[Federal Register Volume 64, Number 92 (Thursday, May 13, 1999)]
[Proposed Rules]
[Pages 26004-26142]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-11384]
[[Page 26003]]
_______________________________________________________________________
Part III
Environmental Protection Agency
_______________________________________________________________________
40 CFR Parts 80, 85 and 86
Air Pollution; Tier 2 Motor Vehicle Emission Standards and Gasoline
Sulphur Control Requirements; Diesel Fuel Quality Controls; Proposed
Rules
Federal Register / Vol. 64, No. 92 / Thursday, May 13, 1999 /
Proposed Rules
[[Page 26004]]
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 80, 85 and 86
[AMS-FRL-6337-3]
RIN 2060-AI23
Control of Air Pollution From New Motor Vehicles: Proposed Tier 2
Motor Vehicle Emissions Standards and Gasoline Sulfur Control
Requirements
AGENCY: Environmental Protection Agency (EPA).
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: Today's document proposes a major program designed to
significantly reduce the emissions from new passenger cars and light
trucks, including pickup trucks, minivans, and sport-utility vehicles.
These reductions would provide for cleaner air and greater public
health protection, by reducing ozone and PM pollution. The proposed
program is a comprehensive regulatory initiative that treats vehicles
and fuels as a system, combining requirements for much cleaner vehicles
with requirements for much lower levels of sulfur in gasoline. A list
of major highlights of the proposed program appears at the beginning of
SUPPLEMENTARY INFORMATION.
For the first time, through a phase-in, we propose to apply a
single average exhaust emission standard that would cover both
passenger cars and all light trucks operated on any fuel. The proposed
emission levels (``Tier 2 standards'') are feasible for both types of
vehicles and are appropriate since the miles traveled in light trucks
are increasing and the emissions from these vehicles are thus an
increasing problem. This approach will build on the recent technology
improvements resulting from the successful National Low-Emission
Vehicles (NLEV) program and improve the performance of these vehicles
through lower sulfur gasoline.
To enable the vehicle technology and generate emission reductions
from current vehicles we propose to significantly reduce average
gasoline sulfur levels nationwide. Refiners would generally install
refining equipment to remove sulfur in their refining processes, while
importers would be required to market only gasoline meeting the
proposed sulfur standards. The proposal outlines an averaging, banking,
and trading program to provide flexibility for refiners and ease
implementation.
This program focuses on reducing the passenger car and light truck
emissions most responsible for causing ozone and particulate matter
problems. Without today's action, we project that emissions from these
vehicles will represent 30-40 percent of nitrogen oxides and volatile
organic compound emissions in some cities, and almost 20 percent
nationwide, by the year 2020.
Our proposal would bring about major reductions in annual emissions
of these pollutants and also reduce the emissions of sulfur compounds
coming from the sulfur in gasoline. For example, we project a reduction
in oxides of nitrogen emissions of nearly 800,000 tons per year by 2007
and 1,200,000 by 2010, the time frame when many states will have to
demonstrate compliance with air quality standards. Emission reductions
would continue increasing for many years, reaching almost 2,200,000
tons per year in 2020. In addition, the proposed program would reduce
the contribution of vehicles to other serious public health and
environmental problems, including regional visibility problems, toxic
air pollutants, acid rain, and nitrogen loading of estuaries.
Furthermore, we project that these reductions, and their resulting
environmental benefits, would come at an average cost increase of less
than $100 per passenger car, less than $200 per light truck, and an
increase of less than 2 cents per gallon of gasoline (or about $100
over the life of an average vehicle).
DATES: Comments: We must receive your comments by August 2, 1999.
Hearings: We will hold four public hearings, on June 9-10, June 11,
June 15, and June 17, 1999. EPA requests that parties who want to
testify notify the contact person listed in the ADDRESSES section of
this document two weeks before the date of the hearing.
ADDRESSES: Comments: You may send written comments in paper form or by
E-mail. We must receive them by the date indicated under ``DATES''
above (August 2, 1999). Send paper copies of written comments (in
duplicate if possible) to Public Docket No. A-97-10 at the following
address: U.S. Environmental Protection Agency (EPA), Air Docket (6102),
Room M-1500, 401 M Street, SW, Washington, DC 20460. If possible, we
also encourage you to send an electronic copy of your comments (in
ASCII format) to the docket by e-mail to A-and-R-D[email protected] or on a
3.5 inch diskette accompanying your paper copy. If you wish, you may
send your comments by E-mail to the docket at the address listed above
without the submission of a paper copy, but a paper copy will ensure
the clarity of your comments.
Please also send a separate paper copy to the contact person listed
below. If you send comments by E-mail alone, we ask that you send a
copy of the E-mail message that contains the comments to the contact
person listed below.
EPA's Air Docket makes materials related to this rulemaking
available for review at the above address (on the ground floor in
Waterside Mall) from 8:00 a.m. to 5:30 p.m., Monday through Friday,
except on government holidays. You can reach the Air Docket by
telephone at (202) 260-7548 and by facsimile at (202) 260-4400. We may
charge a reasonable fee for copying docket materials, as provided in 40
CFR part 2.
Hearings: We will hold four public hearings at the following
locations:
June 9-10, 1999, Top of the Tower, 1717 Arch Street, 51st Floor,
Philadelphia, PA 19103, telephone: 215-567-8787, fax: 215-557-5171
June 11, 1999, Renaissance Atlanta Hotel, 590 West Peachtree Street,
Atlanta, GA, 30308, telephone: 404-881-6000, fax: 404-815-5010
June 15, 1999, Doubletree Hotel, 3203 Quebec Street, Denver, CO, 80207,
telephone: 303-321-3333, fax: 303-329-5233
June 17, 1999, Holiday Inn Lakeside City Center, 1111 Lakeside Avenue,
Cleveland, OH 44144, telephone: 216-241-5100, fax: 216-241-7437
Additional information on the comment procedure and public hearings
can be found in SUPPLEMENTARY INFORMATION under Section VII, ``Public
Participation.''
FOR FURTHER INFORMATION CONTACT: Carol Connell, U.S. EPA, National
Vehicle and Fuels Emission Laboratory, 2000 Traverwood, Ann Arbor MI
48105; Telephone (734) 214-4349, FAX (734) 214-4816, E-mail
[email protected].
SUPPLEMENTARY INFORMATION:
Highlights of the Tier 2/ Gasoline Sulfur Proposal
For cars and light trucks, the proposed program would:
Through a phase-in, apply for the first time a single
average exhaust emission standard that would cover both passenger cars
and all light trucks. The proposed emission levels (``Tier 2
standards'') are feasible for both types of vehicles and are
appropriate since the miles traveled in light trucks is increasing and
the emissions from these vehicles are thus an increasing problem.
During the phase-in, apply interim standards that match or
are more
[[Page 26005]]
stringent than current federal and California ``LEV I'' (Low-Emission
Vehicle, Phase I) standards.
Apply the same standards to vehicles operated on any fuel.
Allow auto manufacturers to comply with the very stringent
proposed new standards in a flexible way while ensuring that the
expected environmental benefits occur.
Build on the recent technology improvements resulting from
the successful National Low-Emission Vehicles (NLEV) program and
improve the performance of these vehicles through lower sulfur
gasoline.
Set more stringent particulate matter standards, primarily
affecting diesel powered vehicles.
Set more stringent evaporative emission standards.
For commercial gasoline, the proposed program would:
Significantly reduce average gasoline sulfur levels
nationwide. Refiners would generally install refining equipment to
remove sulfur in their refining processes. Importers of gasoline would
be required to import and market only gasoline meeting the proposed
sulfur limits.
Provide for flexible implementation by refiners through an
averaging, banking, and trading program.
Apply temporary, less stringent gasoline sulfur standards
to certain small refiners.
Enable the new Tier 2 vehicles to meet the proposed
emission standards, since sulfur in gasoline degrades a vehicle's
emission control performance. Lower sulfur gasoline is also important
in order to enable the introduction of advanced technologies that
promise higher fuel economy but are very susceptible to sulfur
poisoning (for example, gasoline direct injection engines).
Reduce emissions from NLEV vehicles and other vehicles
already on the road.
Regulated Entities
This proposed action would affect you if you produce new motor
vehicles, alter individual imported motor vehicles to address U.S.
regulation, or convert motor vehicles to use alternative fuels. It
would also affect you if you produce, distribute, or sell gasoline
motor fuel.
The table below gives some examples of entities that may have to
follow the proposed regulations. But because these are only examples,
you should carefully examine the proposed and existing regulations in
40 CFR parts 80, 85 and 86. If you have questions, call the person
listed in the FOR FURTHER INFORMATION CONTACT section above.
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Examples of potentially regulated
Category NAICS Codes a SIC Codes b entities
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Industry................................... 336111 3711 Motor Vehicle Manufacturers.
336112 .............. ...................................
336120 .............. ...................................
Industry................................... 336311 3592 Alternative fuel vehicle
converters.
336312 3714 ...................................
422720 5172 ...................................
454312 5984 ...................................
811198 7549 ...................................
541514 8742 ...................................
541690 8931 ...................................
Industry................................... 811112 7533 Commercial Importers of Vehicles
and Vehicle Components.
811198 7549 ...................................
541514 8742 ...................................
Industry................................... 324110 2911 Petroleum Refiners.
Industry................................... 422710 5171 Gasoline Marketers and
Distributors.
422720 5172 ...................................
Industry................................... 484220 4212 Gasoline Carriers.
484230 4213
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a North American Industry Classification System (NAICS).
b Standard Industrial Classification (SIC) system code.
Access to Rulemaking Documents Through the Internet
Today's document is available electronically on the day of
publication from the Environmental Protection Agency Internet Web site
listed below. Electronic copies of the preamble, regulatory language,
Draft Regulatory Impact Analysis, and other documents associated with
today's proposal are available from the EPA Office of Mobile Sources
Web site listed below shortly after the rule is signed by the
Administrator. This service is free of charge, except any cost that you
already incur for connecting to the Internet.
Environomental Protection Agency Web Site:
http://www.epa.gov/docs/fedrgstr/epa-air/
(Either select a desired date or use the Search feature.)
Office of Mobile Sources (OMS) Web Site:
http://www.epa.gov/omswww/
(Look in ``What's New'' or under the ``Automobiles'' topic.)
Please note that due to differences between the software used to
develop the document and the software into which the document may be
downloaded, changes in format, page length, etc. may occur.
