[Federal Register Volume 63, Number 176 (Friday, September 11, 1998)]
[Rules and Regulations]
[Pages 48848-48887]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 98-22659]



[[Page 48848]]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 59

[AD-FRL-6149-7]
RIN 2060-AE55


National Volatile Organic Compound Emission Standards for 
Architectural Coatings

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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

SUMMARY: This action promulgates national volatile organic compound 
(VOC) emission standards for architectural coatings pursuant to section 
183(e) of the Clean Air Act (Act). This final rule is based on the 
Administrator's determination that VOC emissions from the use of 
architectural coatings have the potential to cause or contribute to 
ozone levels that violate the national ambient air quality standards 
(NAAQS) for ozone. Ozone is a major component of smog which causes 
negative health and environmental impacts when present in high 
concentrations at ground level. The final rule is estimated to reduce 
VOC emissions by 103,000 megagrams per year (Mg/yr) (113,500 tons per 
year [tpy]) by requiring manufacturers and importers to limit the VOC 
content of architectural coatings.

DATES: The effective date is September 11, 1998. The incorporation by 
reference of certain publications listed in the regulation is approved 
by the Director of the Federal Register as of September 11, 1998.

ADDRESSES: Technical Support Documents. The regulation promulgated 
today is supported by two background information documents (BID); one 
specific to the architectural coatings rule, and one that addresses 
comments on the study and Report to Congress under section 183(e). 
These documents are: the BID for the promulgated architectural coating 
standards, National Volatile Organic Compound Emission Standards for 
Architectural Coatings--Background for Promulgated Standards 
(Architectural Coatings BID); and the BID containing the 
Administrator's response to comments on the section 183(e) study and 
Report to Congress, Response to Comments on Section 183(e) Study and 
Report to Congress (183-BID). The Architectural Coatings BID contains a 
summary of the changes made to the standards since proposal, a summary 
of all the public comments on the standards, and the Administrator's 
response to the comments and the 183-BID contains a summary of all the 
public comments made on the section 183(e) study and Report to Congress 
and the list and schedule for regulation as well as the Administrator's 
response to the comments. Both documents may be obtained from the 
docket for this rulemaking and are also accessible through the Internet 
at http://www.epa.gov/ttn/oarpg/ramain.html; or from the United States 
Environmental Protection Agency Library (MD-35), Research Triangle 
Park, North Carolina 27711, telephone (919) 541-2777. Please refer to 
``National Volatile Organic Compound Emission Standards for 
Architectural Coatings--Background for Promulgated Standards,'' EPA-
453/R-98-006b, or ``Response to Comments on Section 183(e) Study and 
Report to Congress'' EPA-453/R-98-007.
    Docket. Docket No. A-92-18, contains supporting information used in 
developing the promulgated standards. Docket No. A-94-65 contains 
information considered by the EPA in development of the consumer and 
commercial products study and the subsequent list and schedule for 
regulation. The dockets are available for public inspection and copying 
from 8:00 a.m. to 5:30 p.m. Monday through Friday, excluding legal 
holidays. The

[[Page 48849]]

dockets are located at the EPA's Air and Radiation Docket and 
Information Center, Waterside Mall, Room M1500, 1st Floor, 401 M 
Street, SW, Washington, DC 20460; telephone (202) 260-7548 or fax (202) 
260-4400. A reasonable fee may be charged for copying.

FOR FURTHER INFORMATION CONTACT: Ms. Ellen Ducey at (919) 541-5408, 
Coatings and Consumer Products Group, Emission Standards Division (MD-
13), United States Environmental Protection Agency, Research Triangle 
Park, North Carolina 27711 (ducey.ellen@epa.gov). Any correspondence 
related to compliance with this rule must be submitted to the 
appropriate EPA Regional Office listed in Sec. 59.409 of the rule.

SUPPLEMENTARY INFORMATION:
    Regulated Entities. Entities potentially regulated by this action 
are manufacturers and importers of architectural coatings. 
Architectural coatings are coatings that are recommended for field 
application to stationary structures and their appurtenances, to 
portable buildings, to pavements, or to curbs. Regulated categories and 
entities include:

------------------------------------------------------------------------
                Category                  Examples of regulated entities
------------------------------------------------------------------------
Industry...............................  Manufacturers (which includes  
                                          packagers and repackagers) and
                                          importers of architectural    
                                          coatings that are manufactured
                                          for sale or distribution in   
                                          the United States, including  
                                          all United States territories.
State/local/tribal governments.........  State Departments of           
                                          Transportation that           
                                          manufacture their own         
                                          coatings.                     
------------------------------------------------------------------------

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be regulated by this 
action. This table lists the types of entities that the EPA is now 
aware could potentially be regulated by this action. Other types of 
entities not listed in this table could also be regulated. To determine 
whether your product is regulated by this action, you should carefully 
examine the applicability criteria in Sec. 59.400 of the final rule. If 
you have questions regarding the applicability of this action to a 
particular entity, consult the person listed in the preceding FOR 
FURTHER INFORMATION CONTACT section of this preamble.
    Judicial review. This section 183(e) rule for architectural 
coatings was proposed on June 25, 1996 (61 FR 32729). This notice 
promulgating a rule for architectural coatings constitutes final 
administrative action concerning that proposal. Under section 307(b)(1) 
of the Act, judicial review of this final rule is available only by 
filing a petition for review in the United States Court of Appeals for 
the District of Columbia Circuit by November 10, 1998. Under section 
307(d)(7)(B) of the Act, only an objection to this rule which was 
raised with reasonable specificity during the period for public comment 
can be raised during judicial review. Moreover, under section 307(b)(2) 
of the Act, the requirements established by today's final action may 
not be challenged separately in any civil or criminal proceeding 
brought by the EPA to enforce these requirements.
    Outline. The information presented in this preamble is organized as 
follows:

I. Background
    A. Purpose of Regulation
    B. Statutory and Regulatory Background
II. Summary of Standards
    A. Applicability
    B. Volatile Organic Compound Content Limits
    C. Exceedance Fee
    D. Tonnage Exemption
    E. Labeling
    F. Recordkeeping
    G. Reporting

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    H. Compliance Provisions
III. Summary of Considerations in Developing Standards
    A. Basis of the Regulation
    B. Stakeholder and Public Participation
IV. Summary of Impacts
    A. Environmental Impacts
    B. Energy Impacts
    C. Cost and Economic Impacts
V. Significant Comments and Changes to Proposed Standards
    A. National Rule versus Control Techniques Guidelines
    B. Applicability and Regulated Entities
    C. General Comments on Determination of Best Available Controls
    D. Changes in Proposed Coating Categories
    E. Addition of New Coating Categories
    F. Category Overlap
    G. Low Volume/Tonnage Exemption
    H. Compliance Variance Provisions
    I. Exceedance Fee Option
    J. Labeling, Recordkeeping, and Reporting
    K. Determination of Volatile Organic Compound Content
    L. Compliance Date
    M. Cost/Economic Impacts
    N. Small Business Issues
    O. Cost-Effectiveness
    P. Future Study and Future Limits
    Q. Administrative Provisions
VI. Administrative Requirements
    A. Docket
    B. Paperwork Reduction Act
    C. Executive Order 12866
    D. Executive Order 12875
    E. Regulatory Flexibility Act/Small Business Regulatory 
Enforcement Fairness Act of 1996
    F. Unfunded Mandates Reform Act of 1995
    G. Submission to Congress and the General Accounting Office
    H. National Technology Transfer and Advancement Act
    I. Executive Order 13045

I. Background

A. Purpose of Regulation

    Ground-level ozone, which is a major component of ``smog,'' is 
formed in the atmosphere by reactions of VOC and oxides of nitrogen 
(NOX) in the presence of sunlight. The formation of ground-
level ozone is a complex process that is affected by many variables.
    Exposure to ground-level ozone is associated with a wide variety of 
human health effects, agricultural crop loss, and damage to forests and 
ecosystems. Acute health effects are induced by short-term exposures to 
ozone (observed at concentrations as low as 0.12 parts per million 
[ppm]), generally while individuals are engaged in moderate or heavy 
exertion, and by prolonged exposures to ozone (observed at 
concentrations as low as 0.08 ppm), typically while individuals are 
engaged in moderate exertion. Moderate exertion levels are more 
frequently experienced by individuals than heavy exertion levels. The 
acute health effects include respiratory symptoms, effects on exercise 
performance, increased airway responsiveness, increased susceptibility 
to respiratory infection, increased hospital admissions and emergency 
room visits, and pulmonary inflammation. Groups at increased risk of 
experiencing such effects include active children, outdoor workers, and 
others who regularly engage in outdoor activities and individuals with 
preexisting respiratory disease. Available information also suggests 
that long-term exposures to ozone may cause chronic health effects 
(e.g., structural damage to lung tissue and accelerated decline in 
baseline lung function).
    In accordance with section 183(e) of the Act, the Administrator has 
determined that VOC emissions from the use of architectural coatings 
have the potential to contribute to ozone levels that violate the NAAQS 
for ozone. Under authority of section 183(e), the EPA conducted a study 
of the VOC emissions from consumer and commercial products to determine 
their potential to contribute to ozone levels which violate the NAAQS 
for ozone. Based on the results of the study, the EPA determined that 
the architectural coatings category accounts for about 9 percent of the 
emissions from all consumer and commercial products. It is one of the 
largest emission sources among the consumer and commercial products 
categories and in many States represents one of the largest 
identifiable sources of unregulated VOC emissions. Consequently, the 
EPA and many States consider the regulation of architectural coatings 
to be an important component of the overall approach to reducing those 
emissions that contribute to ozone nonattainment. The EPA's 
determination that VOC emissions from the use of architectural coatings 
have the potential to contribute to nonattainment of the ozone NAAQS 
and the decision to regulate architectural coatings are discussed in 
the preamble to the proposed rule (61 FR 32729), in the ``Consumer and 
Commercial Products Report to Congress'' (EPA-453/R-94-066-A), in the 
Federal Register notice announcing the schedule for regulation (60 FR 
15264), and in a separate Federal Register document published today 
that constitutes final action on the EPA's listing of architectural 
coatings for regulation.

B. Statutory and Regulatory Background

1. Section 183(e)
    In 1990, Congress enacted section 183(e) of the Act, establishing a 
new regulatory program for controlling VOC emissions from consumer and 
commercial products. Section 183(e) directs the Administrator to list, 
and schedule for regulation, categories of consumer and commercial 
products after completion of a study and report to Congress concerning 
the products and their potential to contribute to levels of ozone which 
violate the ozone NAAQS. A separate document in today's Federal 
Register contains a description of section 183(e) of the Act and 
contains a summary of significant public comments and the EPA responses 
regarding the section 183(e) study, the Report to Congress, and the 
list and schedule for regulation.
2. Regulatory Negotiation
    In 1992, the EPA initiated a regulatory negotiation to address 
architectural coatings. The regulatory negotiation process is an 
alternative to the traditional approach to rulemaking. The members of 
the architectural coatings regulatory negotiation committee represented 
the affected industries, consumers, Federal agencies, State and local 
air pollution control agencies, environmental groups, and labor 
organizations. Regulatory negotiation meetings were held from October 
1992 to February 1994. Despite negotiation efforts, the committee could 
not reach consensus on some key regulatory issues for developing the 
rule, and on September 23, 1994, the regulatory negotiation concluded 
without consensus. Therefore, the EPA initiated development of the 
architectural coatings rule through conventional rule development 
procedures. The EPA utilized data and information obtained from the 
regulatory negotiation to complement additional information gathered 
during the rule development. Specifically, the EPA took into 
consideration information on the volume, VOC content, and hazardous air 
pollutant (HAP) content of coatings produced in 1990 in the VOC 
Emissions Inventory Survey conducted by industry.
3. Relationship to State and Local Regulation of Architectural Coatings
    Emissions from the use of architectural coatings are not currently 
regulated at the Federal level. Although a few States have had 
architectural coatings regulations in place for a number of years, many 
State and local areas are still seeking to obtain VOC reductions from 
this source category either from a national rule or from additional 
regulation at the State or local level.
    Differing requirements of State and local architectural coating 
regulations have created administrative, technical,

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and marketing problems for both large and small companies that market 
and distribute products in multiple States. Both large and small 
manufacturers have noted the additional burden associated with 
differences in State and local requirements. These industry 
representatives have noted that a Federal rule would provide some 
degree of consistency, predictability, and administrative ease for the 
industry.
    States with ozone pollution problems are supportive of the EPA 
rulemakings that will assist them in their efforts toward achievement 
of the ozone standard. The National Governors' Association and 
Environmental Council of States (a group composed of environmental 
commissioners from each State), the State and Territorial Air Pollution 
Program Administrators and the Association of Local Air Pollution 
Control program Administrators, and the 37-State Ozone Transport 
Assessment Group (OTAG) all have urged the EPA to finalize national 
rules for architectural coatings. State representatives have long 
recommended that the EPA develop a national rule for this product 
category. In part, this is because a national rule will help reduce 
compliance problems associated with transportation of noncompliant 
coatings into nonattainment areas from neighboring areas and 
neighboring States.
    Given the EPA's commitment to develop a national VOC rule for 
architectural coatings, 14 States currently are depending on 
anticipated reductions from the rule to meet a Clean Air Act 
requirement for State Implementation Plans (SIP) to achieve a 15-
percent reduction in overall VOC emissions, which is required for areas 
with ozone pollution classed as moderate nonattainment or worse. Other 
States can use these emission reductions to meet Clean Air Act 
requirements for additional rate-of-progress plans required for 1999 
and beyond. If the EPA failed to promulgate a Federal rule for 
architectural coatings, these States would need to make up the 
shortfall in emission reductions needed to achieve attainment through 
other regulations, which would likely target substantially more 
expensive reductions from local industries and businesses.

II. Summary of Standards

A. Applicability

    The architectural coatings rule applies to manufacturers and 
importers of architectural coatings that are manufactured after 
September 13, 1999 for sale or distribution in the United States, 
including the District of Columbia and all United States territories. 
For architectural coatings registered under the Federal Insecticide, 
Fungicide, and Rodenticide Act (7 U.S.C. Section 136, et seq.,) 
(FIFRA), the applicable date is March 10, 2000.
    The regulated entity under this rule is the manufacturer or 
importer of a regulated architectural coating. The regulated entities 
include any manufacturers or importers that produce, package, or 
repackage architectural coatings for sale or distribution in the United 
States, including the District of Columbia and all United States 
territories. A person that repackages architectural coatings as part of 
a paint exchange and does not produce, package, or repackage any other 
architectural coatings for sale or distribution in the United States, 
is not included in the definition of manufacturer. Similarly, a person 
that repackages an architectural coating by transferring it from one 
container to another is not included in the definitions of importer and 
manufacturer, provided the VOC content of the coating is not altered 
and the coating is not sold or distributed to another party.
    An architectural coating is defined in the rule as: ``a coating 
recommended for field application to stationary structures and their 
appurtenances, to portable buildings, to pavements, or to curbs.'' The 
definition of architectural coating excludes: ``adhesives and coatings 
recommended by the manufacturer or importer solely for shop 
applications or solely for application to non-stationary structures, 
such as airplanes, ships, boats, and railcars.''
    Architectural coatings that are subject to the rule are divided 
into a number of coating categories, such as ``exterior flats'' or 
``industrial maintenance coatings.'' These coating categories are 
defined in the rule for purposes of specifying the applicable emission 
limits. In determining if a coating is subject to this rule, a coating 
must first meet the general definition of an architectural coating.
    The standards do not apply to the following:
    (1) Coatings manufactured exclusively for sale or distribution 
outside the United States;
    (2) Coatings manufactured prior to September 13, 1999;
    (3) Coatings sold in nonrefillable aerosol containers;
    (4) Coatings that are collected and redistributed at paint 
exchanges in accordance with this rule; and
    (5) coatings sold in containers with a volume of 1 liter or less.

B. Volatile Organic Compound Content Limits

    Manufacturers and importers must limit the VOC content of subject 
coatings to the VOC content levels presented in table 1 of this 
subpart, unless they utilize the exceedance fee or tonnage exemption 
provisions described below. These limits apply to the VOC content that 
would result after thinning a coating according to the manufacturer's 
maximum thinning recommendations. Each subject coating must be 
classified by the manufacturer or importer as belonging to at least one 
of the categories listed in table 1. Each category is defined in the 
rule's definitions section. If none of the specific category 
definitions applies to a coating, then the coating is included in 
either the flat or nonflat category, depending on its gloss level.

  Table 1 of Subpart D.--Volatile Organic Compound (VOC) Content Limits 
                       for Architectural Coatings                       
  [Unless otherwise specified, limits are expressed in grams of VOC per 
  liter of coating thinned to the manufacturer's maximum recommendation 
 excluding the volume of any water, exempt compounds, or colorant added 
                             to tint bases.]                            
------------------------------------------------------------------------
                                             Grams per      Pounds per  
            Coating category                   liter          gallona   
------------------------------------------------------------------------
Antenna coatings........................             530             4.4
Anti-fouling coatings...................             450             3.8
Anti-graffiti coatings..................             600             5.0
Bituminous coatings and mastics.........             500             4.2
Bond breakers...........................             600             5.0
Calcimine recoater......................             475             4.0
Chalkboard resurfacers..................             450             3.8
Concrete curing compounds...............             350             2.9
Concrete curing and sealing compounds...             700             5.8

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Concrete protective coatings............             400             3.3
Concrete surface retarders..............             780             6.5
Conversion varnish......................             725             6.0
Dry fog coatings........................             400             3.3
Extreme high durability coatings........             800             6.7
Faux finishing/glazing..................             700             5.8
Fire-retardant/resistive coatings:                                      
    Clear...............................             850             7.1
    Opaque..............................             450             3.8
Flat coatings:                                                          
    Exterior............................             250             2.1
    Interior............................             250             2.1
Floor coatings..........................             400             3.3
Flow coatings...........................             650             5.4
Form release compounds..................             450             3.8
Graphic arts coatings (sign paints).....             500             4.2
Heat reactive coatings..................             420             3.5
High temperature coatings...............             650             5.4
Impacted immersion coatings.............             780             6.5
Industrial maintenance coatings.........             450             3.8
Lacquers (including lacquer sanding                                     
 sealers)...............................             680             5.7
Magnesite cement coatings...............             600             5.0
Mastic texture coatings.................             300             2.5
Metallic pigmented coatings.............             500             4.2
Multi-colored coatings..................             580             4.8
Nonferrous ornamental metal lacquers and                                
 surface protectants....................             870             7.3
Nonflat coatings:                                                       
    Exterior............................             380             3.2
    Interior............................             380             3.2
Nuclear coatings........................             450             3.8
Pretreatment wash primers...............             780             6.5
Primers and undercoaters................             350             2.9
Quick-dry coatings:                                                     
    Enamels.............................             450             3.8
    Primers, sealers, and undercoaters..             450             3.8
Repair and maintenance thermoplastic                                    
 coatings...............................             650             5.4
Roof coatings...........................             250             2.1
Rust preventative coatings..............             400             3.3
Sanding sealers (other than lacquer                                     
 sanding sealers).......................             550             4.6
Sealers (including interior clear wood                                  
 sealers)...............................             400             3.3
Shellacs:                                                               
    Clear...............................             730             6.1
    Opaque..............................             550             4.6
Stains:                                                                 
    Clear and semitransparent...........             550             4.6
    Opaque..............................             350             2.9
    Low solids..........................            b120            b1.0
Stain controllers.......................             720             6.0
Swimming pool coatings..................             600             5.0
Thermoplastic rubber coatings and                                       
 mastics................................             550             4.6
Traffic marking coatings................             150             1.3
Varnishes...............................             450             3.8
Waterproofing sealers and treatments....             600             5.0
Wood preservatives:                                                     
    Below ground wood preservatives.....             550             4.6
    Clear and semitransparent...........             550             4.6
    Opaque..............................             350             2.9
    Low solids..........................            b120            b1.0
Zone marking coatings...................             450             3.8
------------------------------------------------------------------------
a English units are provided for information only. Enforcement of the   
  rule will be based on the metric units.                               
b Units are grams of VOC per liter (pounds of VOC per gallon) of        
  coating, including water and exempt compounds, thinned to the maximum 
  thinning recommended by the manufacturer.                             

    If a coating is marketed in more than one of the coating categories 
listed in table 1 of this subpart, the manufacturer or importer must 
comply with the lowest applicable VOC content limit, unless an 
exception is specified in

[[Page 48853]]

Sec. 59.402(c) of the rule. These exceptions were developed to clarify 
which VOC content limit applies in situations where inherent overlap 
exists between category definitions. For example, varnishes used on 
wood floors were not intended to be subject to the more stringent 
emission limit for floor coatings. Therefore, an exception paragraph is 
included in the rule stating that varnishes recommended for use on 
floors are subject to the VOC content limit for varnishes, and not the 
limit for floor coatings.
    Manufacturers and importers of recycled coatings are given the 
compliance option of calculating an adjusted-VOC content. Manufacturers 
and importers of recycled architectural coatings are defined as those 
that collect, reprocess, and market coatings that contain a percentage 
of post-consumer coating. Such use is environmentally beneficial 
because it reduces the amount of waste from architectural coatings that 
would otherwise result from evaporation of VOC from unused coatings or 
of coatings sent to landfills or elsewhere. The adjusted-VOC content 
provides regulated entities some credit for the amount of post-consumer 
material contained in the coating. The EPA is providing this credit to 
encourage recycling of unused coatings. The adjusted-VOC content is 
determined by multiplying the percentage of post-consumer content of 
the coating by the VOC content of the recycled coating, which is then 
subtracted from the VOC content of the end product. An explicit 
equation for the calculation is given in the rule.

C. Exceedance Fee

    The rule includes an exceedance fee compliance option. This is an 
economic incentive approach whereby manufacturers and importers may 
choose to comply with the rule by paying a fee in lieu of meeting the 
VOC content limits for their coating products. The fee is $0.0028 per 
gram ($2,500 per ton) of excess VOC. The fee is calculated using the 
amount of VOC in excess of the applicable VOC content limit. The 
exceedance fee is paid annually to the appropriate EPA Regional Office 
and is due no later than March 1 in the year following the calendar 
year in which the coating is manufactured or imported.

D. Tonnage Exemption

    The final rule also includes a tonnage exemption that allows each 
manufacturer and importer to sell or distribute limited quantities of 
architectural coatings that do not comply with the VOC content limits 
and for which no exceedance fee is paid. The tonnage exemption can be 
used for multiple products, but the total mass of VOC contained in a 
single manufacturer's or importer's exempt coatings may not exceed the 
amounts in table 2. The total mass of VOC is calculated based on the 
volume of coatings manufactured or imported and the total VOC content 
of each of the coatings for which an exemption is claimed. To 
reiterate, the calculation is based on the total mass of VOC contained 
in all exempt coatings, not the difference between the VOC content of 
each coating and the applicable VOC content limit in the rule.

                       Table 2.--Tonnage Exemption                      
------------------------------------------------------------------------
  The total mass of VOC contained in all                                
  exempt coatings combined may not exceed     During the time period of 
------------------------------------------------------------------------
23 megagrams (25 tons) VOC................  September 13, 1999 through  
                                             December 31, 2000.         
18 megagrams (20 tons) VOC................  Calendar year 2001          
9 megagrams (10 tons) VOC.................  Calendar year 2002 and each 
                                             year thereafter.           
------------------------------------------------------------------------

E. Labeling

    For coatings complying with the VOC content limits in table 1 of 
this subpart, manufacturers and importers must provide the following 
information on the label or lid of each coating: (1) the date the 
coating was manufactured, or a code indicating this date (this 
information may alternatively be provided on the bottom of the can); 
(2) a statement of the manufacturer's recommendation regarding thinning 
of the coating (does not apply to thinning with water); and (3) either 
the VOC content of the coating in the container, or the VOC content 
limit from table 1 of the rule with which the coating must comply and 
with which it does comply. (Any coating for which the exceedance fee or 
tonnage exemption provision is being used must be labeled with its VOC 
content because it would not be in compliance with the VOC content 
limits in table 1 of this subpart.)
    Industrial maintenance coatings must be labeled with one of several 
prescribed phrases indicating that the coating is not intended for 
general consumer use. For recycled coatings, manufacturers and 
importers must indicate the post-consumer coating content on the 
container label or lid.

F. Recordkeeping

    There are no recordkeeping requirements for coatings complying with 
the VOC content limits in table 1 of this subpart. However, the rule 
does include recordkeeping requirements for compliance with the 
recycled coating, exceedance fee, and tonnage exemption provisions.
    For recycled coatings, the manufacturer or importer must keep 
records of the volume of coatings received for recycling, the volume of 
coatings received that is unusable, the volume of virgin coatings used 
with recycled coatings, and the volume of final recycled coatings 
manufactured or imported. In addition, manufacturers and importers of 
recycled coatings must keep records of the calculation of adjusted-VOC 
contents.
    For compliance with the exceedance fee provisions, manufacturers 
and importers must keep records on an annual basis for each coating of 
the VOC content, the VOC content in excess of the applicable limit, and 
the volume manufactured or imported. Manufacturers and importers must 
also keep records of the calculation of fees, the annual fee for each 
coating, and the total annual fee.
    For the tonnage exemption, manufacturers and importers must keep 
records of the products claimed under the exemption, the VOC content 
and actual sales or distribution for each exempt product, and the total 
mass of VOC contained in all products claimed under the exemption.
    All required records must be retained for a period of 3 years in a 
form suitable for inspection.
    Although the retention of test data is not required by this rule, 
the EPA encourages facilities to keep any information resulting from 
either Method 24 or any other acceptable method to determine 
compliance. This information will help the EPA make a preliminary 
assessment of compliance for the coatings subject to this rule. In the 
absence of demonstrable indications of compliance, the EPA may require 
Method 24 testing by the facility in accordance with Sec. 59.406(b).

G. Reporting

    All manufacturers and importers of subject coatings must file an 
initial notification report listing the coating categories from table 1 
of this subpart that they manufacture or import and the locations of 
facilities that manufacture architectural coatings in the United 
States. The initial notification report must be submitted no later than 
September 13, 1999 or 180 days after the date that the manufacturer or 
importer first manufactures or imports a subject coating, whichever is 
later.

[[Page 48854]]

    In addition, if a manufacturer or importer uses a date coding 
system, an explanation of the coding system must be submitted with the 
initial report. Explanations of new codes must be filed within 30 days 
after their first use.
    There are no reporting requirements beyond the initial notification 
and date code explanation for manufacturers and importers who meet the 
VOC content limits in table 1. There are additional reporting 
requirements for manufacturers and importers who choose to take 
advantage of optional provisions, including: (1) the calculation of an 
adjusted-VOC content for recycled coatings (based on post-consumer 
coating content); (2) the payment of the exceedance fee; and (3) the 
tonnage exemption. An annual report is required for each of these 
provisions.

