.

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In today's action, EPA is proposing to amend certain provisions

intended to encourage and facilitate the certification of CFVs by

reducing the costs of certifying in three specific areas. These

provisions are described in detail below.

II. Today's Proposal

A. Definition of Dedicated Vehicle

Current EPA regulations define a ``dual-fuel vehicle'' as a motor

vehicle, or engine, engineered and designed to be operated on two

different fuels, but not on a mixture of fuels.4 A

``dedicated vehicle'' is defined as a vehicle or engine engineered and

designed to be operated using a single fuel.5

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\4\ 40 CFR 88.102-94.

\5\ 40 CFR 86.090-2.

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There are specific requirements that apply to dual-fuel light-duty

vehicles (LDVs) 6 and light light-duty trucks (LLDT)

7 certifying to the CFV emissions standards. A dual-fuel

vehicle must comply with the applicable set of standards for each fuel

on which it can operate. To qualify as CFVs for purposes of state

CFFPs, dual-fuel vehicles must meet LEV (or more stringent) emissions

standards on the clean alternative fuel and the TLEV non-methane

organic gas (NMOG) emission standard on the conventional

fuel.8 On the conventional fuel, the vehicle must meet Tier

1, NMOG and HCHO emission standards and also comply with all other

motor vehicle emissions control requirements contained in 40 CFR Part

86 (such as the cold temperature carbon monoxide standard (Cold CO),

onboard diagnostic requirement (OBD), and certification short test

(CST) requirements) that apply to comparable conventional gasoline

vehicles.

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\6\ 40 CFR 86.082-2, A light-duty vehicle (LDV) means a

passenger car or passenger car derivative capable of seating 12

passengers or less.

\7\ 40 CFR 86.094-2, A light light-duty ( LLDT) means any light-

duty truck rated through 6,000 lbs. GVWR.

\8\ Formaldehyde (HCHO) exhaust emission standards apply to any

fuel used to meet CFV standards, including gasoline.

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For vehicles with a dedicated fuel system to be a feasible option

for fleets, many fleet operators will need the flexibility to operate

on conventional fuel in emergency situations, when central fueling is

impossible. If the fleet operator is subject to the CFFP, and is

operating in a nonattainment area covered by the CFFP, he must operate

the vehicle on a fuel on which the vehicle meets the CFV emissions

standards to comply with the CFFP requirements. If the vehicle is

certified to the LEV emissions standards on both fuels, the fleet

operator would have the option of using the conventional fuel in the

covered nonattainment area. However, if the vehicle is certified to the

LEV standards only on CNG or LPG, that option would not be available.

In light of the limited gaseous-fuel fueling stations in the

nonattainment areas covered by a CFFP, fleet operators are concerned

that the safety of vehicle operators and occupants could be at risk

during inclement weather.9 In addition, unforeseen traffic

delays (or other unforeseen delays) may cause fleet vehicles to be

stranded, resulting in higher costs for and reduced efficiency of the

fleet. For these reasons, EPA has determined that it would be

reasonable and appropriate to revise the definition of a dedicated

vehicle to allow operation up to a limited mileage on a conventional

fuel.

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\9\ The CFFP requires fleet operators to operate their CFVs on

clean alternative fuels only when in the covered nonattainment area.

Therefore, for dual-fuel CFVs, fleet operators may use either the

clean alternative fuel or the conventional fuel outside the covered

nonattainment area.

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As described above, fleet operators subject to the CFFP must

operate their CFV's on a ``clean alternative fuel,'' as defined in CAA

Section 241(2). To ensure that CFVs that operate on gaseous fuels are a

feasible option for fleet operators covered by the CFFP, EPA would

certify as dedicated CFVs vehicles meeting the CFV dual-fuel standards

with limited ability to operate on a conventional fuel, as described

above. EPA's issuance of such certificates is authorized by the

Agency's authority to adopt de minimis exemptions to statutory

requirements, and is consistent with Congressional intent.

Section 246(b) of the CAA requires state CFFPs to provide that

covered fleet operators must operate their clean-fuel vehicles on clean

alternative fuels when operating in the covered nonattainment area.

Clean alternative fuel, in turn, is defined as a fuel used in a CFV

that meets applicable emissions standards and requirements when

operating on such fuel. See Sec. 241(2). Courts have recognized EPA's

authority to provide exemptions from CAA requirements when the burdens

of regulation yield a gain of trivial or no value. Alabama Power v.

Costle, 636 F.2d.323 (D.C. Cir. 1979). EPA believes that prohibiting

gaseous-fueled vehicles capable of limited operation on gasoline from

qualifying as CFVs would unnecessarily increase the burden of

compliance with state CFFPs, and would not result in any emissions

benefits.

Allowing limited operation of such vehicles on gasoline in

emergency situations would not result in any adverse emissions impacts.