Outline of This Preamble
I. Introduction
A. What Are the Basic Components of Today's Proposal?
1. Vehicle Emission Standards
2. Gasoline Sulfur Standards
B. What Is EPA's Statutory Authority for Proposing Today's
Action?
1. Light-Duty Vehicles and Trucks
2. Gasoline Sulfur Controls
C. The Tier 2 Study and the Sulfur Staff Paper
II. Proposed Tier 2 Determination
A. There Is a Substantial Need for Further Emission Reductions
in Order to Attain and Maintain National Ambient Air Quality
Standards
B. More Stringent Standards for Light-Duty Vehicles and Trucks
Are Technologically Feasible
C. More Stringent Standards for Light-Duty Vehicles and Trucks
Are Needed and Cost Effective Compared to Available Alternatives
III. Air Quality Need for and Impact of Today's Proposal
A. Americans Face Serious Air Quality Problems That Require
Further Emission Reductions
[[Page 26006]]
B. Ozone
1. Ozone Levels Have Declined, but Unhealthy Levels of Ozone
Persist
2. Cars and Light-Duty Trucks Are a Big Part of the VOC and
NOX Inventory, and Today's Proposal Would Reduce This
Contribution Substantially
3. Tier 2/Sulfur Ozone Benefits and the Post Tier 2/Sulfur Ozone
Problem
C. Particulate Matter
1. Particulate Matter Presents Substantial Public Health Risks
2. Reducing Emissions From Cars and Light Trucks Would Reduce
Ambient Levels
3. Today's Proposal Would Limit the Potential Health Risks From
Increased Diesel Engine Use in Cars and Light Trucks
4. Today's Proposal Would Have Substantial PM Benefits
D. Other Criteria Pollutants: Carbon Monoxide, Nitrogen Dioxide,
Sulfur Dioxide
E. Visibility
F. Air Toxics
G. Acid Deposition
H. Eutrophication/Nitrification
I. Conclusion: Cleaner Cars and Light Trucks Are Critically
Important to Improving Air Quality
IV. What Are We Proposing and Why?
A. Why Are We Proposing Vehicle and Fuel Standards Together?
1. Feasibility of Stringent Standards for Light-Duty Vehicles
and Light-Duty Trucks
a. Gasoline Fueled Vehicles
b. Diesel Vehicles
2. Gasoline Sulfur Control Is Needed to Support the Proposed
Vehicle Standards
a. How Does Gasoline Sulfur Affect Vehicle Emission Performance?
b. How Large Is Gasoline Sulfur's Effect on Emissions?
3. A Comprehensive Vehicle/Fuel Approach Is Therefore Necessary
B. Our Proposed Program for Vehicles
1. Overview of the Proposed Vehicle Program
a. Introduction
b. Corporate Average NOX Standard
c. Tier 2 Emission Standard ``Bins''
d. Schedules for Implementation
i. Implementation Schedule for LDVs and LLDTs
ii. Implementation Schedule for HLDTs
e. LDVs and LDTs Not Covered by Tier 2
i. Interim Standards for LDV/LLDTs
ii. Interim Standards for HLDTs
iii. Interim Programs Would Provide Reductions over Previous
Standards
iv. Alternative Approach for Interim Standards
f. Generating, Banking, and Trading NOX Credits
2. Why Are We Proposing the Same Set of Standards for Tier 2
LDVs and LDTs?
3. Why Are We Proposing the Same Standards for Both Gasoline and
Diesel Vehicles?
4. Key Elements of the Proposed Vehicle Program
a. Basic Exhaust Emission Standards and ``Bin'' Structure
i. Why Are We Proposing Extra Bins?
b. The Proposed Program Would Phase in the Tier 2 Vehicle
Standards over Several Years
i. Primary Phase-in Schedule
ii. Alternative Phase-in Schedule
c. Manufacturers Would Meet a ``Corporate Average''
NOX Standard.
d. Manufacturers Could Generate, Bank, and Trade NOX
Credits.
i. General Provisions
ii. Averaging, Banking and Trading of NOX Credits
Would Fulfill Several Goals.
iii. How Manufacturers Would Generate and Use NOX
Credits.
iv. Manufacturers Could Earn and Bank Credits for Early
NOX Reductions.
v. NOX Credits Would Have Unlimited Life.
vi. NOX Deficits Could Be Carried Forward.
e. Interim Standards
i. Interim Standards for LDV/LLDTs
ii. Interim Standards for HLDTs
f. More Stringent Proposed Light-Duty Evaporative Emission
Standards
C. Our Proposed Program for Controlling Gasoline Sulfur
1. Oil Industry Proposal
2. Why EPA Believes the Gasoline Sulfur Program must Be
Nationwide
a. Sulfur's Negative Impact on Tier 2 Catalysts Is Irreversible.
b. Sulfur Has Negative Impacts on OBD Systems and I/M Programs.
c. Sulfur Reductions Would Ensure Lower Emissions of Many
Pollutants.
d. The Refining Industry Can Control Gasoline Sulfur.
e. Other Stakeholders Support National Gasoline Sulfur Control.
3. Proposed Gasoline Sulfur Standards
a. Standards for Refiners and Importers
i. Why Begin the Program in 2004?
ii. How Did We Arrive at the 80 ppm Cap and 30 ppm Average
Standards?
iii. Should a Near-Zero Gasoline Sulfur Standard Be Considered?
iv. Why Are We Proposing Less Stringent Standards for 2004 and
2005?
b. Standards for Small Refiners
i. What Standards Would Small Refiners Have to Meet Under
Today's Proposal?
ii. Application for Small Refiner Status
iii. Application for a Small Refiner Sulfur Baseline
iv. Volume Limitation on Use of a Small Refinery Standard
v. Hardship Extensions Beyond 2007 for Small Refiners
vi. What Alternative Provisions for Small Refiners Are Possible?
4. Compliance Flexibilities
a. Sulfur Averaging, Banking, and Trading (ABT) Program
i. Why Are We Proposing a Sulfur Averaging, Banking, and Trading
Program?
ii. How Would Refiners Establish a Sulfur Baseline?
iii. How Would Refiners Generate Credits?
iv. How Would Refiners Use Credits?
v. Could Small Refiners Participate in the ABT Program?
vi. What Alternative Implementation Approaches Are Possible?
b. Refinery Air Pollution Permitting Requirements
i. New Source Review Program
ii. Title V Operating Permit Program
iii. EPA Assistance to Explore Permit Streamlining Options and
Solicitation of Comment
c. Should Hardship Relief Be Available?
5. Consideration of Diesel Fuel Control
D. What Are the Economic Impacts, Cost Effectiveness and
Monetized Benefits of the Proposal?
1. What Are the Estimated Costs of the Proposed Vehicle
Standards?
2. What Are the Estimated Costs of the Proposed Gasoline Sulfur
Standards?
3. What Are the Aggregate Costs of the Tier 2/Gasoline Sulfur
Proposal?
4. How Does the Cost-Effectiveness of this Program Compare to
Other Programs?
a. What Is the Cost Effectiveness of this Program?
b. How Does the Cost Effectiveness of this Program Compare with
Other Means of Obtaining Mobile Source NOX + NMHC
Reductions?
c. How Does the Cost Effectiveness of this Proposed Program
Compare with Other Known Non-Mobile Source Technologies for Reducing
NOX + NMHC?
5. Does the Value of the Benefits Outweigh the Cost of the
Proposed Standards?
a. What Is the Purpose of this Benefit-Cost Comparison?
b. What Was Our Overall Approach to the Benefit-Cost Analysis?
c. What Are the Significant Limitations of the Benefit-Cost
Analysis?
d. How Did We Perform the Benefit-Cost Analysis?
e. What Were the Results of the Benefit-Cost Analysis?
f. What Additional Efforts Will Be Made Following Proposal?
E. Other Program Design Options We Have Considered
1. Corporate Average Standards Based on NMOG or
NMOG+NOX
2. More Stringent Tier 2 NOX and Gasoline Sulfur
Standards
V. Additional Elements of the Proposed Vehicle Program and Areas for
Comment
A. Other Vehicle-related Elements of the Proposal
1. Proposed Tier 2 CO, HCHO and PM Standards
a. Carbon Monoxide (CO) Standards
b. Formaldehyde (HCHO) Standards
c. Particulate Matter (PM) Standards
2. Useful Life
a. Mandatory 120,000 Mile Useful Life
b. 150,000 Mile Useful Life Certification Option
3. Light Duty Supplemental Federal Test Procedure (SFTP)
Standards
4. LDT Test Weight
5. Test Fuels
6. Changes to Evaporative Certification Procedures to Address
Impacts of Alcohol Fuels
7. Other Test Procedure Issues
8. Small Volume Manufacturers
9. Compliance Monitoring and Enforcement
a. Application of EPA's Compliance Assurance Program, CAP2000
b. Compliance Monitoring
[[Page 26007]]
c. Relaxed In-Use Standards for Tier 2 Vehicles Produced During
the Phase-in Period
d. Enforcement of the Tier 2 and Interim Corporate Average
NOX Standards.
10. Miscellaneous Provisions
B. Other Areas on Which We Are Seeking Comment
1. LDV/LDT Program Options
a. Alternatives to Address Stringency of the Standards
i. Alternative Standards and Implementation Schedules
ii. Use of Family Emission Limits (FELs) Rather than Bins
iii. Use of Different Averaging Sets
iv. Different Standards for Different Categories of Vehicles
v. Consideration of Special Provisions for the Largest LDTs and
Advanced Technology
vi. Measures to Prevent LDT Migration to Heavy-Duty Vehicle
Category
vii. Use of Non-conformance Penalties (NCPs)
viii. Additional NOX Credits for Vehicles Certifying
to Low NOX Levels
ix. Incentives for Manufacturers to Bank Additional Early
NOX Credits
x. Flexibilities for Small Volume Manufacturers and Small
Businesses
xi. Adverse Effects of System Leaks
xii. Consideration of Other Corporate Averaging Approaches
2. Tighter Evaporative Emission Standards
3. Credits for Innovative VOC, NOX and Ozone
Reduction Technologies Not Appropriately Credited by EPA's Emission
Test Procedures
4. Need for Intermediate Useful Life Tier 2 Standards
VI. Additional Proposed Elements and Areas for Comment: Gasoline
Program
A. Other Areas for Comment
1. Would States Be Preempted from Adopting Their Own Sulfur
Control Programs?