H. Compliance Provisions

    The rule specifies the procedure to determine the VOC content of 
coatings subject to the rule. Although the EPA has chosen Method 24 as 
the reference method for determining compliance with the VOC content 
requirements of this rule, it is not the exclusive method for 
determining compliance. The manufacturer or importer may also use a 
different analytical method than Method 24 (if it is approved by the 
Administrator on a case-by-case basis), formulation data, or any other 
reasonable means to determine the VOC content of coatings. However, the 
EPA may require a Method 24 analysis to be conducted, and if there are 
any inconsistencies between the results of a Method 24 test and any 
other means for determining VOC content, the Method 24 test results 
will govern. The EPA can use other evidence as well to establish 
whether or not a manufacturer or importer is in compliance with the 
provisions of this rule.

III. Summary of Considerations in Developing Standards

A. Basis of the Regulation

    Section 183(e) of the Act directs the EPA to regulate products 
using best available controls (BAC), and defines BAC as:

the degree of emissions reduction the Administrator determines, on 
the basis of technological and economic feasibility, health, 
environmental, and energy impacts, is achievable through the 
application of the most effective equipment, measures, processes, 
methods, systems or techniques, including chemical reformulation, 
product or feedstock substitution, repackaging, and directions for 
use, consumption, storage, or disposal.

    The statute thus empowers the EPA to examine a variety of 
considerations to use in determining the best means of obtaining VOC 
emission reductions from a given consumer or commercial product 
category. As discussed in the preamble to the proposed rule (61 FR 
32737, June 25, 1996), the primary factors the EPA considered in 
determining BAC for architectural coatings were technological and 
economic feasibility, and environmental impacts.
    Non-air environmental impacts (solid waste and water) and energy 
impacts are expected to be minimal and, therefore, do not vary 
significantly among various VOC control levels. With regard to health 
impacts, the EPA has concluded that reductions in VOC emissions and 
concomitant reductions in ozone will reduce health impacts of exposure 
to ozone.
    For architectural coatings, the EPA determined that BAC is the 
degree of emission reduction achievable through a system of regulation 
that encourages product reformulation to meet the VOC content limits in 
table 1 of this subpart, provides an economic incentive (the exceedance 
fee option) to lower VOC content of coatings, and allows for limited 
exemption of coatings (the VOC tonnage exemption). The EPA concluded 
that for this product category, pollution prevention is the most 
effective means of achieving VOC emission reductions. In working to 
comply with State VOC rules over the past several years, the 
architectural coatings industry has established product reformulation 
as the most technologically and economically feasible strategy for 
reducing VOC emissions. Reformulation can consist of minor adjustments 
in coating VOC contents or larger adjustments involving a change in 
resin technology. The EPA considered many factors in evaluating the 
economic and technological feasibility of different VOC content levels 
and different degrees of reformulation. These factors included existing 
State and local VOC emission standards, coating VOC content and sales 
information, analysis of coating technologies, performance 
considerations, cost considerations, market impacts, and stakeholder 
input. In addition, the EPA considered the relative contribution of 
different coating types to overall VOC emissions from architectural 
coatings.
    At proposal, the EPA requested comment on alternatives to the 
proposed VOC content limits that would provide flexibility, if 
additional time were needed or it was not cost-effective to develop a 
low-VOC formulation. Based on comments received, the EPA included in 
the final rule an exceedance fee (discussed in sections II.C and V.I) 
and an exemption for a certain tonnage of VOC content (discussed in 
sections II.D and V.G).
    The final VOC content limits in conjunction with the exceedance fee 
and tonnage exemption reflect the EPA's determination of BAC and are 
based primarily on the 1990 VOC Emissions Inventory Survey, analysis of 
existing State rules for architectural coatings, data obtained from 
participants in the regulatory negotiation, and information submitted 
by coating manufacturers and other interested parties during the course 
of the rule development and public comment period.

B. Stakeholder and Public Participation

    The EPA proposed the architectural coatings rule and published the 
preamble in the Federal Register on June 25, 1996 (61 FR 32729). The 
EPA placed the proposed regulatory text, BID, and Economic Impact 
Analysis (EIA) in a docket open to the public at that time and made 
them available to interested parties. The EPA solicited comments at the 
time of the proposal. To provide easier access by the public, the EPA 
subsequently published the proposed regulatory text in the Federal 
Register on September 3, 1996 (61 FR 46410) and extended the comment 
period from August 30 to September 30, 1996. The EPA again extended the 
comment period to November 4, 1996 (notice published at 61 FR 52735, 
October 8, 1996).
    To provide interested persons the opportunity for oral presentation 
of data, views, or arguments concerning the proposed architectural 
coating rule, the EPA held a public hearing in Durham, North Carolina 
on July 30, 1996. Nineteen speakers presented oral testimony at this 
hearing. The EPA held another public meeting to discuss issues related 
to the impact of the proposed rule on small manufacturers in Rosemont, 
Illinois, on August 13, 1996. There were 77 persons who participated in 
the meeting, and 18 speakers presented oral testimony.
    The EPA received over 200 comment letters on the proposed rule. 
Commenters included coating manufacturers and importers, State 
regulatory agencies, trade associations, environmental groups, the 
United States military, and others. The EPA has carefully considered 
the comments and has made changes to the proposed rule where determined 
by the Administrator to be appropriate. The most significant comments 
and responses are discussed in section V of this preamble. A detailed

[[Page 48855]]

discussion of all significant comments and responses on the rule itself 
can be found in the architectural coatings BID, which is referenced in 
the ADDRESSES section of this preamble.
    A separate document in today's Federal Register contains a summary 
of public comments and the EPA's responses regarding the section 183(e) 
study, the Report to Congress, the list of consumer and commercial 
product categories selected for regulation, and the schedule for 
regulation.

IV. Summary of Impacts

A. Environmental Impacts

1. VOC Reductions
    The standards will reduce nationwide emissions of VOC from 
architectural coating products by an estimated 103,000 Mg/yr (113,500 
tpy). These reductions are compared to the 1990 baseline emissions 
estimate of 510,000 Mg/yr (561,000 tpy). This reduction equates to a 
20-percent reduction, compared to the emissions that would have 
resulted in the absence of these standards.
2. Health Effects
    Because VOC are precursors to ozone formation, the VOC reductions 
from architectural coatings will contribute to a decrease in adverse 
health effects that result from exposure to ground-level ozone. These 
health effects result from short-term or prolonged exposure to ground-
level ozone and include respiratory symptoms, effects on exercise 
performance, increased airway responsiveness, increased susceptibility 
to respiratory infection, increased hospital admissions and emergency 
room visits, and pulmonary inflammation. Available information also 
suggests that long-term exposures to ozone may cause chronic health 
effects (e.g., structural damage to lung tissue and accelerated decline 
in baseline lung function).
3. Secondary Air, Water, and Solid Waste Impacts
    No significant adverse secondary air, water, or solid waste impacts 
are anticipated from compliance with these standards. Generally, 
coating reformulation, a pollution prevention technique, will be used 
to comply with these standards. In cases where conversion from 
solventborne to waterborne coatings is the method used to achieve 
compliance, an increase in wastewater discharge may occur if waste from 
the manufacture of waterborne coatings is discharged by manufacturers 
to publicly owned treatment works. The provisions for recycling of 
coatings in the rule may potentially reduce the amount of coating 
discarded as solid waste.
    The regulations do not impact existing product inventories. 
Products manufactured before the compliance deadline are not affected. 
Excluding existing product inventories from the regulations will 
eliminate any incremental solid waste increase due to discarded, unsold 
products. The new products are not expected to require any more 
packaging than existing products, and thus the volume of discarded 
packaging should not increase.

B. Energy Impacts

    The EPA anticipates that there will be no increase in national 
annual energy usage as a result of this rule. The standards do not 
require the use of air pollution control devices, which can affect 
energy use.

C. Cost and Economic Impacts

    Sixty-four percent of the products included in the 1990 industry 
survey meet the VOC content limits in this rule and, therefore, there 
will be no costs to reformulate these products. The manufacturer of an 
architectural coating that does not meet the VOC content limits in 
table 1 of this subpart, will be required to reformulate the product if 
it will continue to be marketed, unless the manufacturer chooses to use 
an alternative compliance mechanism such as the exceedance fee or 
tonnage exemption provisions. The EPA presumes that manufacturers will 
choose the option that is most advantageous to them, but each option 
imposes costs, some of which will be passed on to consumers in the form 
of moderately higher prices and some of which will be borne directly by 
the manufacturers.
    The cost for reformulating noncompliant products depends on the 
level of effort required to develop a new product (e.g., research and 
development and market testing expenditures) and how these expenditures 
are incurred over time. Based on comments received at proposal and the 
original data presented at proposal, the EPA revised its estimate of 
the cost to reformulate a product from a lump-sum initial investment of 
$250,000 to $87,000 (in 1991 dollars), which is annualized to an upper 
bound value of $14,570 per reformulation (see Section V. M of this 
preamble for further discussion). Although variations are likely to 
exist, for purposes of this analysis, this reformulation cost estimate 
is assumed to be the same for all product types and variations, so the 
value is independent of VOC content and the annual sales volume of the 
product. Other costs and cost savings associated with reformulation are 
likely, but could not be quantified. These costs are discussed 
qualitatively in the EIA. Reformulation costs are direct costs imposed 
on manufacturers of noncompliant products. Based on public comments, 
the EPA found that in the traffic markings category, the user of the 
coating may have to modify technology or purchase new equipment to 
apply the coating. This additional cost is not considered a direct 
impact because it occurs as a result of restrictions on coating 
manufacturers, but the cost is borne by the user of the coating rather 
than the manufacturer. Nevertheless, the EPA examined the indirect 
impacts of this category because the changed equipment costs are so 
directly related to the change of formulation. The EPA estimates that 
changes in traffic marking equipment may cost up to $3 million annually 
(in 1991 dollars). For other regulated categories, it is not 
anticipated that new equipment or other indirect costs will be incurred 
to apply compliant coatings.
    Based on the information above, implementation of this regulation 
is estimated to result in national annualized costs of approximately 
$25.6 million (in 1991 dollars). (For the benefit of readers, this 
value is equivalent to approximately $29 million in 1996 dollars.) This 
estimate includes $0.6 million in costs for manufacturers and importers 
that the EPA anticipates will take advantage of the alternative 
exceedance fee compliance provision. The rule does not impose 
monitoring requirements (and associated costs), but ensures compliance 
through recordkeeping, reporting, and labeling requirements. The annual 
cost for these requirements is expected to be approximately $2.5 
million. Therefore, the EPA estimates the total cost associated with 
the rule to be $28 million per year (1991 dollars) (or $32 million in 
1996 dollars). In comparison, the 1991 value of shipments for this 
industry was $6.3 billion. Thus, the estimated costs amount to roughly 
0.4 percent of the baseline revenues for this industry.
    The estimated cost-effectiveness of the rule is $270 per megagram 
($250 per ton) of VOC emission reduction. This cost per megagram of VOC 
emission reduction makes the architectural coatings rule an 
economically efficient means of obtaining VOC emission reductions, when 
compared to the cost per megagram of reduction potentially available 
through other control measures. As a result of the costs discussed 
above, the EPA anticipates

[[Page 48856]]

that the average change in market prices and output across all market 
segments are minimal, with an average estimated impact of less than 
one-tenth of 1 percent of baseline values.
    The EPA believes the estimates of total cost and associated 
economic impacts are conservatively high. Since the best available data 
on VOC content of architectural coatings is from 1990, and the final 
rule has VOC content requirements similar to State rules which have 
been enforced since 1990, the EPA believes the estimated number of 
reformulations and/or their reformulation cost that result from this 
action may be overstated in that the compliant products developed by 
manufacturers to comply with various State rules can be used to meet 
the requirements of the Federal rule. The EIA also takes a conservative 
approach to several assumptions to produce an upper bound estimate of 
social cost.

V. Significant Comments and Changes to Proposed Standards

    A complete summary of public comments on the architectural coatings 
rule and the EPA's responses are presented in the Architectural 
Coatings BID, as referenced in the ``ADDRESSES'' section of this 
preamble. The EPA received many comments addressing a wide variety of 
issues in the proposed rule for architectural coatings. After careful 
consideration of these comments, the EPA has made a number of changes 
to the proposed rule. The major changes made to the rule since proposal 
include: (1) clarification of the definitions of ``architectural 
coating,'' ``coating,'' ``importer,'' ``manufacturer,'' and ``paint 
exchange,'; (2) addition of definitions for ``imported'' and 
``manufactured,'; (3) clarification of which standards apply to 
overlapping coating categories; (4) changes to the definitions and VOC 
content limits for certain categories; (5) addition of certain new 
coating categories; (6) addition of the exceedance fee provision; (7) 
deletion of the variance provisions; (8) addition of an exemption for 
prescribed quantities of coatings (tonnage exemption); (9) addition of 
administrative provisions; and (10) reorganization and reformatting of 
the rule for clarity.
    The following sections of the preamble discuss the most significant 
issues raised by commenters and the EPA's responses to them.

A. National Rule Versus Control Techniques Guidelines

    The EPA requested comment on whether and how a CTG approach would 
be as effective as a national rule in reducing VOC emissions from 
architectural coatings in ozone nonattainment areas. Section 183(e) of 
the Act authorizes the Administrator to issue a CTG in lieu of a 
national rule if the CTG will be substantially as effective in reducing 
VOC emissions in ozone nonattainment areas.
    Over 20 commenters stated that they support a national 
architectural coatings rule. Commenters who supported a national rule 
with VOC content limits stated that complying with a single uniform 
regulation would be less burdensome, and more cost-effective than 
complying with many different standards in different States. Commenters 
also stated that small manufacturers and importers are less likely to 
have the resources necessary to produce different lines of products to 
meet varying standards for different areas of the country. Furthermore, 
many commenters pointed out that coatings are widely distributed and 
easily transported from attainment areas to nonattainment areas. 
Therefore, regulating products only in nonattainment areas would be a 
less effective strategy, and a more difficult one to enforce.
    Seven commenters stated that they support a CTG in lieu of a 
national rule. Commenters favoring a CTG generally contended that 
section 183(e) targets VOC emissions in nonattainment areas, and that a 
national rule is not warranted. The commenters stated that a CTG would 
be more appropriate since issuance of a CTG requires States to 
implement standards only in nonattainment areas. According to these 
commenters, allowing coatings manufactured or imported in attainment 
areas to remain unregulated would provide market niches for small 
manufacturers and importers. Some commenters also argued that consumers 
in attainment areas should not have to forego the alleged benefits of 
higher VOC content coatings.
    Several commenters noted that, even with implementation of a 
national rule, States can promulgate more stringent standards. 
Therefore, even a national rule does not ensure uniform nationwide VOC 
standards. Some commenters urged cooperation and discussion between the 
EPA and States that consider implementing standards more stringent than 
the national rule.
    The EPA has concluded that a national rule is the more effective 
approach for reducing emissions from architectural coatings for the 
following reasons. First, the EPA believes that a national rule is an 
appropriate means to reduce emissions from products that are, by their 
nature, easily transported across area boundaries, and many are widely 
distributed and are used by widely varied types of end-users. For many 
such products, the end-user may use them in different locations from 
day-to-day. Because the products themselves are easily transportable, a 
national rule would preempt opportunities for end-users to purchase 
such consumer and commercial products in attainment areas and then use 
them in nonattainment areas, thereby circumventing the regulations and 
undermining the decrease in VOC emissions in nonattainment areas. The 
EPA, therefore, believes that a national rule with applicability to 
products, regardless of where they are marketed, is a reasonable means 
to ensure that the regulations result in the requisite degree of VOC 
emission reduction.
    Second, the EPA believes that national rules with nationwide 
applicability may help to mitigate the impact of ozone and ozone 
precursor transport across some area boundaries. Recent modeling 
performed by the OTAG and others suggests that in some circumstances 
VOC emitted outside nonattainment area boundaries can contribute to 
ozone pollution in nonattainment areas, for example, by traveling into 
neighboring nonattainment areas. The EPA has recognized the potential 
for VOC transport in the December 29, 1997, ``Guidance for Implementing 
the 1-hour Ozone and Pre-Existing PM10 NAAQS'' concerning 
credit for VOC emission reductions towards rate-of-progress 
requirements. The guidance indicates that the EPA may give credit for 
VOC reductions within 100 kilometers of nonattainment areas. In 
addition, the June 1997 recommendations made by OTAG supported the 
EPA's use of VOC regulations that apply to both nonattainment and 
attainment areas to implement section 183(e) of the Act for certain 
products. The particular product categories OTAG cited for national VOC 
regulations are automobile refinish coatings, consumer products, and 
architectural coatings. The EPA believes that regulation of products in 
at least some attainment areas is necessary to mitigate VOC emissions 
that have the potential to contribute to ozone nonattainment in 
accordance with section 183(e) of the Act.
    Based on these considerations, and considerations of the 
effectiveness and enforceability of emission controls, the EPA has 
determined that a CTG for architectural coatings would not be 
substantially as effective as a national rule in reducing VOC emissions 
in ozone nonattainment areas.

[[Page 48857]]

    A major trade association representing many architectural coating 
manufacturers provided comments supporting a national rule that applies 
to all areas as the most efficient regulatory mechanism from the 
perspective of marketing and distribution of products. In addition, 
comments from a number of small and large manufacturers favored a 
national rule to encourage uniformity in regulation from State to 
State, and thereby minimize significant costs and burdens associated 
with understanding and meeting differing State and local requirements.
    The EPA also received some comments suggesting that a national rule 
apply only in nonattainment areas. The EPA believes that rules 
applicable only in nonattainment areas would be unnecessarily complex 
and burdensome for many regulated entities to comply with and for the 
EPA to administer. The potentially regulated entities under section 
183(e) are the manufacturers, processors, wholesale distributors, or 
importers of consumer and commercial products. For these three product 
categories, EPA believes that regulations that would differentiate 
between products destined for attainment and nonattainment areas should 
adequately insure that only compliant products go to nonattainment 
areas. For such a rule to be effective, EPA believes that this would 
necessitate requiring regulated entities to track their products and 
control their distribution, sale, and ultimate destination for use to 
insure that only compliant products go to nonattainment areas. The EPA 
notes that for architectural coatings, regulated entities do not 
currently track or control distribution of their products once they 
sell them to retail distributors. Although the EPA recognizes that some 
product lines in some product categories may only be distributed 
regionally in areas that are already in attainment, the large majority 
of the product lines will be distributed nationally. Regulations 
targeted only at nonattainment areas could, thus, impose significant 
additional burdens upon regulated entities to achieve the goals of 
section 183(e).
    By comparison, existing State regulations in some instances apply 
to a broader range of entities, including retail distributors and end-
users. Given the limitations of section 183(e) as to regulated 
entities, the EPA believes that regulations applicable to both 
attainment areas and nonattainment areas is a reasonable means to 
ensure use of complying products where necessary, while avoiding 
potentially burdensome impacts and less reliable mechanisms to achieve 
the goals of section 183(e).
    The EPA expects a national VOC rule for architectural coatings to 
encourage uniformity in requirements across the country. Many States 
may choose to rely on the EPA rule rather than adopt their own 
requirements. The EPA's consideration of this factor, however, is not 
meant to imply that it would be inappropriate for States to develop 
more stringent levels of controls where necessary to attain the ozone 
standard. Some States, particularly those with long-standing and 
significant nonattainment problems, may need additional emission 
reductions to achieve attainment of the NAAQS and may need to adopt or 
maintain more stringent requirements for consumer products like 
architectural coatings in order to help reach attainment of the ozone 
NAAQS. The final rule has been amended to include provisions in 
Sec. 59.410, State authority, to clarify that States are not restricted 
by this rule in establishing and enforcing their own additional 
standards and limits.
    The consultation provisions of section 183(e)(9) of the Act are 
designed to promote uniformity in such cases where States or local 
areas need to adopt requirements other than those promulgated by the 
EPA. Section 183(e)(9) requires the EPA to provide relevant information 
and studies requested by any State. The EPA expects such consultation 
and cooperation to result in States developing options for regulation 
that will be compatible with other States and with the national 
standards. The EPA considers a national VOC rule an important element 
in promoting consistency among architectural coating standards.

B. Applicability and Regulated Entities

1. Subject Coatings
    The EPA received several comments requesting clarification 
regarding the definition of ``coating'' and what particular coatings 
are subject to the architectural coatings rule. The EPA has modified 
the definition of ``coating'' so that it no longer defines a coating as 
an application that creates a film when applied. The revised definition 
states that a coating is a ``material applied onto or impregnated 
into'' a substrate. The EPA did not intend to limit rule applicability 
to film-building products.
    Commenters questioned whether coatings recommended for both 
architectural uses and non-architectural uses would be subject to the 
rule. The commenters also questioned whether shop-applied and factory-
applied coatings would be subject. Additional commenters requested 
clarification as to whether adhesives are subject to the rule.
    The architectural coatings rule applies to coatings ``recommended 
for field application to stationary structures and their appurtenances, 
to portable buildings, to pavements, or to curbs.'' Therefore, the rule 
does not apply to coatings that are marketed solely for shop 
application, such as in a manufacturing setting, or coatings marketed 
solely for application to non-stationary structures, such as aircraft 
and ships. However, a coating that is recommended by the manufacturer 
or importer for use as an architectural coating is subject to the 
architectural coatings rule even if the coating is also recommended for 
non-architectural uses. The fact that a coating regulated by the 
architectural coatings rule may also be subject to other rules with 
different requirements does not alter the manufacturer's or importer's 
obligation to meet the requirements of the architectural coatings rule.
    The EPA did not intend to regulate adhesives of any kind in the 
architectural coatings rule. The EPA intends to regulate industrial 
adhesives as a separate product category under section 183(e) 
authority.
    To clarify the EPA's intent regarding what products are covered by 
this final rule, the definition of architectural coating has been 
revised to exclude adhesives and coatings recommended solely for shop 
application or for application to non-stationary structures. For 
additional clarity, definitions of ``adhesive'' and ``shop 
application'' have also been added to the final rule.
    The EPA has added definitions of ``imported'' and ``manufactured'' 
to the final rule to clarify the point at which an architectural 
coating becomes subject to the requirements in the rule. The final rule 
also includes additional language in the definitions of ``importer'' 
and ``manufacturer'' to clarify that all divisions of a company, 
subsidiaries, and parent companies are considered to be a single 
importer or manufacturer for the purpose of this rule.
2. Regulation of Processors
    Section 183(e)(1)(C) of the Act allows the regulation of processors 
of consumer and commercial products. For the proposed architectural 
coatings rule, the EPA considered regulating processors as well as 
manufacturers and importers. ``Processors'' would be defined as 
individuals who add organic thinner to coatings in a commercial or 
industrial setting at the point of application. The EPA's concern was 
to provide a means

[[Page 48858]]

to enforce against thinning of coatings beyond manufacturers' 
recommendations. Thus, the EPA considered a provision to prohibit an 
applicator from using organic solvents to thin a coating beyond the 
manufacturer's recommendation.
    In the proposal preamble (61 FR 32737), the EPA requested comment 
on the possible regulation of processors under the architectural 
coatings rule. Commenters generally opposed the regulation of 
applicators, arguing that: (1) over-thinning is not likely to occur 
since the proposed VOC content limits are reasonable; (2) rules 
promulgated under section 183(e) of the Act are not intended to apply 
to end-users or applicators; and (3) restrictions on thinning at the 
point of application would be difficult to enforce. The commenters 
stated that the term ``processors'' was intended to mean entities that 
repackage coating materials or further enhance finished products before 
they are offered for sale to end-users.
    The final rule does not include processors as a regulated entity. 
The EPA believes that end-users' compliance with thinning restrictions 
for architectural coatings would be difficult to enforce in practice. 
Instead, the EPA has determined that it will be more effective to guard 
against excessive VOC emissions from thinning by taking into account 
the amount of thinning in advance. Thus, the final limits are expressed 
as VOC content of coating ``thinned to the manufacturer's maximum 
recommendation.'' The EPA believes that these limits provide adequate 
assurance that compliant coatings will be manufactured to perform 
optimally with recommended thinning. Regulation of processors would not 
add significantly to the effectiveness of the rule.