If a gaseous-fueled fleet vehicle is stranded within the nonattainment

area due to lack of fuel, and cannot operate on gasoline, even for a

limited number of miles, without violating the CFFP requirements,

another vehicle would have to be dispatched to ``rescue'' the stranded

vehicle and its occupants. The second vehicle may not be a CFV,

especially if it is not owned by the covered fleet (e.g., if a tow

truck was required to retrieve the stranded vehicle). This ``rescue

operation'' will therefore result in emissions likely to be equivalent

to, and perhaps in excess of, the incremental additional emissions

resulting from the limited operation of the gaseous-fueled CFV on

gasoline.

In general, EPA expects that CFVs meeting the revised definition of

dedicated vehicle would meet the Tier 1 emission standards when

operating on conventional fuel. EPA expects that Original Equipment

Manufacturers (OEMs) will produce vehicles that meet the revised

definition of dedicated vehicle and have limited ability to operate on

a conventional fuel by limiting the conventional fuel use function of

dual-fuel vehicles (or engines) previously certified to Tier 1

emissions standards on conventional fuel. Aftermarket conversion

companies are likely to convert vehicles (or engines) previously

certified to Tier 1 standards on a conventional fuel to operate on a

gaseous fuel at least LEV emissions levels. If these vehicles are

equipped with an emergency reserve tank with limited capacity for the

conventional fuel, EPA expects that the vehicles' emissions on

conventional fuel during emergency operation will be similar to the

emissions of the vehicle prior to conversion (i.e., Tier 1 emissions

levels). Therefore, EPA believes it would be appropriate for state

CFFPs to allow fleet operators to purchase dedicated gaseous-fueled

vehicles that have limited ability to operate on gasoline, and to

operate for

[[Page 38769]]

limited mileage on gasoline in emergency situations in the covered

nonattainment area.

EPA regulations define the term ``centrally fueled'' as meaning a

fleet, or that part of a fleet, consisting of vehicles that are fueled

100 percent of the time at a location that is owned, operated, or

controlled by the covered fleet operator, or is under contract with the

covered fleet operator. See 40 CFR 88.302-94. The proposed de minimis

exemption for limited operation on conventional fuel described above

would not affect this definition of ``centrally fueled'', because the

de minimis exemption would allow only limited operation in emergency

circumstances. A fleet operator would still need to determine whether,

in normal circumstances, its covered fleet vehicles are centrally

fueled 100 percent of the time.

EPA considered two modifications to the definition of dedicated

vehicle to allow limited operation on conventional fuel. EPA considered

proposing to modify the definition of a dedicated fueled vehicle to

allow vehicles to be equipped with a fuel tank that would allow a range

of operation of 50 statute miles. This would require the replacement of

the existing gasoline tank with a tank of approximately two-gallon

capacity. However, the act of removing an existing fuel tank that has

met the crash tests and other testing required by the National Highway

Transportation Safety Administration (NHTSA) 10 could

require another set of vehicle crash tests with any vehicle using a

``new'' fuel tank system, and the cost of conducting another set of

vehicle crash tests may deter manufacturers from modifying vehicles in

this manner.

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\10\ Reference NHTSA's rules found at 49 CFR Part 555.

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An alternative modification EPA considered proposing is retention

of the existing fuel tank and use of a timer to restrict fuel usage.

The timer could allow a maximum of one hour of operation on gasoline

followed by a period of time the vehicle could not operate on gasoline.

Manufacturers would be required to program these time periods into one

of the vehicle's computers. The choice of one hour of operation is

roughly equivalent to the 50-mile range criterion, based on the

combined fuel economy values and an assumed vehicle average speed of 50

miles-per-hour.

To provide maximum flexibility to manufacturers and fleet

operators, EPA is proposing to amend definition of a dedicated vehicle

to allow both of these approaches: clean fuel vehicles equipped with a

timer that limits operation on gasoline to one hour at a time, and

clean fuel vehicles equipped with a fuel tank with fuel capacity of no

more than 50 miles of operation on gasoline, will be included in the

definition of a dedicated vehicle. Because the use of conventional fuel

is intended for emergency use only, and the operation on conventional

fuel is expected to be an exception, no emission or fuel economy

testing would be required on these vehicles with conventional fuel.

The proposed revision to the definition of dedicated fuel systems

would apply only to light-duty vehicles and light-duty trucks, because

EPA has not adopted heavy-duty flexible and dual fueled Clean-Fuel

vehicle standards. See 59 FR 50050 (September 30, 1994).

B. Engine Family Criteria and Assigned Deterioration Factors

Manufacturers and aftermarket converters have expressed concerns to

EPA regarding the overall burden of complying with EPA's certification

regulations for vehicles converted to operate on a clean alternative

fuel for the purpose of meeting EPA's CFV emissions standards. The

burdens identified relate to the cost of certifying each engine family

and the narrowness of the criteria under which exhaust emission control

systems are classified into engine families.11

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\11\ 40 CFR 86.096-24.

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Because of the diversity in marketing requirements, a number of

engine families, with limited sales, would be created under current

regulations to meet consumer needs. Currently EPA provides for relief

from full useful life deterioration factor (DF) requirement for engine

families with a combined total sales of no more than 10,000 vehicles or

engines.12 In today's action EPA is proposing to adopt

similar provisions, applicable thru MY 2001, for vehicles and engines

certified to EPA's CFV emissions standards.