2. Potential Changes in Gasoline Distillation Properties
B. Gasoline Sulfur Program Compliance and Enforcement Provisions
1. Overview
2. What Requirements Is EPA Proposing for Foreign Refiners and
Importers?
a. What Are the Proposed Requirements for Small Foreign Refiners
with Individual Refinery Sulfur Standards?
b. What Are the Proposed Requirements for Truck Importers?
3. What Standards Would Apply Downstream?
4. What Are the Proposed Testing and Sampling Methods and
Requirements?
a. What Is the Primary Test Method for Gasoline?
b. What Is the Proposed Test Method for Sulfur in Butane?
c. Is EPA Proposing a Requirement to Test Every Batch of
Gasoline Produced or Imported?
d. What Sampling Methods Are Proposed?
e. What Are the Proposed Gasoline Sample Retention Requirements?
5. What Federal Enforcement Provisions Would Exist for
California and When Could California Test Methods be Used to
Determine Compliance?
6. What Are the Proposed Recordkeeping and Reporting
Requirements?
a. What Are the Proposed Product Transfer Document Requirements?
b. What Are the Proposed Recordkeeping Requirements?
c. What Are the Proposed Reporting Requirements?
d. What Are the Proposed Attest Requirements?
7. What Are the Proposed Exemptions for Research, Development
and Testing?
8. What Are the Proposed Liability and Penalty Provisions for
Noncompliance?
9. How Would Compliance with the Sulfur Standards Be Determined?
VII. Public Participation
A. Comments and the Public Docket
B. Public Hearings
VIII. Administrative Requirements
A. Administrative Designation and Regulatory Analysis
B. Regulatory Flexibility Act
1. Potentially Affected Small Businesses
2. Small Business Advocacy Review Panel and the Evaluation of
Regulatory Alternatives
C. Paperwork Reduction Act
D. Intergovernmental Relations
1. Unfunded Mandates Reform Act
2. Executive Order 12875: Enhancing Intergovernmental
Partnerships
3. Executive Order 13084: Consultation and Coordination with
Indian Tribal Governments
E. National Technology Transfer and Advancement Act
F. Executive Order 13045: Children's Health Protection
IX. Statutory Provisions and Legal Authority
I. Introduction
Since the passage of the 1990 Clean Air Act Amendments significant
progress has been made in reducing emissions from passenger cars and
light trucks. The National Low-Emission Vehicle (NLEV) and Reformulated
Gasoline (RFG) programs are important examples of control programs that
will continue to help reduce car and truck emissions into the near
future.
Nonetheless, due to increasing vehicle population and vehicle miles
traveled, passenger cars and light trucks will be significant
contributors to air pollution inventories into the indefinite future.
In fact, the emission contribution of light trucks and sport utility
vehicles will likely surpass that of passenger cars within the next
year. (This is occurring because of the combination of growth in miles
traveled by light trucks and their less stringent emission standards
compared to passenger cars). The program we describe below builds on
the NLEV and RFG Phase II programs to develop a strong national program
to protect public health and the environment well into the next
century. The program while reducing VOC emissions focuses especially on
NOX because that is where the largest air quality gains can
be achieved.
We have followed several overarching principles in developing this
proposal:
Design a strong national program to assist states in every
region of the country in meeting their air quality objectives.
View vehicles and fuels as an integrated system. Define a
program that continues to ensure that car and truck emission reductions
are part of the solution to our nation's air quality problems.
Establish a single set of emission standards that apply
regardless of the fuel used and regardless of whether the vehicle is a
car or a light truck.
Provide compliance flexibilities that allow vehicle
manufacturers and oil refiners to adjust to future market trends and
honor consumer preferences.
Encourage the development of advanced low emission, fuel
efficient technologies such as lean-burn engines.
Ensure sufficient leadtime for phase-in of the Tier 2 and
gasoline sulfur program.
With these principles as background, we turn now to an overview of
the vehicle and fuel aspects of the proposal. Sections I and II of this
preamble will give you a brief overview of our proposal and the basics
of our rationale for proposing it. Subsequent sections will expand on
the air quality need, the economic impacts, and provide a more detailed
description of the specifics of the proposal. The final sections deal
with several subjects, including opportunities for public participation
that you may wish to take advantage of. You may also want to review our
Draft Regulatory Impact Analysis (RIA), found in the docket and on the
Internet, where we present more detailed analyses and discussions of
many topics raised in this preamble.
A. What Are the Basic Components of Today's Proposal?
The nation's air quality, while certainly better than in the past,
will continue to expose tens of millions of Americans to unhealthy
levels of air pollution well into the future in the absence of
significant new controls on emissions from motor vehicles. EPA is
therefore proposing a major, comprehensive program designed to
significantly reduce emissions from passenger cars and light trucks
(including sport-utility vehicles, minivans, and pickup trucks) and
reduce sulfur in gasoline. Under the proposed program, automakers would
produce vehicles designed to have very low emissions when operated on
low-sulfur gasoline, and oil refiners would
[[Page 26008]]
provide that cleaner gasoline nationwide. In this preamble, we refer to
the proposed comprehensive program as the ``Tier 2/Gasoline Sulfur
Control Program'' or simply as the ``Tier 2 Program.''
1. Vehicle Emission Standards
Today's action proposes new federal emission standards (``Tier 2
standards'') for passenger cars and light trucks. The program is
designed to focus on reducing the emissions most responsible for the
ozone and particulate matter (PM) impact from these vehicles--nitrogen
oxides (NOX) and non-methane organic gases (NMOG),
consisting primarily of hydrocarbons (HC) and contributing to ambient
volatile organic compounds (VOC). The program would also, for the first
time, apply the same federal standards to passenger cars and all light
trucks (``light light-duty trucks'' (or LLDTs), rated at less than 6000
pounds gross vehicle weight and ``heavy light-duty trucks'' (HLDTs),
rated at more than 6000 pounds gross vehicle weight).
The proposed Tier 2 standards would reduce new vehicle
NOX levels to an average of 0.07 grams per mile (g/mi). For
new passenger cars and light LDTs, these standards would phase in
beginning in 2004, with the standards to be fully phased in by
2007.1 For heavy LDTs, the proposed Tier 2 standards would
be phased in beginning in 2008, with full compliance in 2009. During
the phase-in period from 2004-2007, all passenger cars and light LDTs
not certified to Tier 2 standards would have to meet an interim average
standard of 0.30 g/mi NOX, equivalent to the current NLEV
standards for LDVs.2 During the period 2004-2008, heavy LDTs
not certified to Tier 2 standards would phase in an average standard of
0.20
g/mi NOX. Those not covered by the phase-in would be
required to meet a traditional (non-averaging) standard of 0.60 g/mi
NOX.
---------------------------------------------------------------------------
\1\ By comparison, the NOX standards for the National
Low Emission Vehicle (NLEV) program, which will be in place
nationally in 2001, range from 0.30 g/mi for passenger cars to 0.50
g/mi for medium-sized light trucks. For further comparison, the
standards met by today's Tier 1 vehicles range from 0.60 g/mi to
1.53 g/mi.
\2\ There are also NMOG standards associated with both the
interim and Tier 2 standards. The NMOG standards vary depending on
which of various individual sets of emission standards manufacturers
choose to use in complying with the average NOX standard.
This ``bin'' approach is described more fully in section IV.B.
---------------------------------------------------------------------------
Manufacturers would be allowed to comply with the very stringent
proposed new standards in a flexible way, assuring that the average
emissions of a company's production met the target emission levels
while allowing the manufacturer to choose from several more- and less-
stringent emission categories for certification. The proposed
requirements also include more stringent PM standards, which primarily
affect diesel vehicles, and more stringent hydrocarbon controls
(exhaust NMOG and evaporative emissions standards).
We are also proposing stringent particulate matter standards that
would be especially important if there were substantial future growth
in diesel sales. Even under an assumed scenario where diesel sales grew
to represent 50 percent of all light-duty trucks by 2010, the PM
standards being proposed today would result in a steady decrease in
total direct PM 2.5 from cars and light trucks. For this
scenario of a 50 percent share for diesel light trucks, direct PM
emissions in 2020 with today's proposal would be less than they are at
present. Therefore, we believe that today's proposal accommodates
environmental concerns about such vehicles in a way that insures
positive environmental results.
2. Gasoline Sulfur Standards
The other major part of today's proposal would significantly reduce
average gasoline sulfur levels nationwide. These reductions could begin
to phase in as early as 2000, with full compliance by 2006. Refiners
would generally install advanced refining equipment to remove sulfur
during the production of gasoline. Importers of gasoline would be
required to import and market only gasoline meeting the proposed sulfur
limits. Temporary, less stringent standards would apply to a few small
refiners.
EPA is proposing that gasoline produced by refiners and sold by
gasoline importers generally meet an average sulfur standard of 30 ppm
and a cap of 80 ppm in 2004. The proposed program builds upon the
existing regulations covering gasoline content as it relates to
emissions performance. It includes provisions for trading of sulfur
credits, increasing the flexibility available to refiners for complying
with the new requirements. We intend the proposed credit program to
ease compliance uncertainties by providing refiners the flexibility to
phase in early controls in 2000-2003 and use credits gained in these
years to delay some control to as late as 2006. As proposed, the
program would achieve expected environmental benefits while providing
substantial flexibility to refiners. The effect of the credit program
is that those refiners that participate would have the opportunity for
more overall leadtime to reach the final sulfur levels.
B. What Is EPA's Statutory Authority for Proposing Today's Action?
1. Light-Duty Vehicles and Trucks
We are proposing the motor vehicle emission standards under the
authority of section 202 of the Clean Air Act. Sections 202(a) and (b)
of the Act provide EPA with general authority to prescribe vehicle
standards, subject to any specific limitations otherwise included in
the Act. Sections 202(g) and (h) specify the current standards for LDVs
and LDTs, which became effective beginning in model year 1994 (``Tier 1
standards'').