C. General Comments on Determination of Best Available Controls

    Many commenters provided general comments on the overall stringency 
of the VOC content limits in the proposed rule. One group of 
commenters, composed mainly of manufacturers and trade organizations 
representing coating users and manufacturers, stated that the VOC 
content limits in the proposed rule represent BAC and are 
technologically and economically achievable. One of these commenters, 
representing a national association of coating manufacturers, stated 
that the proposal recognized the need for solventborne coatings in 
certain specialty areas, as well as in some more general usage 
categories, and adequately addressed the fact that the same coating 
must be able to perform in all regions and climates of the United 
States. Another commenter, representing a national association of 
coating users, stated that the proposed limits fit squarely within 
current technologies and are consistent with various existing State 
regulations. And finally, a commenter representing another national 
trade association of coating users, stated that the proposed table of 
VOC content limits will not significantly increase construction costs 
and will not appreciably reduce coating performance.
    A second group of commenters, mainly composed of individual State 
regulatory agencies, organizations of State and regional regulatory 
agencies, and environmental groups, stated that they did not support 
the VOC content limits in the rule because they believe they are too 
lenient. Two of the commenters, representing environmental groups, 
contended that the EPA's BAC determination did not include 
consideration of lower VOC coatings that have been developed since 
1990. Several of the commenters cited the existence of more stringent 
State and local architectural coating regulations that have been in 
place for many years as evidence that the proposed limits do not 
represent BAC. Several of the commenters added that the proposed rule 
falls short of State VOC reduction goals and may result in the States 
adopting more stringent control measures for this source category and 
for other source categories. The majority of the commenters in this 
group supported an alternative, more stringent, table of VOC content 
limits submitted by one of the commenters. (The commenter also 
suggested a second phase of limits that would take effect in the 
future. For comments and responses regarding the suggested second phase 
of limits, see section V.P of this preamble). The alternative table 
contains more stringent limits for several categories and would achieve 
a 30-percent emission reduction (calculated on a solids basis). The 
more stringent VOC content limits in the table are based on the 1989 
California Air Resources Board Suggested Control Measure.
    Finally, a third group of commenters, composed mainly of coating 
manufacturers, did not support the limits in the rule because they 
believe they are too stringent. These commenters stated that low-VOC 
products (i.e., products meeting the proposed standards) do not perform 
as well as higher-VOC (non-compliant) products. These commenters 
claimed that low-VOC coatings are too thick and require considerable 
thinning to apply, are less durable and require more frequent 
repainting, and exhibit poor gloss properties. Two of the commenters 
explained that these performance problems could result in more 
emissions, rather than less. Two of the commenters stated that 
available paint raw materials are not adequate to reformulate every 
non-compliant coating the paint industry offers and still meet customer 
performance requirements. One commenter stated that the proposed rule 
will require a massive reformulation of products in the paint and 
coating industry. The commenter claimed that some organizations were 
supporting lower limits based on improper data or based on 
environmental conditions that do not represent circumstances in other 
areas.
    The EPA believes that the final rule represents BAC. Best available 
control is ``the degree of emissions reduction that the Administrator 
determines on the basis of technological and economic feasibility, 
health, and energy impacts, is achievable.'' In developing the rule, 
the EPA considered many factors in evaluating the economic and 
technological feasibility of different VOC content levels and different 
degrees of product reformulation. These factors included: (1) limits in 
State/local regulations; (2) coating VOC content and sales information; 
(3) performance considerations; (4) cost considerations; and (5) market 
impacts.
    The sources of information for these factors included: (1) pre-
proposal letters; (2) the 1992 industry survey (collected 1990 data); 
(3) public comments on the proposed rule; (4) follow-up discussions 
with commenters to gather additional technical information; (5) State/
local regulations and pre-proposal discussions with State/local 
regulators; (6) input from coating manufacturers and other 
stakeholders; and (7) EPA expertise. Considering all these factors, the 
EPA concluded that the VOC content limits in table 1 of the rule, along 
with the exceedance fee provisions and the tonnage exemption, represent 
BAC for architectural coatings. The EPA's process for developing BAC 
was described in the proposal preamble (61 FR 32737) and is further 
discussed in the following paragraphs.
Technical Feasibility and Coating Performance Issues
    Throughout development of this rule, there has been debate among 
stakeholders over the degree to which the VOC content in architectural 
coatings can be reduced and on the performance characteristics of low-
VOC coatings. The term ``performance'' refers to the coating qualities 
that are

[[Page 48859]]

acceptable to consumers and that maximize the interval required between 
repainting. Performance is particularly difficult to assess. As 
discussed in the preamble to the proposed rule (61 FR 32738), these 
acceptable qualities can vary significantly depending on the consumer 
and the coating category. There is no consensus within the 
architectural coatings industry on standards by which to evaluate 
acceptable coating performance. Therefore, the EPA requested comment on 
the technological feasibility of the limits in the proposed table of 
standards and on performance issues. The proposal requested 
documentation, tests, and factual evidence to support or refute claims 
about performance and the technological feasibility of low-VOC systems.
    The EPA evaluated all data that were submitted by commenters 
pertaining to the feasibility of the rule and sought additional 
information that was reasonably available. In evaluating the degree of 
emission reduction that represents BAC, the EPA took into consideration 
that these requirements would apply to all areas of the country and to 
all manufacturers and importers of architectural coatings within a 
specific time frame (i.e., approximately 1 year from promulgation). 
Based on the public comments received, a number of changes were made to 
the proposed rule. These changes are discussed in section 2.2.4 of the 
BID (Coating Categories and VOC Content Limits). In some cases, 
commenters claimed that the rule is not feasible or does not represent 
BAC, but provided no data to support the general claim. In such cases, 
the EPA sought additional information that was reasonably available and 
considered the comments in the context of the overall BAC decision, but 
often found no basis for making substantive changes to the proposed 
rule.
Relationship of BAC to State and Local Regulations
    State and local regulations were one of the primary factors used by 
the EPA to develop BAC. As stated in the proposal preamble (61 FR 
32737), State and local architectural coating requirements were used 
prior to proposal as a starting point in determining ``what categories 
and associated VOC limits might constitute the degree of emissions 
reduction that represents BAC.'' After proposal, the EPA used State and 
local architectural coating requirements as a primary factor in the 
evaluation of public comments on the proposed VOC content limits.
    However, the EPA does not agree with commenters who believe that, 
at a minimum, BAC for the national rule should be equivalent to or more 
stringent than the lowest emission limits that exist in any State 
regulation (as presented in a table of standards by one commenter). In 
the development of a national rule under section 183(e), the EPA has 
the obligation to determine that the emission limits are 
technologically and economically feasible on a national scale. State 
and local VOC limits are based on coating performance under the local 
meteorological conditions and patterns of coating demand, some of which 
may be very different than in other locations. Moreover, based on local 
air quality and existing regulatory programs, a State or local agency 
may set rules based on a balancing of technological, economic, and 
environmental factors that might differ from the balance appropriate 
for a national rule.
    Therefore, the EPA departed from the State and local requirements 
where other factors, such as information on VOC content and sales, 
performance, costs, and market effects indicated that the limits were 
not technologically or economically feasible on a national scale.
The Role of the Exceedance Fee and Tonnage Exemption in BAC
    While the EPA believes that the technology exists to meet the 
limits in table 1 of this subpart, some manufacturers may need more 
time beyond the compliance deadline to obtain the necessary technology. 
Still other manufacturers may find that reformulation of some of their 
specialty products that are produced in low volume is not cost-
effective. The exceedance fee and tonnage exemption provisions were 
included in the final rule to minimize impacts on the supply of coating 
products and to avoid unnecessary impacts upon small manufacturers. The 
exceedance fee (discussed in section 2.4 of the BID) is intended to 
allow manufacturers and importers additional time to develop low-VOC 
formulations while providing an appropriate economic incentive to 
encourage reformulation. The tonnage exemption (see section 2.2.1.2 of 
the BID) is intended to allow manufacturers and importers the 
flexibility to continue to market certain low-volume product lines 
where reformulation of a specialty product used for unique applications 
may not be cost-effective. The EPA anticipates that use of the tonnage 
exemption and exceedance fee will reduce the potential VOC emission 
reductions of the rule by only a small percentage and that foregoing 
this portion of the reductions to achieve other objectives of the BAC 
analysis is an appropriate balancing of the relevant factors to achieve 
BAC reductions. The EPA believes that all available data indicate that 
the system of regulation adopted in the final rule, consisting of VOC 
content limits, an exceedance fee provision, and a tonnage exemption, 
reflects BAC for the architectural coatings category.
Consideration of New Low-VOC Coatings
    The EPA recognizes that the 1992 industry survey that the EPA used 
as one of the factors for developing BAC collected 1990 data. Although 
the data in this survey are now 7 years old, they still represent the 
most complete set of data for the architectural coatings industry (the 
survey captured approximately 75 percent of the coating volume). In 
addition, the industry survey was only one of the many factors used in 
determining BAC. Information on advances since 1990 were obtained from 
over 300 pre-proposal letters, over 200 public comment letters, over 40 
follow-up telephone calls, and information obtained from State 
regulatory agencies. The EPA believes that the final rule represents 
BAC based on the survey database and other data available to the EPA.
    The EPA acknowledges that there are coating technologies in 
existence with VOC contents lower than those listed in table 1. 
However, section 183(e) of the Act does not require the EPA to set BAC 
at the level of the lowest-VOC product. It requires that the EPA 
determine BAC based on ``the degree of emissions reduction that the 
Administrator determines on the basis of technological and economic 
feasibility, health, and energy impacts, is achievable.'' To determine 
whether a more stringent rule would meet the criteria for BAC, the EPA 
would need to undertake additional study of the recent technological 
developments for the architectural coatings category. As discussed in 
section 2.6 of the Architectural Coatings BID (see ADDRESSES section of 
this preamble), such an additional study is under consideration. 
However, the EPA does not believe it would be appropriate to delay 
issuing this rule to await the results of that additional study.

D. Changes in Proposed Coating Categories

    Several commenters addressed the selection of the coating 
categories to which the rule applies and the VOC content limits for 
specific categories. In response to these comments, the EPA has 
modified the definitions of several

[[Page 48860]]

of the proposed categories and has added seven new coating categories. 
In addition, the EPA has modified the proposed VOC content limits for 
several categories based on information provided by commenters. This 
section of the preamble discusses the changes made to the requirements 
for the proposed coating categories. (The new categories are described 
in section V.E below.) A detailed discussion of all of the comments and 
responses pertaining to the proposed coating categories and their VOC 
content limits is contained in section 2.2.4.3 of the Architectural 
Coatings BID (see ADDRESSES section of this preamble).
    Some commenters suggested changes and clarifications to the 
proposed category definitions. In response to these comments, the EPA 
has changed the definitions of a number of the coating categories. The 
purpose of these changes is to clarify which particular coatings are 
included in these categories.
    There were also many requests to revise the VOC content limits in 
the proposed rule. The EPA contacted many of the commenters, most of 
whom were coating manufacturers, to obtain additional information in 
order to evaluate these requests more fully. Based upon consideration 
of the public comments and additional information obtained since 
proposal, the EPA has changed the VOC content limits where deemed 
appropriate. In addition, the final rule provides a tonnage exemption 
and an exceedance fee option. These provisions provide flexible 
compliance options that accommodate the need for higher VOC contents in 
unique or niche products, and in limited-use products. The significant 
comments and changes made with regard to the VOC content limits are 
discussed in the following paragraphs. The EPA's rationale for each of 
these issues is explained more fully in the Architectural Coatings BID 
(see ADDRESSES section of this preamble).
Roof Coatings and Bituminous Coatings and Mastics
    One commenter, a national trade association of roof coating 
manufacturers, supported the proposed VOC content limits for roof 
coatings (250 grams per liter (g/l)) and for bituminous coatings and 
mastics (500 g/l), and the inclusion of all bituminous coatings in the 
bituminous coatings and mastics category. Another commenter suggested 
reducing the VOC content limit for bituminous coatings and mastics from 
500 g/l to 350 g/l. A third commenter suggested adopting one roof 
coating category that includes bituminous materials at a VOC content 
limit of 300 g/l, consistent with State architectural coating rules. 
This commenter argued that the proposed rule permitted bituminous 
roofing materials to comply with a less stringent limit (500 g/l) than 
other roofing materials (250 g/l) and that this discrepancy afforded an 
unfair competitive advantage to the bituminous roofing products.
    The EPA reviewed its basis for establishing the proposed category 
for bituminous coatings and mastics and VOC content limit of 500 g/l 
and has decided to retain this category and limit in the final rule. 
The EPA reviewed information submitted by a national trade association 
comprised of 60 bituminous and nonbituminous coatings manufacturers and 
suppliers, before proposal (Docket Item No. II-D-56), regarding the 
composition, specialized manufacture, performance, and use limitations 
of these coatings. According to this information, a significant portion 
of these coatings are needed for repair and maintenance of existing 
roofs as well as for installing new roofing systems. The trade 
association pointed out that waterborne bituminous coatings and mastics 
are not practical in almost all of the applications where solventborne 
bituminous coatings and mastics are used and that coating performance 
comparisons between waterborne and solventborne bituminous coatings and 
mastics range from good to very poor, depending on conditions. Another 
national trade association for roofing contractors, which has over 
3,000 members represented in all 50 States, argued that there is no 
viable alternative to solventborne bituminous coatings in many 
circumstances and pointed to bituminous primers as an example of this. 
According to this trade association, if the VOC content limit were 
reduced by any significant amount in these primers, the adhesion 
properties, the application process, and the life of the roof would 
suffer dramatically. Therefore, in order to satisfy performance 
requirements of bituminous coatings and mastics nationwide, the EPA has 
retained this category with a VOC content limit of 500 g/l in the final 
rule.
    With respect to the comments on the separate category for roof 
coatings, the EPA has decided to retain the category as proposed. 
Although there are several State architectural coating rules that have 
a VOC content limit of 300 g/l for roof coatings, the EPA believes that 
the national Roof Coatings Manufacturers Association's support (Docket 
Item No. IV-D-181) of the proposed VOC content limit for roof coatings 
at 250 g/l provides persuasive evidence that this limit is achievable 
nationwide. Therefore, the EPA has retained the VOC content limit of 
250 g/l for roof coatings in the final rule.
Concrete Curing Compounds
    Several commenters commented on the proposed VOC content limit of 
350 g/l for concrete curing compounds, which are used predominantly in 
highway construction. Seven commenters stated that the proposed limit 
for concrete curing compounds is achievable based on existing 
technology, and one of these commenters maintained that the limit could 
be lowered to 300 g/l. On the other hand, one commenter took issue with 
the achievability and performance at the proposed limit of 350 g/l. The 
latter commenter suggested a VOC content limit of 625 g/l for this 
category, arguing that the proposed limit would eliminate most concrete 
curing membranes from the market, and that many companies do not sell 
curing compounds in States that have the 350 g/l limit.
    In addition to consideration of these comments, the EPA reviewed 
the VOC content limits for this category in State rules. Several 
States, including Arizona, California, Massachusetts, New Jersey, and 
New York have had a VOC content limit of 350 g/l for concrete curing 
compounds for several years. The availability of compliant products in 
these States suggests that the limits are achievable, notwithstanding 
that not all manufacturers have chosen to market in those States. Based 
on the information provided by the commenters in favor of the proposed 
limits and upon the existing State rules, the EPA has concluded that 
the proposed VOC content limit of 350 g/l for concrete curing compounds 
is technologically achievable and has retained this limit in the final 
rule.
Graphic Arts Coatings
    Two commenters indicated concern about the performance of shop-
applied graphic arts coatings at the proposed VOC content limit of 500 
g/l. One commenter's specific concerns with coatings at this level 
included difficulty in achieving variation in gloss levels, variation 
in the required drying times in the drying room (implying shop-applied 
coatings), need for greater application amounts, and higher costs. 
Graphic arts coatings recommended by the manufacturer solely for shop 
applications are not required to meet the 500 g/l VOC content limit. As 
discussed earlier, the EPA has revised the definition of architectural 
coating to

[[Page 48861]]

clarify that coatings recommended by the manufacturer solely for shop 
application are not subject to the rule. In addition, the definition of 
graphic arts coatings has been modified by removing the reference to 
in-shop coatings, and a definition of ``shop application'' has been 
added to the rule.
    Based on a review of the 1990 VOC emission inventory survey and 
State architectural coating rules, the EPA determined that the 500 g/l 
VOC content limit for field-applied graphic arts coatings should not be 
changed.
Shellac--Clear
    Two commenters requested that the EPA raise the VOC content limit 
for clear shellac from the proposed level of 650 g/l to 730 g/l. The 
commenters requested the higher level to accommodate the degree of 
thinning required for certain uses of shellac to meet performance 
specifications. According to information provided by one commenter, the 
elevated cost and limited availability of shellac (referring to 
secretions of the lac beetle) minimize the potential use of this 
product.
    Based on a review of State architectural coating rules, which limit 
clear shellac VOC content to 730 g/l, and the information provided by 
the commenters, the EPA has raised the VOC content limit for clear 
shellac from 650 g/l to 730 g/l.
Nuclear Coatings
    Four commenters objected to the proposed 420 g/l VOC content limit 
for nuclear coatings, in light of the 450 g/l limit for industrial 
maintenance coatings. The commenters pointed out that nuclear coatings 
must meet more exacting performance specifications (set by the Nuclear 
Regulatory Commission) than industrial maintenance coatings and, 
therefore, should not be subject to a more stringent VOC content limit. 
One commenter was also concerned that the proposed limit offered no 
flexibility for cold weather thinning as provided in the Shipbuilding 
and Ship Repair (Surface Coating) National Emission Standards for 
Hazardous Air Pollutants (NESHAP) for this category.
    The EPA agrees that the nuclear coatings category VOC content limit 
should not be more stringent than the VOC content limit for industrial 
maintenance coatings since nuclear coatings are subject to some of the 
same extreme environmental conditions as industrial maintenance 
coatings, and must also meet further specifications and rigorous 
requirements of the Nuclear Regulatory Commission. The nuclear coatings 
category is intended to include coatings manufactured for use at 
nuclear facilities to ensure operational safety, and the definition 
requires that these coatings meet various testing requirements. The EPA 
expects that a limited amount of coatings will be affected by this 
change due to the various testing requirements to qualify for 
classification in this category and the limited number of nuclear 
facilities where such coatings are used. Also, as pointed out in the 
proposal preamble (61 FR 32739), this is one of 17 specialty coating 
categories that did not appear in existing State architectural coating 
rules, and no data were collected in the 1990 VOC emissions inventory 
survey. In consideration of performance specifications for this 
category and the need to allow for thinning, the EPA has raised the VOC 
content limit for the nuclear coatings category to 450 g/l. This limit 
is the same as the limit for industrial maintenance coatings.
Antifouling Coatings
    Two commenters requested a higher VOC content limit for the 
antifouling coating category (400 g/l proposed), and one of these 
commenters specifically requested that the EPA increase the level to 
450 g/l. One of the commenters indicated that antifouling architectural 
coatings are generally not applied at fixed installations where 
painting conditions are more easily controlled, and that a thinning 
allowance should be included to accommodate application of the coating 
in cold weather.
    The EPA agrees with the commenters that the limit for antifouling 
coatings should be raised to allow for cold weather thinning. Also, 
similar to nuclear coatings, these coatings are subject to some of the 
same extreme environmental conditions as industrial maintenance 
coatings and must meet other rigorous requirements, such as those under 
the FIFRA. Moreover, this is one of 17 specialty coating categories 
that did not appear in existing State architectural coating rules, and 
no data were collected in the 1990 VOC emissions inventory survey. 
Therefore, the EPA believes a low volume of coatings will be affected 
by a change to the proposed limit. The final rule specifies a VOC 
content limit of 450 g/l for this category.
Floor Coatings
    One commenter suggested that the EPA either add an exemption 
paragraph to clarify that floor coatings that meet the definition for 
industrial maintenance coatings are subject to the industrial 
maintenance coating VOC content limit of 450 g/l or specify that the 
floor coating category applies to floor coatings intended for 
residential use. The commenter believed that high performance floor 
coatings cannot achieve the 400 g/l VOC level proposed for floor 
coatings. Although the commenter reportedly has developed lower-
performing systems that meet the 400 g/l level, the commenter stated 
that they are not acceptable for all applications.
    Two commenters recommended that opaque floor paint be regulated at 
a 400 g/l VOC level. However, one of these commenters requested 
clarification of whether the floor coating category included clear 
floor finishes, such as varnishes.
    The EPA has retained the floor coatings category, with a modified 
definition, and VOC content limit of 400 g/l as proposed. The floor 
coatings category includes opaque coatings that have a high degree of 
abrasion resistance that are formulated for application to flooring, 
including but not limited to decks, porches, and steps in a residential 
setting. The EPA did not intend to include floor coatings that meet the 
definition of industrial maintenance coatings under the floor coating 
category. The definition of floor coating has been changed to specify 
that it applies to floor coatings intended for use in a residential 
setting. Thus, floor coatings that meet the definition of industrial 
maintenance coatings are subject to only the industrial maintenance 
coating category limit of 450 g/l.
    Based on information from commenters, the EPA agrees that opaque 
floor coatings should be subject to the 400 g/l limit as proposed. 
However, clear varnishes that may be recommended for use as floor 
coatings are subject to the VOC content limit of 450 g/l for clear 
varnishes. An exception paragraph has been included in Sec. 59.402 of 
the rule to clarify this category overlap.
Waterproofing Sealers and Treatments
    Eight commenters provided assessments of the achievability of the 
proposed VOC content limit for waterproofing sealers and treatments. 
Five commenters suggested that the EPA raise the VOC content limit, and 
two commenters suggested that the EPA lower it. One commenter 
maintained that there is no need to distinguish between clear and 
opaque waterproofing sealers and treatments (600 g/l and 400 g/l, 
respectively) in the rule since many opaque sealers penetrate the 
substrate and perform the same function as clear sealers. This 
manufacturer requested a VOC content limit of 700 g/l for all 
waterproofing sealers and treatments and explained that this level 
would still

[[Page 48862]]

require reformulation of existing technologies. Another manufacturer 
has reported that it has not been successful in reformulating to meet 
the 600 g/l level for clear waterproofing sealers and treatments. On 
the other hand, one manufacturer strongly encouraged the EPA to adopt a 
lower VOC content limit of 350 g/l applicable to both clear and opaque 
waterproofing sealers and treatments based on the VOC content of its 
products, which are available now in the marketplace. Another commenter 
agreed that the proposed levels for waterproofing sealers are 
technologically and economically feasible.
    Based on evaluation of the comments and a review of survey data and 
State architectural coating regulations, the EPA has combined the clear 
and opaque waterproofing treatment sealer categories into one category 
with a VOC content limit of 600 g/l. The EPA agrees that there is no 
need to distinguish between clear and opaque waterproofing sealers and 
treatments since many opaque sealers penetrate the substrate and 
perform the same function as clear sealers. The EPA believes that, 
based on information provided by these commenters/manufacturers, the 
appropriate limit for this combined category is 600 g/l. Before 
proposal, industry representatives (Docket Item No. III-B-1) argued 
that multipurpose waterproofing sealers at 400 g/l do not meet minimum 
performance criteria for clear waterproofing sealers (that is, 60-
percent water repellency for wood and 1 percent or less water 
absorption for brick). The representatives stated that 400 g/l products 
are high-solids products that may leave an oily residue or cause 
darkening of the surfaces to which they are applied and, thus, product 
performance may not meet industry standards. Combining clear and opaque 
waterproofing treatment sealers into one category is consistent with 
all existing State rules, which do not divide the category into clear 
and opaque waterproofing sealers and treatments. The State 
architectural coating VOC content limits for waterproofing sealers and 
treatments are either 400 g/l (for example, Arizona and California) or 
600 g/l (Massachusetts, New Jersey, and New York).

E. Addition of New Coating Categories

    The EPA received requests to establish 20 new coating categories in 
the final rule. In response to these comments, the EPA has established 
seven new categories: (1) calcimine recoaters; (2) concrete surface 
retarders; (3) concrete curing and sealing compounds; (4) conversion 
varnishes; (5) zone markings; (6) faux finishing/glazing; and (7) stain 
controllers. The EPA also evaluated requests, but did not establish new 
categories, for the following coatings: (1) adhesion promoters; (2) 
asbestos and lead-based paint encapsulation; (3) concrete/masonry 
conditioners; (4) porcelain repair coatings; (5) marine/architectural 
coatings; (6) alkali-resistant primers; (7) tung oil finishes; (8) 
lacquer stains; (9) elastomeric high performance industrial finishes; 
(10) low solids coatings; (11) oil-modified urethanes; (12) 
thermoplastic (treatment) sealers; and (13) zinc-rich coatings. In 
general, new categories were not established for these coatings because 
the EPA determined that it is technologically and economically feasible 
for coating manufacturers and importers to achieve compliance with the 
rule. Further discussion of the rationale for the EPA's decisions on 
the new categories is contained in section 2.2.4.2 of the Architectural 
Coatings BID referenced under the ADDRESSES section of this preamble.
    In general, the EPA considered creation of new categories if 
commenters submitted information supporting higher VOC content limits 
for such products than the otherwise applicable limits. The EPA 
considered the data submitted by commenters and obtained all reasonably 
available additional data to evaluate these requests. In cases where 
the EPA concluded that the proposed emission limits were not 
achievable, the EPA established a separate category with an appropriate 
emission limit. The following is a discussion of the rationale for each 
of the new coating categories and its VOC content limit.
Calcimine Recoaters
    Under the proposed standards, calcimine recoaters would have been 
subject to the VOC content limit for interior flat coatings (250 g/l). 
However, several commenters stated that calcimine recoaters have a 
higher VOC content of 475 g/l, cannot be reformulated, are low-volume 
coatings, and serve a unique function of recoating water soluble 
calcimine paints. These paints are used in Victorian and Early American 
homes, especially on ceilings. Due to their low density, calcimine 
recoaters do not disbond the existing calcimine ceiling coatings, as 
conventional (250 g/l VOC) high-solids flat alkyd paints would tend to 
do. If a calcimine recoater is not used, the only alternative is to 
remove the existing coating, which is labor-intensive and expensive. 
Because these low-volume coatings reportedly cannot be reformulated, 
their composition is unique, and there is no substitute for these 
products, the EPA has added a separate category for calcimine recoater 
products to the rule with a VOC content limit of 475 g/l.
Concrete Curing and Sealing Compounds
    Under the proposed rule, these coatings would be subject to the 350 
g/l VOC content limit for concrete curing compounds. However, 
commenters presented information not previously considered by the EPA 
demonstrating that compounds designed for curing and sealing, as 
opposed to those designed for curing only, have different technical 
specifications that make it difficult to achieve the 350 g/l level. 
Concrete curing and sealing compounds function as longer term sealers 
that provide protection, aesthetic benefits, and durability in addition 
to curing. Commenters pointed out that there are separate American 
Society for Testing and Materials (ASTM) methods available for each of 
these categories and that ASTM Committee experts and at least two 
government agencies consider them distinct categories with different 
performance requirements.
    Through follow-up phone calls with several concrete curing and 
sealing coating manufacturers, the EPA confirmed that concrete curing 
and sealing products are typically sold at levels much higher than 350 
g/l. While waterborne products below 350 g/l are available, some 
industry representatives cited drawbacks such as poor low-temperature 
performance and stability. Since these products must often be used in 
low-temperature environments, the EPA agrees that the VOC content limit 
should reflect this usage. Therefore, the final rule includes a new 
category for concrete curing and sealing compounds. Based on an 
analysis of VOC content and sales data for these products, the EPA has 
established the VOC content limit at 700 g/l.
Concrete Surface Retarders
    Concrete surface retarders do not fall within any of the proposed 
categories except the general category for interior flat coatings with 
a VOC content limit of 250 g/l. These products are generally used in a 
manufacturing setting at a precast facility, but a small volume of 
products are field-applied. Commenters argued that these products 
cannot meet the 250 g/l level and, furthermore, that they are not 
coatings and should not be subject to the rule. However, they requested 
a VOC content limit of 780 g/l if the EPA regulated these products.