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\12\ 40 CFR 86.094-24(e)(2).

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The costs identified by the OEM and aftermarket conversion

manufacturers were the actual costs associated with certifying each

engine family. Costs attributed to certifying each engine family are

development costs, testing costs, and certification fees. Various

aftermarket conversion entities have estimated the costs of generating

DFs to be in excess of $1 million for each engine family. While EPA

does not have data to corroborate these cost estimates, the Agency

believes that the cost of generating DFs is significant, but expects it

is well below $1 million per engine family. EPA's current regulations

for small volume engine family certification allow manufacturers to use

assigned DFs generated by EPA. See 40 CFR 86.096-24(e)(2) Manufacturers

may also use Dfs they have generated using good engineering judgment.

See 40 CFR 86.094-14(c)(7)(i)(C)(2)(i). In today's action, EPA is

proposing to amend the regulations that clarify these options are also

available for CFV small-volume engine families. In September, 1995, EPA

issued a guidance letter to manufacturers containing assigned DFs for

gaseous fueled vehicles. In general, EPA expects that manufacturer's

use of these assigned DFs for gaseous fueled CFVs would qualify as DFs

generated using good engineering judgment under the regulatory

provision adopted today.

EPA is proposing to amend the provisions that allow grouping of

certain CFV engine families into an engine family class. The criteria

for such grouping is described below. EPA expects that this proposed

action would serve to encourage production of CFVs for fleet operators

to purchase and use to meet state CFFP purchase requirements by

reducing the amount of testing needed for certification of CFVs. This

would allow manufacturers to introduce a greater number of CFV models

desired by fleet owners without incurring additional testing costs.

Fleet vehicles must be able to perform a wide variety of duties,

such as meter-reading tasks, service repair, making deliveries,

transporting passengers, etc. Therefore, for a manufacturer or

aftermarket converter to be competitive in the clean fuel vehicle fleet

market, multiple engine families need to be certified for different

needs.

Currently, vehicle grouping for the purpose of certification is

accomplished though the application of the ``engine family'' and

``emission control system'' definitions in the regulations. Today's

proposal would establish a new definition for grouping engine families:

engine family class. An engine family class would be defined as engines

sharing the following common characteristics: (1) Meeting LEV, ILEV,

ULEV, or ZEV emission standards in 40 CFR Part 88, (2) same car line

name, (3) all engines have engine displacements within a range of 0.8L

13 less than the displacement of the engine used for

certification testing, (4) same catalyst construction, (5) same type of

precious metals used in the catalyst, and (6) same

[[Page 38770]]

relative engine/catalyst size and loading rates.

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\13\ See EPA Advisory Circular 17F, page 9, which can be found

in the docket for this rulemaking action.

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EPA is proposing to amend the criteria for engine family classes to

reduce the certification burden for CFVs and to combine vehicles which

are likely to exhibit similar exhaust emission deterioration over their

useful lives, based on the characteristics of current-technology

vehicles that most significantly affect the deterioration of emission

control over time. Each engine family class would be certified using

separate emission compliance data and a separate certificate of

conformity would be required for each engine family class.

The engine family concept was originally developed as a way to

combine vehicles of similar emission deterioration rates. At that time

(in the early 1970's), the use of catalytic converters was less

prevalent and most emission reductions occurred though modifications to

the engine operating characteristics. For these vehicles, all emission

deterioration was due to increases in emissions coming directly out of

the engine (called ``engine-out'' emissions). Consequently, the

definition of engine family focused on engine-based parameters. Since

that time, there have been many advances in exhaust emission control

technology which have made the engine family concept less useful for

the purposes of grouping vehicles together on the basis of emission

deterioration.

In today's vehicles, most emission control is accomplished through

catalytic conversion of the exhaust while the engine is controlled to

operate within carefully controlled air/fuel ratios to ensure optimum

catalyst efficiency. While manufacturers have demonstrated that

essentially no engine-out deterioration is experienced in their current

product, the mating of the catalyst with the engine is extremely

important. Appropriate sizing of the catalyst to the engine is critical

to achieve an appropriate catalyst residence time (the time the exhaust

gases remain in the catalyst) so that the catalytic reaction has time

to be completed. Adequate levels of precious metal loading and

appropriate dispersion are necessary to provide the active sites for

conversion and achieve the desired conversion rates. Also, the catalyst

must be placed in a temperature environment that allows it to quickly

come to operating temperature but does not expose it to damaging

amounts of high temperature during in-use driving.

The proposed engine family class definition takes into account the

changes in emission control technology by shifting the focus away from

engine parameters to the ability of the overall engine and emission

control system to meet LEV, or better, standards. This single

requirement of focusing on a more stringent emission standard would

require the matching of the catalyst to the engine. The Agency believes

that the proposed engine family class definition would comprise an

effective emission control program and result in significant

environmental benefits by giving manufacturers additional incentives to

produce and market a broader range of vehicles and engines that meet

the CFV standards.