Section 202(i) of the Act provides specific procedures that EPA
must follow to determine whether standards more stringent than Tier 1
standards for LDVs and certain LDTs 3 are appropriate
beginning in the 2004 model year. 4 Specifically, we are
required to first issue a study regarding ``whether or not further
reductions in emissions from light-duty vehicles and light-duty trucks
should be required * * *'' (the ``Tier 2 study''). This study ``shall
examine the need for further reductions in emissions in order to attain
or maintain the national ambient air quality standards.'' It is also to
consider (1) the availability of technology to meet more stringent
standards, taking cost, lead time, safety, and energy impacts into
consideration, and, (2) the need for, and cost effectiveness of, such
standards, including consideration of alternative methods of attaining
or maintaining the national ambient air quality standards. A certain
set of ``default'' emission standards for these vehicle classes is
among those options for new standards that EPA is to consider.
---------------------------------------------------------------------------
\3\ LDTs with a loaded vehicle weight less than or equal to 3750
pounds.
\4\ Section 202(b)(1)(C) forbids EPA from promulgating mandatory
standards more stringent than Tier 1 standards until the 2004 model
year.
---------------------------------------------------------------------------
After the study is completed and the results are reported to
Congress, EPA is required to determine by rulemaking whether (1) there
is a need for further emission reductions; (2) the technology for more
stringent emission standards from the affected classes is available;
and (3) such standards are needed and cost-effective, taking into
account alternatives. If EPA answers ``yes'' to these questions, then
the Agency is to promulgate new, more stringent motor vehicle standards
(``Tier 2 standards'').
EPA submitted its report to Congress on July 31, 1998. Today's
proposal considers and proposes affirmative responses to the three
questions above (see section II below) and sets forth new proposed
standards that are more
[[Page 26009]]
stringent than the default standards in the Act.
EPA is also proposing standards for larger light-duty trucks under
the general authority of section 202(a)(1) and under section 202(a)(3)
of the Act, which requires that standards applicable to emissions of
hydrocarbons, NOX, CO and PM from heavy-duty vehicles
5 reflect the greatest degree of emission reduction
available for the model year to which such standards apply, giving
appropriate consideration to cost, energy, and safety.
---------------------------------------------------------------------------
\5\ LDTs that have gross vehicle weight ratings above 6000
pounds are considered heavy-duty vehicles under the Act. See section
202(b)(3). For regulatory purposes, we refer to these LDTs as
``heavy light-duty trucks'' made up of LDT3s and LDT4s.
---------------------------------------------------------------------------
2. Gasoline Sulfur Controls
We are proposing gasoline sulfur controls pursuant to our authority
under section 211(c)(1) of the Clean Air Act.6 Under section
211(c)(1), EPA may adopt a fuel control if at least one of the
following two criteria is met: (1) the emission products of the fuel
cause or contribute to air pollution which may reasonably be
anticipated to endanger public health or welfare, or (2) the emission
products of the fuel will significantly impair emissions control
systems in general use or which would be in general use were the fuel
control to be adopted.
---------------------------------------------------------------------------
\6\ We currently have regulatory requirements for conventional
and reformulated gasoline adopted under sections 211(c) and 211(k)
of the Act, in addition to the ``substantially similar''
requirements for fuel additives of section 211(f). These
requirements directly or indirectly control sulfur levels in
gasoline. See the Draft RIA for more details.
---------------------------------------------------------------------------
We are proposing to control sulfur levels in gasoline based on both
of these criteria. Under the first criterion, we believe that emissions
products of sulfur in gasoline used in Tier 1 and LEV technology
vehicles contribute to ozone pollution, air toxics, and PM. Under the
second criterion, we believe that gasoline sulfur in fuel that will be
used in Tier 2 technology vehicles will significantly impair the
emissions control systems expected to be used in such vehicles. Please
refer to section IV.C. below and to the Draft Regulatory Impact
Analysis (RIA) for more details of our analysis and findings. The Draft
RIA includes a more detailed discussion of EPA's authority to set
gasoline sulfur standards, including a discussion of our proposed
conclusions relating to the factors required to be considered under
section 211(c).
C. The Tier 2 Study and the Sulfur Staff Paper
On July 31, 1998, EPA submitted its report to Congress containing
the results of the Tier 2 study.7 The study indicated that
in the 2004 and later time frame, there will be a need for emission
reductions to aid in meeting and maintaining the National Ambient Air
Quality Standards (NAAQS) for both ozone and PM. Air quality modeling
showed that in the 2007-2010 time frame, when Tier 2 standards would
become fully effective, a number of areas would still be in
nonattainment for ozone and PM even after the implementation of
existing emission controls. EPA also found ample evidence that
technologies would be available to meet more stringent Tier 2
standards. In addition, the study provided evidence that such standards
could be implemented at a similar cost per ton of reduced pollutants as
other programs aimed at similar air quality problems. Finally, the
study identified several additional issues in need of further
examination, including the relative stringency of car and light truck
emission standards, the appropriateness of identical versus separate
standards for gasoline and diesel vehicles, and the effects of sulfur
in gasoline on catalyst efficiency.
---------------------------------------------------------------------------
\7\ On April 28, 1998, EPA published a notice of availability
announcing the release of a draft of the Tier 2 study and requesting
comments on the draft. The final report to Congress included a
summary and analysis of the comments EPA received.
---------------------------------------------------------------------------
In addition, on May 1, 1998, EPA released a staff paper presenting
EPA's understanding of the impact of gasoline sulfur on emissions from
motor vehicles and exploring what gasoline producers and automobile
manufacturers could do to reduce sulfur's impact on emissions. The
staff paper noted that gasoline sulfur is a catalyst poison and that
high sulfur levels in commercial gasoline could affect the ability of
future automobiles to meet more stringent standards in use. It also
pointed out that sulfur control would provide additional benefits by
lowering emissions from the current fleet of vehicles.
II. Proposed Tier 2 Determination
Based on the statutory requirements described above and the
evidence provided in the Tier 2 Study, as updated in this document, EPA
proposes its determination that new, more stringent emission standards
are indeed needed, technologically feasible, and cost effective.
A. There Is a Substantial Need for Further Emission Reductions in Order
To Attain and Maintain National Ambient Air Quality Standards
We believe that there is a clear air quality need for new emission
standards, based on the continuing air quality problems predicted to
exist in future years. As the discussion in section III.B. illustrates,
our modeling shows that in 2007 approximately 80 million Americans will
be living in areas that are in nonattainment for the 8-hour ozone
NAAQS, even with all other expected controls in place. Another 49
million people will live in attainment areas that are within 15% of
being reclassified as nonattainment areas. This is a total of nearly
130 million people, which represents about 48 percent of the population
of the United States.
In addition to these ozone concerns, our models indicate that by
2010, 45 areas, with 18 million people, will be in nonattainment for
the original PM10 NAAQS and 11 areas with 10 million people
will be in nonattainment for the revised PM10 NAAQS. While
not a specific driving factor in today's findings, our models also
project that 102 areas with about 55 million people will be in
nonattainment with the new PM2.5 NAAQS by 2010. We also must
recognize that nonattainment areas remain for other criteria pollutants
(e.g., CO) and that non-criteria pollution (e.g., air toxics and
regional haze) also contributes to environmental and health concerns.
Clearly there is a critical need for reductions in the emissions
being projected for future years. Furthermore, mobile sources are
important contributors to the emission problem. As we will explain more
fully later in this preamble, in the year 2007, the cars and light
trucks that are the subject of today's proposal are projected to
contribute nearly 40 percent of the total NOX and VOC
inventory in some cities, and 20 percent of nationwide NOX
and VOC emissions. This situation would have been considerably worse
without the NLEV program created by vehicle manufacturers, EPA, the
Northeastern states, and others. We therefore believe that reductions
in these source categories are an essential part of the reductions
needed to attain and maintain the NAAQS. As we explain below, we
propose to find that major reductions in future emissions from light-
duty vehicles and trucks are both feasible and cost effective compared
to available alternatives.
[[Page 26010]]
B. More Stringent Standards for Light-Duty Vehicles and Trucks Are
Technologically Feasible
We believe that emission standards more stringent than current Tier
1 and National Low Emission Vehicle (NLEV) levels are technologically
feasible. We believe this to be true both for the LDVs and LDTs
specifically covered in section 202(i) and for the heavier LDTs also
included in today's proposal. Manufacturers are currently producing
NLEV vehicles that meet more stringent standards than similar Tier 1
models. Our analysis shows that mainly through improvements in engine
control software and catalytic converter technology, manufacturers can
and are building durable vehicles and trucks, including heavy light-
duty trucks, which have very low emission levels.8
---------------------------------------------------------------------------
\8\ The Draft RIA contains an extended analysis, Section IV.A.
below has more discussion of the technological feasibility of our
proposed standards including detailed discussions of the various
technology options that we believe manufacturers may use to meet
these standards.
---------------------------------------------------------------------------
For light duty vehicles, certified NOX levels for 1999
reveal that NOX levels representing full-life, deteriorated
emissions in the 0.01 to 0.10 g/mi range are already being seen on some
production vehicles. Similarly, light-duty trucks up to 8500 lbs. GVWR,
also included in today's proposal, have some very low 1999
certification levels for NOX, with NOX levels of
as low as 0.04 g/mi for some of the largest LDTs. These levels are well
below Tier 1 and NLEV standards. Manufacturers have also certified LDVs
and LDTs to NMOG and CO levels as much as 80 percent below Tier 1
standards.
As discussed in more detail below and in the Draft RIA, we believe
that, by the 2004-2009 time frame proposed for the Tier 2 standards,
manufacturers would be fully able to comply with the proposed new
standard levels. In addition, to facilitate manufacturers' efforts to
meet these new standards, the Tier 2 regulations would include a
corporate fleet average, which would allow manufacturers to optimize
the deployment of technology across their product lines. Our analysis
of the available technology improvements and the very low emission
levels already being realized on these vehicles leads us to propose a
finding that today's proposed standards are fully feasible for LDVs and
LDTs.
C. More Stringent Standards for Light-Duty Vehicles and Trucks Are
Needed and Cost Effective Compared to Available Alternatives
In this document, we propose that Tier 2 motor vehicle standards
are both necessary and cost effective. We have already described our
belief that substantial further reductions in emissions are needed to
help reduce the levels of unhealthy air pollution that millions of
people are being exposed to. (We describe this further below and in the
Draft RIA.) In its analyses supporting the new ozone and PM NAAQS, the
Agency identified those methods that were reasonably cost effective,
and showed that substantial progress toward attainment could be made.
However, we also concluded that methods beyond those that could be
identified as cost effective at the time were needed and we assumed
they would be identified in the future.