[[Page 48863]]

    The EPA has concluded that concrete surface retarders meet the 
rule's definition of a ``coating.'' Concrete surface retarders that are 
recommended by the manufacturer for use in the field at job sites are, 
therefore, subject to the rule. When retarders are recommended by the 
manufacturer solely for use in a manufacturing setting, such as at a 
precast facility, which is the typical situation, they are not subject 
to the rule. The EPA determined that concrete surface retarders that 
are used in the field at the actual job location are specialized, low-
volume coatings used in limited circumstances, and there is no lower 
VOC content substitute for the function of these products. Therefore, 
the EPA has included a separate category for these products in the 
final rule, with a VOC content limit of 780 g/l as requested by the 
commenters.
Zone Marking Coatings
    Under the proposed rule, zone marking coatings were subject to the 
150 g/l VOC content limit for traffic marking coatings. Zone marking 
coatings are those used to mark surfaces such as parking lots, 
driveways, sidewalks, and airport runways; they are generally applied 
by small commercial applicators. In contrast, traffic marking coatings 
are applied to streets and highways and are usually applied by large 
contractors or State Departments of Transportation. The commenters 
noted two issues associated with meeting the 150 g/l content limit for 
zone marking coatings. First, the 150 g/l content limit could only be 
met with waterborne coatings, which require different application 
equipment than solventborne coatings. Small applicators would be 
disproportionately impacted by the cost of acquiring the new equipment 
that is compatible with waterborne zone marking coatings. Secondly, the 
commenters asserted that waterborne zone marking coatings do not dry or 
cure properly during high humidity or low temperatures, conditions 
under which they must sometimes be applied.
    After consideration of these comments, the EPA has added a separate 
category for zone marking coatings and has established the VOC content 
limit at 450 g/l. This level allows the use of solventborne coatings. 
However, the new category applies only to zone marking coatings sold in 
containers of 5 gallons or less. Available information reveals that 
State Departments of Transportation buy traffic marking coatings in 
larger than 5 gallon containers. Thus, this size restriction should 
limit the use of zone marking coatings to applications smaller than 
those of general traffic marking coatings intended for use on public 
roads and highways. Zone marking coatings sold in larger containers 
fall within the traffic marking coatings category and are subject to 
the 150 g/l limit. The establishment of this category allows the use of 
solventborne coatings by small applicators and under adverse drying and 
curing conditions.
Conversion Varnishes
    Conversion varnishes are specialty products used by contractors for 
wood floor finishing. Under the proposed rule, these coatings would 
have been subject to the 450 g/l VOC content limit for varnishes. 
Commenters argued that conversion varnishes cannot be reformulated to 
meet the 450 g/l level, and that they have unique chemical formulation 
and performance specifications, compared to other varnishes, (i.e., 
appearance and proven durability). Furthermore, the commenters noted 
that only three companies manufacture conversion varnishes and that 
they market them only to licensed wood flooring contractors, thereby 
implying that these are specialty coatings deserving different 
standards.
    In response to these comments, the final rule includes a new 
category for conversion varnishes with a VOC content limit of 725 g/l. 
Due to the chemical make-up of these products, manufacturers reportedly 
have been unable to reformulate to meet the 450 g/l level for 
varnishes. The EPA believes that the category comprises a well-defined 
coating technology that is limited, due to its chemical formulation, to 
the applications for which it is intended. Several wood flooring 
contractors' comments support the performance arguments made by the 
manufacturers. The EPA determined that the VOC content limit of 725 g/l 
is the lowest level achievable based on analysis of currently available 
products.
    The EPA has added a definition for this category to the rule. The 
category definition was developed from information provided by two of 
the manufacturers.
Faux Finishing/Glazing
    Under the proposed rule, faux finishing/glazing coatings were 
subject to the VOC content limit of 380 g/l for nonflat interior 
coatings. Faux finishing/glazing coatings include waterborne acrylic 
finishes and other waterborne products with miscible VOC that are 
designed to retard drying time. One commenter stated that these 
products provide open time required for wet-in-wet techniques, such as 
faux wood grain, faux marble, and simulated aging, which require the 
finish to remain wet for an extended period of time.
    The commenter stated that, based on formulation including water, 
the calculated VOC content of these coatings can range up to 340 g/l. 
However, because the products are waterborne, the VOC ``less water'' 
calculation results in a range up to 700 g/l. The commenter stated that 
the VOC content limit for a similar category (Japan/faux finishing 
coatings) has been proposed by California's South Coast Air Quality 
Management District (SCAQMD) at 700 g/l. The commenter stated that, to 
date, there has not been an identifiable way to reformulate these 
products to achieve a lower VOC while maintaining the characteristics 
required for acceptable use.
    Upon review and evaluation of available information, the EPA has 
determined that creating a separate category for faux finishing/glazing 
with a VOC content limit of 700 g/l is warranted. According to the 
commenter, there are no competing compliant products on the market. 
Despite 2 years of reported reformulation efforts, this coating cannot 
meet the proposed VOC content limit of 380 g/l for nonflat interior 
coatings. The EPA notes that this specialty coating category is low 
volume and that the foregone VOC emission reductions that may result 
from setting a higher limit for this category should be limited.
Stain Controllers
    Under the proposed rule, stain controllers were subject to the VOC 
content limit of 400g/l for sealers. ``Stain controllers'' (also called 
``wood conditioners'' or ``prestains'') are products that are applied 
to soft woods before applying a stain to prevent uneven penetration or 
blotching of the stain by filling those pores where excess penetration 
would occur. One commenter asserted that these products cannot achieve 
the 400 g/l level for sealers. According to the commenter, after 3 
years of reformulation efforts, they have concluded that it is 
technologically infeasible to reformulate stain  controllers  to  the 
proposed 400 g/l VOC content limit. The current VOC content of the 
commenter's products is 714 g/l. According to the commenter, the 400 g/
l level for sealers would force a very high solids content, which would 
make these products unfit for use as prestains. The commenter asserted 
that, in order to be effective, stain controllers must have a very low 
solids content because excessive solids will overload the texture of 
the substrate so that the wood will not properly accept the stain.

[[Page 48864]]

Water cannot be added to these products because they are used almost 
exclusively to treat interior fine wood and contact with water would 
produce an undesirable grain-raising effect in the wood. Stain 
controllers are low-volume, specialized products that are important to 
the consumer and have a minimal effect on air quality. The commenter 
asserted that about 97 percent of total sales for these products are 
already exempt under the small container exemptions in regulated areas.
    After review and evaluation of these comments and follow-up 
information provided by the commenter, the EPA has determined that a 
new category for stain controllers with a VOC content limit of 720 g/l 
is warranted. This is a specialized, limited use product that is 
important to consumers, and the EPA believes that the additional 
emissions from this low-volume coating would be negligible. According 
to the commenter, reformulation attempts during the last 3 years have 
been unsuccessful, and the commenter considers it technologically 
infeasible to reformulate stain controllers to achieve the proposed VOC 
content limit of 400 g/l for sealers (the category the commenter's 
coating would be subject to under the proposed rule). According to the 
commenter, there are competing waterbased products meeting the proposed 
limit on the market, but there are performance problems with these 
coatings. The EPA believes that this is an example of a low-volume, 
specialty niche coating for which it may not be cost-effective for the 
manufacturer to continue reformulation attempts. Therefore, the final 
rule contains a separate category for stain controllers.

F. Category Overlap

    Many commenters expressed concern about the VOC content limit that 
applies to coatings that fall into more than one category. The proposed 
rule stated that if a manufacturer made the representation that a 
coating was suitable for use in more than one category, then the 
coating must comply with the VOC limit for the category with the most 
restrictive limit. Commenters objected that a coating may be 
``suitable'' for many uses, even though not intended by the 
manufacturer for those uses. Coatings could potentially be used in ways 
for which they were never intended and, thus, be subject to unduly 
restrictive VOC content limits.
    The EPA agrees with the commenters and has reworded the provisions 
as suggested by the commenters. In the final rule, if the manufacturer 
or importer makes any representation that indicates that the coating 
``meets the definition'' of more than one coating category, then the 
most restrictive limit applies. The EPA has removed the phrase ``may be 
suitable for use'' from the rule so that the manufacturer or importer 
is not responsible to meet the limits of other categories if consumers 
choose to use them for purposes not recommended by the manufacturer or 
importer. However, if a manufacturer or importer indicates that a 
coating may be suitable for uses like coatings in other categories, the 
EPA will consider this a representation that requires the coating to 
meet the most restrictive applicable limit. Thus, determination of the 
applicable category and VOC content limit is based on a comparison 
between the technical criteria in the rule's definitions and the 
coating manufacturer's or importer's representations.
    The proposed rule also included exceptions for seven types of 
coatings to the requirement that the most restrictive limit always 
applies. The EPA recognizes that these seven coatings potentially meet 
the definition of more than one category of coating, but cannot meet 
the more restrictive limit. For these exceptions, the rule explicitly 
specifies that the less restrictive limit applies. Commenters suggested 
additional instances of overlap that might also warrant special 
exceptions. After considering the information presented by these 
commenters, the EPA has included further exceptions, in addition to the 
proposed exceptions, to the most restrictive limit provision. The EPA 
has added the following exceptions: (1) anti-graffiti coatings, high 
temperature coatings, impacted immersion coatings, thermoplastic rubber 
coatings and mastics, repair and maintenance thermoplastic coatings, 
pretreatment wash primers, and flow coatings are not required to meet 
the VOC content limit for industrial maintenance coatings; (2) 
industrial maintenance coatings are not required to meet the VOC 
content limit for primers and undercoaters, sealers, or mastic texture 
coatings; (3) varnishes and conversion varnishes used as floor coatings 
are not required to meet the VOC content limit for floor coatings; (4) 
sanding sealers are not required to meet the VOC content limit for 
quick-dry sealers; (5) waterproofing sealers and treatment coatings are 
not required to meet the VOC content limit for quick-dry sealers; (6) 
quick-dry primers, sealers, and undercoaters are not required to meet 
the VOC content limit for primers and undercoaters; (7) nonferrous 
ornamental metal lacquers and surface protectants are not required to 
meet the VOC content limit for lacquers; and (8) antenna coatings are 
not required to meet the VOC content limit for industrial maintenance 
coatings or primers. These exceptions are discussed more fully in 
section 2.2.3.14 of the Architectural Coatings BID (see ADDRESSES 
section of this preamble).

G. Low Volume/Tonnage Exemption

    In the preamble to the proposed rule, the EPA presented the concept 
of an exemption for coatings produced in low volumes and requested 
comment on this potential provision. The EPA described this exemption 
as a compliance option under which, ``any manufacturer or importer may 
request an exemption from the VOC levels in table 1 of this subpart for 
specialized coating products that are manufactured or imported in 
quantities less than a specified number of gallons per year.'' Twenty-
one commenters provided comments on an exemption for coatings produced 
in low volumes.
    In general, commenters in favor of the exemption pointed out that 
it would mitigate the impact of the rule on small manufacturers for 
which costs of reformulation would be more significant, and would 
prevent the elimination of specialty products for niche markets that 
could not easily be reformulated. Commenters opposed to the concept of 
a low-volume exemption generally argued that it would create a loophole 
allowing continued manufacture of noncompliant coatings and that in the 
aggregate such emissions would be significant.
    The EPA considered these comments and concluded that some type of 
exemption is needed to help ensure the continued availability of niche 
products, to mitigate potential impacts on small manufacturers, and to 
enhance the economic feasibility of the rule. The exemption in the 
final rule is based on VOC tonnage rather than on production volume, 
the concept presented at proposal. This approach continues to 
accommodate the needs of small manufacturers, niche markets, and 
specialty products, as did the proposed low-volume exemptions, but it 
more effectively limits the VOC emissions resulting from the exemption 
in response to comments received on the proposal.
    Under the tonnage exemption, each manufacturer can exempt a volume 
of coatings that contains no more than a specified total mass of VOC 
for all coatings included in the exemption (see table 2 in section 
II.B, Summary of Standards). The EPA has designed the tonnage limits to 
exempt no more than

[[Page 48865]]

1.5 to 2 percent of the total expected emission reductions from all 
architectural coatings. In addition, the EPA has structured the tonnage 
exemption to decrease over time, thereby decreasing the aggregate VOC 
emissions in a staggered fashion to provide additional compliance 
flexibility. The EPA believes that it is appropriate to provide the 
exemption in this manner for the dual purpose of preserving niche 
products and of providing greater initial assistance to manufacturers 
as they reformulate their products. The EPA believes that limiting the 
exemption in this fashion will address the concerns of commenters who 
viewed the low-volume exemption as a potential loophole that would 
allow significant aggregate excess VOC emissions. The EPA expects that 
the 9 Mg/yr (10 tpy) exemption that goes into effect in the third year 
will help to preserve niche products and to provide adequate 
flexibility for unforeseen future needs while effectively limiting 
emissions due to the exemption. In addition, the EPA expects that the 
initial tonnage exemption of 23 Mg (25 tons) for the time period from 
September 13, 1999 through December 31, 2000, will allow manufacturers 
to exempt one to three 27,000 liter (7,100 gallon) product lines, 
depending on the VOC content, thereby meeting the functional intent of 
the originally proposed low-volume exemption.
    The rule provides that the manufacturer or importer will calculate 
emissions from exempt coatings by multiplying the total sales volume in 
liters by the ``in the can'' VOC content of the coating in grams of VOC 
per liter of coating, including any water or exempt compounds. The ``in 
the can'' VOC content must include consideration of the maximum 
thinning recommended by the manufacturer. The manufacturer or importer 
may exempt any combination of different coatings as long as the total 
VOC tonnage from these coatings does not exceed the limit for the 
tonnage exemption. In addition, the manufacturer or importer may choose 
to combine the exceedance fee provision and the VOC tonnage exemption 
for one or more coatings.
    For example, under this exemption, in the time period from 
September 13, 1999 through December 31, 2000, a manufacturer could 
exempt 38,300 liters (10,000 gallons) of a 600 g/l [5 pounds per gallon 
(lb/gal)] coating.
[GRAPHIC] [TIFF OMITTED] TR11SE98.012

    Alternatively, a manufacturer could exempt 18,939 liters (5,000 
gallons) of an 800 g/l (6.67 lb/gal) coating plus 13,731 liters (3,625 
gallons) of a 550 g/l (4.58 lb/gal) coating.
[GRAPHIC] [TIFF OMITTED] TR11SE98.013

    This exemption differs from the low-volume exemption in the 
proposal preamble in three ways. First, the exemption is on a ``per 
manufacturer'' basis rather than a ``per product'' basis. This change 
was necessary due to the difficulty in defining a ``product'' and the 
potential for abuse in designating products for exemption. Second, the 
exemption level is based on megagrams of VOC rather than liters of 
coating. Using VOC tonnage as the basis for the exemption places an 
upper bound on the emission reductions that are lost through this 
exemption while still accommodating the needs for which it was 
intended. Third, the total quantity of the exemption reduces over time. 
The EPA intends for the ratcheting down of the tonnage exemption over 
time to encourage regulated entities using the exemption to continue to 
reduce the VOC content of their coatings.
    The EPA has concluded that the exemption, as structured in the 
final rule, provides benefits in terms of flexibility, mitigation of 
impacts for small manufacturers, and continuation of specialized niche 
products that justify the EPA in foregoing the small percentage of 
overall potential VOC reduction lost through the exemption. 
Furthermore, the EPA has concluded that the creation of the tonnage 
exemption is consistent with the EPA's explicit discretion and 
authority to create the appropriate system or systems of regulation in 
accordance with section 183(e)(4) of the Act.

H. Compliance Variance Provisions

    In the proposed rule, the EPA included a variance provision 
allowing manufacturers and importers of architectural coatings to 
obtain additional time to comply. To obtain a variance, applicants 
would have had to demonstrate that, for reasons beyond their reasonable 
control, they could not comply with the requirements of the rule. The 
EPA envisioned the proposed variance provision as a benefit primarily 
for small businesses that might need extra time to develop new 
technologies.
    Several commenters addressed the variance provisions. Those who 
supported the provisions noted that a variance would provide the needed 
extra time to come into compliance. Those opposed to the variance 
generally argued that it was not sufficiently protective of the 
environment. In addition, even the commenters in favor of the variance 
provision stated that the requirements for applying for a variance were 
too burdensome, and that small businesses would be particularly 
impacted by the burden associated with the application process. Many of 
these commenters stated that exceedance fee provisions are a more 
effective way to accommodate the need for compliance flexibility yet 
still encourage reductions of VOC emissions.
    Based upon the comments received, the EPA has not included the 
variance provision in the final rule. It is evident to the EPA that a 
variance process may not provide the intended compliance flexibility, 
especially for small manufacturers. Even though the EPA intended the 
proposed variance requirements to be the minimum necessary to justify 
and approve a coating variance, the EPA recognizes that the 
requirements may have been burdensome, particularly for small 
manufacturers with limited or no regulatory compliance staff. It is 
also possible that the variance provision could create an uneven 
playing field because small businesses would not have the resources 
needed to pursue

[[Page 48866]]

this option, thereby putting small businesses at a disadvantage 
compared to large businesses.
    Moreover, with the tonnage exemption and exceedance fee provisions 
included in the final rule, the EPA has concluded that a compliance 
date variance is not necessary. The EPA believes that these alternative 
provisions provide even greater flexibility than the variance provision 
and are less burdensome to regulated entities. Both of these compliance 
options are automatically available to all regulated entities and, 
therefore, do not involve complex application and approval processes. 
These compliance options require only the limited recordkeeping and 
reporting necessary for the EPA to ensure compliance.
    The EPA anticipates that regulated entities will use the tonnage 
exemption for low-volume products that require 2 to 3 years to 
reformulate, or for extremely low-volume products that cannot be 
reformulated in the foreseeable future. The exceedance fee option, 
described more fully below, is also designed to give manufacturers 
additional time to develop lower VOC technologies, which are already 
used for similar coatings by other manufacturers, where necessary. This 
compliance option allows regulated entities to continue to sell 
coatings that exceed the VOC content limits, provided that they pay an 
exceedance fee.
Need for Long-term, Universal Variance Procedure
    Several commenters, including a national trade association, 
recommended a provision in the rule for a long-term variance procedure 
for new products. The commenters expressed concern that new and 
innovative products may not fit into the coating categories that define 
particular coating technologies, and will therefore, by default, be 
subject to the VOC content limits for the general flat or nonflat 
categories. Since the VOC content limits for these default categories 
are among the most stringent, the commenters suggested provisions that 
would allow manufacturers up to 5 years to develop and commercialize 
innovative coating technologies under an extended variance. The 
commenters argued that a long-term variance would protect manufacturers 
who operate mainly in unique or niche markets and whose access to newer 
technologies may be limited.
    The EPA has determined that such a variance procedure is not 
warranted, given the other provisions in the final architectural 
coatings rule. The EPA has included compliance provisions in the final 
rule that it believes will allow for the development of new technology. 
The tonnage exemption and exceedance fee option in the final rule 
create such additional compliance flexibility. In the event that 
coatings manufacturers in the future develop specialized categories of 
coatings for uses not now foreseeable, they could notify the EPA if 
they believe a new coating category is needed. The EPA could then 
assess the appropriateness of such a category.

I. Exceedance Fee Option

    The EPA received a total of 27 comments on the exceedance fee 
provision presented in the proposal preamble. About half of the 
commenters supported this option and half opposed it. Under this 
provision, manufacturers and importers have the option of paying a fee, 
based on the extent to which a coating's VOC content exceeds the 
applicable VOC content limit instead of meeting the limit listed in 
table 1 of this subpart. The fee is calculated by: (1) determining the 
difference between the coating's actual VOC content and the allowed VOC 
content (in grams of VOC per liter of coating), (2) multiplying this 
difference by the fee rate of $0.0028 per gram of excess VOC per liter 
of coating, and (3) multiplying the resulting product by the volume of 
the coating manufactured or imported during the reporting period. The 
resulting dollar amount is owed by the manufacturer or importer as a 
fee. After careful evaluation of all of the comments and discussions 
with the Small Business Administration, the Administrator has decided 
to include this compliance option in the final rule for several 
reasons. First, the exceedance fee provision will provide transition 
time over and above the tonnage exemption provision for those 
manufacturers that may need additional time to obtain or develop lower 
VOC technologies. The exceedance fee provision is significantly less 
burdensome than the proposed compliance variance provision, which the 
EPA has not retained in the final rule (see discussion in section V.H 
of this preamble). Second, the exceedance fee provides long-term 
flexibility and a less costly compliance option for manufacturers who 
sell very low volume, specialty coatings where the cost of 
reformulation may be prohibitive compared to the potential profit on 
low volume products. Thus, these important specialty products will 
continue to be available to consumers. Third, contrary to some comments 
received, the EPA believes that the higher costs resulting from the 
exceedance fees can encourage the development of innovative technology, 
such as high-performance products with lower VOC content, thus reducing 
VOC content to the limits in table 1 for many coatings.
    With regard to some commenters' concerns about enforcement of the 
exceedance fee, the recordkeeping and reporting requirements in the 
rule will ensure compliance with this option. The final rule requires 
manufacturers and importers to maintain records and submit annual 
reports to the EPA if they wish to exercise their option to use the 
exceedance fee. Any violations of the recordkeeping and reporting or 
any other requirements of the rule could result in enforcement actions 
and the possibility of penalties.
    There were various questions and opinions from several commenters 
regarding the level of the fee. The EPA considered several factors in 
setting the fee level. Specifically, the EPA has set the fee level so 
that it would not be advantageous for most manufacturers and importers 
merely to opt for the fee in lieu of reformulating large volume 
products, which generate a disproportionately large share of emissions. 
At the same time, the EPA has sought to set the fee at a level that 
will provide flexibility for producers of small volume or specialty 
products to keep products on the market. Clearly, these are competing 
considerations, but they are not mutually exclusive. In fact, the EIA 
conducted by the EPA suggests that manufacturers of a large number of 
coatings may opt for the fee (as a lower-cost compliance option to 
reformulation or product withdrawal). However, the total sales volumes 
of these products are uniformly small and, thus, their contribution to 
total market output (and emission reductions) is relatively small. The 
fee level also provides incentive for fee-paying firms to reduce VOC 
content on the margin, as this will reduce the amount of fee they must 
pay. The EPA has concluded that imposition of the fee is an appropriate 
mechanism to encourage development of lower-VOC content products while 
at the same time preserving specialty niche products and mitigating the 
impact on small regulated entities. The level of the fee reflects the 
EPA's attempt to balance the intent to encourage reformulation without 
mandating that products be priced out of the market. The EPA believes 
that this is consistent with its authority to use economic incentives 
as part of the system of regulation as contemplated by section 
183(e)(4) of the Act.

J. Labeling, Recordkeeping, and Reporting

    A number of commenters requested more flexible labeling 
requirements to reduce the compliance burden. After

[[Page 48867]]

consideration of these comments, the EPA has determined that several 
labeling requirements can be adjusted to provide more flexibility 
without adversely affecting their usefulness. First, the EPA has 
provided greater flexibility by allowing the date of manufacture or 
date code to appear either on the bottom of cans or on the labels or 
lids. Second, the EPA has clarified the VOC content labeling 
requirement. These provisions allow manufacturers two options; they may 
label the coating with either: (1) the VOC content of the coating, 
including recommended thinning and considering fluctuations in VOC 
content that may occur in the manufacturing process, or (2) the 
applicable VOC content limit for the type coating as listed in table 1 
of the rule. The second option is allowed only if the VOC content of 
the coating does not exceed the applicable VOC content limit (i.e., it 
is not available for coatings complying by exercise of the exceedance 
fee or tonnage exemption provisions). Third, the final rule includes a 
more flexible labeling requirement for industrial maintenance coatings. 
Manufacturers may choose from the following phrases for labeling 
industrial maintenance coatings:
    (1) For industrial use only;
    (2) For professional use only;
    (3) Not for residential use;
    (4) Not intended for residential use; or
    (5) This product is intended for use under the following 
condition(s): (list of each condition from the definition of industrial 
maintenance coating that applies.)
    The proposal preamble requested comment on the inclusion of 
labeling requirements for coating coverage information and an 
educational statement about the role of VOC emissions from coatings in 
ozone formation. Based on comments received concerning coverage 
information, the EPA determined that coating coverage is so variable, 
depending on the coating and the substrate being coated, that the 
information would be of minimal benefit. Upon consideration of comments 
regarding the educational statement, the EPA concluded that an outreach 
program would just as effectively educate consumers on the role of VOC 
emissions in the formation of ozone and on the reasons why ground-level 
ozone is undesirable. Thus, the final rule does not require the 
proposed coverage information and educational statements.

K. Determination of Volatile Organic Compound Content

    Four commenters expressed concern that Method 24 (40 CFR part 60, 
appendix A) would not provide reliable results in certain 
circumstances, such as for waterborne coatings, and requested that the 
EPA allow the use of alternative tests in lieu of Method 24. The 
requests included methods to test for acetone content, acid content, 
water content, and for testing coatings that cure via chemical 
reactions that are quenched by the dilution solvent used in Method 24. 
Two commenters also requested that the EPA accept compliance 
demonstrations based on theoretical formula calculations or formula 
batch card loading information and documentation.
    The EPA believes that Method 24 provides consistent, reliable 
results when determining the VOC content of architectural coatings. 
Specifically regarding concerns about Method 24's reliability for 
determining the VOC content of waterborne coatings, the EPA believes 
that Method 24 is the best currently available compliance method for 
low-VOC solvent content (high water content or waterborne) coatings. 
For waterborne coatings, VOC content is determined indirectly using 
methods that determine nonvolatile matter content and water content. 
The VOC content is assumed to be what is unaccounted for by these two 
fractions. The EPA acknowledges that the inherent imprecision of 
indirectly determining the VOC content of such coatings by this method 
necessitates an adjustment of the analytical results. Such adjustments 
must be based on confidence limits calculated from the precision 
statement established for Method 24. The precision adjustment procedure 
is incorporated in Method 24. Therefore, the final rule specifies that 
Method 24 is to be used for determining the VOC content of coatings 
subject to the rule. However, in response to comments received and 
consistent with other coating regulations established by the EPA in the 
past, the final rule does provide that other means may be used to 
determine VOC content. Nevertheless, the rule also provides that the 
Administrator may request at any time that the coating manufacturer or 
importer conduct a Method 24 test for the purpose of demonstrating 
compliance with the rule. If there are any inconsistencies between 
Method 24 test results and other means of determining VOC content, the 
Method 24 results will govern. The rule also provides an option for the 
Administrator to approve, on a case-by-case basis, alternative methods 
of determining the VOC content of coatings if they are demonstrated to 
the Administrator's satisfaction to provide results satisfactory for 
determining compliance. Such alternative methods could include 
procedures for testing for acetone, acid content, and water content, 
procedures for coatings that are chemically-cured, and procedures for 
using formulations and batch processing data for adjusting or 
determining VOC content.

L. Compliance Date

    At proposal, the EPA requested comment on the appropriate 
compliance deadline for the rule. Commenters expressed a range of 
opinions regarding the appropriate compliance date. Commenters who 
supported a compliance period of up to 12 months stated that this 
amount of time was necessary to adjust formulations, reprint labels, 
adjust inventories, use up existing label stock, and conduct research 
and development. Some commenters stated that the compliance period 
should be greater than 1 year to allow adequate time for developing, 
performance testing, and marketing new products. Some State Agencies 
requested no further delay in the compliance date, since States are 
depending upon the architectural coatings rule for VOC reduction credit 
under their SIP. The latter commenters stated that extending the 
compliance date would have an adverse impact on the environment, would 
lead to additional State regulations, and is unnecessary given the 
current state of technology.
    The EPA supports making the architectural coatings rule effective 
and applicable as quickly as possible, but in a time frame within which 
regulated entities may reasonably comply. The EPA believes that the 12-
month compliance period in the final rule allows the industry 
appropriate time to achieve compliance with the rule. The EPA believes 
that coating technologies currently exist to meet all of the rule's VOC 
content limits. In limited cases where manufacturers or importers need 
additional time to comply, the tonnage exemption and the exceedance fee 
option already provide additional compliance flexibility and offset any 
need for additional compliance time.
    At proposal, the EPA requested comment on whether the final rule 
should include a compliance extension for small manufacturers. Three-
quarters of the commenters providing comments on this provision were 
against special treatment for small manufacturers. After careful 
evaluation of the comments, the EPA has decided not to include a 
compliance extension specifically restricted to small manufacturers. 
Instead, the EPA has extended the compliance period for all 
manufacturers

[[Page 48868]]

and importers to 12 months. The EPA has concluded that the information 
provided by commenters demonstrates that the 12-month compliance period 
allows adequate time for all regulated entities to comply. The EPA 
believes that other mechanisms such as the tonnage exemption and the 
exceedance fee will also help alleviate concerns regarding the 
compliance period for small entities.