EPA is proposing to provide this newly created engine family class

criteria through model year 2001, by which time EPA expects that

manufacturers would have had several years to assess the market

requirements and should be able to more accurately predict which

vehicle models, out of approximately 400 engine families currently

certified, fleet owners need and consumers favor. Manufacturers would

then know which engine families to focus certification testing on,

rather than certifying a variety of engine families. EPA currently

intends to propose new certification procedures for all light-duty

vehicles and light-duty trucks for application in model year 2000. If

these expected actions are delayed, the applicability of the definition

proposed in this notice could be extended in a subsequent rule.

EPA notes that the proposed requirement that all engines in an

engine family class have the same type of catalyst precious metal

loading would apply only to OEMs. EPA is aware that catalysts are built

to the OEM's specifications, and that the actual amount and ratio of

precious metals in the catalyst is often considered confidential

business information that cannot be obtained by an aftermarket

converter who purchases a vehicle manufactured by an OEM to convert it

to operate on a clean alternative fuel. EPA believes that the remaining

criteria for grouping engines into an engine family class are

sufficient to ensure that vehicles and engines converted to operate on

a clean alternative fuel have similar emissions characteristics and

that it would be appropriate to group such vehicles and engines

together. Because manufacturers can only group vehicles that are in the

same car line, and have similar engine displacements, catalyst

construction, etc., it is unlikely that vehicles or engines that share

those common characteristics will have different catalyst precious

metal loadings. In the event that EPA has reason to believe that, in

spite of meeting the other criteria, an aftermarket converter is

attempting to group engines with different precious metal loadings, EPA

is proposing to reserve the right to limit engine family groupings by

aftermarket conversion companies if the Agency has reason to believe

that the proposed engine family grouping would result in an engine

family class containing engine families that are so dissimilar that

such grouping is not appropriate. Since the Agency's belief could be

based on information that is protected by confidential business

practices, EPA could not necessarily disclose this information to the

aftermarket conversion company. Based on a review of engine families

from previous model years, the Agency does not believe this scenario is

likely to occur but has decided to propose such a provision due to the

theoretical possibility of the scenario occurring in the future.

C. Fees

Today's action proposes to amend the current fee schedule in 40 CFR

Part 86, Subpart J by proposing exemptions from certification fee

requirements. The exemption (through MY 2001) is proposed for vehicles

and engines using certified to LEV, ULEV, ILEV, or ZEV, emission

standards in 40 CFR Part 88 under the small-volume certification

procedures in 40 CFR 86.094-14. In addition, a fee exemption is

provided through MY 2001 for dedicated gaseous fuel systems meeting

Tier 1 emission standards.

The Act authorizes EPA to promulgate (and from time to time revise)

regulations establishing fees to recover all reasonable costs to the

Agency associated with (1) certification of new vehicles or engines

under section 206(a) or under part C of Title II of the Act, (2)

compliance monitoring and testing under section 206(b) or part C, and

(3) in-use compliance monitoring and testing under section 207(c) of

part C. Section 217 of the Act requires such fees to be consistent with

the Independent Offices Appropriation Act (IOAA), 37 U.S.C. 9701 et

seq., and requires that the Agency's fee schedule be based on such

factors as the Administrator finds appropriate, equitable, and

nondiscriminatory (including the number of vehicles or engines produced

under a certificate).

Pursuant to its authority under section 217, EPA established a fee

schedule to recover costs associated with the activities described

above. This fee schedule currently applies to light-duty vehicles,

light-duty trucks, heavy-duty vehicles, heavy-duty engines, and

motorcycles, regardless of the emissions standards to which such

vehicles are

[[Page 38771]]

certified. Current EPA regulations provide for a partial fee waiver for

certification requests where the full fee exceeds one percent of the

aggregate projected retail sales price of vehicles that the certificate

would cover. If EPA grants a waiver, the applicable fee would be

equivalent to one percent of the aggregate projected retail sales price

of the vehicles or engines covered by the certification request.

The first exemption proposed today is for vehicle technologies

certifying to LEV, ULEV, ILEV, or ZEV emissions standards in 40 CFR

88.104-94 and 88.105-94. This proposed exemption is consistent with

Section 217 of the CAA, and with the IOAA. Section 217 requires EPA's

fee schedule to be based on factors that the Administrator finds are

``appropriate and equitable and nondiscriminatory.'' Section 217 also

requires EPA's fee regulations to be consistent with the IOAA. The IOAA

states that ''* * * [I]t is the sense of Congress that each service or

thing of value provided by an agency * * * is to be self-sustaining to

the extent possible.'' In addition, the IOAA authorizes agency heads to

adopt regulations establishing a fee for such ``services or things of

value'' provided by the agency. Such fees must be fair, and must be

based on the following factors: (1) Cost to the government, (2) value

of the service or thing to the recipient, (3) public policy or interest

serviced, and (4) other relevant facts.