We believe that the Tier 2/gasoline sulfur proposal is one of those
methods. This proposal would reduce annual NOX emissions by
about 2.2 million tons per year in 2020 and 2.8 million tons per year
in 2030 after the program is fully implemented. By way of comparison,
if all of the controls identified for the NAAQS analysis costing less
than $10,000/ton (the limit on cost effectiveness used in that
analysis) were implemented nationwide, they would produce
NOX emission reductions of about 2.9 million tons per year.
That is, to achieve significant further reductions using control
approaches other than the proposed Tier 2/Gasoline Sulfur program could
mean adopting measures costing well beyond $10,000 per ton.
Further emission reductions are needed. Without Tier 2 and gasoline
sulfur controls, we project that in 2007 at least 8 metropolitan areas
and 2 rural counties with a combined population of 39 million will
exceed the 1-hour ozone NAAQS and 28 metropolitan areas and 4 rural
counties with a combined population of 80 million will exceed the 8-
hour ozone NAAQS. We project that cars and light trucks will contribute
17 percent of the nationwide NOX inventory by 2007 and 20 to
40 percent in some cities with air quality problems. The NOX
reductions from today's proposal range from 19 to 48 percent of the
reductions we estimate are needed for areas to achieve attainment. We
believe that the proposed program, as well as the technologies assumed
for the NAAQS analysis mentioned above, are clearly cost effective
approaches for attaining and maintaining the NAAQS.
The magnitude of emission reductions that can be achieved by a
comprehensive national Tier 2/gasoline sulfur program would be
difficult to achieve from any other source category. Given the
contribution that light-duty mobile source emissions make to the
national emissions inventory and the range of control programs ozone-
affected areas already have in place or would be expected to implement,
we believe it will be very difficult, if not impossible, to attain and
maintain the ozone NAAQS in a cost-effective manner without reducing
emissions from LDVs and LDTs. In addition, we project that the Tier 2/
gasoline sulfur program would reduce direct and secondary particulate
matter coming from LDVs and LDTs by over 70 percent, providing
reductions of almost 240,000 tons annually by 2010.
We believe, then, that today's proposal is a major and attractive
source of ozone and PM precursor emission reductions when compared to
other available options. It would represent a degree of emission
reduction beyond those programs identified in the NAAQS analysis that
we believe is currently unavailable from any other reasonable program.
We also believe that it would be a cost effective program, costing
approximately $2,000 per ton of NOX plus hydrocarbon reduced
according to our estimates, which is quite attractive compared to other
alternatives. The discussion of cost and cost effectiveness later in
this preamble explains the derivation of these numbers and compares
them to other alternatives. That discussion indicates that today's
proposal would be as cost effective as both the Tier 1 and NLEV
standards and cost effective when compared to non-mobile source
programs as well.
III. Air Quality Need for and Impact of Today's Proposal
In the absence of significant new controls on emissions, tens of
millions of Americans would continue to be exposed to unhealthy levels
of air pollution. Emissions from passenger cars and light trucks are a
significant contributor to a number of air pollution problems. Today's
proposal would significantly reduce emissions from cars and light
trucks and hence would significantly reduce the health risks posed by
air pollution. This section summarizes the results of the analyses we
performed to arrive at our proposed determination that continuing air
quality problems are likely to exist, that these air quality problems
would be in part due to emissions from cars and light trucks, and that
the new standards being proposed today would improve air quality and
mitigate other environmental problems.
[[Page 26011]]
A. Americans Face Serious Air Quality Problems That Require Further
Emission Reductions
Air quality in the United States continues to improve. Nationally,
the 1997 air quality levels were the best on record for all six
criteria pollutants.9 In fact, the 1990s have shown a steady
trend of improvement, due to reductions in emissions from most sources
of air pollution, from factories to motor vehicles. Despite these
continued improvements in air quality, however, tens of millions of
Americans are still exposed to unhealthy levels of ozone and PM.
Moreover, unless there are reductions in overall emissions beyond those
that are scheduled to be achieved by already committed controls, many
of these Americans will continue to be so exposed.
---------------------------------------------------------------------------
\9\ National Air Quality and Emissions Trend Report, 1997, Air
Quality Trends Analysis Group, Office of Air Quality Planning and
Standards, U.S. Environmental Protection Agency, Research Triangle
Park, N.C., December 1998 (available on the World Wide Web at http:/
/www.epa.gov/oar/aqtrnd97/).
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Ambient ozone is formed in the atmosphere through a complex
interaction of VOC and NOX emissions. Cars and light trucks
emit a substantial fraction of these emissions. Ambient PM is emitted
directly from cars and light trucks; it also forms in the atmosphere
from NOX, sulfur oxides (SOX) and VOC, all of
which are emitted by motor vehicles. When ozone exceeds the air quality
standards, otherwise healthy people often have reduced lung function
and chest pain, and hospital admissions for people with respiratory
ailments like asthma increase; for longer exposures, permanent lung
damage can occur. Similarly, particles can penetrate deep into the
lungs and are linked with premature death, increased hospital
admissions, increased respiratory symptoms, and changes in lung tissue.
When either ozone or PM air quality problems are present, those hardest
hit tend to be children, the elderly, and people who already have
health problems.
The health effects of high ozone and PM levels are not the only
reason for concern about continuing air pollution. Ozone and PM also
harm plants and damage materials. PM reduces visibility and contributes
to significant visibility impairment in our national parks and
monuments and in many urban areas. In addition, air pollution from
motor vehicles contributes to cancer and other health risks,
acidification of lakes and streams, eutrophication of coastal and
inland waters, and elevated drinking water nitrate levels. These
problems impose a substantial burden on public health, our economy, and
our ecosystems.
In recognition of this burden, Congress has passed and subsequently
amended the Clean Air Act. The Clean Air Act requires each state to
have an approved State Implementation Plan (SIP) that shows how an area
plans to meet its air quality obligations, including achieving and then
maintaining attainment of all of the National Ambient Air Quality
Standards (NAAQS), such as those for ozone and PM.
Under EPA's proposed policy for implementing the new 8-hour ozone,
revised PM10, and new PM2.5 ambient standards (63
FR 65593, November 27, 1998), states must prepare and submit SIP
revisions to demonstrate attainment of the 8-hour ozone standard
between 2000 and 2003, depending on ozone classification under the 8-
hour standard. The earlier submittal date applies to ``transitional''
areas, which are areas that are in attainment with the 1-hour standard
and can attain the 8-hour standard through local measures adopted prior
to classification (under the 8-hour standard) and the regional emission
reductions to be achieved under the Regional Ozone Transport Rule (63
FR 57356, October 27, 1998). In general, EPA expects these areas to
demonstrate attainment by 2007. Other 8-hour nonattainment areas will
be classified as ``traditional'' under the 8-hour standard, and we
believe that these areas will have attainment dates of 2007, 2009, or
2010 depending on their 1-hour classification status and 1-hour
attainment date.
Because it takes three ``clean'' years to qualify an area to be
redesignated as attainment for the ozone standard, the deadline for
each area to achieve the VOC and NOX emission reductions
needed to meet the ozone standard generally should be two years earlier
than its attainment date. For example, 8-hour ozone nonattainment areas
for which we would establish an attainment date of 2009 would need to
implement emission reductions by the start of the 2007 ozone season in
order to have three ``clean'' years by their 8-hour attainment deadline
of 2009.
The SIP revisions to demonstrate attainment with the revised
PM10 standard must be prepared by 2002, with attainment by
2006, unless this date is not practicable. As discussed below, EPA has
also finalized regulations that regions and states implement plans for
protecting and improving visibility in the 156 mandatory Federal Class
I areas as defined in section 162(a) of the Clean Air Act. These areas
are primarily national parks and wilderness areas.
To accomplish the goal of full attainment in all areas according to
the schedules for the various NAAQS and the visibility program, the
federal government must assist the states by reducing emissions from
sources that are not as practical to control at the state level as at
the federal level. Vehicles and fuels move freely among the states, and
they are produced by national or global scale industries. Most
individual states are not in a position to regulate these industries
effectively and efficiently. The Clean Air Act therefore gives EPA
primary authority to regulate emissions from the various types of
highway vehicles and their fuels. Our actions to reduce emissions from
these and other national sources are a crucial and essential complement
to actions by states to reduce emissions from more localized sources.
If we do not adopt new standards to reduce emissions from cars and
light trucks, emissions from these vehicles would remain a large
portion of the emissions burden that causes elevated ozone and
continued nonattainment with the ozone NAAQS, which in turn affects
tens of millions of Americans. Without new standards, steady annual
increases in fleet size and miles of travel will outstrip the benefits
of current emission controls, and will cause ozone-forming emissions
from cars and trucks to grow each year starting about 2014. The
contribution of these vehicles to PM exposure and PM nonattainment
would also remain significant, and could increase considerably if
diesel engines are used in more cars or light trucks. For ozone in
particular, the contribution of cars and light trucks--in terms of both
local emissions and transported pollution--will be so significant to
those areas expected to be in nonattainment in the 2007 to 2010 time
frame, and the expected emission reduction shortfall in these areas
will be so large, that further reductions from cars and light trucks
are an inescapable element of any attainment strategy.
The standards we are proposing would cut the contribution of ozone
and PM precursors from cars and light trucks greatly. Even with this
cut, many areas will likely still find it necessary to obtain
additional reductions from other sources in order to fully attain the
ozone and PM NAAQS. However, their task would be easier and the
economic impact on their industries and citizens would be lighter as a
result of the actions proposed today. This would be a critical benefit
of today's proposal. Following implementation of the Regional Ozone
Transport Rule, states
[[Page 26012]]
will have already adopted emission reduction requirements for nearly
all large sources of VOC and NOX for which cost-effective
control technologies are known. Those that remain in nonattainment will
therefore have to consider their other alternatives. In fact, however,
many of the alternatives states will have to consider are very costly,
with a small impact from each additional category subjected to new
emission controls. The emission reductions from today's proposed
standards for gasoline, cars, and light trucks would ease the need for
states to find first-time reductions from the mostly smaller sources
that have not yet been controlled, including area sources that are
closely connected with individual and small business activities. They
would also reduce the need for states to seek even deeper reductions
from large and small sources already subject to emission controls.