M. Cost/Economic Impacts

    At proposal, the EPA solicited comment regarding the size and 
nature of reformulation costs to gauge the reasonableness of the 
estimate used in the EPA's EIA. The estimate the EPA used at proposal 
($250,000 per product reformulation) was based on an estimate presented 
to the Regulatory Negotiation Committee in 1993 (Docket# II-E-52). The 
EPA received several public comments in response to this request and 
categorized the estimates provided based on the following dimensions: 
technical staff training, prioritization of products needing 
reformulation, survey of available materials, reformulation to desired 
properties, performance tests, field tests, marketing costs, production 
costs (labels), sales training, and executive expenses. Eleven of the 
comments received provided comparable information for gauging 
reformulation costs per product. Other comments provided less complete 
information that the EPA has taken into account, but did not include 
the specific information necessary to assess the reasonableness of the 
EPA's estimate. The EPA combined the estimates from these eleven 
comments with the original cost estimate and found that reformulation 
cost per product ranged in value from $576 to $272,000 (1991 dollars), 
with a mean value of approximately $87,000. This gives an indication 
that the EPA's estimate at proposal significantly overstated the 
average cost to reformulate a product. Because the mean value from 
these comments represents a wide variety of conditions for 
reformulation (in comparison to the one scenario described to the 
Regulatory Negotiation Committee), the EPA revised the EIA using 
$87,000 as the average cost to reformulate a product. Appendix B of the 
EIA and the architectural coatings BID provides a full discussion of 
the review of these cost estimates.
    Several commenters indicated that they thought that the estimate of 
total social cost was too low because the EPA underestimated or omitted 
several cost factors. Some of the factors cited by commenters that 
costs are underestimated are listed below:
    (1) The estimate did not consider every reformulation such as the 
recalibration and reformulation of every color in a tint base system 
when the base is reformulated,
    (2) The survey used to estimate costs excluded 400 small paint 
manufacturing companies,
    (3) Only the costs of laboratory personnel are included in the 
estimate,
    (4) The estimate did not consider the cost of foregone new product 
development when expending scarce technical effort to reformulate 
existing products, and
    (5) Aggregation of 50 product categories into 13 market segments 
reduces the impact presented.
    Commenters also cited several cost categories that potentially were 
omitted from the total cost estimate, including:
    (6) Costs for preparing product literature, including material 
safety data sheets, sales aids, color brochures, and technical data 
bulletins;
    (7) Costs for manufacturer education;
    (8) Costs to consumers from increased surface preparation, 
application, and drying time;
    (9) Costs associated with warranty claims and complaints about poor 
performance of compliant coatings;
    (10) Litigation costs due to increased safety hazards from using 
acetone formulations;
    (11) Increased costs to retailers, contractors, and other 
consumers;
    (12) Additional job losses in the paint industry and the 
socioeconomic impact on low income workers; and
    (13) Impacts of product bans on the nation.
    Two of these commenters (a manufacturer and its legal counsel) 
stated that if the EPA included all cost factors in the total cost 
estimate, then the impacts of the rule would exceed $100 million and 
would necessitate additional analyses under Executive Order 12866 and 
the Unfunded Mandates Reform Act. Some commenters also believed that 
the method of calculating the national cost was flawed in that costs 
are calculated on an annualized basis. A commenter also stated that 
expressing the cost in 1991 dollars did not represent real costs today 
and that assuming an interest rate of 7 percent was not a valid 
assumption for small businesses.
    The EPA has carefully considered the comments regarding the 
economic impact of the rule, especially in light of the EPA's 
overestimate of the costs of reformulation in the proposal. The EPA 
believes the total social cost estimate provided at proposal was 
significantly above the actual cost of the regulation because of 
several conservative assumptions that were adopted in the analysis, and 
the evidence that the per-product reformulation cost was nearly three 
times greater than the average estimate obtained by public comments.
    The method of calculating national cost for the final rule adheres 
to the EPA policy and Office of Management and Budget (OMB) guidance 
(OMB Circular A-94). It is a well-established tenet of benefit-cost 
analysis and cost-effectiveness analysis that benefits and costs need 
to be placed on a time-consistent basis for direct comparison. 
Therefore, the costs of the action must be computed on an annualized 
basis through discounting to be time consistent with the annual stream 
of emission reductions achieved. For the architectural coatings rule, 
the costs of reformulation and its VOC reduction benefits occur in 
different time periods. The reformulation of current noncompliant 
products is a ``one-time event,'' but the emission reductions of the 
new formula and the knowledge gained from developing the reformulation 
continue over the life of the product, which is an infinite period of 
time unless the product is permanently removed from the market. In 
other words, once a formulation is developed to comply with the 
regulation, manufacturers will have some knowledge to carry forward to 
all future modifications of the product (i.e., if they adjust the 
formula to improve certain attributes or characteristics of the 
product). However, the EPA recognizes that a case can be made for 
treating each product formula as having a finite service life, 
requiring periodic reformulation. Under this alternative assumption, 
the regulation is viewed as accelerating each product's next round of 
reformulation, an event that would have occurred anyway. For example, 
if a product is usually reformulated every 8 years, the rule's 
implementation may cause a manufacturer to investigate the 
reformulation 4 years earlier, thus accelerating the reformulation 
schedule for all future years. In response to this issue, the EIA for 
the final rule presents a calculation of annualized costs for both a 
finite and an infinite product life. Because the finite product life 
results in a higher annualized value, the EPA uses this estimate for 
the economic analysis of the final rule to produce a conservative 
estimate of impacts associated with the rule.
    Also, because the survey of architectural coating producers was 
conducted in 1992 with information on products through the end of 1991, 
the EPA has set 1991 as the baseline year for the analysis. All market 
data are in 1991 dollars, and so for the purpose of

[[Page 48869]]

modeling, the costs are expressed in 1991 dollars. However, in response 
to comments, values for the final rule are expressed in both 1991 (the 
base year of analysis) and 1996 dollars. The EPA's conclusions 
regarding the impacts of the final rule are the same, whether expressed 
in 1991 or 1996 dollars.
    In addition, OMB (OMB Circular A-94) stipulates that the discount 
rate used for economic analyses of Federal regulations is 7 percent. 
This is based on an assessment of a wide range of private and public 
investment returns. The 7-percent rate is a real discount rate 
(adjusting out inflation). In contrast, the market interest rates paid 
by firms are in nominal terms (i.e., they include a component for 
inflation). If inflation is 3 percent, then a real rate of 7 percent is 
equivalent to a nominal rate of 10 percent. All dollar values in the 
economic analysis are expressed in real terms, thus the discount rate 
used is a real discount rate.
    Using the stated method for calculating the per-product costs of 
reformulation, the EPA conducted an in-depth analysis of national cost 
and economic impact to support both the proposed and final rules. More 
specifically, the estimate of net social cost is based on the average 
cost to reformulate products that exceed the limits set by the 
standard. These costs are applied to specific products identified by 
the survey. For these products, costs are applied to two-thirds of the 
population of non-compliant products because one-third of these 
products are similar enough in characteristics to other ``over-the-
limit'' products that a separate reformulation effort is not likely to 
be necessary. Although the survey was unable to capture all products 
produced by small businesses as one commenter states, the EPA assumed 
(for an upper bound estimate) that all product volume in the non-survey 
population was produced by small businesses. Thus, costs are 
extrapolated to the nation using conservative assumptions of the total 
number of products requiring reformulation nationally. The analysis 
then considers influences in a competitive market on product price and 
output, along with the consideration of lower-cost compliance options 
such as the exceedance fee provision or product withdrawal from the 
market. The analysis not only measures the cost to producers that must 
comply with the regulation, but also to all consumers impacted by the 
changes in the market resulting from the regulation. The analysis also 
identifies gains in revenues to producers that are not constrained by 
the rule (thus, not incurring costs), but who gain an advantage of 
higher market prices for their products. Thus, the EPA believes that 
the analysis reasonably captures all capital and social costs for 
surveyed as well as non-surveyed products.
    The original product reformulation cost estimate included several 
components beyond the cost of the laboratory personnel, which are 
itemized in the EIA. Although some of the items listed by commenters as 
improperly omitted may not have been included in the per-product 
reformulation cost estimate at proposal, several of the estimates from 
public comments that were used for the final rule included these 
components, and therefore, they are included in the estimate used for 
the final rule. The EPA also considered the influence (positive and 
negative) of other factors that are not possible to quantify, and 
presented these biases in a table of the EIA at proposal and for the 
final rule. Most of the biases are variable and case specific. For 
example, product quality changes were found to have both positive and 
negative effects on cost depending on the product. The EPA found no 
link between product quality and VOC content since quality, high-
performing products are available in a wide range of VOC content levels 
in many product categories. Given this finding, the EPA does not 
consider warranty claims and complaints for poor performance to be 
typical or quantifiable for a reformulated product. The EPA also found 
examples of increased and decreased time utilized for surface 
preparation, application, and drying of compliant coatings. The use of 
acetone formulations is also not considered a necessity to comply with 
the rule since there are other raw material substitutes available to 
manufacturers. Thus, incurring increased safety hazards by choosing an 
acetone formulation is a decision that should be made by a manufacturer 
based on benefit/cost considerations, rather than as a result of the 
rule. Other categories of influence on the cost estimate are also 
discussed qualitatively in the EIA.
    The cost of foregone new product development is an aspect of 
opportunity cost that is implicitly included in the EPA's estimate of 
economic impacts. The amortized cost of reformulation reflects both the 
payment of principal and the cost of capital. The cost of capital 
directly reflects the value of opportunities foregone by investing 
funds in a particular activity, in this case, reformulation. Thus, if 
investing in reformulation diverts funds from investing in other 
product enhancements, the foregone value of those investments is 
captured in the discount rate used in the analysis.
    The aggregation of 50 categories into 13 market segments is the 
result of cross-referencing the emissions inventory data from the 
industry survey with the coding system set by the Census of 
Manufacturers, a large source of economic data. The methodology to link 
survey categories with the Census data is described in an appendix to 
the EIA. The EPA's objective was to specify as many market categories 
as the data would allow. Using this method, the largest possible number 
of meaningful market categories was 13. The aggregation process 
presents an appropriate way to analyze the cost and economic impacts 
and does not in any way diminish the estimates of the absolute impact 
of the regulation. However, the aggregation process may make it 
difficult to detect relatively large impacts within one subgroup of a 
market category, if these impacts are offset by relatively small 
impacts in other subgroups of that market. In other words, a product 
may be more likely to be withdrawn from the market than is indicated in 
the 13 market segments of the analysis since multiple product niches 
would be lumped within the same market segment. On the other hand, this 
aggregation may increase the estimated effect on manufacturers by over-
stating the degree to which products within the market segment can 
substitute for products affected by the regulation.
    While the EPA did not directly measure impacts on the retailing 
sector, contractors, and other consumers, the indirect impacts to these 
entities and other users of coatings products are captured in the 
market analysis by the estimated change in ``consumer surplus,'' along 
with all other downstream effects beyond the manufacturer. Consumer 
surplus measures the distribution of the burden of the regulation to 
all consumers. Since the impact on consumers calculated for proposal 
was less than one-third of the manufacturers' burden, and contractors 
and retailers are a small subset of this effect, the EPA saw no 
indication of a need for an in-depth analysis of secondary (indirect) 
impacts.
    It should be recognized that retail outlets have the ability to 
substitute between compliant and noncompliant coatings offered for 
sale. While the EPA projects the number of withdrawn products to be 
small, if a manufacturer does choose to discontinue a product, 
retailers will presumably replace this product with other compliant 
products in that category. Thus, although foregone profits are ``lost'' 
for the

[[Page 48870]]

manufacturer withdrawing a product, the retailer offsets any lost 
profits from selling the withdrawn product with profits obtained by 
selling substitutes within that category. As indicated above, the 
number and volume of product withdrawals is projected to be quite small 
(less than 1-percent nationally), thus suggesting retailing effects, if 
they exist at all, are also likely to be quite small.
    The job loss and other substantial economic impacts that are 
referred to by a commenter are the result of assuming that every 
reformulation required by the standards is not feasible, thus the 
products would be removed from the market causing manufacturers, 
contractors, retailers, and other consumers to be economically 
impacted. Because there are a very limited number of products that are 
expected to be withdrawn from the market, most products will be 
reformulated or produced with current formulations (with manufacturers 
using the tonnage exemption provision or paying a fee for emissions in 
excess of the standards).
    Likewise, this regulatory action cannot be considered a ``product 
ban'' because the EPA believes that it is technologically feasible to 
reformulate all product categories to meet the standards. The expected 
level of product withdrawal is calculated based upon the aggregate 
impact on numerous varieties of products across 13 different market 
segments, so it is unlikely to eliminate (or ban) an entire product 
category. In addition, the rule contains limits for 61 categories of 
products, many of which were created to preserve specialty, niche 
market sectors within the industry. Also, the tonnage exemption and 
exceedance fee provisions in the rule are expected to provide further 
compliance flexibility which will allow manufacturers to maintain 
product lines with VOC contents that exceed the applicable VOC content 
limits in appropriate circumstances.
    In conclusion, based on the data and information provided to the 
EPA prior to proposal and through public comments, the revised national 
annualized cost estimate of the final rule of $25.6 million in 1991 
dollars (or $29 million in 1996 dollars) is representative of all costs 
to producers and consumers. This cost and its effect on the industry do 
not meet the minimum criteria set forth by Executive Order 12866 or the 
Unfunded Mandates Reform Act to require additional analyses, as some 
commenters have suggested.

N. Small Business Issues

    The EPA received several comments that small businesses would be 
disproportionately impacted by the regulation because: (1) they 
manufacture products with higher VOC content in comparison to the large 
companies; (2) due to the lack of resources, it would take longer for 
small firms to reformulate all affected products; and (3) the rule 
would discourage niche market products that support many regional and 
local manufacturers. Some commenters also claimed that the proposed 
regulation provided a competitive advantage to large national and 
international companies because a uniform national rule simplifies 
marketing, production, and compliance activities of these firms.
    During development of the rule, the EPA was aware of the above 
concerns of small manufacturers and designed the architectural coatings 
rule to minimize any potential adverse impacts on small manufacturers. 
In fact, special consideration was given to economic feasibility of VOC 
levels for coating categories where small manufacturers have a 
disproportionate presence. The small entity analysis confirmed that 
small producers that were included in the survey of manufacturers do 
tend to produce higher VOC content products (75 percent higher than the 
average of all surveyed manufacturers), partly because of a 
specialization of products and partly because of choice of technology. 
They produced 20 percent of the number of products in the survey, but 
only account for 4 percent of total volume of coatings produced, and 4 
percent of total revenue of surveyed manufacturers. Thus, the revenues 
and production levels are generally lower than the average of all 
manufacturers. Because the costs to reformulate are fixed for all 
levels of production, the costs to reformulate the products that exceed 
the VOC content limits have the potential to comprise a greater share 
of baseline costs and revenues for small producers, which gives some 
indication that a disproportionate impact on small businesses could 
occur if reformulation were the only compliance option available. The 
EPA considered this finding and has taken several steps in the final 
rule to mitigate this impact, provide flexibility and additional 
compliance time, and preserve niche markets, including:
     The creation of new product categories where warranted,
     An increased compliance time (12 months),
     A tonnage exemption provision, and
     An exceedance fee provision.
    All of these provisions were considered in part to address niche 
markets and small business burdens; however, the provisions will be 
available to all producers regardless of size. The EPA's analysis of 
the impacts of the final rule shows that small businesses are likely to 
utilize these provisions and that the impact on a typical small firm is 
reduced without significant deterioration of the rule's effectiveness 
(i.e., the foregone emission reductions are limited). See section VI.E 
of this preamble for a summary of findings from the analysis.
    The EPA disagrees that the proposed architectural coatings rule 
favors larger businesses to the detriment of smaller businesses. As the 
EIA indicates, estimated market effects from the architectural coatings 
rule are relatively slight. Approximately one-tenth of 1 percent of 
industry product volume is projected to withdraw from the market, and 
price effects in each market are expected to range from no effect to an 
increase of less than 2 cents per liter, which is still less than a 1-
percent increase of the baseline price. The expected level of product 
withdrawal discussed above is based upon the aggregate of numerous 
varieties of products across 13 different market segments, so it is 
unlikely to eliminate an entire product category. Compared to other 
industries, the coatings industry is highly competitive due to the 
numerous manufacturers in the industry. Therefore, a relatively small 
product withdrawal effect on a very competitive industry suggests that 
significant degradation of market competition is unlikely.
    The EPA also does not agree that a uniform national regulation 
would have negative implications for competition with respect to 
antitrust laws and would reduce market efficiency. In fact, the 
existence of nonuniform standards across States tends to favor one 
sector of the industry (local manufacturers) at the expense of another 
(non-local manufacturers), thereby limiting competition in those 
markets. Some public commenters supported a national rule because they 
believe nonuniform standards harmed small manufacturers. As one 
commenter testified at the public hearing, small companies lack the 
resources to deal with a large number of different State regulations 
and labeling requirements and a regulatory climate that changes 
frequently. Another commenter pointed out that these conditions hinder 
small companies' ability to plan for new products, production, 
expansion, and marketing. All of these activities require the

[[Page 48871]]

investment of time and money that can easily be expended if a county, 
district, or State implements a new VOC rule. The EPA considers a 
national VOC rule an important element in promoting consistency among 
architectural coating standards. The EPA also recognizes that a 
national rule for architectural coatings sets minimum national 
requirements, and that some States may need to adopt requirements for 
architectural coatings more stringent than those in this rule.
    The EPA also received comments on the definition of a small entity 
that the EPA adopted for the regulatory flexibility analysis. One 
commenter supported the definition, while several others argued that 
the definition was too restrictive and suggested it be revised to 
include more firms (i.e., firms with architectural coatings sales 
between $20 and $30 million, or firms with less than $50 million, or 
firms with less than $100 million in sales). Because the coating 
manufacturing industry is not labor-intensive, a revenue value cut-off 
rather than a number-of-employees cut-off appeared to be a better 
measure to reflect the ability of a manufacturer to devote time as well 
as research and development resources to meet regulatory requirements. 
Based on input from stakeholders during the regulatory negotiation 
process (II-E-62), the EPA has defined small manufacturers as those 
having less than $10 million in annual architectural coating sales and 
less than $50 million in total annual sales from all products. Using 
this definition, between 70 and 85 percent of the architectural 
coatings industry would be classified as small. This definition does 
not change the requirements of the Regulatory Flexibility Act (RFA); it 
is used for analysis purposes only. If the definition were changed to 
include more firms at sales levels greater than $10 million, the 
impacts on this sector of the industry may appear lower on average 
because the impacts on a company with sales around $30 million may 
offset impacts on a $5 million company. In such a case, the EPA may 
have been less likely to consider special provisions such as the 
exceedance fee or tonnage exemption. The EPA believes the current 
definition is representative of the industry and has not revised it for 
the final rule.

O. Cost-Effectiveness

    In the preamble to the proposed rule (61 FR 32735, June 25, 1996), 
the EPA solicited comments on alternative approaches to the cost-
effectiveness calculation for the proposed rule. As distinct from EPA's 
consideration of cost in the BAC analysis, the discussion in this 
section did not form a basis for EPA's selection of BAC for the 
categories of products regulated by the rule.
    Cost-effectiveness is a measure used to compare alternative 
strategies for reducing pollutant emissions, or to provide a comparison 
of a new strategy with historical strategies. The EPA's established 
method of calculating the cost-effectiveness of a rule with nationwide 
applicability is to divide the total cost of the rule by total emission 
reductions. At proposal, the EPA requested comment on two alternative 
ways of calculating cost-effectiveness for the architectural coatings 
rule: (1) cost-effectiveness considering total emission reductions in 
ozone nonattainment areas only, and (2) cost-effectiveness considering 
emission reductions in ozone nonattainment areas during the ozone 
season only.
    Before discussing the comments received on this cost-effectiveness 
methodology issue, it is important to note that the provisions and 
rationale for today's rule are not dependent upon the disposition of 
this issue. The EPA nonetheless took comment on the issue because this 
rule was among the first to be proposed under section 183(e) of the Act 
and presented an opportunity to receive public input early in the 
program.
    In regard to cost-effectiveness methodologies, the EPA received 
comments from three commenters, all of whom favored the EPA's 
traditional measure of cost-effectiveness. One commenter stated that it 
is important to characterize cost-effectiveness in a consistent manner 
so that various control strategies can be compared on equal footing and 
that calculating cost-effectiveness based solely on nonattainment areas 
unfairly biases the calculation by ignoring the benefit of reducing the 
transport of ozone and its precursors. Another commenter advised the 
EPA to maintain the traditional measure since it is commonly used and 
will continue to provide meaningful comparisons. The latter commenter 
opposed more narrow measures of cost-effectiveness, such as exclusively 
measuring the effect on ozone concentrations or VOC reductions in ozone 
nonattainment areas only. The third commenter considered cost-
effectiveness based on VOC reductions solely in ozone nonattainment 
areas to be impractical, because the manufacturer has little control 
over where coatings will be used. Such control would necessitate 
additional recordkeeping to track intended and actual locations of 
product use.
    After considering these comments, the EPA does not plan to adopt 
these alternative approaches to calculating cost-effectiveness for 
rules with nationwide control requirements, for reasons that are 
presented below.
    One issue raised by the comments is whether the EPA's traditional 
measure creates a bias against strategies that apply in a limited 
geographic area (e.g., in nonattainment areas) relative to nationwide 
strategies, or against seasonal strategies relative to year-round 
strategies. This issue would arise if the EPA used cost-effectiveness 
figures to compare the desirability of these dissimilar types of 
strategies. In fact, the EPA did not use cost-effectiveness estimates 
in this way in developing the architectural coatings rule. In the case 
of the architectural coatings rule, the EPA considered applying 
restrictions to architectural coatings only in nonattainment areas 
(either by rule or through a CTG). The EPA believes that such 
geographically targeted restrictions for these nationally distributed 
architectural coatings would pose substantial implementation 
difficulties for government and would impose substantial compliance 
burdens on a large number of regulated entities. The EPA also believes 
that such geographically targeted restrictions for these nationally 
distributed products would be less effective at reducing emissions than 
a national rule (see section V.A of this preamble for further 
discussion). Because the EPA determined that a strategy applicable only 
to nonattainment areas would be less desirable than a national rule for 
architectural coatings, the EPA did not see a need to invest resources 
to pursue that strategy and calculate its cost-effectiveness.
    The EPA considered whether use of one of the alternative cost-
effectiveness methodologies would enable the EPA to make valid cost-
effectiveness comparisons between nationwide and targeted geographic 
strategies, or year-round and seasonal strategies, for reducing ozone 
pollution. The EPA has not chosen these alternatives because it has the 
following concerns about the two alternative approaches:
    First, VOC emission reductions have benefits other than reducing 
ozone levels in nonattainment areas. As a result, the EPA believes the 
cost-effectiveness calculation for a nationwide, year-round rule should 
not exclude VOC emission reductions in attainment areas or outside the 
ozone season. The EPA recognizes that a primary objective of section 
183(e) of the Act is to reduce VOC emissions in ozone nonattainment 
areas. However, as

[[Page 48872]]

previously explained, in the development of the architectural coatings 
rule, the EPA believes that the best policy alternative is to implement 
a nationwide rule. Therefore, emission reductions from this rule will 
not only be realized in ozone nonattainment areas, but also in all 
other parts of the country in which architectural coatings are 
distributed and consumed.
    In general, the benefits of VOC reductions in ozone attainment 
areas include reductions in emissions of VOC air toxics, reductions in 
the contribution from VOC emissions to the formation of fine 
particulate matter, and reductions in damage to agricultural crops, 
forests, and ecosystems from ozone exposure. Emission reductions in 
attainment areas help to maintain clean air as the economy grows and 
new pollution sources come into existence. Also, ozone health benefits 
can result from reductions in attainment areas, although the most 
certain health effects from ozone exposure below the NAAQS appear to be 
both transient and reversible. The closure letter from the Clean Air 
Science Advisory Committee (CASAC) for the recent review of the ozone 
NAAQS states that there is no apparent threshold for biological 
responses to ozone exposure [See U.S. EPA; Review of NAAQS for Ozone, 
Assessment of Scientific and Technical Information, Office of Air 
Quality Planning and Standards Staff Paper; document number: EPA-452\R-
96-007].
    Second, under either alternative approach, emission reductions in 
ozone attainment areas would not be included in the calculation. This 
appears to imply that emissions reductions in attainment areas do not 
contribute to cleaner air in nonattainment areas. VOC sources in 
regions adjacent to nonattainment areas may contribute to ozone levels 
in nonattainment areas. As a result, a cost-effectiveness comparison 
based on the alternative approaches sometimes could create a bias 
against a nationwide rule relative to a strategy that applies in 
nonattainment areas only.
    In light of the transport issue, it has been suggested that the EPA 
apply a weighting factor to account for differences in the extent to 
which emissions inside and outside nonattainment areas contribute to 
ozone formation in nonattainment areas. The EPA is concerned that in 
order to calculate cost-effectiveness using this concept, the EPA would 
have to conduct extensive and costly air quality modeling to estimate 
ozone reductions resulting from each candidate control strategy and 
that this would require extensive data on the location of emissions. 
Such detailed analysis is appropriate for some policy decisions, but 
not for all. As a result, the EPA is skeptical that this weighting 
approach would represent a generally useful analytical tool for 
decision making.
    The EPA, of course, agrees that differences in the location and 
timing of emission reductions are a significant consideration in 
choosing among alternative strategies. The extent of ozone reductions 
and other benefits resulting from VOC emission reductions varies, 
partly based on location and season. In considering nationwide vs. 
geographically targeted controls, and year-round vs. seasonal controls, 
the EPA considers available information on the effectiveness of those 
strategies in reducing ozone--as well as other health and environmental 
considerations, economic considerations, and other relevant factors--in 
making a holistic assessment of which strategy is most desirable from 
an overall public policy standpoint.
    There are instances where the EPA does provide an estimate of cost-
effectiveness of a control strategy during the ozone season, i.e., 
generally, when a control strategy is feasible to apply on a seasonal 
basis, or when limits are set on a seasonal basis. Although these 
figures are useful for comparing different seasonal strategies, the EPA 
does not plan to use cost-effectiveness figures for inappropriate 
(i.e., apple to orange) comparisons between seasonal and year-round 
strategies for the 183(e) program for the reasons presented above. In 
regard to today's rule, the EPA notes that the nature of architectural 
coatings emissions does not allow for control strategies that reduce 
emissions only during the ozone season to be an objective for 
consideration. One reason is that the shelf life and consumption rate 
of architectural coatings varies greatly and one cannot predict that a 
certain percentage of a product made with a specified formulation will 
be consumed and, thus, result in VOC emitted during the ozone season. 
Because the Agency has concluded that an ozone season-based approach is 
not a viable control strategy for architectural coatings, the EPA did 
not believe it was appropriate to develop a seasonal-based approach to 
measuring cost-effectiveness for the architectural coatings rule.