The proposed exemption from certification fees for vehicles and

engines certified as LEVs, ILEVs, ULEVs, and ZEVs emission standards is

consistent with the IOAA. The IOAA does not require agencies to be

completely self-sustaining, but only ``to the extent possible.'' In

establishing fees, it is appropriate for EPA to weigh its broad purpose

under the CAA of protecting the nation's air quality against the sense

of Congress that agencies should be self-sustaining to the extent

possible. See Aeronautical Radio v. Federal Communications Commission,

335 F.2d. 304 (7th Cir., 1964). While EPA recognizes that the Agency

would incur costs in issuing certificates for such vehicles, and in

assuring compliance with the applicable emissions standards, the

proposed fee exemption is consistent with Congressional intent to

encourage the development and production of clean-fuel vehicles for

state clean-fuel fleet programs, and with the broader long-term goal of

encouraging the penetration of clean-fuel vehicles in the national

vehicle market. These are valid public policy interests that may be

considered as a factor in setting fees under the IOAA in a manner that

furthers such interests.

The proposed fee exemption for Tier 1 alternative fuel vehicles is

also consistent with Section 217 of the CAA and with the IOAA. As

described above, the IOAA does not require agencies to be completely

self-sustaining, but only to ``the fullest extent possible,'' and it is

appropriate for EPA to weigh its broad purpose under the CAA of

protecting air quality against the sense of Congress that agencies

should be self-sustaining to the extent possible. While EPA recognizes

that the Agency would incur costs in issuing certificates for such

vehicles and in assuring compliance with the applicable emissions

standards, the proposed fee exemption is consistent with EPA's broad

purpose of protecting air quality. Although these vehicles would be

certified to Tier 1 emissions standards, rather than to the more

stringent CFV emissions standards, all fuel systems for a gaseous-fuel

would have lower evaporative emissions than gasoline fueled vehicles

because these fuel systems are ``closed'' fuel systems under pressure.

These closed fuel systems are the only fuel systems thus far that have

been able to demonstrated compliance with the lower evaporative

emission standards required for ILEV evaporative emission compliance.

Even though the operating fuel system on these vehicles and engines

will have a fuel system that is similar to systems meeting ILEV

evaporative standards, these vehicles could also have an emergency

supply of conventional fuel and still qualify as dedicated vehicles if

EPA finalized the proposed revisions to the definition of dedicated

vehicle discussed in section C. 1. above. Lower evaporative emissions

can still be expected from such vehicles because they will carry lower

volumes of conventional fuel than do dedicated conventional fuel

vehicles. In addition, there will be lower refueling losses because the

conventual fuel is an emergency only fuel supply and will be

replenished infrequently. Therefore, it would be appropriate and

consistent with EPA's broad purpose of reducing emissions that result

in air pollution problems for the Agency to waive certification fees

for gaseous-fueled Tier 1 vehicles as a means to encourage

manufacturers to produce such vehicles. Moreover, EPA expects that some

CFVs purchased by fleet operators towards compliance with requirements

of CFFPs will be gaseous-fueled CFVs, and encouraging production of

gaseous-fueled Tier 1 vehicles would assist those fleet operators that

choose gaseous-fueled CFVs by promoting and supporting the gaseous fuel

fueling infrastructure.

The current fee structure is based on recovering EPA's cost for

each engine family. Current regulations rules do allow for partial

waiver of the full fee. This waiver requires the manufacturer to pay 1

percent of the retail value of the vehicle up to a full fee. The net

result is for any engine family with expected annual sales of

approximately 100 units, the manufacturers would be required to pay the

full certification fee. For aftermarket conversions, however, the one

percent of the retail value criterion is based on the sales price of

the converted vehicle, and does not reflect the cost of procuring the

pre-conversion vehicle or engine. The conversion process may add $5,000

to the vehicle's pre-conversion cost. The retail value of the converted

vehicle may be anywhere from $10,000 for a LDV to $20,000 for a pickup

truck. The fee the aftermarket conversion manufacturer pays is based on

the total retail value of the vehicle, not just the value added.

Therefore, if the retail value of the converted vehicle is $25,000 the

fee under the current waiver provision would be 1 percent of $25,000,

or $250. If the convertor expects to sell at least 100 converted

vehicles, it would have to pay the full certification fee of $23,741.00

.

For the 1997 model year 14 EPA certified 12 engine

families to LEV, ILEV, ULEV, and ZEV emission standards; three LDV's,

four LDT's, and five HDE's. The total fees paid to EPA for these 12

engine families amount to less than $250,000. Since few gaseous-fueled

engine families have been certified to Tier 1 emissions standards, EPA

does not expect the cost of the fee waiver proposed for Tier 1 gaseous-

fueled vehicles and engines would be significant. The cost of the

proposed fees exemptions would not be passed on to other manufacturers.

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

\14\ As of May 30, 1997.

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In today's action, EPA is proposing a fee exemption for any engine

family certified to Federal LEV, ILEV, ULEV, or ZEV emissions standards

in 40 CFR Part 88. The proposed fee exemption, applicable through MY

2001, would be expected to result in a greater number of engine

families and vehicles available for fleet operators to purchase and use

to comply with the requirements of Clean-Fuel Fleet Programs. In

addition, today's proposal is intended to reduce the overall burden of

certifying clean-fuel vehicles and to provide additional incentive to

both OEM and aftermarket converters to certify vehicles and engines

that meet the CFV emission standards.