In our meetings and correspondence with state and local officials,
they asked us to reduce the emissions from cars and trucks, so that
their charge of protecting the public against air pollution is one they
can accomplish on schedule and without adverse economic impacts. We
heard from the Northeast States for Coordinated Air Use Management, the
Ozone Transport Commission, the State and Territorial Air Program
Administrators, and the Association of Local Air Pollution Control
Officers. They consistently told us that it would be very difficult and
costly for the states to obtain comparable reductions from other
sources as substitutes for reductions from cars and light trucks,
especially on top of the additional reductions needed to reach ozone
attainment even with the reductions from today's proposal.
We project that today's proposal would also have important benefits
for regional visibility, acid rain, and coastal water quality.
For these and other reasons discussed in this document, we are
proposing to determine that significant emission reductions will still
be needed by the middle of the next decade and beyond to achieve and
maintain further improvements in air quality in many, geographically
dispersed areas. We also believe that a significant portion of these
emission reductions can be obtained by reducing emissions from cars and
light trucks. We believe that such reductions are in fact necessary
(since cars and light trucks are such large contributors to current and
projected ozone problems) and reasonable (since these reductions could
be achieved at a reasonable cost compared to other alternative
reductions).
The remainder of this section describes the health and
environmental problems that today's proposal would help mitigate and
the expected health and environmental benefits of this proposal. Ozone
is discussed first, followed by PM, other criteria pollutants,
visibility, air toxics, and other environmental impacts. The emission
inventories and air quality analyses are explained more fully in the
Draft Regulatory Impact Analysis for today's proposal.
B. Ozone
1. Ozone Levels Have Declined, but Unhealthy Levels of Ozone Persist
Ground-level ozone is the main harmful ingredient in
smog.10 It is produced by complex chemical reactions when
its precursors, VOC and NOX, react in the presence of
sunlight. The chemical reactions that create ozone take place while the
wind is carrying the pollutants, which means that ozone can be more
severe many miles away from the source of ozone-forming emissions than
it is at the source. The movement of ozone and its precursors is called
``ozone transport'' and suggests two complementary approaches to reduce
ozone levels in areas affected by ozone transport:
---------------------------------------------------------------------------
\10\ Ozone also occurs naturally in the stratosphere and
provides a protective layer high above the earth.
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(1) Reduce ozone precursor emissions in the area itself.
(2) Reduce ozone precursor emissions in upwind areas to reduce
incoming ozone and ozone precursor levels.
Within a nonattainment area itself, both VOC and NOX
reductions are generally beneficial. Especially in the eastern portion
of the U.S., the second approach of controlling upwind emissions can
play an important part in efforts to reduce ozone levels in
nonattainment areas. Because individual states cannot control upwind
sources of air pollution that lie outside their borders, EPA has a
special role in managing transport impacts. Vehicle and fuel standards
should play a part in doing so.
Since NOX affects downwind ozone levels in the eastern
U.S. over greater distances than VOC does, reductions in upwind
NOX emissions are particularly important in reducing ozone
levels downwind. Modeling conducted by the Ozone Transport Assessment
Group, discussed below, indicates that VOC reductions substantially
upwind from nonattainment areas have little benefit in those
nonattainment areas across the eastern region of the U.S. By contrast,
VOC reductions in or near nonattainment areas do provide air quality
benefits. Since cars and light trucks meeting today's proposed
standards would operate everywhere, today's proposal would reduce VOC
and NOX emissions in both nonattainment areas and in upwind
areas.
The new standards being proposed today would have their largest
effect on NOX emissions. Sulfur in gasoline has been found
to increase NOX emissions more than VOC emissions, and
reducing sulfur would therefore yield larger NOX reductions
than VOC reductions. Similarly, the vehicle standards proposed today
represent a greater reduction from current NOX standards
than is the case for VOC. We have taken this approach because air
quality modeling conducted for OTAG, and subsequent modeling we have
conducted, indicates that NOX reductions would have larger
ozone benefits than would VOC reductions. In addition, we believe that
individual nonattainment areas have a wider range of alternative
control opportunities for VOC than they have for NOX.
Ozone levels have decreased significantly over the past 20 years as
VOC and NOX emissions have been reduced. However, ozone
levels in much of the country remain a major concern. Outside of
California, the 1990 census showed 72 million people living in areas
that were formally designated as non-attainment for the 1-hour standard
as of August 10, 1998. Measured ozone design values from 1995 to 1997
in the region analyzed by the Ozone Transport Assessment Group (OTAG)
11 indicate that in this region alone, 26 metropolitan areas
and 8 rural counties together containing 75 million people experienced
ozone levels in excess of the 1-hour ozone standard.
---------------------------------------------------------------------------
\11\ OTAG evaluated a region that included all or part of the
easternmost 37 states.
---------------------------------------------------------------------------
The 8-hour ozone standard is more stringent and protective than the
1-hour standard, and more areas have exceeded it in the recent past. In
1995 to 1997, at least one county in each of 81 metropolitan areas and
an additional 30 rural counties together containing 110 million people
had ozone values in excess of the 8-hour ozone standard. Additional
areas in the OTAG region had ozone levels within 15 percent of the 8-
hour standard and hence faced potentially significant maintenance
challenges: 52 metropolitan areas and 44 rural counties together
containing 26 million people.
For several reasons, we expect to see substantial additional
progress in
[[Page 26013]]
reducing ozone levels over the next ten years despite continued growth
in electric power generation, industrial output, nonroad activity
levels, and vehicle miles traveled. NOX and VOC emissions
from mobile sources will continue to decline as older, higher-emitting
vehicles and nonroad engines are retired from service and replaced with
newer vehicles and nonroad engines that must meet more stringent
federal emission standards. Other federal regulations that will reduce
ozone precursor emissions will take effect, such as regulations that
will reduce VOC emissions from paints and other architectural coatings.
Beginning in 2000, areas of the country participating in the federal
reformulated gasoline program will receive lower-emitting Phase 2
reformulated gasoline. States are expected to implement additional
measures to reduce NOX and VOC emissions in 1-hour ozone
nonattainment areas. In addition, the final Regional Ozone Transport
Rule (ROTR) (63 FR 57356, October 27, 1998) requires the District of
Columbia and 22 states in the eastern U.S. to reduce their
NOX emissions substantially by 2003 to reduce ozone levels
in downwind states.
Using the most recent improvements to the OTAG emission inventories
and the OTAG ozone model, we project that in the OTAG region, these
combined emission reductions will bring 18 of the aforementioned 26
metropolitan areas and 6 of the 8 rural counties, with 36 million
residents, into attainment with the 1-hour ozone standard by 2007. The
same emission reductions are projected to bring ozone design values
below the 8-hour standard in 53 out of 81 metropolitan areas and 26 out
of 30 rural counties, with a combined 1990 population of 30 million
people.12
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\12\ The design value is the calculated ozone level, based on
ozone measurements in the area, that is compared to the NAAQS to
determine compliance with the standard.
---------------------------------------------------------------------------
However, we still project many areas in the OTAG region to have
ozone design values in 2007 in excess of the 1-hour and 8-hour
standards. Eight metropolitan areas and two counties with a combined
1990 population of 39 million are projected to experience ozone design
values in excess of the 1-hour ozone standard in 2007.13
Twenty-eight areas and 4 rural counties, with a combined 1990
population of 80 million, are projected to experience ozone design
values at levels in excess of the 8-hour standard in 2007.
---------------------------------------------------------------------------
\13\ Various states have submitted SIPs to meet a requirement
that they demonstrate attainment with the 1-hour ozone standard by
2005 or 2007 (the exact date is state-specific, depending on the
severity of their violation of the 1-hour standard). These plans
were submitted to EPA in the first half of 1998, and we are still
reviewing them for their completeness and approvability. We have not
fully evaluated the impact of the measures contained in these plans
on future ozone levels. As a result, they are not included in the
baseline emission inventory.
---------------------------------------------------------------------------
Additional areas outside the OTAG modeling region may also
experience high ozone levels, even with the additional emission
controls that will be implemented by 2007. The most recent assessment
for these areas was made in the Regulatory Impact Analysis for the
revised NAAQS (NAAQS RIA).14 That assessment predicted that
many areas in California will require substantial additional reductions
to attain the 1-hour and 8-hour ozone standards. Although the vehicle
and fuel standards being proposed today would not apply to vehicles and
fuel sold in California, we project that today's proposals would lead
to emission reductions within California. According to the State of
California, about 7 to 10 percent of all car and light truck travel in
California takes place in vehicles originally sold outside California.
These vehicles operate in California during visits and after relocation
of households from other states. Today's proposal would cause those
vehicles to be cleaner, assisting California's nonattainment areas to
meet the ozone standards. In addition, this proposal requires that
gasoline in all states (except California, which has its own low-sulfur
gasoline program) have a low sulfur content, in order to maintain
catalyst effectiveness. This would ensure that vehicles belonging to
California residents get clean gasoline when they travel outside of
California, so that they return to California with fully functioning
catalysts.
---------------------------------------------------------------------------
\14\ ``Regulatory Impact Analyses for the Particulate Matter and
Ozone National Ambient Air Quality Standards and Proposed Regional
Haze Rule,'' Innovative Strategies and Economics Group, Office of
Air Quality Planning and Standards, U.S. Environmental Protection
Agency, Research Triangle Park, NC, July 17, 1997.
---------------------------------------------------------------------------
Outside of California and the OTAG region, the NAAQS RIA modeling
indicated that all areas would attain the 1-hour standard by 2010. One
area (Phoenix, AZ) was projected not to attain the 8-hour standard.
Eleven other areas were projected to have ozone levels within 15
percent of the 8-hour standard and hence face potential challenges in
maintaining their attainment status.
Furthermore, even an area now in attainment or that reaches
attainment by 2007 can be at risk of becoming nonattainment in the face
of continued growth in its population, economy, vehicle traffic, and
nonroad equipment activity levels. Also, an area that we have estimated
will reach attainment in 2007 may fail to do so if growth is higher
than we project, if emission controls are less effective, or if the
modeling is otherwise in error. Our modeling for the OTAG region has
estimated that of the 1-hour nonattainment areas projected to reach
attainment by 2007 with the benefits of the Regional Ozone Transport
Rule (ROTR) and other already committed measures, 17 metropolitan areas
and 5 rural counties, with a combined 1990 population of 35 million
people, will remain within 15 percent of the 1-hour standard. These
areas would benefit from additional reductions to help ensure that they
will attain.