P. Future Study and Future Limits

    The EPA has determined to regulate architectural coatings based 
upon the study and Report to Congress required by Section 183(e) of the 
Act. For the reasons discussed in the separate final listing decision 
published today in the Federal Register, the 183(e) study established 
that the EPA should regulate architectural coatings to reduce VOC 
emissions, as directed by the Act. The final rule's VOC content limits, 
in combination with the exceedance fee and tonnage exemption 
provisions, reflect the EPA's determination of BAC for architectural 
coatings, based on the EPA's analysis of currently available 
information on coating technologies. However, the EPA recognizes that 
manufacturers are continuously developing new and innovative products 
in response to competitive markets as well as to regulatory pressures. 
The EPA has developed the final requirements for architectural coatings 
largely from data for coatings manufactured in the early 1990s, and the 
EPA believes, therefore, that VOC reductions beyond those reflected in 
table 1 of the rule may be technologically and economically feasible in 
the future. In the preamble for the proposed rule, the EPA discussed 
the idea of a joint study with the industry to investigate the cost and 
performance characteristics of coatings with VOC contents lower than 
the promulgated limits and to assess the environmental and economic 
impacts of requiring lower VOC contents. The EPA requested comments 
concerning such an EPA/industry study and any performance, cost, or 
reactivity considerations that should be included in such a study. The 
EPA also requested information on coating categories where recent 
progress in low-VOC resin systems has resulted in the introduction of 
new low-VOC coatings into the market since 1990. In addition, the EPA 
requested cost information and comments on the ability of coatings with 
VOC content limits lower than the proposed levels to meet the 
performance needs within the coating category.
    A total of 27 commenters responded to the EPA's request for 
comments, representing a wide variety of positions. The comments 
generally addressed three issues: (1) the usefulness of the proposed 
joint study, (2) how the EPA should conduct the study, and (3) the 
merit of promulgating additional or more stringent standards for 
architectural coatings.
    Based on these comments, the EPA has concluded that an additional 
study for this category may be warranted to determine the feasibility 
of additional reductions in VOC limits. However, contrary to some 
commenters' assertions, the EPA would not necessarily impose future 
requirements as a result of any study. A study could indicate that 
further regulation of architectural coatings is unwarranted.

[[Page 48873]]

    The EPA appreciates the willingness expressed by many commenters to 
participate in a joint study. The effectiveness of any study is highly 
dependent on a spirit of openness and cooperation between all affected 
parties. In order to determine the potential for useful results from a 
second study, the EPA will solicit input from industry representatives 
and other interested parties on the timing, scope, and content of the 
study. Decisions concerning the additional study will be made on the 
basis of this input.
    Some commenters questioned the EPA's authority to engage in any 
future regulatory initiatives involving architectural coatings. These 
commenters did not identify any statutory language in section 183(e) of 
the Act that supports this position. The EPA believes that section 
183(e) explicitly authorizes the EPA to use ``any system or systems of 
regulation'' that are appropriate to achieve the goals of the statute, 
and the EPA's explicit directive is to require BAC. Nothing in section 
183(e) explicitly or implicitly prohibits the EPA from updating or 
amending the regulations in the future, if appropriate. The EPA has 
striven to promulgate the appropriate regulations given the current 
state of technology. Future innovation in technology may justify 
reexamination of the regulations, and the EPA wishes to encourage such 
innovation in order to achieve the objectives of section 183(e).

Q. Administrative Provisions

    Since proposal, the EPA has added several new sections to the 
regulation to aid in implementing the rule. These administrative 
provisions do not add any new compliance requirements to the rule, and 
pose no additional impacts on regulated entities. The EPA has added the 
new requirements to provide consistent procedures for implementation. 
The provisions that were added are as follows: (1) Addresses of the EPA 
Regional Offices, (2) State Authority, (3) Circumvention, (4) 
Incorporations by Reference, and (5) Availability of Information and 
Confidentiality.
    The section on addresses specifies the mailing addresses of the EPA 
Regional Offices for the submittal of required reports. The States and 
territories served by the various Regional Offices are listed in this 
section as well. The appropriate Regional Office for purposes of 
reporting would be that Regional Office which serves the State or 
territory in which the regulated entity's corporate headquarters are 
physically located.
    The section on State authority clarifies that this rule in no way 
prevents States from adopting more stringent regulations. The section 
on circumvention prohibits regulated entities from doing anything to 
conceal what would otherwise be noncompliance, by such means as 
falsifying records of product formulation or VOC content. The section 
on incorporations by reference includes as part of the rule the ASTM 
methods and technical standards of the American Architectural 
Manufacturer's Association that are cited by reference. Finally, the 
section on availability of information and confidentiality clarifies 
the type of information that is available to the public, and provides 
for the confidential handling of any proprietary information that may 
be submitted to the EPA in response to the rule.

VI. Administrative Requirements

A. Docket

    The docket is an organized and complete file of all the information 
considered by the EPA in the development of this rule. The docket is a 
dynamic file, since material is added throughout the rulemaking 
development. The docketing system is intended to allow members of the 
public to identify and locate documents so that they can effectively 
participate in the rulemaking process. Along with the statement of 
basis and purpose of the proposed and promulgated standards and the EPA 
responses to significant comments, the contents of the docket will 
serve as the record in case of judicial review [see 42 U.S.C. 
7607(d)(7)(A)].

B. Paperwork Reduction Act

    The information collection requirements in this rule have been 
submitted for approval to OMB under the Paperwork Reduction Act, 44 
U.S.C. 3501, et seq. An Information Collection Request (ICR) document 
has been prepared by the EPA (ICR No. 1750.02) and a copy may be 
obtained from Sandy Farmer, OPPE Regulatory Information Division, 
United States Environmental Protection Agency (2137), 401 M Street, SW, 
Washington, DC 20460, or by calling (202) 260-2740. The information 
requirements are not effective until OMB approves them.
    The information collections required under this rule are needed as 
part of the overall compliance and enforcement program. The information 
will be used by the EPA to identify the regulated entities subject to 
the rule and to ensure their compliance with the rule. The 
recordkeeping, reporting, and labeling requirements are mandatory and 
are being established under sections 114 and 183(e) of the Act. All 
information submitted to the EPA for which a claim of confidentiality 
is made will be safeguarded according to the EPA policies set forth in 
Title 40, Chapter 1, Part 2, Subpart B-Confidentiality of Information 
(see 40 CFR part 2; 41 FR 36902, September 1, 1976, as amended by: 43 
FR 39999, September 8, 1978; 43 FR 42251, September 28, 1978; and 44 FR 
17674, March 23, 1979).
    The total annual reporting and recordkeeping burden for this 
information collection averaged over the first 3 years is estimated to 
be 65,851 hours per year. The total annualized recordkeeping and 
reporting costs for this rule are estimated to be $2,452,683. This is 
the estimated burden for the estimated 500 respondents (i.e., 
architectural coating manufacturers).
    The average estimated burden, per respondent, is 132 hours per 
year. The total reporting and recordkeeping burden for an individual 
respondent will vary depending on the compliance option chosen. 
Respondents meeting the VOC content limits will have the lowest 
reporting and recordkeeping burden. Manufacturers and importers that 
choose the option of calculating an ``adjusted-VOC content'' (for 
recycled coatings), paying an exceedance fee, or exercising the tonnage 
exemption will have a higher reporting and recordkeeping burden. The 
final rule requires an initial one-time notification from each 
respondent. Respondents whose coating products have a VOC content that 
is less than or equal to the VOC content limits have no periodic 
reporting requirements. Respondents using the recycled coatings 
provision must keep records and submit annual reports. Respondents 
taking advantage of the tonnage exemption must file annual reports and 
must maintain records for the coatings being claimed under the 
exemption. Respondents paying an exceedance fee must submit reports on 
an annual basis. These manufacturers must also keep records for each 
coating product on which fees are paid.
    Burden in this context means the total time, effort, or financial 
resources expended by persons to generate, maintain, retain, disclose, 
or provide information to or for a Federal agency. This includes the 
time needed to: (1) Review instructions; (2) 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; (3) adjust the 
existing ways to comply with any previously applicable instructions and

[[Page 48874]]

requirements; (4) train personnel to be able to respond to a collection 
of information; (5) search data sources; (6) complete and review the 
collection of information; and (7) 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 the 
EPA's regulations are listed in 40 CFR part 9 and 48 CFR chapter 15.
    Send comments on the EPA'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 to the Director, OPPE Regulatory Information 
Division, United States Environmental Protection Agency (2137), 401 M 
Street, SW, Washington, DC 20460, and to the Office of Information and 
Regulatory Affairs, Office of Management and Budget, 725 17th Street, 
N.W., Washington, DC 20503, marked ``Attention: Desk Officer for EPA.'' 
Comments are requested within October 13, 1998. Include the ICR number 
in any correspondence.

C. Executive Order 12866

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the EPA 
must determine whether a regulatory action is ``significant'' and 
therefore subject to OMB review and the requirements of the Executive 
Order. The Order defines ``significant regulatory action'' as one that 
is likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    Pursuant to the terms of the Executive Order, the EPA has 
determined that this final rule is a ``significant regulatory action'' 
under criterion (4) above, based on the novel use of economic 
incentives (an exceedance fee) for this industry. Therefore, the EPA 
submitted this action to OMB for review. Any changes made in response 
to OMB suggestions or recommendations are documented in the public 
record.

D. Executive Order 12875

    To reduce the burden of Federal regulations on States and small 
governments, the President issued Executive Order 12875 on October 26, 
1993, entitled Enhancing the Intergovernmental Partnership. This 
Executive Order requires agencies to assess the effects of regulations 
that are not required by statute and that create mandates upon State, 
local, or tribal governments. In compliance with Executive Order 12875, 
the EPA has involved State and local governments in the development of 
this rule. State and local air pollution control agencies participated 
in the regulatory negotiation and have also submitted comments after 
proposal for consideration in developing the final rule.

E. Regulatory Flexibility Act/Small Business Regulatory Enforcement 
Fairness Act of 1996

    The RFA of 1980 (5 U.S.C. 601, et seq.), as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), requires 
the EPA to give special consideration to the effect of Federal 
regulations on small entities and to consider regulatory options that 
might mitigate any such impacts. The EPA is required to prepare a 
regulatory flexibility analysis, including consideration of regulatory 
options for reducing any significant impacts, unless the EPA determines 
that a rule will not have a significant economic impact on a 
substantial number of small entities.
    The EPA prepared analyses to support both the proposed and final 
rules to meet the requirements of the RFA as modified by the SBREFA. 
The EPA undertook these analyses because of the large presence of small 
entities in the architectural coatings industry and because the EIA 
indicated that there could be a significant economic impact on a 
substantial number of small entities if mitigating regulatory options 
were not adopted for the rule. After evaluating public comment on the 
proposed mitigating options, the EPA made a number of changes to the 
proposed rule to further mitigate the rule's small business impacts. As 
a result, the EPA believes that it is highly unlikely that the rule 
will have a significant economic impact on a substantial number of 
small entities. However, in light of the EPA's inability to quantify 
the effect of all of the mitigating provisions included in the rule, 
the EPA has elected to conduct a regulatory flexibility analysis and to 
prepare a SBREFA compliance guide to eliminate any potential dispute 
about whether the EPA has fulfilled SBREFA requirements. The EPA 
expects to complete the compliance guide by the end of 1998.
    The analysis supporting the proposed rule was published in the 
report titled, ``Economic Impact and Regulatory Flexibility Analysis of 
Air Pollution Regulations: Architectural and Industrial Maintenance 
Coatings,'' (June 1996). For the purpose of the analysis, the EPA 
considered small manufacturers to be firms with less than $10 million 
of total gross annual revenues from the sale of architectural coatings 
and less than $50 million in total gross annual revenues from all 
products. The EPA proposed this definition of small entity for the 
reasons stated in the September 3, 1996 Federal Register (61 FR 46411) 
and has determined that this definition is appropriate. The Small 
Business Administration has concurred on this definition of small 
entity.
    Using this definition, one-third of the 116 firms for which the EPA 
has survey data are classified as small. There are approximately 500 
total manufacturers. Since the EPA does not have data to indicate the 
total number of small firms producing architectural coatings, the EPA 
assumes as a conservative estimate that the unsurveyed manufacturer 
population (i.e., the remaining 384 manufacturers) are all small, and 
consequently, all product volume not captured by the 116 manufacturers 
surveyed is manufactured by small firms. Using this assumption, the EPA 
conducted an analysis that assumed 84 percent of the estimated 500 
architectural coating producers, i.e., 420 firms, are small entities.
    Based on an analysis of the survey data at proposal, the EPA 
recognized the fact that small businesses tend to produce products in 
specialized or niche markets and also to produce products that tend to 
have higher than industry-average VOC contents within less specialized 
markets. In addition, small manufacturers' revenue and production 
levels are generally lower than the average for all manufacturers. One 
benefit of their smaller production levels is that small manufacturers 
have a greater ability to adjust quickly to changes in markets. 
However, because the costs to reformulate are fixed for all levels of 
production, and small manufacturers have lower than average production 
levels, the costs for small manufacturers to reformulate represents a 
greater share of baseline costs and revenues. Without any rule 
provisions designed to mitigate impacts on small

[[Page 48875]]

manufacturers' niche markets and smaller production levels, there is 
some indication that a disproportionate impact on small businesses 
could occur.
    At proposal, the EPA included categories and limits to preserve 
niche product markets. In addition, to evaluate whether further steps 
were still needed to accommodate niche market coatings, the EPA 
requested that commenters identify any additional specialty coatings 
which would not comply with VOC content requirements. The EPA also 
requested comment on whether to include an ``exceedance fee'' which 
would allow companies the option of paying a fee, based on the amount 
that VOC content limits are exceeded, instead of achieving the limit. 
In addition, the EPA requested comment on the concept of a low volume 
cut-off, under which a coating may be exempt from regulation. The 
analysis prepared to support the final rule builds upon the analysis 
performed for the proposal and takes into consideration compliance 
options the EPA has added to the final rule.
    Due to confidentiality considerations associated with the survey 
data provided by the industry trade association, the EPA could not 
derive compliance cost as a percentage of revenues for each small 
manufacturer included in the survey population. This is because the 
aggregated information provided to the EPA did not have sales and VOC 
content information linked to any particular small manufacturer. The 
data compiled all responses for small manufacturers without any 
indication of firm name. Therefore, individual product VOC content 
information is available, and total revenues of all firms responding to 
the survey as a small business is available, but no method exists for 
the EPA to connect each response to an individual firm for a 
calculation of actual firm-level cost-to-revenues ratios. Absent exact 
information for each firm, the EPA performed the analysis based upon an 
average small business, using reasonable assumptions based upon the 
available data. In lieu of firm-level measures, the analysis presents 
an average cost/revenue ratio for a typical small firm based on the 
survey data.
    The analysis has several other limitations. Although the EPA 
included specialty niche market categories in the rule, based on the 
data available to the EPA, there was no way to account for the extent 
to which these additional categories mitigated impacts. For example, 
the EPA's proposal included the following categories: ``impacted 
immersion coatings'', ``flow coatings'', and ``nonferrous ornamental 
metal lacquer and surface coatings'' which likely would have been 
reported in the survey under the broader ``industrial maintenance'' 
category. The analysis would likely overestimate impacts on some of the 
markets represented in the survey due to the inability to account for 
the subset niche markets within these surveyed categories for which the 
EPA created additional categories. Additionally, the EPA's analysis 
assumes that manufacturers bear the full cost of each reformulation. 
Since the VOC content limits in the rule reflect available resin 
technologies, the EPA expects that the cost to comply for those 
manufacturers needing to reformulate their higher VOC content coatings 
will be partially reduced through the assistance of resin 
manufacturers/suppliers. Upon request, most resin suppliers are willing 
to share information and sample low VOC content formulations with 
interested paint manufacturers, both large and small. For this reason, 
the analysis may overestimate the impact of reformulation costs. A 
further consideration is that the EPA's analysis is based on 1990 data, 
and there has been much technological progress in the past 8 years in 
addition to new State regulations with requirements similar to the 
EPA's rule (e.g., Massachusetts, Kentucky, and Oregon).
    In response to public comments, the EPA added 7 coating categories 
and increased the VOC content limits for 4 coating categories, as well 
as the exceedance fee provision and a provision which would enable each 
manufacturer to claim as exempt a specified amount of VOC (known as the 
tonnage exemption). The EPA also added an extended period of compliance 
after promulgation to allow additional time for reformulations. The EPA 
expects these provisions to mitigate rule impacts on small businesses' 
low production volumes and to allow for the preservation of several 
niche markets. However, based on the limited data available to the EPA, 
only the mitigating impact of exceedance fees can be quantified.
    The EPA first conducted the analysis without incorporating the 
quantifiable mitigating impacts of compliance options available in the 
final rule. The analysis shows that when reformulation is the only 
option for compliance, the cost/revenue ratio is 2.5 percent on 
average. When the alternative compliance options of the exceedance fee 
or product withdrawal are considered, the ratio decreases to 2 percent. 
This ratio would likely decrease further if the cost effects of the 
additional niche product categories, use of the tonnage exemption, and 
reduction in cost to reformulate due to resin supplier assistance could 
be specifically quantified.
    The analysis in the EIA suggests that a large percentage of small 
firms will opt for one of the alternative compliance strategies in lieu 
of reformulation. For some of the products listed in the survey as 
produced by a small manufacturer, the EPA anticipates that it would be 
less costly for a firm to utilize the exemption provision, pay the 
exceedance fee, or withdraw a product (and forego profits on the 
product) rather than to reformulate. Although the lack of data at the 
firm level does not allow for an approximation of the use of the 
exemption, the analysis suggests that 35.5 percent of the small 
business products in the survey that exceed the standards will be 
maintained at current VOC content levels through the payment of the 
exceedance fee, 4 percent will be removed from the market, and 60.5 
percent of the products will undergo reformulation. The availability of 
the alternative compliance strategies reduces the cost to small 
manufacturers by 23 percent (or more if the effect of the tonnage 
exemption and the portion of reformulation cost borne by resin 
manufacturers/suppliers could be quantified).
    Based on the findings of the analysis and consideration of 
additional provisions which are designed to mitigate impacts, the EPA 
believes that it is highly unlikely that the rule will have a 
significant economic impact on a substantial number of small entities. 
The EPA believes that these measures adopted in the final rule will 
significantly mitigate the economic impacts on small businesses that 
might otherwise have occurred.

F. Unfunded Mandates Reform Act of 1995

    Under section 202 of the Unfunded Mandates Reform Act of 1995 
(``Unfunded Mandates Act''), signed into law on March 22, 1995, the EPA 
must prepare a budgetary impact statement to accompany any proposed or 
final rule that includes a Federal mandate that may result in estimated 
costs to State, local, or tribal governments in the aggregate, or to 
the private sector, of $100 million or more in any one year. Under 
section 205, the EPA must select the most cost-effective and least 
burdensome alternative that achieves the objectives of the rule and is 
consistent with statutory requirements. Section 203 requires the EPA to 
establish a plan for informing and advising any small governments

[[Page 48876]]

that may be significantly or uniquely impacted by the rule.
    Based upon the analysis presented in the EIA, the EPA has 
determined that the action promulgated today does not include a Federal 
mandate that may result in estimated costs of $100 million or more to 
either State, local, or tribal governments in the aggregate, or to the 
private sector, in any one year. Therefore, the requirements of 
sections 202 and 205 of the Unfunded Mandates Reform Act do not apply 
to this action. The EPA has likewise determined that the final rule 
does not include regulatory requirements that would significantly or 
uniquely affect small governments. Thus, today's action is not subject 
to the requirements of section 203 of the Unfunded Mandates Act.

G. Submission to Congress and the General Accounting Office

    The Congressional Review Act, 5 U.S.C. 801, et seq., as added by 
the SBREFA of 1996, generally provides that before a rule may take 
effect, the agency promulgating the rule must submit a rule report, 
which includes a copy of the rule, to each House of the Congress and to 
the Comptroller General of the United States. The EPA will submit a 
report containing this rule and other required information to the 
United States Senate, the United States House of Representatives, and 
the Comptroller General of the United States prior to publication of 
the rule in the Federal Register. A Major rule cannot take effect until 
60 days after it is published in the Federal Register. This rule is not 
a ``major rule'' as defined by 5 U.S.C. 804(2). This rule will be 
effective September 11, 1998.

H. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (the NTTAA), Pub. L. No. 104-113, Sec. 12(d) (15 U.S.C. 272 
note), directs the EPA to use voluntary consensus standards in its 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials specifications, test methods, 
sampling procedures, business practices, etc.) that are developed or 
adopted by voluntary consensus standard bodies. The NTTAA requires the 
EPA to provide Congress, through OMB, explanations when the EPA decides 
not to use available and applicable voluntary consensus standards.
    In the case of this rule, the proposed rule required the use of 
Method 24 to determine VOC content of coatings. This method is a 
compilation of existing voluntary consensus methods to determine the 
volatile matter content, water content, and density of coatings. In 
response to the proposed rule, the EPA received no comments pertaining 
to the use of additional voluntary consensus standards rather than the 
proposed Method 24, either during or after the comment period. In 
preparing the final rule, however, the EPA has investigated to 
determine the availability of any other existing voluntary consensus 
standards for use in lieu of Method 24.
    The EPA has searched for additional voluntary consensus standards 
that might be applicable. The search included use of the National 
Standards System Network, an automated service provided by the American 
National Standards Institute for identifying available national and 
international standards. The EPA has not identified any voluntary 
consensus standards that are not presently included in Method 24 and 
that would result in equivalent results. The EPA did identify another 
voluntary consensus method (ASTM Method D 3960) that provides 
instructions for calculating VOC content in many different units. 
Because this other method does not specify which units to use, it may 
result in inconsistent applications of the procedure and could make the 
standard more difficult to enforce. Consequently, the EPA determined 
that this other voluntary consensus method would be impractical to 
adopt. In addition, the EPA believes that it is appropriate to use 
Method 24 both because it has proven reliable and practical to achieve 
the goals of reducing VOC and because the EPA wishes to foster 
uniformity in testing nationwide. Accordingly, the EPA has determined 
that Method 24 constitutes the appropriate method for determining 
product compliance under this final rule.

I. Executive Order 13045

    Executive Order 13045 applies to any rule that the EPA determines 
(1) is economically significant as defined under Executive Order 12866, 
and (2) for which the environmental health or safety risk addressed by 
the rule has a disproportionate effect on children. If the regulatory 
action meets both criteria, the EPA must evaluate the environmental 
health or safety effects of the planned rule on children and explain 
why the planned regulation is preferable to other potentially effective 
and reasonably feasible alternatives considered by the EPA.
    This final rule is not subject to Executive Order 13045, entitled 
Protection of Children from Environmental Health Risks and Safety Risks 
(62 FR 19885, April 23, 1997), because it is not an economically 
significant regulatory action as defined by Executive Order 12866, and 
it does not address an environmental health or safety risk that would 
have a disproportionate effect on children.
Executive Order 13084
    Under Executive Order 13084, the EPA may not issue a regulation 
that is not required by statute, that significantly or uniquely affects 
the communities of Indian tribal governments, and that imposes 
substantial direct compliance costs on those communities, unless the 
Federal government provides the funds necessary to pay the direct 
compliance costs incurred by the tribal governments, or the EPA 
provides to the Office of Management and Budget a description of the 
prior consultation and communications the agency has had with 
representatives of tribal governments and a statement supporting the 
need to issue the regulation. In addition, Executive Order 13084 
requires the EPA to develop an effective process permitting elected and 
other representatives of Indian tribal governments ``to provide 
meaningful and timely input in the development of regulatory policies 
on matters that significantly or uniquely affect their communities.'' 
Information available to the Administrator does not indicate that this 
action will have any effect on Indian tribal governments.

List of Subjects in 40 CFR Part 59

    Environmental protection, Air pollution control, Architectural 
coatings, Consumer and commercial products, Incorporation by reference, 
Ozone, volatile organic compound.

    Dated: August 14, 1998.
Carol M. Browner,
Administrator.
    For the reasons set out in the preamble, part 59 of title 40 of the 
Code of Federal Regulations is amended as follows:

PART 59--NATIONAL VOLATILE ORGANIC COMPOUND EMISSION STANDARDS FOR 
CONSUMER AND COMMERCIAL PRODUCTS

    1. The authority citation for part 59 continues to read as follows:

    Authority: 42 U.S.C. 7401, et seq.

    2. Part 59 is amended by adding subpart D to read as follows:

[[Page 48877]]

Subpart D--National Volatile Organic Compound Emission Standards for 
Architectural Coatings

Secs.
59.400  Applicability and compliance dates.
59.401  Definitions.
59.402  VOC content limits.
59.403  Exceedance fees.
59.404  Tonnage exemption.
59.405  Container labeling requirements.
59.406  Compliance provisions.
59.407  Recordkeeping requirements.
59.408  Reporting requirements.
59.409  Addresses of EPA Regional Offices.
59.410  State authority.
59.411  Circumvention.
59.412  Incorporations by reference.
59.413  Availability of information and confidentiality.
Appendix A to subpart D--Determination of Volatile Matter Content of 
Methacrylate Multicomponent Coatings Used as Traffic Marking 
Coatings
Table 1 to Subpart D--Volatile Organic Compound (VOC) Content Limits 
for Architectural Coatings

Subpart D--National Volatile Organic Compound Emission Standards 
for Architectural Coatings


Sec. 59.400  Applicability and compliance dates.

    (a) Except as provided in paragraphs (b) and (c) of this section, 
the provisions of this subpart apply to each architectural coating 
manufactured on or after September 13, 1999 for sale or distribution in 
the United States.
    (b) For any architectural coating registered under the Federal 
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136, et 
seq.), the provisions of this subpart apply to any such coating 
manufactured on or after March 13, 2000 for sale or distribution in the 
United States.
    (c) The provisions of this subpart do not apply to any 
architectural coating described in paragraphs (c)(1) through (c)(5) of 
this section:
    (1) A coating that is manufactured for sale or distribution to 
architectural coating markets outside the United States; such a coating 
must not be sold or distributed within the United States as an 
architectural coating.
    (2) A coating that is manufactured prior to September 13, 1999.
    (3) A coating that is sold in a nonrefillable aerosol container.
    (4) A coating that is collected and redistributed at a paint 
exchange.
    (5) A coating that is sold in a container with a volume of one 
liter or less.


Sec. 59.401  Definitions.