[[Page 38772]]

This proposed exemption would apply through MY 2001 because EPA

expects that such incentive will not be needed after MY 2001 as the

production and sales of CFVs by that time should be at a level such

that the amount of fees paid to EPA can easily be amortized over the

total sales. EPA would apply this exemption in an equitable,

nondiscriminatory manner--any manufacturer of a small volume engine

family certified to LEV, ULEV, ILEV, or ZEV emissions standards under

40 CFR Part 88 would be eligible to receive an exemption.

III. Administrative Requirements

A. Administrative Designation

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

Agency must determine whether this proposed 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 has determined

that this proposed action is not a ``significant regulatory action''

within the meaning of the Executive Order, and is therefore not subject

to OMB review. Today's action proposes to amend current regulations to

streamline the certification process for manufacturers of Clean Fuel

vehicles and dual fuel gaseous fueled vehicles and engines.

B. Regulatory Flexibility

The Regulatory Flexibility Act (RFA) generally requires an agency

to conduct a regulatory flexibility analysis of any rule of any rule

subject to notice and comment rulemaking requirements unless the agency

certifies that the rule will not have significant economic impact on a

substantial number of small entities. Small entities include small

business, small not-for-profit enterprises, and small governmental

jurisdictions. This proposed rule would not have significant impact on

a substantial number of small entities because today's proposed action

would not impose any new requirements on small entities. In fact, this

proposal would reduce the costs of certification for all entities,

including small entities, that manufacturers of CFVs, as well as

reducing costs for all entities that convert conventional vehicles to

vehicles that operate on gaseous and other fuels, including small

entities that perform such actions. Therefore, I certify that this

action will not have a significant economic impact on a number of small

entities.

C. Unfunded Mandates

Under section 202 of the Unfunded Mandates Reform Act of 1995

(``UMRA'') signed into law on March 22, 1995, EPA must prepare a

written statement to accompany any rule where the estimated costs to

State, local, or tribal governments, in the aggregate, or to the

private sector, will be $100 million or more in any one year. Under

section 205, for any rule subject to section 202, 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 has determined that this proposed rule does not trigger the

requirements of UMRA. The proposed rule does not include a Federal

mandate that may result in estimated annual costs to State, local, or

tribal governments in the aggregate, or to the private sector, of $100

million or more, and it does not propose regulatory requirements that

may significantly or uniquely affect small governments. Therefore, this

proposed rule does not trigger the requirements of UMRA.

D. Reporting and Recordkeeping Requirement

Today's proposal does not impose any new information collection

burden. The Office of Management and Budget (OMB) has previously

approved the information collection requirements under the provisions

of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. And has assigned

OMB control number 2060-0104 (EPA ICR No. 0783).

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 instruction; 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 for data sources; complete and review the collection of

information; and transmit or otherwise disclose the information.

Copies of the ICR document(s) may be obtained from Sandy Farmer,

OPPE Regulatory Information Division; EPA; 401 M St., SW. (mail code

2137); Washington, DC 20460 or by calling (202) 260-2740. Include the

ICR and/or OMB number in any correspondence.

E. Environmental and Economic Impacts

This proposal will have no adverse effects on air quality, since

all current emissions standards and requirements would continue to

apply to vehicles and engines affected by today's action. EPA believes

that this proposed action would encourage manufacturers to develop and

market vehicles and engines with innovative, new emissions control

technology, ultimately resulting in broader market penetration of CFVs

and clean alternative fuels.

By proposing to waive certification fees for qualifying vehicles,

this proposed action would reduce the regulatory burden on industry

without adversely affecting air quality.

F. Protection of Children From Environmental Health Risks and Safety

Risks

This proposed rule is not subject to E.O. 13045, entitled

``Protection of Children from Environmental Health Risks and Safety

Risks (62 FR 19885, April 23, 1997), because it does not involve

decisions on environmental health risks or safety risks that

disproportionately affect

G. Public Participation

1. Comments and the Public Docket

EPA welcomes comments on all aspects of this proposed rulemaking.

All comments, with the exception of proprietary information should be

addressed to the EPA Air Docket Section, Docket No. A-97-27 (see

ADDRESSES).

Commenters who wish to submit proprietary information for

[[Page 38773]]

consideration should clearly separate such information from other

comments by (1) labeling proprietary information ``Confidential

business Information'' and (2) sending proprietary information directly

to the contact person listed (see FOR FURTHER INFORMATION CONTACT) and

not to the public docket. This would help insure that proprietary

information is not inadvertently placed in the docket. If a commenter

wants EPA to use a submission labeled as confidential business

information as part of the basis for the notice of proposed rulemaking,

then a non-confidential version of the document, which summarizes the

key data or information, should be sent to the docket.

Information covered by 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, the submission may be made available to the

public without notifying the commenters.

2. Public Hearing

Any person can request EPA to hold a public hearing on this

proposed action, but such request must be received by August 19, 1998.

Because no hearing will occur, absent a request for one, interested

parties should contact Clifford D. Tyree at the number listed below

after August 19, 1998 to determine whether a hearing will take place.