With respect to the 8-hour standard, we estimate that 80
metropolitan areas and 39 rural counties with a 1990 population of 49
million people will have design values within 15 percent of the 8-hour
standard. These areas have some risk of not actually being in
attainment in 2007, and will face potentially significant challenges
maintaining their attainment status in future years. Today's proposed
standards would help ensure these areas do attain, and help these areas
accommodate continued population and economic growth while staying in
attainment with the 8-hour ozone standard by further reducing levels of
ozone precursors.
EPA's best ozone projections at the current time for the OTAG
region are summarized in Tables III-1 and III-2, where ``ROTR'' refers
to the Regional Ozone Transport Rule. It should be noted that the
results for the OTAG regions discussed above and summarized in the
following tables apply to only a portion of the area that would benefit
from today's proposal.
Table III-1.--Extent of Potential 1-Hour Ozone Problem Areas in 2007 in
the OTAG Region.a
------------------------------------------------------------------------
2007
projections
with ROTR
------------------------------------------------------------------------
Design values in excess of the 1-Hour NAAQS (125 ppb)
------------------------------------------------------------------------
Number of Metropolitan Areas............................ 8
Number of Rural Counties................................ 2
1990 Population of Metropolitan Areas and Rural Counties 39
(millions).............................................
------------------------------------------------------------------------
a Additional potential problem areas in California.
[[Page 26014]]
Table III-2.--Extent of Potential 8-Hour Ozone Problem Areas in 2007 in
the OTAG Region a
------------------------------------------------------------------------
2007
projections
with ROTR
------------------------------------------------------------------------
Design values in excess of the 8-Hour NAAQS (85 ppb)
------------------------------------------------------------------------
Number of Metropolitan Areas............................ 28
Number of Rural Counties................................ 4
1990 Population of Metropolitan Areas and Rural Counties 80
(millions).............................................
------------------------------------------------------------------------
Design values within 15 percent of the 8-Hour NAAQS (72-84 ppb)
------------------------------------------------------------------------
Number of Metropolitan Areas............................ 80
Number of Rural Counties................................ 39
1990 Population of Metropolitan Areas and Rural Counties 49
(millions).............................................
------------------------------------------------------------------------
a Phoenix, Arizona and multiple areas in California are also potential
problem areas.
It should be noted that the areas included in Table III-2 have not
been designated to be in nonattainment with the 8-hour ozone NAAQS.
Such designations will not be made by EPA until 2000, and these
designations will be based on the data that are most recently available
at that time.15 Instead, the areas included in Table III-2
have been projected to have design values that would place them in
nonattainment in 2007, using an approach described in the Draft
RIA.16 This approach enabled EPA to estimate the extent of
the 8-hour nonattainment problem after implementing the reductions set
forth in the Regional Ozone Transport Rule and the measures states have
adopted or are specifically required by the Clean Air Act to adopt for
their existing 1-hour nonattainment areas. (The modeling did not
consider the impact of additional measures that may appear in the SIP
revisions submitted by some states in the first half of 1998.)
---------------------------------------------------------------------------
\15\ It should also be noted that the number and 1990 population
of metropolitan areas projected to be near or above the 8-hour ozone
standard in Table III-2 are based on the boundaries of ozone
nonattainment areas as currently defined under the 1-hour ozone
standard. These boundaries will be reevaluated as 8-hour ozone
nonattainment areas are designated and may change from those used
above, affecting the count and population of the potential problem
areas.
\16\ The approach uses a combination of ambient monitoring data
and regional ozone photochemical grid modeling for specific ozone
episodes to develop statistical correlations between modeled ozone
levels and projected future monitoring results. The approach does
not reflect any further emission reductions that may have been
included in revisions to State Implementation Plans (SIPs) for ozone
that EPA received from some states in the first half of 1998. These
SIP revisions are still under review by EPA for completeness and
approvability.
---------------------------------------------------------------------------
We believe the large reductions called for in today's action would
substantially reduce ozone levels nationwide and would therefore reduce
ozone levels and design values in the areas projected to otherwise
exceed the 8-hour standard as well as in those areas facing potentially
significant maintenance challenges.
2. Cars and Light-Duty Trucks Are a Big Part of the NOX and
VOC Inventory, and Today's Proposal Would Reduce This Contribution
Substantially
Emissions of VOCs and NOX come from a variety of
sources, both natural and from human activity. Natural sources,
including emissions that have been traced to vegetation, account for a
substantial portion of total VOC emissions in rural areas. The
remainder of this section focuses on the contribution of motor vehicles
to emissions from human sources. Human-caused VOCs are released as
byproducts of incomplete combustion as well as evaporation of solvents
and fuels. For gasoline-fueled cars and light trucks, approximately
half of the VOC emissions come from the vehicle exhaust and half come
from the evaporation of gasoline from the fuel system. NOX
emissions are dominated by human sources, most notably high-temperature
combustion processes such as those occurring in automobiles and power
plants. Emissions from cars and light trucks are currently, and will
remain, a major part of nationwide VOC and NOX emissions. In
1996, cars and light trucks comprised 25 percent of the VOC emissions
and 21 percent of the NOX emissions from human sources in
the U.S.17 The contribution in metropolitan areas was
generally larger.
---------------------------------------------------------------------------
\17\ Emission Trend Report, 1997.
---------------------------------------------------------------------------
Motor vehicle emission controls have led to significant
improvements in emission levels in the air (the ``emission inventory'')
and will continue to do so in the near term. As a result of the
introduction of cleaner reformulated gasoline in 2000, the introduction
of National Low Emission Vehicles (NLEVs) and vehicles complying with
the Enhanced Evaporative Test Procedure and Supplemental Federal Test
Procedures, and the continuing removal of older, higher-emitting
vehicles from the in-use vehicle fleet, total emissions from the car
and light truck fleet are projected to continue to decline through the
next decade, reaching a low point for NOX in 2013 (Figure
III-1) and for VOC in 2015.18 On a per mile basis, average
VOC and NOX emissions from cars and light trucks combined
will continue to decline well beyond 2015, reflecting the continuing
effect of existing emission control programs. However, projected
increases in vehicle miles traveled (VMT) will cause total emissions
from these vehicles to increase. With this increase in travel and
without additional controls, we project that combined NOX
and VOC emissions for cars and light trucks will increase starting in
2013 and 2015, respectively, so that by 2030 they will have returned to
levels nearly the same as they will be in 2000. In cities experiencing
rapid growth, such as Charlotte, North Carolina, the near-term trend
toward lower emissions tends to reverse sooner.
---------------------------------------------------------------------------
\18\ The auto manufacturer and northeastern state commitments to
the NLEV program are scheduled to end in 2004 without further EPA
action on Tier 2 standards, although continued voluntary compliance
by automobile manufacturers and the affected states is a
possibility. Our analysis of emission trends and the emission
benefits expected from today's proposal assumes for the base
scenario a continuation of the NLEV program past 2004. It also
includes all other control measures assumed to be implemented for
the purposes of the proposed state-level NOX budgets in
the Regional Ozone Transport Rule, such as reformulated gasoline in
all required and opt-in areas and enhanced I/M where required.
---------------------------------------------------------------------------
Figure III-1 illustrates this expected trend in car and light truck
NOX emissions in the absence of today's proposed standards
for vehicles and gasoline. The figure also allows the contribution of
cars to be distinguished from that of light trucks. The figure clearly
shows the impact of steady growth in light truck sales and travel on
overall light-duty NOX emissions; the decrease in overall
light-duty emission levels is due solely to reductions in LDV
emissions. In 2000, we project that trucks will produce about 50
percent of combined car and light truck NOX emissions. We
project that truck emissions will actually increase after 2000, and
over the next 30 years, trucks will grow to dominate light-duty
NOX emissions. By 2007, we project trucks will make up two-
thirds of light-duty NOX emissions; by 2020, nearly three-
quarters of all light-duty NOX emissions will be produced by
trucks.
BILLING CODE 6560-50-P
[[Page 26015]]
[GRAPHIC] [TIFF OMITTED] TP13MY99.000
BILLING CODE 6560-50-C
[[Page 26016]]
Today's action would significantly decrease NOX and VOC
emissions from cars and light trucks, and would delay the date by which
NOX and VOC emissions would begin to increase due to
continued VMT growth. With Tier 2/Sulfur control, light-duty vehicle
NOX and VOC emissions are projected to continue their
downward trend past 2020. Table III-3 shows the annual tons of
NOX that we project would be reduced if today's proposal
were adopted.19 These projections include the benefits of
low sulfur fuel and the introduction of Tier 2 car and light truck
standards.
---------------------------------------------------------------------------
\19\ Today's proposed standards for both vehicles and fuels
would apply in 49 states and the U.S. territories, excluding only
California. If today's proposal is adopted, there would also be
emissions reductions in California from vehicles that relocate or
visit from other states. However, much of the emissions inventory
analysis for this proposal was made for a 47-state region that
excludes California, Alaska, and Hawaii, since these states were not
included in the scope of ozone modeling.
Table III-3.--NOX Emissions From Cars and Light Trucks as Percent of Total Emissions, and Reductions Due to Tier
2/Sulfur Control a
----------------------------------------------------------------------------------------------------------------
Light-duty
Light-duty percent of Light-duty
Year tons without total without tons reduced
tier 2 tier 2 by tier 2 b
(percent)
----------------------------------------------------------------------------------------------------------------
2007............................................................ 3,218,530 17 795,734
2010............................................................ 3,041,639 17 1,182,323
2015............................................................ 3,020,806 17 1,778,881
2020............................................................ 3,221,151 18 2,198,113
----------------------------------------------------------------------------------------------------------------
a Estimates exclude California, Alaska, and Hawaii, although reductions would occur in all three. For all cases,
this table reflects implementation of ROTR and other measures assumed in the ROTR. For the ``Without Tier 2''
case, the estimates reflect continuation of NLEV beyond 2004.
b Does not include emission reductions from heavy-duty gasoline vehicles.
The lower sulfur levels proposed today would produce large emission
reductions on pre-Tier 2 vehicles as soon as low-sulfur gasoline is
introduced, in addition to enabling Tier 2 vehicles to achieve lower
emission levels. Among the pre-Tier 2 vehicles, the largest per vehicle
emission reductions from lower sulfur in gasoline would be achieved
from vehicles that automobile manufacturers will have sold under the
voluntary National Low Emission Vehicle program. These vehicles are
capable of substantially lower emissions when operated on low sulfur
fuel. Older technology vehicles experience a smaller but significant
effect.