    Act means the Clean Air Act (42 U.S.C. 7401, et seq., as amended by 
Pub. L. 101-549, 104 Stat. 2399).
    Adhesive means any chemical substance that is applied for the 
purpose of bonding two surfaces together other than by mechanical 
means. Under this subpart, adhesives are not considered coatings.
    Administrator means the Administrator of the United States 
Environmental Protection Agency (U.S. EPA) or an authorized 
representative.
    Antenna coating means a coating formulated and recommended for 
application to equipment and associated structural appurtenances that 
are used to receive or transmit electromagnetic signals.
    Anti-fouling coating means a coating formulated and recommended for 
application to submerged stationary structures and their appurtenances 
to prevent or reduce the attachment of marine or freshwater biological 
organisms, including, but not limited to, coatings registered with the 
EPA under the Federal Insecticide, Fungicide, and Rodenticide Act (7 
U.S.C. Section 136, et seq.) and nontoxic foul-release coatings.
    Anti-graffiti coating means a clear or opaque high performance 
coating formulated and recommended for application to interior and 
exterior walls, doors, partitions, fences, signs, and murals to deter 
adhesion of graffiti and to resist repeated scrubbing and exposure to 
harsh solvents, cleansers, or scouring agents used to remove graffiti.
    Appurtenance means any accessory to a stationary structure, whether 
installed or detached at the proximate site of installation, including 
but not limited to: bathroom and kitchen fixtures; cabinets; concrete 
forms; doors; elevators; fences; hand railings; heating equipment, air 
conditioning equipment, and other fixed mechanical equipment or 
stationary tools; lamp posts; partitions; pipes and piping systems; 
rain gutters and downspouts; stairways, fixed ladders, catwalks, and 
fire escapes; and window screens.
    Architectural coating means a coating recommended for field 
application to stationary structures and their appurtenances, to 
portable buildings, to pavements, or to curbs. This definition excludes 
adhesives and coatings recommended by the manufacturer or importer 
solely for shop applications or solely for application to non-
stationary structures, such as airplanes, ships, boats, and railcars.
    Below-ground wood preservative means a coating that is formulated 
and recommended to protect below-ground wood from decay or insect 
attack and that is registered with the EPA under the Federal 
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136, et 
seq.).
    Bituminous coating and mastic means a coating or mastic formulated 
and recommended for roofing, pavement sealing, or waterproofing that 
incorporates bitumens. Bitumens are black or brown materials including, 
but not limited to, asphalt, tar, pitch, and asphaltite that are 
soluble in carbon disulfide, consist mainly of hydrocarbons, and are 
obtained from natural deposits of asphalt or as residues from the 
distillation of crude petroleum or coal.
    Bond breaker means a coating formulated and recommended for 
application between layers of concrete to prevent a freshly poured top 
layer of concrete from bonding to the layer over which it is poured.
    Calcimine recoater means a flat solventborne coating formulated and 
recommended specifically for recoating calcimine-painted ceilings and 
other calcimine-painted substrates.
    Chalkboard resurfacer means a coating formulated and recommended 
for application to chalkboards to restore a suitable surface for 
writing with chalk.
    Clear means allowing light to pass through, so that the substrate 
may be distinctly seen.
    Coating means a material applied onto or impregnated into a 
substrate for protective, decorative, or functional purposes. Such 
materials include, but are not limited to, paints, varnishes, sealants, 
inks, maskants, and temporary coatings. Protective, decorative, or 
functional materials that consist only of solvents, acids, bases, or 
any combination of these substances are not considered coatings for the 
purposes of this subpart.
    Colorant means a concentrated pigment dispersion of water, solvent, 
and/or binder that is added to an architectural coating in a paint 
store or at the site of application to produce the desired color.
    Concrete curing compound means a coating formulated and recommended 
for application to freshly placed concrete to retard the evaporation of 
water.
    Concrete curing and sealing compound means a liquid membrane-
forming compound marketed and sold solely for application to concrete 
surfaces to reduce the loss of water during the hardening process and 
to seal old and new concrete providing resistance against alkalis, 
acids, and ultraviolet light, and provide adhesion promotion qualities. 
The coating must meet the requirements of American Society for Testing 
and Materials (ASTM) C 1315-95, Standard

[[Page 48878]]

Specification for Liquid Membrane-Forming Compounds Having Special 
Properties for Curing and Sealing Concrete (incorporated by reference--
see Sec. 59.412 of this subpart).
    Concrete protective coating means a high-build coating, formulated 
and recommended, for application in a single coat over concrete, 
plaster, or other cementitious surfaces. These coatings are formulated 
to be primerless, one-coat systems that can be applied over form oils 
and/or uncured concrete. These coatings prevent spalling of concrete in 
freezing temperatures by providing long-term protection from water and 
chloride ion intrusion.
    Concrete surface retarder means a mixture of retarding ingredients 
such as extender pigments, primary pigments, resin, and solvent that 
interact chemically with the cement to prevent hardening on the surface 
where the retarder is applied, allowing the retarded mix of cement and 
sand at the surface to be washed away to create an exposed aggregate 
finish.
    Container means the individual receptacle that holds the coating 
for storage and/or sale or distribution.
    Conversion varnish means a clear acid curing coating with an alkyd 
or other resin blended with amino resins and supplied as a single 
component or two-component product. Conversion varnishes produce a 
hard, durable, clear finish designed for professional application to 
wood flooring. The film formation is the result of an acid-catalyzed 
condensation reaction, affecting a transetherification at the reactive 
ethers of the amino resins.
    Dry fog coating means a coating formulated and recommended only for 
spray application such that overspray droplets dry before subsequent 
contact with incidental surfaces in the vicinity of the surface coating 
activity.
    Exempt compounds means specific organic compounds that are not 
considered volatile organic compounds (VOC) due to negligible 
photochemical reactivity. The exempt compounds are specified in 40 CFR 
51.100.
    Exterior coating means an architectural coating formulated and 
recommended for use in conditions exposed to the weather.
    Extreme high durability coating means an air dry coating, including 
a fluoropolymer-based coating, that is formulated and recommended for 
touchup of precoated architectural aluminum extrusions and panels and 
to ensure the protection of architectural subsections, and that meets 
the weathering requirements of American Architectural Manufacturer's 
Association (AAMA) specification 605-98, Voluntary Specification 
Performance Requirements and Test Procedures for High Performance 
Organic Coatings on Aluminum Extrusions and Panels, Section 7.9 
(incorporated by reference--see Sec. 59.412 of this subpart).
    Faux-finishing/glazing means a coating used for wet-in-wet 
techniques, such as faux woodgrain, faux marble, and simulated aging, 
which require the finish to remain wet for an extended period of time.
    Fire-retardant/resistive coating means a coating formulated and 
recommended to retard ignition and flame spread, or to delay melting or 
structural weakening due to high heat, that has been fire tested and 
rated by a certified laboratory for use in bringing buildings and 
construction materials into compliance with Federal, State, and local 
building code requirements.
    Flat coating means a coating that is not defined under any other 
definition in this section and that registers gloss less than 15 on an 
85-degree meter or less than 5 on a 60-degree meter according to ASTM 
Method D 523-89, Standard Test Method for Specular Gloss (incorporated 
by reference--see Sec. 59.412 of this subpart).
    Floor coating means an opaque coating with a high degree of 
abrasion resistance that is formulated and recommended for application 
to flooring including, but not limited to, decks, porches, and steps in 
a residential setting.
    Flow coating means a coating that is used by electric power 
companies or their subcontractors to maintain the protective coating 
systems present on utility transformer units.
    Form release compound means a coating formulated and recommended 
for application to a concrete form to prevent the freshly placed 
concrete from bonding to the form. The form may consist of wood, metal, 
or some material other than concrete.
    Graphic arts coating or sign paint means a coating formulated and 
recommended for hand-application by artists using brush or roller 
techniques to indoor or outdoor signs (excluding structural components) 
and murals including lettering enamels, poster colors, copy blockers, 
and bulletin enamels.
    Heat reactive coating means a high performance phenolic-based 
coating requiring a minimum temperature of 191  deg.C (375  deg.F) to 
204  deg.C (400  deg.F) to obtain complete polymerization or cure. 
These coatings are formulated and recommended for commercial and 
industrial use to protect substrates from degradation and maintain 
product purity in which one or more of the following extreme conditions 
exist:
    (1) Continuous or repeated immersion exposure of 90 to 98 percent 
sulfuric acid, or oleum;
    (2) Continuous or repeated immersion exposure to strong organic 
solvents;
    (3) Continuous or repeated immersion exposure to petroleum 
processing at high temperatures and pressures; and
    (4) Continuous or repeated immersion exposure to food or 
pharmaceutical products which may or may not require high temperature 
sterilization.
    High temperature coating means a high performance coating 
formulated and recommended for application to substrates exposed 
continuously or intermittently to temperatures above 202 deg.C 
(400 deg.F).
    Impacted immersion coating means a high performance maintenance 
coating formulated and recommended for application to steel structures 
subject to immersion in turbulent, debris-laden water. These coatings 
are specifically resistant to high-energy impact damage caused by 
floating ice or debris.
    Imported means that a coating manufactured outside the United 
States has been brought into the United States for sale or 
distribution.
    Importer means a person that brings architectural coatings into the 
United States for sale or distribution within the United States. This 
definition does not include any person that brings a coating into the 
United States and repackages the coating by transferring it from one 
container to another, provided the coating VOC content is not altered 
and the coating is not sold or distributed to another party. For 
purposes of applying this definition, divisions of a company, 
subsidiaries, and parent companies are considered to be a single 
importer.
    Industrial maintenance coating means a high performance 
architectural coating, including primers, sealers, undercoaters, 
intermediate coats, and topcoats formulated and recommended for 
application to substrates exposed to one or more of the following 
extreme environmental conditions in an industrial, commercial, or 
institutional setting:
    (1) Immersion in water, wastewater, or chemical solutions (aqueous 
and nonaqueous solutions), or chronic exposure of interior surfaces to 
moisture condensation;
    (2) Acute or chronic exposure to corrosive, caustic, or acidic 
agents, or to chemicals, chemical fumes, or chemical mixtures or 
solutions;
    (3) Repeated exposure to temperatures above 120  deg.C (250 
deg.F);
    (4) Repeated (frequent) heavy abrasion, including mechanical wear

[[Page 48879]]

and repeated (frequent) scrubbing with industrial solvents, cleansers, 
or scouring agents; or
    (5) Exterior exposure of metal structures and structural 
components.
    Interior clear wood sealer means a low viscosity coating formulated 
and recommended for sealing and preparing porous wood by penetrating 
the wood and creating a uniform smooth substrate for a finish coat of 
paint or varnish.
    Interior coating means an architectural coating formulated and 
recommended for use in conditions not exposed to natural weathering.
    Label means any written, printed, or graphic matter affixed to, 
applied to, attached to, blown into, formed, molded into, embossed on, 
or appearing upon any architectural coating container for purposes of 
branding, identifying, or giving information with respect to the 
product, use of the product, or contents of the container.
    Lacquer means a clear or pigmented wood finish, including clear 
lacquer sanding sealers, formulated with cellulosic or synthetic resins 
to dry by evaporation without chemical reaction and to provide a solid, 
protective film. Lacquer stains are considered stains, not lacquers.
    Low solids means containing 0.12 kilogram or less of solids per 
liter (1 pound or less of solids per gallon) of coating material and 
for which at least half of the volatile component is water.
    Magnesite cement coating means a coating formulated and recommended 
for application to magnesite cement decking to protect the magnesite 
cement substrate from erosion by water.
    Manufactured means that coating ingredients have been combined and 
put into containers that have been labeled and made available for sale 
or distribution.
    Manufacturer means a person that produces, packages, or repackages 
architectural coatings for sale or distribution in the United States. A 
person that repackages architectural coatings as part of a paint 
exchange, and does not produce, package, or repackage any other 
architectural coatings for sale or distribution in the United States, 
is excluded from this definition. A person that repackages a coating by 
transferring it from one container to another is excluded from this 
definition, provided the coating VOC content is not altered and the 
coating is not sold or distributed to another party. For purposes of 
applying this definition, divisions of a company, subsidiaries, and 
parent companies are considered to be a single manufacturer.
    Mastic texture coating means a coating formulated and recommended 
to cover holes and minor cracks and to conceal surface irregularities, 
and is applied in a single coat of at least 10 mils (0.010 inch) dry 
film thickness.
    Metallic pigmented coating means a nonbituminous coating containing 
at least 0.048 kilogram of metallic pigment per liter of coating (0.4 
pound per gallon) including, but not limited to, zinc pigment.
    Multi-colored coating means a coating that is packaged in a single 
container and exhibits more than one color when applied.
    Nonferrous ornamental metal lacquers and surface protectant means a 
clear coating formulated and recommended for application to ornamental 
architectural metal substrates (bronze, stainless steel, copper, brass, 
and anodized aluminum) to prevent oxidation, corrosion, and surface 
degradation.
    Nonflat coating means a coating that is not defined under any other 
definition in this section and that registers a gloss of 15 or greater 
on an 85-degree meter or 5 or greater on a 60-degree meter according to 
ASTM Method D 523-89, Standard Test Method for Specular Gloss 
(incorporated by reference--see Sec. 59.412 of this subpart).
    Nuclear coating means a protective coating formulated and 
recommended to seal porous surfaces such as steel (or concrete) that 
otherwise would be subject to intrusion by radioactive materials. These 
coatings must be resistant to long-term (service life) cumulative 
radiation exposure (ASTM Method D 4082-89, Standard Test Method for 
Effects of Gamma Radiation on Coatings for Use in Light-Water Nuclear 
Power Plants (incorporated by reference--see Sec. 59.412 of this 
subpart)), relatively easy to decontaminate, and resistant to various 
chemicals to which the coatings are likely to be exposed (ASTM Method D 
3912-80 (Reapproved 1989), Standard Test Method for Chemical Resistance 
of Coatings Used in Light-Water Nuclear Power Plants (incorporated by 
reference--see Sec. 59.412 of this subpart)).
    Opaque means not allowing light to pass through, so that the 
substrate is concealed from view.
    Paint exchange means a program in which consumers, excluding 
architectural coating manufacturers and importers, may drop off and 
pick up usable post-consumer architectural coatings in order to reduce 
hazardous waste.
    Person means an individual, corporation, partnership, association, 
State municipality, political subdivision of a State, and any agency, 
department, or instrumentality of the United States and any officer, 
agent, or employee thereof.
    Pigmented means containing finely ground insoluble powder used to 
provide one or more of the following properties: color; corrosion 
inhibition; conductivity; fouling resistance; opacity; or improved 
mechanical properties.
    Post-consumer coating means an architectural coating that has 
previously been purchased by a consumer or distributed to a consumer 
but not applied, and reenters the marketplace to be purchased by or 
distributed to a consumer. Post-consumer coatings include, but are not 
limited to, coatings collected during hazardous waste collection 
programs for repackaging or blending with virgin coating materials.
    Pretreatment wash primer means a primer that contains a minimum of 
0.5 percent acid, by weight, that is formulated and recommended for 
application directly to bare metal surfaces in thin films to provide 
corrosion resistance and to promote adhesion of subsequent topcoats.
    Primer means a coating formulated and recommended for application 
to a substrate to provide a firm bond between the substrate and 
subsequent coatings.
    Quick-dry enamel means a nonflat coating that has the following 
characteristics:
    (1) Is capable of being applied directly from the container under 
normal conditions with ambient temperatures between 16 and 27 deg.C (60 
and 80 deg.F);
    (2) When tested in accordance with ASTM Method D 1640-83 
(Reapproved 1989), Standard Test Methods for Drying, Curing, or Film 
Formation of Organic Coatings at Room Temperature (incorporated by 
reference--see Sec. 59.412), sets to touch in 2 hours or less, is tack 
free in 4 hours or less, and dries hard in 8 hours or less by the 
mechanical test method; and
    (3) Has a dried film gloss of 70 or above on a 60 degree meter.
    Quick-dry primer, sealer, and undercoater means a primer, sealer, 
or undercoater that is dry to the touch in a \1/2\ hour and can be 
recoated in 2 hours when tested in accordance with ASTM Method D 1640-
83 (Reapproved 1989), Standard Test Methods for Drying, Curing, or Film 
Formation of Organic Coatings at Room Temperature (incorporated by 
reference--see Sec. 59.412 of this subpart).
    Recycled coating means an architectural coating that contains some 
portion of post-consumer coating. Recycled architectural coatings 
include, but are not limited to, post-consumer

[[Page 48880]]

coatings that have been repackaged or blended with virgin coating 
materials.
    Repackage means to transfer an architectural coating from one 
container to another.
    Repair and maintenance thermoplastic coating means an industrial 
maintenance coating that has vinyl or chlorinated rubber as a primary 
resin and is recommended solely for the repair of existing vinyl or 
chlorinated rubber coatings without the full removal of the existing 
coating system.
    Roof coating means a coating formulated and recommended for 
application to exterior roofs for the primary purpose of preventing 
penetration of the substrate by water or reflecting heat and reflecting 
ultraviolet radiation. This does not include thermoplastic rubber 
coatings.
    Rust preventative coating means a coating formulated and 
recommended for use in preventing the corrosion of ferrous metal 
surfaces in residential situations.
    Sanding sealer means a clear wood coating formulated and 
recommended for application to bare wood to seal the wood and to 
provide a coat that can be sanded to create a smooth surface. A sanding 
sealer that also meets the definition of a lacquer is not included in 
this category, but is included in the lacquer category.
    Sealer means a coating formulated and recommended for application 
to a substrate for one or more of the following purposes: to prevent 
subsequent coatings from being absorbed by the substrate; to prevent 
harm to subsequent coatings by materials in the substrate; to block 
stains, odors, or efflorescence; to seal fire, smoke, or water damage; 
or to condition chalky surfaces.
    Semitransparent means not completely concealing the surface of a 
substrate or its natural texture or grain pattern.
    Shellac means a clear or pigmented coating formulated with natural 
resins (except nitrocellulose resins) soluble in alcohol (including, 
but not limited to, the resinous secretions of the lac beetle, Laciffer 
lacca). Shellacs dry by evaporation without chemical reaction and 
provide a quick-drying, solid protective film that may be used for 
blocking stains.
    Shop application means that a coating is applied to a product or a 
component of a product in a factory, shop, or other structure as part 
of a manufacturing, production, or repairing process (e.g., original 
equipment manufacturing coatings).
    Stain means a coating that produces a dry film with minimal 
coloring. This includes lacquer stains.
    Stain controller means a conditioner or pretreatment coating 
formulated and recommended for application to wood prior to the 
application of a stain in order to prevent uneven penetration of the 
stain.
    Swimming pool coating means a coating formulated and recommended to 
coat the interior of swimming pools and to resist swimming pool 
chemicals.
    Thermoplastic rubber coating and mastic means a coating or mastic 
formulated and recommended for application to roofing or other 
structural surfaces and that incorporates no less than 40 percent by 
weight of thermoplastic rubbers in the total resin solids and may also 
contain other ingredients including, but not limited to, fillers, 
pigments, and modifying resins.
    Tint base means a coating to which colorant is added in a paint 
store or at the site of application to produce a desired color.
    Traffic marking coating means a coating formulated and recommended 
for marking and striping streets, highways, or other traffic surfaces 
including, but not limited to, curbs, berms, driveways, parking lots, 
sidewalks, and airport runways.
    Undercoater means a coating formulated and recommended to provide a 
smooth surface for subsequent coatings.
    United States means the United States of America, including the 
District of Columbia, the Commonwealth of Puerto Rico, the Virgin 
Islands, Guam, American Samoa, and the Commonwealth of the Northern 
Mariana Islands.
    Varnish means a clear or semi-transparent coating, excluding 
lacquers and shellacs, formulated and recommended to provide a durable, 
solid, protective film. Varnishes may contain small amounts of pigment 
to color a surface, or to control the final sheen or gloss of the 
finish.
    Volatile organic compound or VOC means any organic compound that 
participates in atmospheric photochemical reactions, that is, any 
organic compound other than those which the Administrator designates as 
having negligible photochemical reactivity. For a list of compounds 
that the Administrator has designated as having negligible 
photochemical reactivity, also referred to as exempt compounds, refer 
to 40 CFR 51.100(s).
    VOC content means the weight of VOC per volume of coating, 
calculated according to the procedures in Sec. 59.406(a) of this 
subpart.
    Waterproofing sealer and treatment means a coating formulated and 
recommended for application to a porous substrate for the primary 
purpose of preventing the penetration of water.
    Wood preservative means a coating formulated and recommended to 
protect exposed wood from decay or insect attack, registered with the 
EPA under the Federal Insecticide, Fungicide, and Rodenticide Act (7 
U.S.C. Section 136, et seq.).
    Zone marking coating means a coating formulated and recommended for 
marking and striping driveways, parking lots, sidewalks, curbs, or 
airport runways, and sold or distributed in a container with a volume 
of 19 liters (5 gallons) or less.


Sec. 59.402  VOC Content limits.

    (a) Each manufacturer and importer of any architectural coating 
subject to this subpart shall ensure that the VOC content of the 
coating does not exceed the applicable limit in table 1 of this 
subpart, except as provided in Secs. 59.403 and 59.404 of this subpart.
    (b) Except as provided in paragraph (c) of this section, if 
anywhere on the container of any architectural coating, or any label or 
sticker affixed to the container, or in any sales, advertising, or 
technical literature supplied by a manufacturer or importer or anyone 
acting on their behalf, any representation is made that indicates that 
the coating meets the definition of more than one of the coating 
categories listed in table 1 of this subpart, then the most restrictive 
VOC content limit shall apply.
    (c) The provision in paragraph (b) of this section does not apply 
to the coatings described in paragraphs (c)(1) through (c)(15) of this 
section.
    (1) High temperature coatings that are also recommended for use as 
metallic pigmented coatings are subject only to the VOC content limit 
in table 1 of this subpart for high temperature coatings.
    (2) Lacquer coatings (including lacquer sanding sealers) that are 
also recommended for use in other architectural coating applications to 
wood, except as stains, are subject only to the VOC content limit in 
table 1 of this subpart for lacquers.
    (3) Metallic pigmented coatings that are also recommended for use 
as roof coatings, industrial maintenance coatings, or primers are 
subject only to the VOC content limit in table 1 of this subpart for 
metallic pigmented coatings.
    (4) Shellacs that are also recommended for use as any other

[[Page 48881]]

architectural coating are subject only to the VOC content limit in 
table 1 of this subpart for shellacs.
    (5) Fire-retardant/resistive coatings that are also recommended for 
use as any other architectural coating are subject only to the VOC 
content limit in table 1 of this subpart for fire-retardant/resistive 
coatings.
    (6) Pretreatment wash primers that are also recommended for use as 
primers or that meet the definition for industrial maintenance coatings 
are subject only to the VOC content limit in table 1 of this subpart 
for pretreatment wash primers.
    (7) Industrial maintenance coatings that are also recommended for 
use as primers, sealers, undercoaters, or mastic texture coatings are 
subject only to the VOC content limit in table 1 of this subpart for 
industrial maintenance coatings.
    (8) Varnishes and conversion varnishes that are recommended for use 
as floor coatings are subject only to the VOC content limit in table 1 
of this subpart for varnishes and conversion varnishes, respectively.
    (9) Anti-graffiti coatings, high temperature coatings, impacted 
immersion coatings, thermoplastic rubber coatings and mastics, repair 
and maintenance thermoplastic coatings, and flow coatings that also 
meet the definition for industrial maintenance coatings are subject 
only to the VOC content limit in table 1 of this subpart for their 
respective categories (i.e., they are not subject to the industrial 
maintenance coatings VOC content limit in table 1 of this subpart).
    (10) Waterproofing sealers and treatments that also meet the 
definition for quick-dry sealers are subject only to the VOC content 
limit in table 1 of this subpart for waterproofing sealers and 
treatments.
    (11) Sanding sealers that also meet the definition for quick-dry 
sealers are subject only to the VOC content limit in table 1 of this 
subpart for sanding sealers.
    (12) Nonferrous ornamental metal lacquers and surface protectants 
that also meet the definition for lacquers are subject only to the VOC 
content limit in table 1 of this subpart for nonferrous ornamental 
metal lacquers and surface protectants.
    (13) Quick-dry primers, sealers, and undercoaters that also meet 
the definition for primers and undercoaters are subject only to the VOC 
content limit in table 1 of this subpart for quick-dry primers, 
sealers, and undercoaters.
    (14) Antenna coatings that also meet the definition for industrial 
maintenance coatings or primers are subject only to the VOC content 
limit in table 1 of this subpart for antenna coatings.
    (15) Bituminous coatings and mastics that are recommended for use 
as any other architectural coatings are subject only to the VOC content 
limit in table 1 of this subpart for bituminous coatings and mastics.


Sec. 59.403  Exceedance fees.

    (a) Except as provided in Sec. 59.404 of this subpart, each 
manufacturer and importer of any architectural coating subject to the 
provisions of this subpart may exceed the applicable VOC content limit 
in table 1 of this subpart for the coating if the manufacturer or 
importer pays an annual exceedance fee. The exceedance fee must be 
calculated using the procedures in paragraphs (b) and (c) of this 
section.
    (b) The exceedance fee paid by a manufacturer or importer, which is 
equal to the sum of the applicable exceedance fees for all coatings, 
must be calculated using equation 1 as follows:
[GRAPHIC] [TIFF OMITTED] TR11SE98.014

Where:

Annual Exceedance Fee=The total annual exceedance fee for a 
manufacturer or importer, in dollars.
Coating Feec=The annual exceedance fee for each coating (c), 
for which a fee applies, in dollars.
n=number of coatings to which a fee applies.

    (c) The exceedance fee to be paid for each coating must be 
determined using equation 2 as follows:
[GRAPHIC] [TIFF OMITTED] TR11SE98.015

Where:

Fee Rate = The rate of $0.0028 per gram of excess VOC.
Excess VOC = The VOC content of the coating, or adjusted VOC content of 
a recycled coating (if applicable), in grams of VOC per liter of 
coating, minus the applicable VOC content limit from table 1 of this 
subpart (that is, VOC content of the coating minus VOC content limit).
Volume Manufactured or Imported = The volume of the coating 
manufactured or imported per year, in liters, excluding any volume for 
which a tonnage exemption is claimed under Sec. 59.404 of this subpart.
    (d) The exceedance fee shall be paid no later than 2 months after 
the end of the calendar year in which the coatings are manufactured or 
imported, and shall be sent to the Regional Office of the U.S. 
Environmental Protection Agency, as listed in Sec. 59.409 of this 
subpart, that serves the State or Territory in which the corporate 
headquarters of the manufacturer or importer is located.


Sec. 59.404  Tonnage exemption.

    (a) Each manufacturer and importer of any architectural coating 
subject to the provisions of this subpart may designate a limited 
quantity of coatings to be exempt from the VOC content limits in table 
1 of this subpart and the exceedance fee provisions of Sec. 59.403 of 
this subpart, provided all of the requirements in paragraphs (a)(1) 
through (a)(4) of this section are met.
    (1) The total amount of VOC contained in all the coatings selected 
for exemption must be equal to or less than 23 megagrams (25 tons) for 
the period of time from September 13, 1999 through December 31, 2000; 
18 megagrams (20 tons) in the year 2001; and 9 megagams (10 tons) per 
year in the year 2002 and each subsequent year. The amount of VOC 
contained in each coating shall be calculated using the procedure in 
paragraph (b) of this section.
    (2) The container labeling requirements of Sec. 59.405 of this 
subpart.
    (3) The recordkeeping requirements of Sec. 59.407(c) of this 
subpart.
    (4) The reporting requirements of Sec. 59.408(b), (e), and (f) of 
this subpart.
    (b) Each manufacturer and importer choosing to use the exemption

[[Page 48882]]

described in paragraph (a) of this section must use equations 3 and 4 
to calculate the total amount of VOC for each time period the exemption 
is elected.
[GRAPHIC] [TIFF OMITTED] TR11SE98.016

Where:

Total VOC = Total megagrams of VOC contained in all coatings being 
claimed under the exemption.
VOCc = The amount of VOC, in megagrams, for each coating (c) 
claimed under the exemption, as computed by equation 4.
n = Number of coatings for which exemption is claimed.
[GRAPHIC] [TIFF OMITTED] TR11SE98.017

Where:

Volume Manufactured or Imported = Volume of the coating manufactured or 
imported, in liters, for the time period the exemption is claimed.
VOC Content = VOC content of the coating in grams of VOC per liter of 
coating thinned to the manufacturer's maximum recommendation, including 
the volume of any water, exempt compounds, or colorant added to tint 
bases.


Sec. 59.405  Container labeling requirements.