IV. Statutory Authority

Authority for the actions set forth in this notice of proposed

rulemaking is granted to the EPA by sections 202, 203, 206, 207, 217,

241, 242, 243, 244, 245, 246, 247, and 301(a) of the Clean Air Act as

amended (15 U.S.C. 2001, 2002, 2003, 2005, 2006, 2013; 42 U.S.C. 7521,

7522, 7524, 7525, 7541, 7542, 7549, 7550, and 7601(a)).

List of Subjects in 40 CFR Part 86

Environmental protection, Administrative practice and procedure,

Confidential business information, Labeling, Motor vehicle pollution,

Reporting and recordkeeping requirements.

Dated: July 8, 1998.

Carol M. Browner,

Administrator.

For the reasons set out in the preamble, chapter I, title 40 of the

Code of Federal Regulations is proposed to be amended as follows:

PART 86--[AMENDED]

1. The authority citation for part 86 continues to read as follows:

Authority: 42 U.S.C. 7401-7671q.

2. Section 86.090-2 of Subpart A is amended by revising the

definition of ``Dedicated vehicle (or engine)'' to read as follows:

Sec. 86.090-2 Definitions.

* * * * *

Dedicated vehicle (or engine) means, any motor vehicle (or motor

vehicle engine) engineered and designed to be operated using a single

fuel. Flexible fuel vehicles and multi-fuel vehicles are not dedicated

fuel vehicles. Through model year 2001, motor vehicles (or motor

vehicle engines) capable of operating on a second fuel through use of

one of the options listed in paragraphs (1) and (2) of this definition

are dedicated vehicles (or engines):

(1) Vehicles or engines certified to Tier 1, LEV, ULEV, ILEV, or

ZEV that are capable of operation on a conventional fuel for a maximum

of one hour during a three-hour period.

(2) Vehicles or engines certified to Tier 1, LEV, ULEV, ILEV, or

ZEV that are capable of operation on a conventional fuel no more than

50 miles on a conventional fuel limited either by fuel tank capacity or

tamper-proof electronic software.

* * * * *

3. Section 86.096-24 of Subpart A is amended by revising paragraph

(a)(2) introductory text and adding new paragraphs (c)(4), (c)(5),

(e)(1), (i), and (j) to read as follows:

Sec. 86.096-24 Test vehicles and engines.

(a) * * *

(2) To be classed in the same engine family, engines must be

identical in all the respects listed in paragraphs (a)(2)(i) through

(x) of this section or, at the manufacturers option, as allowed in

paragraphs (i) and (j) of this section.

* * * * *

(c) * * *

(4) Light-duty vehicles and light-duty trucks applying for a

certificate of conformity with Clean-Fuel vehicle emissions standards

in 40 CFR part 88. This paragraph (c)(4) applies to engines, systems,

or components used to establish exhaust emission deterioration factors

for light-duty vehicle and light-duty truck small volume engine

families certified to LEV, ILEV, ULEV, or ZEV emissions standards in 40

CFR part 88.

(i) For light duty vehicles, the Administrator shall select the

vehicles, engines, systems, or components to be used to determine

exhaust emission deterioration factors for each engine family or engine

family class control system combination using the criteria in paragraph

(c)(1) of this section, or, alternatively, by selecting the vehicle

with the largest projected sales volume in the engine family or engine

family class.

(ii) For light duty trucks, the manufacturer shall select the

vehicles, engines, systems, or components to be used to determine

exhaust emission deterioration factors for each engine family or engine

family class control system combination using the criteria in paragraph

(c)(2) of this section, or alternatively, by selecting the vehicle with

the largest projected sales volume in the engine family or engine

family class.

(iii) For light duty vehicles, service accumulation procedures must

comply with one of the following:

(A) 40 CFR 86.094-26 (a); or

(B) 40 CFR 86.094-14 (c)(7)(i)(C).

(iv) For light duty trucks, service accumulation procedures must

comply with one of the following:

(A) 40 CFR 86.094-26 (b) and (d); or

(B) 40 CFR 86.094-14 (c)(7)(i)(C).

(5) Heavy-duty engines applying for a certificate of conformity

with Clean-fuel vehicle emissions standards in 40 CFR part 88. This

paragraph (c)(5) applies to engines, systems, or components used to

establish exhaust emission deterioration factors for small volume

heavy-duty engine families certified to LEV, ILEV, ULEV, or ZEV

emissions standards in 40 CFR part 88.

(i) The manufacturer shall select the vehicles, engines, systems,

or components to be used to determine exhaust emission deterioration

factors for each engine family or engine family class control system

combination using the criteria in paragraph (c)(3) of this section, or

alternatively, by selecting the engine with the largest projected sales

volume in the engine family or engine family class.

(ii) Service accumulation procedures must comply with one of the

following:

(A) 40 CFR 86.094-26(c) and (d);

(B) 40 CFR 86.094-14 (c)(7)(i)(C); or

(C) The engine must be operated at maximum power and maximum fuel

rate for 500 engine hours. Three tests, equally spaced, shall be used

to extrapolate deterioration factors.