    (a) Each manufacturer and importer of any architectural coating 
subject to the provisions of this subpart shall provide the information 
listed in paragraphs (a)(1) through (a)(3) of this section on the 
coating container in which the coating is sold or distributed.
    (1) The date the coating was manufactured, or a date code 
representing the date shall be indicated on the label, lid, or bottom 
of the container.
    (2) A statement of the manufacturer's recommendation regarding 
thinning of the coating shall be indicated on the label or lid of the 
container. This requirement does not apply to the thinning of 
architectural coatings with water. If thinning of the coating prior to 
use is not necessary, the recommendation must specify that the coating 
is to be applied without thinning.
    (3) The VOC content of the coating as described in paragraph 
(a)(3)(i) or (a)(3)(ii) of this section shall be indicated on the label 
or lid of the container.
    (i) The VOC content of the coating, displayed in units of grams of 
VOC per liter of coating; or
    (ii) The VOC content limit in table 1 of this subpart with which 
the coating is required to comply and does comply, displayed in units 
of grams of VOC per liter of coating.
    (b) In addition to the information specified in paragraph (a) of 
this section, each manufacturer and importer of any industrial 
maintenance coating subject to the provisions of this subpart shall 
display on the label or lid of the container in which the coating is 
sold or distributed one or more of the descriptions listed in 
paragraphs (b)(1) through (b)(4) of this section.
    (1) ``For industrial use only.''
    (2) ``For professional use only.''
    (3) ``Not for residential use'' or ``Not intended for residential 
use.''
    (4) ``This coating is intended for use under the following 
condition(s):'' (Include each condition in paragraphs (b)(4)(i) through 
(b)(4)(v) of this section that applies to the coating.)
    (i) Immersion in water, wastewater, or chemical solutions (aqueous 
and nonaqueous solutions), or chronic exposure of interior surfaces to 
moisture condensation;
    (ii) Acute or chronic exposure to corrosive, caustic, or acidic 
agents, or to chemicals, chemical fumes, or chemical mixtures or 
solutions;
    (iii) Repeated exposure to temperatures above 120 deg. C (250 deg. 
F);
    (iv) Repeated (frequent) heavy abrasion, including mechanical wear 
and repeated (frequent) scrubbing with industrial solvents, cleansers, 
or scouring agents; or
    (v) Exterior exposure of metal structures and structural 
components.
    (c) In addition to the information specified in paragraph (a) of 
this section, each manufacturer and importer of any recycled coating 
who calculates the VOC content using equations 7 and 8 in 
Sec. 59.406(a)(3) of this subpart shall include the following statement 
indicating the post-consumer coating content on the label or lid of the 
container in which the coating is sold or distributed: ``CONTAINS NOT 
LESS THAN X PERCENT BY VOLUME POST-CONSUMER COATING,'' where ``X'' is 
replaced by the percent by volume of post-consumer architectural 
coating.


Sec. 59.406  Compliance provisions.

    (a) For the purpose of determining compliance with the VOC content 
limits in table 1 of this subpart, each manufacturer and importer shall 
determine the VOC content of a coating using the procedures described 
in paragraph (a)(1), (a)(2), or (a)(3) of this section, as appropriate. 
The VOC content of a tint base shall be determined without colorant 
that is added after the tint base is manufactured or imported.
    (1) With the exception of low solids stains and low solids wood 
preservatives, determine the VOC content in grams of VOC per liter of 
coating thinned to the manufacturer's maximum recommendation, excluding 
the volume of any water and exempt compounds. Calculate the VOC content 
using equation 5 as follows:
[GRAPHIC] [TIFF OMITTED] TR11SE98.018

Where:

VOC content = grams of VOC per liter of coating
Ws = weight of volatiles, in grams
Ww = weight of water, in grams
Wec = weight of exempt compounds, in grams
Vm = volume of coating, in liters
Vw = volume of water, in liters
Vec = volume of exempt compounds, in liters

    (2) For low solids stains and low solids wood preservatives, 
determine the VOC content in units of grams of VOC per liter of coating 
thinned to the manufacturer's maximum recommendation, including the 
volume of any water and exempt compounds. Calculate the VOC content 
using equation 6 as follows:
[GRAPHIC] [TIFF OMITTED] TR11SE98.019

Where:

VOC content 1s = the VOC content of a low solids coating in 
grams of VOC per liter of coating
Ws = weight of volatiles, in grams
Ww = weight of water, in grams
Wec = weight of exempt compounds, in grams
Vm = volume of coating, in liters

    (3) For recycled coatings, the manufacturer or importer has the 
option of calculating an adjusted VOC content to account for the post-
consumer

[[Page 48883]]

coating content. If this option is used, the manufacturer or importer 
shall determine the adjusted VOC content using equations 7 and 8 as 
follows:
Where:

[GRAPHIC] [TIFF OMITTED] TR11SE98.020

Adjusted VOC content = The VOC content assigned to the recycled coating 
for purposes of complying with the VOC content limits in table 1 of 
this subpart.
Actual VOC content = The VOC content of the coating as determined using 
equation 5 in paragraph (a)(1) of this section.
Percent Post-consumer Coating = The volume percent of a recycled 
coating that is post-consumer coating materials (as determined in 
equation 8)
[GRAPHIC] [TIFF OMITTED] TR11SE98.021

Where:

Percent Post-consumer Coating = The volume percent of a recycled 
coating that is post-consumer coating materials.
Volume of Post-consumer Coating = The volume, in liters, of post-
consumer coating materials used in the production of a recycled 
coating.
Volume of Virgin Materials = The volume, in liters, of virgin coating 
materials used in the production of a recycled coating.

    (b) To determine the composition of a coating in order to perform 
the calculations in paragraph (a) of this section, the reference method 
for VOC content is Method 24 of appendix A of 40 CFR part 60, except as 
provided in paragraphs (c) and (d) of this section. To determine the 
VOC content of a coating, the manufacturer or importer may use Method 
24 of appendix A of 40 CFR part 60, an alternative method as provided 
in paragraph (c) of this section, formulation data, or any other 
reasonable means for predicting that the coating has been formulated as 
intended (e.g., quality assurance checks, recordkeeping). However, if 
there are any inconsistencies between the results of a Method 24 test 
and any other means for determining VOC content, the Method 24 test 
results will govern, except as provided in paragraph (c) of this 
section. The Administrator may require the manufacturer or importer to 
conduct a Method 24 analysis.
    (c) The Administrator may approve, on a case-by-case basis, a 
manufacturer's or importer's use of an alternative method in lieu of 
Method 24 for determining the VOC content of coatings if the 
alternative method is demonstrated to the Administrator's satisfaction 
to provide results that are acceptable for purposes of determining 
compliance with this subpart.
    (d) Analysis of methacrylate multicomponent coatings used as 
traffic marking coatings shall be conducted according to the procedures 
specified in appendix A to this subpart. Appendix A to this subpart is 
a modification of Method 24 of appendix A of 40 CFR part 60. The 
modification of Method 24 provided in appendix A to this subpart has 
not been approved for methacrylate multicomponent coatings used for 
other purposes than as traffic marking coatings or for other classes of 
multicomponent coatings.
    (e) The Administrator may determine a manufacturer's or importer's 
compliance with the provisions of this subpart based on information 
required by this subpart (including the records and reports required by 
Secs. 59.407 and 59.408 of this subpart) or any other information 
available to the Administrator.


Sec. 59.407  Recordkeeping requirements.

    (a) Each manufacturer and importer using the provisions of 
Sec. 59.406(a)(3) of this subpart to determine the VOC content of a 
recycled coating shall maintain in written or electronic form records 
of the information specified in paragraphs (a)(1) through (a)(6) of 
this section for a period of 3 years.
    (1) The minimum volume percent post-consumer coating content for 
each recycled coating.
    (2) The volume of post-consumer coating received for recycling.
    (3) The volume of post-consumer coating received that was unusable.
    (4) The volume of virgin materials.
    (5) The volume of the final recycled coating manufactured or 
imported.
    (6) Calculations of the adjusted VOC content as determined using 
equation 7 in Sec. 59.406(a)(3) of this subpart for each recycled 
coating.
    (b) Each manufacturer and importer using the exceedance fee 
provisions in Sec. 59.403 of this subpart, as an alternative to 
achieving the VOC content limits in table 1 of this subpart, shall 
maintain in written or electronic form the records specified in 
paragraphs (b)(1) through (b)(7) of this section for a period of 3 
years.
    (1) A list of the coatings and the associated coating categories in 
table 1 of this subpart for which the exceedance fee is used.
    (2) Calculations of the annual fee for each coating and the total 
annual fee for all coatings using the procedure in Sec. 59.403 (b) and 
(c) of this subpart.
    (3) The VOC content of each coating in grams of VOC per liter of 
coating.
    (4) The excess VOC content of each coating in grams of VOC per 
liter of coating.
    (5) The total volume of each coating manufactured or imported per 
calendar year in liters of coating, excluding the volume of any water 
and exempt compounds.
    (6) The annual fee for each coating.
    (7) The total annual fee for all coatings.
    (c) Each manufacturer and importer claiming the tonnage exemption 
in Sec. 59.404 of this subpart shall maintain in written or electronic 
form the records specified in paragraphs (c)(1) through (c)(4) of this 
section for a period of 3 years.
    (1) A list of all coatings and associated coating categories in 
table 1 of this subpart for which the exemption is claimed.
    (2) The VOC content, in grams of VOC per liter of coating, 
including water, of each coating for which the exemption is claimed.
    (3) The planned and actual sales, in liters, for each coating for 
which the exemption is claimed for the time period the exemption is 
claimed.
    (4) The total megagrams of VOC contained in each coating for which 
the

[[Page 48884]]

exemption is claimed, and for all coatings combined for which the 
exemption is claimed, for the time period the exemption is claimed, as 
calculated in Sec. 59.404(b) of this subpart.


Sec. 59.408  Reporting requirements.

    (a) Each manufacturer and importer of any architectural coating 
subject to the provisions of this subpart shall submit reports and 
exceedance fees specified in this section to the appropriate address as 
listed in Sec. 59.409 of this subpart.
    (b) Each manufacturer and importer of any architectural coating 
subject to the provisions of this subpart shall submit an initial 
notification report no later than September 13, 1999 or within 180 days 
after the date that the first architectural coating is manufactured or 
imported, whichever is later. The initial report must include the 
information in paragraphs (b)(1) through (b)(3) of this section.
    (1) The name and mailing address of the manufacturer or importer.
    (2) The street address of each one of the manufacturer's or 
importer's facilities in the United States that is producing, 
packaging, or repackaging any architectural coating subject to the 
provisions of this subpart.
    (3) A list of the categories from table 1 of this subpart for which 
the manufacturer's or importer's coatings meet the definitions in 
Sec. 59.401 of this subpart.
    (4) If a date code is used on a coating container to represent the 
date a coating was manufactured, as allowed in Sec. 59.405(a)(1) of 
this subpart, the manufacturer or importer of the coating shall include 
an explanation of each date code in the initial notification report and 
shall submit an explanation of any new date code no later than 30 days 
after the new date code is first used on the container for a coating.
    (c) Each manufacturer and importer of a recycled coating that 
chooses to determine the adjusted VOC content according to the 
provisions of Sec. 59.406(a)(3) to demonstrate compliance with the 
applicable VOC content limit in table 1 of this subpart shall submit a 
report containing the information in paragraphs (c)(1) through (c)(5) 
of this section. The report must be submitted for each coating for 
which the adjusted VOC content is used to demonstrate compliance. This 
report must be submitted by March 1 of the year following any calendar 
year in which the adjusted VOC content provision is used.
    (1) The minimum volume percent post-consumer coating content for 
each recycled coating.
    (2) The volume of post-consumer coating received for recycling.
    (3) The volume of post-consumer coating received that was unusable.
    (4) The volume of virgin materials used.
    (5) The volume of the final recycled coating manufactured or 
imported.
    (d) Each manufacturer and importer that uses the exceedance fee 
provisions of Sec. 59.403 of this subpart shall report the information 
in paragraphs (d)(1) through (d)(7) of this section for each coating 
for which the exceedance fee provisions are used. This report and the 
exceedance fee payment must be submitted by March 1 following the 
calendar year in which the coating is manufactured or imported.
    (1) Manufacturer's or importer's name and mailing address.
    (2) A list of all coatings and the associated coating categories in 
table 1 of this subpart for which the exceedance fee provision is being 
used.
    (3) The VOC content of each coating that exceeds the applicable VOC 
content limit in table 1 of this subpart.
    (4) The excess VOC content of each coating in grams of VOC per 
liter of coating.
    (5) The total volume of each coating manufactured or imported per 
calendar year, in liters.
    (6) The annual fee for each coating.
    (7) The total annual fee for all coatings.
    (e) Each manufacturer and importer of architectural coatings for 
which a tonnage exemption under Sec. 59.404 of this subpart is claimed 
shall submit a report no later than March 1 of the year following the 
calendar year in which the exemption was claimed. The report must 
include the information in paragraphs (f)(1) through (f)(4) of this 
section.
    (1) A list of all coatings and the associated coating categories in 
table 1 of this subpart for which the exemption was claimed.
    (2) The VOC content, in grams of VOC per liter of coating, 
including water, of each coating for which the exemption was claimed.
    (3) The actual sales, in liters, for each coating for which the 
exemption was claimed for the time period the exemption was claimed.
    (4) The total megagrams of VOC contained in all coatings for which 
the exemption was claimed for the time period the exemption was 
claimed, as calculated in Sec. 59.404(b) of this subpart.


Sec. 59.409  Addresses of EPA Regional Offices.

    Each manufacturer and importer of any architectural coating subject 
to the provisions of this subpart shall submit all requests, reports, 
submittals, exceedance fee payments, and other communications to the 
Administrator pursuant to this regulation to the Regional Office of the 
U.S. Environmental Protection Agency that serves the State or Territory 
in which the corporate headquarters of the manufacturer or importer 
resides. These areas are indicated in the following list of EPA 
Regional Offices:

EPA Region I (Connecticut, Maine, Massachusetts, New Hampshire, 
Rhode Island, Vermont), Director, Office of Environmental 
Stewardship, Mailcode: SAA, J.F.K. Federal Building, Boston, MA 
02203-2211.
EPA Region II (New Jersey, New York, Puerto Rico, Virgin Islands), 
Director, Division of Environmental Planning and Protection, 290 
Broadway, New York, NY 10007-1866.
EPA Region III (Delaware, District of Columbia, Maryland, 
Pennsylvania, Virginia, West Virginia), Director, Air Protection 
Division, 1650 Arch Street, Philadelphia, PA 19103.
EPA Region IV (Alabama, Florida, Georgia, Kentucky, Mississippi, 
North Carolina, South Carolina, Tennessee), Director, Air, 
Pesticides, and Toxics Management Division, 61 Forsyth Street, 
Atlanta, GA 30303.
EPA Region V (Illinois, Indiana, Michigan, Minnesota, Ohio, 
Wisconsin), Director, Air and Radiation Division, 77 West Jackson 
Boulevard, Chicago, IL 60604-3507.
EPA Region VI (Arkansas, Louisiana, New Mexico, Oklahoma, Texas), 
Director, Multimedia Planning and Permitting Division, 1445 Ross 
Avenue, Dallas, TX 75202-2733.
EPA Region VII (Iowa, Kansas, Missouri, Nebraska), Director, Air, 
RCRA, and Toxics Division, 726 Minnesota Avenue, Kansas City, KS 
66101.
EPA Region VIII (Colorado, Montana, North Dakota, South Dakota, 
Utah, Wyoming), Director, Office of Partnerships and Regulatory 
Assistance, 999 18th Street, Suite 500, Denver, Colorado 80202-2466.
EPA Region IX (American Samoa, Arizona, California, Guam, Hawaii, 
Nevada), Director, Air Division, 75 Hawthorne Street, San Francisco, 
CA 94105.
EPA Region X (Alaska, Oregon, Idaho, Washington), Director, Office 
of Air Quality, 1200 Sixth Avenue, Seattle, WA 98101.


Sec. 59.410  State authority.

    The provisions of this subpart must not be construed in any manner 
to preclude any State or political subdivision thereof from:
    (a) Adopting and enforcing any emissions standard or limitation 
applicable to a manufacturer or importer of architectural coatings; or
    (b) Requiring the manufacturer or importer of architectural 
coatings to obtain permits, licenses, or approvals prior to initiating 
construction,

[[Page 48885]]

modification, or operation of a facility for manufacturing an 
architectural coating.


Sec. 59.411  Circumvention.

    Each manufacturer and importer of any architectural coating subject 
to the provisions of this subpart must not alter, destroy, or falsify 
any record or report, to conceal what would otherwise be noncompliance 
with this subpart. Such concealment includes, but is not limited to, 
refusing to provide the Administrator access to all required records 
and date-coding information, altering the VOC content of a coating 
batch, or altering the results of any required tests to determine VOC 
content.


Sec. 59.412  Incorporations by reference.

    (a) The materials listed in this section are incorporated by 
reference in the paragraphs noted in Sec. 59.401. These incorporations 
by reference were approved by the Director of the Federal Register in 
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. These materials are 
incorporated as they exist on the date of the approval, and notice of 
any changes in these materials will be published in the Federal 
Register. The materials are available for purchase at the corresponding 
addresses noted below, and all are available for inspection at the 
Office of the Federal Register, 800 North Capitol Street, NW, Suite 
700, Washington, DC; at the Air and Radiation Docket and Information 
Center, U.S. EPA, 401 M Street, SW, Washington, DC 20460; and at the 
EPA Library (MD-35), U.S. EPA, Research Triangle Park, North Carolina.
    (b) The materials listed below are available for purchase at the 
following address: American Society for Testing and Materials (ASTM), 
100 Barr Harbor Drive, West Conshohocken, PA 19428-2959.
    (1) ASTM Method C 1315-95, Standard Specification for Liquid 
Membrane-Forming Compounds Having Special Properties for Curing and 
Sealing Concrete, incorporation by reference approved for Sec. 59.401, 
Concrete curing and sealing compound.
    (2) ASTM Method D 523-89, Standard Test Method for Specular Gloss, 
incorporation by reference approved for Sec. 59.401, Flat coating and 
Nonflat coating.
    (3) ASTM Method D 1640-83 (Reapproved 1989), Standard Test Methods 
for Drying, Curing, or Film Formation of Organic Coatings at Room 
Temperature, incorporation by reference approved for Sec. 59.401, 
Quick-dry enamel and Quick-dry primer, sealer, and undercoater.
    (4) ASTM Method D 3912-80 (Reapproved 1989), Standard Test Method 
for Chemical Resistance of Coatings Used in Light-Water Nuclear Power 
Plants, incorporation by reference approved for Sec. 59.401, Nuclear 
coating.
    (5) ASTM Method D 4082-89, Standard Test Method for Effects of 
Gamma Radiation on Coatings for Use in Light-Water Nuclear Power 
Plants, incorporation by reference approved for Sec. 59.401, Nuclear 
coating.
    (c) The following material is available from the AAMA, 1827 Walden 
Office Square, Suite 104, Schaumburg, IL 60173.
    (1) AAMA 605-98, Voluntary Specification Requirements and Test 
Procedures for High Performance Organic Coatings on Aluminum Extrusions 
and Panels, incorporation by reference approved for Sec. 59.401, 
Extreme high durability coating.
    (2) [Reserved]


Sec. 59.413  Availability of information and confidentiality.

    (a) Availability of information. The availability to the public of 
information provided to or otherwise obtained by the Administrator 
under this part shall be governed by part 2 of this chapter.
    (b) Confidentiality. All confidential business information entitled 
to protection under section 114(c) of the Act that must be submitted or 
maintained by each manufacturer or importer of architectural coatings 
pursuant to this section shall be treated in accordance with 40 CFR 
part 2, subpart B.

Appendix A to Subpart D--Determination of Volatile Matter Content 
of Methacrylate Multicomponent Coatings Used as Traffic Marking 
Coatings

1.0  Principle and Applicability

    1.1  Applicability. This modification to Method 24 of appendix A 
of 40 CFR part 60 applies to the determination of volatile matter 
content of methacrylate multicomponent coatings used as traffic 
marking coatings.
    1.2  Principle. A known amount of methacrylate multicomponent 
coating is dispersed in a weighing dish using a stirring device 
before the volatile matter is removed by heating in an oven.

2.0  Procedure

    2.1 Prepare about 100 milliliters (mL) of sample by mixing the 
components in a storage container, such as a glass jar with a screw 
top or a metal can with a cap. The storage container should be just 
large enough to hold the mixture. Combine the components (by weight 
or volume) in the ratio recommended by the manufacturer. Tightly 
close the container between additions and during mixing to prevent 
loss of volatile materials. Most manufacturers' mixing instructions 
are by volume. Because of possible error caused by expansion of the 
liquid when measuring the volume, it is recommended that the 
components be combined by weight. When weight is used to combine the 
components and the manufacturer's recommended ratio is by volume, 
the density must be determined by section 3.5 of Method 24 of 
appendix A of 40 CFR part 60.
    2.2  Immediately after mixing, take aliquots from this 100 mL 
sample for determination of the total volatile content, water 
content, and density. To determine water content, follow section 3.4 
of Method 24 of appendix A of 40 CFR part 60. To determine density, 
follow section 3.5 of Method 24. To determine total volatile 
content, use the apparatus and reagents described in section 3.8.2 
of Method 24 and the following procedures:
    2.2.1  Weigh and record the weight of an aluminum foil weighing 
dish and a metal paper clip. Using a syringe as specified in section 
3.8.2.1 of Method 24, weigh to 1 milligrams (mg), by difference, a 
sample of coating into the weighing dish. For methacrylate 
multicomponent coatings used for traffic marking use 3.0 
 0.1 g.
    2.2.2  Add the specimen and use the metal paper clip to disperse 
the specimen over the surface of the weighing dish. If the material 
forms a lump that cannot be dispersed, discard the specimen and 
prepare a new one. Similarly, prepare a duplicate. The sample shall 
stand for a minimum of 1 hour, but no more than 24 hours before 
being oven dried at 110  5 degrees Celsius for 1 hour.
    2.2.3  Heat the aluminum foil dishes containing the dispersed 
specimens in the forced draft oven for 60 minutes at 110 
 5 degrees Celsius. Caution--provide adequate 
ventilation, consistent with accepted laboratory practice, to 
prevent solvent vapors from accumulating to a dangerous level.
    2.2.4  Remove the dishes from the oven, place immediately in a 
desiccator, cool to ambient temperature, and weigh to within 1 mg. 
After weighing, break up the film of the coating using the metal 
paper clip. Weigh dish to within 1 mg. Return to forced draft oven 
for an additional 60 minutes at 110  5 degrees Celsius.
    2.2.5  Remove the dishes from the oven, place immediately in a 
desiccator, cool to ambient temperature, and weigh to within 1 mg.
    2.2.6  Run analyses in pairs (duplicate sets for each coating 
mixture until the criterion in section 4.3 of Method 24 of appendix 
A of 40 CFR part 60 is met. Calculate the weight of volatile matter 
for each heating period following Equation 24-2 of Method 24 and 
record the arithmetic average. Add the arithmetic average for the 
two heating periods to obtain the weight fraction of the volatile 
matter.

3.0  Data Validation Procedure

    3.1  Follow the procedures in Section 4 of Method 24 of appendix 
A to 40 CFR part 60.
    3.2  If more than 10 percent of the sample is lost when the 
sample is being broken up in 2.2.4, the sample is invalid.

[[Page 48886]]

4.0  Calculations

    Follow the calculation procedures in Section 5 of Method 24 of 
appendix A of 40 CFR part 60.

 Table 1 To Subpart D.--Volatile Organic Compound (VOC), Content Limits 
                       for Architectural Coatings                       
  [Unless otherwise specified, limits are expressed in grams of VOC per 
  liter of coating thinned to the manufacturer's maximum recommendation 
 excluding the volume of any water, exempt compounds, or colorant added 
                             to tint bases.]                            
------------------------------------------------------------------------
                                           Grams VOC per  Pounds VOC per
            Coating category                   liter         gallon a   
------------------------------------------------------------------------
Antenna coatings........................             530             4.4
Anti-fouling coatings...................             450             3.3
Anti-graffiti coatings..................             600             5.0
Bituminous coatings and mastics.........             500             4.2
Bond breakers...........................             600             5.0
Calcimine recoater......................             475             4.0
Chalkboard resurfacers..................             450             3.8
Concrete curing compounds...............             350             2.9
Concrete curing and sealing compounds...             700             5.8
Concrete protective coatings............             400             3.3
Concrete surface retarders..............             780             6.5
Conversion varnish......................             725             6.0
Dry fog coatings........................             400             3.3
Extreme high durability coatings........             800             6.7
Faux finishing/glazing..................             700             5.8
Fire-retardant/resistive coatings:                                      
    Clear...............................             850             7.1
    Opaque..............................             450             3.8
Flat coatings:                                                          
    Exterior coatings...................             250             2.1
    Interior coatings...................             250             2.1
Floor coatings..........................             400             3.3
Flow coatings...........................             650             5.4
Form release compounds..................             450             3.8
Graphic arts coatings (sign paints).....             500             4.2
Heat reactive coatings..................             420             3.5
High temperature coatings...............             650             5.4
Impacted immersion coatings.............             780             6.5
Industrial maintenance coatings.........             450             3.8
Lacquers (including lacquer sanding                                     
 sealers)...............................             680             5.7
Magnesite cement coatings...............             600             5.0
Mastic texture coatings.................             300             2.5
Metallic pigmented coatings.............             500             4.2
Multi-colored coatings..................             580             4.8
Nonferrous ornamental metal lacquers and                                
 surface protectants....................             870             7.3
Nonflat coatings:                                                       
    Exterior coatings...................             380             3.2
    Interior coatings...................             380             3.2
Nuclear coatings........................             450             3.8
Pretreatment wash primers...............             780             6.5
Primers and undercoaters................             350             2.9
Quick-dry coatings:                                                     
    Enamels.............................             450             3.8
    Primers, sealers, and undercoaters..             450             3.8
Repair and maintenance thermoplastic                                    
 coatings...............................             650             5.4
Roof coatings...........................             250             2.1
Rust preventative coatings..............             400             3.3
Sanding sealers (other than lacquer                                     
 sanding sealers).......................             550             4.6
Sealers (including interior clear wood                                  
 sealers)...............................             400             3.3
Shellacs:                                                               
    Clear...............................             730             6.1
    Opaque..............................             550             4.6
Stains:                                                                 
    Clear and semitransparent...........             550             4.6
Opaque                                               350             2.9
Low solids                                         b 120           b 1.0
Stain controllers.......................             720             6.0
Swimming pool coatings..................             600             5.0
Thermoplastic rubber coatings and                                       
 mastics................................             550             4.6
Traffic marking coatings................             150             1.3
Varnishes...............................             450             3.8
Waterproofing sealers and treatments....             600             5.0
Wood preservatives:                                                     
    Below ground wood preservatives.....             550             4.6

[[Page 48887]]

                                                                        
    Clear and semitransparent...........             550             4.6
    Opaque..............................             350             2.9
    Low solids..........................           b 120           b 1.0
Zone marking coatings...................             450             3.8
------------------------------------------------------------------------
a English units are provided for information only. Compliance will be   
  determined based on the VOC content limit, as expressed in metric     
  units.                                                                
b Units are grams of VOC per liter (pounds of VOC per gallon) of        
  coating, including water and exempt compounds, thinned to the maximum 
  thinning recommended by the manufacturer.                             

[FR Doc. 98-22659 Filed 9-10-98; 8:45 am]
BILLING CODE 6560-50-p