* * * * *

(e)(1) Any manufacturer may request to certify engine families,

with combined total U.S. sales of vehicles and engines fewer than

10,000 units, for the model years 1999 through 2001, to the clean-fuel

vehicle standards prescribed in 40 CFR 88.104-94 and

[[Page 38774]]

88.105-94, under the provisions of Sec. 86.094-14, in addition to the

vehicles certified under paragraph (e)(2) of this section.

* * * * *

(i) For light duty vehicles and light duty trucks, small volume

engine families certified to LEV, ULEV, ILEV, or ZEV emissions

standards in 40 CFR part 88 may be grouped into an engine family class,

provided that:

(1) For original equipment manufacturers, the following criteria

are met:

(i) Vehicles are all certified to the same emissions standards

prescribed in 40 CFR 88.104-94.

(ii) The maximum range of engine displacement is less than or equal

to 0.8 liters of the largest displacement in the class.

(iii) Same type of catalyst (e.g., beads or monolith).

(iv) Same precious metal composition of the catalyst by the type of

principle active material(s) used (e.g., platinum based oxidation

catalyst, palladium based oxidation catalyst, platinum and rhodium

three-way catalyst, palladium and rhodium three-way catalyst).

(v) The ratios of [(catalysts volume/displacement) x (catalyst

loading rate)] of all catalysts is within 25 percent or 0.2 g/liter of

each other.

(2) For aftermarket conversions, the following criteria are met:

(i) Vehicles are all certified to the same emissions standards

prescribed in 40 CFR 88.104-94.

(ii) The maximum range of engine displacement is less than or equal

to 0.8 liters of the largest displacement in the class.

(iii) Same type of catalyst (e.g., beads or monolith).

(iv) All carlines or engine models were included on the certificate

for the pre-conversion configuration.

(3) Vehicles certifying to more than one set of emission standards

specified in this paragraph (i) may be grouped into a single engine

family class, as provided in paragraphs (i)(1) and (i)(2) of this

section. For example, a manufacturer may certify a vehicle to both ULEV

and ILEV standards, or to both ZEV and ILEV standards.

(j) For heavy duty engines, small volume engine families certified

to LEV, ULEV, or ZEV emissions standards in 40 CFR 88.105-94 may be

grouped into an engine family class, provided that:

(1) For original equipment manufacturers, the following criteria

are met:

(i) The engines meet the requirements of paragraphs (a)(2)(iv)

through (a)(2)(x) of this section.

(ii) The maximum range of engine displacement is less than or equal

to 0.8 liters of the largest displacement in the class.

(iii) Same type of catalyst (e.g., beads or monolith).

(iv) Same precious metal composition of the catalyst by the type of

principle active material(s) used (e.g., platinum based oxidation

catalyst, palladium based oxidation catalyst, platinum and rhodium

three-way catalyst, palladium and rhodium three-way catalyst).

(v) The ratio of [(catalysts volume/displacement)] x [catalyst

loading rate] of all combinations is within 25% or .2 g/liter.

(2) For aftermarket conversions, the following criteria are met:

(i) The maximum range of engine displacement is less than or equal

to 0.8 liters of the largest displacement in the class.

(ii) Same type of catalyst (e.g., beads or monolith).

(iii) All carlines or engine models were included on the

certificate for the pre-conversion configuration.

4. Section 86.099-2 is added to subpart A to read as follows:

Sec. 86.099-2 Definitions.

The definitions of Sec. 86.098-2 continue to apply to 1998 and

later model year vehicles. The definitions listed in this section apply

beginning with the 1999 model year.

Engine Family Class means:

(1) A grouping of vehicles or engine families that meets the

following criteria:

(i) Dedicated vehicles or engines that meet LEV, ILEV, ULEV, or ZEV

emission standards in 40 CFR 88.104-94 or 88.105-94.

(ii) The maximum range of engine displacement is not more than 0.8L

of the largest displacement tested in the class.

(iii) Same type of catalyst.

(iv) Same principle active precious metal.

(v) The ratios of [(catalysts volume/displacement) x (catalyst

loading rate)] of all catalysts is within 25 percent or 0.2 g/liter of

each other.

(vi) For aftermarket conversions, all carlines or engine models

were included on the certificate for the pre-conversion configuration.

(2) This definition is applicable for model years 1999 through

2001.

5. Section 86.908-93 of Subpart J is amended by adding paragraph

(d) to read as follows:

Sec. 86.908-93 Waivers and refunds.

* * * * *

(d)(1) For model years 1999 through 2001, the required fees under

this subpart shall be waived for any light-duty vehicle, light-duty

truck, or heavy-duty engine family that meets the following

requirements:

(i) Is a dedicated vehicle or engine;

(ii) Is seeking certification to LEV, ILEV, ULEV, or ZEV emissions

standards in 40 CFR part 88; and

(iii) Meets the small volume sales requirements of Sec. 86.094-

14(b) or Sec. 86.094-24(e).

(2) If the manufacturer does not receive a certificate of

conformity with the LEV, ILEV, ULEV, or ZEV emissions standards in 40

CFR part 88, the fee requirements of this section will apply. Before

any certificate can be issued, the applicable fee must be paid.

[FR Doc. 98-18860 Filed 7-17-98; 8:45 am]

BILLING CODE 6560-50-P