In 2007, when all gasoline would meet the new sulfur limit and when
large numbers of 2004 and newer vehicles meeting the proposed standards
would be in use, the combined NOX emission reduction from
vehicles and fuels would be nearly 800,000 tons per year. After 2007,
emissions would be reduced further as the fleet turned over to Tier 2
vehicles operating on low sulfur fuel. By 2020, NOX
emissions would be reduced by two-thirds from the levels that would
occur if today's proposal were not adopted. This reduction equals the
NOX emissions from over 166 million pre-Tier 2/Sulfur cars
and light trucks. This reduction would represent a 12 percent
NOX reduction in emissions from all manmade sources.
VOC emissions would also be reduced by today's proposal, with
reductions increasing as the fleet turns over. The reductions as a
percent of emissions from cars and light trucks would be 5 percent in
2007 and grow to 16 percent in 2020.
As discussed earlier, in California, smaller but still substantial
reductions in both NOX and VOC would be achieved because
vehicles visiting and relocating to California would be designed to
meet today's proposed standards. Also, vehicles from California
visiting other states would not be exposed to high sulfur fuel.
These estimates of emission reductions reflect a mixture of urban,
suburban, and rural areas. As we noted in the Tier 2 Study, however,
cars and light trucks generally make up a larger fraction of the
emission inventory for urban and suburban areas, where human population
and personal vehicle travel is more concentrated than emissions from
other sources such as heavy-duty highway vehicles, power plants, and
industrial boilers. We have estimated emission inventories for three
cities using the same methods as were used to project the nationwide
inventories, and we present the results for 2007 below in Table III-4.
Inventory shares in 2010 are about the same.
These results confirm that light-duty vehicles make up a greater
share of the NOX emission inventories in urban areas than
they do in the nationwide inventory. While these vehicles' share of
national NOX emissions in 2007 is about 17 percent, it is
estimated to be about 38 percent in the Atlanta area. There is also a
range in VOC contributions, with Atlanta again being the area with the
largest car and light truck contribution at 33 percent. In metropolitan
areas with high car and light truck contributions, today's proposal
would represent a larger step toward attainment since it would have a
larger effect on total emissions.
Table III-4.--Proportion of the Total Urban Area NOX and VOC Inventory
in 2007 Attributable to Light-Duty Vehicles a
------------------------------------------------------------------------
NOX VOC
Region (percent) (percent)
------------------------------------------------------------------------
Nationwide a...................................... 17 18
New York urban area............................... 29 15
Atlanta urban area................................ 38 33
Charlotte urban area.............................. 18 15
------------------------------------------------------------------------
a For all cases, this table reflects implementation of ROTR and other
measures assumed in the ROTR. The estimates reflect continuation of
NLEV beyond 2004.
Another useful perspective from which to view the magnitude of the
emission reductions from today's proposal is in terms of the additional
emission reductions from all human sources that areas will need to
attain the 8-hour ozone standard. For this analysis, we included the
implementation of the Regional Ozone Transport Rule but assumed that
today's proposal was not implemented. In the previously referenced
NAAQS RIA we estimated additional NOX emission reductions
that, along with specific accompanying VOC reductions, would bring each
residual nonattainment area into attainment with the 8-hour ozone
[[Page 26017]]
standard by 2010. We have used these estimated reductions as the basis
for Table III-5, which shows the NOX reductions needed to
reach attainment in 2007 for six metropolitan areas.20 These
are areas for which both the NAAQS RIA and the ozone modeling for this
proposal forecasted continued 8-hour nonattainment in that year, even
with the emission reductions from the Regional Ozone Transport Rule.
---------------------------------------------------------------------------
\20\ We calculated the estimated reductions needed for
attainment in 2007 by adding the reductions due to NLEV vehicles
entering the fleet between 2007 and 2010 to the estimated reductions
needed for attainment in 2010.
---------------------------------------------------------------------------
Table III-5 also shows the NOX emission reductions in
those same six areas that we project would result if today's proposal
were implemented. Although the two analyses differ in some emission
modeling estimates, the comparison is valid as a general indication of
the contribution today's proposal can make to attainment. Cars and
light trucks contribute about 20 to 40 percent of the NOX
inventory in these six areas. The NOX reductions estimated
for today's proposal range from 19 to 50 percent of the reductions that
are estimated to be needed for attainment. These figures show that
today's proposal would make a very substantial contribution to these
cities' attainment programs, but that there will still be a need for
additional reductions from other sources. The emission reductions from
today's proposal would clearly not exceed the reductions needed from an
air quality perspective for these areas; as described in the next
section, we project that about 20 other areas in the eastern U.S. would
also need reductions beyond those of today's proposed program to attain
the NAAQS for NOX.
Table III-5.--Comparison of Tier 2/Sulfur NOX Reductions to NOX Reductions Estimated to Produce 8-Hour Ozone
Attainment in 2007
----------------------------------------------------------------------------------------------------------------
Tier 2/sulfur
NOX reductions NOX reductions NOX reductions
estimated to from proposed as percent of
Metro area produce tier 2/sulfur reductions to
attainment standards produce
(tons/year) (tons/year) attainment
----------------------------------------------------------------------------------------------------------------
Atlanta......................................................... 69,802 17,271 25
Dallas.......................................................... 41,283 14,761 36
Memphis......................................................... 7,343 3,683 50
NY-NJ-CT........................................................ 186,880 35,906 19
Philadelphia.................................................... 63,456 19,942 31
Washington, DC-Baltimore........................................ 62,519 22,673 36
----------------------------------------------------------------------------------------------------------------
3. Tier 2/Sulfur Ozone Benefits and the Post-Tier 2/Sulfur Ozone
Problem
By reducing ozone precursor emissions from cars and light trucks in
areas where ozone levels are near or above the ozone standard, today's
proposal would reduce local ozone levels. And by reducing ozone
precursor emissions in upwind areas, today's proposal would reduce
ozone and ozone precursor levels in the air flowing into areas where
ozone levels are high. EPA's analysis of the ozone impact of today's
proposal suggests that it would yield large reductions in ozone,
particularly in areas where ozone transport plays a significant role in
local nonattainment problems. There are uncertainties associated with
the modeling we have used to estimate these reductions, but we are
certain that the emission reductions would be large.
Ozone levels in a few locations in the centers of large
metropolitan areas are VOC-limited; that is, the atmospheric chemistry
is such that ozone levels tend to respond to VOC reductions rather than
to NOX reductions. Some of these areas may experience
essentially no change or a slight ozone increase on some days, if one
considers only the isolated effect of the emission reductions due to
today's proposal. However, it has long been recognized that
metropolitan areas containing such locations will need to implement
additional VOC reductions from local sources to reach attainment. If
these reductions and the reductions from today's proposal were
combined, the net effect would be a progressive drop in ozone levels
until attainment is reached.
To examine the impact of today's proposal on ozone levels, we
estimated the ozone effects of the emission reductions that would occur
in 2007 and 2010 for the area covered by the OTAG ozone model. The 1-
hour ozone reductions in 2007 are relevant to the several 1-hour
nonattainment areas required to reach attainment in that year. The 8-
hour reductions in 2007 and 2010 are of great relevance to the efforts
of states to achieve attainment with the 8-hour ozone standard, since
for many areas these dates bracket the three ``clean'' years required
to show attainment by their actual deadline.
The estimated emission reductions from our proposal in 2007 and
2010 would be substantial due to the effect of low sulfur fuel on the
entire in-use fleet of gasoline vehicles and trucks of all sizes,
especially those designed to meet NLEV standards, and due to the fact
that many cleaner 2004 and newer vehicles would be on the road. Table
III-6 provides a summary of the 1-hour ozone results for the OTAG
modeling area for 2007. Table III-7 provides a summary of the 2007 and
2010 results for the 8-hour standard. According to our best modeling,
the reductions in 2007 would make the difference between nonattainment
and attainment for four metropolitan areas with a combined 1990
population of 15 million people. In 2010, we estimate that the Tier2/
Sulfur reductions would be enough by themselves to bring eight
metropolitan areas with 13 million people into attainment with the 8-
hour standard.
Tables III-6 and III-7 indicate that we project that some areas
would not attain with only the emission reductions from the Tier 2/
Sulfur proposal. However, we do project that those areas would
experience reductions in ozone levels. These reductions would mean that
even the areas that are not brought all the way to attainment would not
need to reduce emissions from other sources as much as would be
required without today's proposal, as previously explained. Of the 18
areas that we projected would not be brought to attainment with the 8-
hour standard in 2010, we project that 10 areas would
[[Page 26018]]
have design values within 5 percent of the standard.
Today's proposal would also benefit ozone nonattainment areas
outside of the OTAG modeling region, including the one area (Phoenix,
Arizona) projected to be in nonattainment for ozone in 2010 in the
absence of Tier 2/Sulfur controls. The Tier 2/Sulfur controls being
proposed today would help Phoenix attain the ozone standard,
particularly since cars and light trucks are a relatively large part of
the Phoenix emission inventory. These controls also would help the 11
areas projected to face potential maintenance challenges stay in
attainment as their economies and populations grow. And as already
mentioned, because about 7 to 10 percent of travel in California is by
non-California vehicles, there would be a substantial benefit in that
state also.
Table III-6.--Projected Tier 2/Sulfur Impact on Potential 1-Hour Ozone Problem Areas in the OTAG Region in 2007
a
----------------------------------------------------------------------------------------------------------------
2007 without 2007 with tier Change due to
tier 2/sulfur 2/sulfur tier 2/sulfur
----------------------------------------------------------------------------------------------------------------
Design values projected to be in excess of the 1-Hour NAAQS (125 ppb)
----------------------------------------------------------------------------------------------------------------
Number of Metropolitan Areas.................................... 8 4 -4
Number of Rural Counties........................................ 2 2 0
1990 Population of Metropolitan Areas and Rural Counties 39 24 -15
(millions).....................................................
----------------------------------------------------------------------------------------------------------------
a For all cases, this table reflects implementation of ROTR and other measures assumed in the ROTR. For the
``Without Tier 2/Sulfur'' case, the estimates reflect continuation of NLEV beyond 2004.
Table III-7.--Projected Tier 2/Sulfur Impact on Potential 8-Hour Ozone Problem Areas in the OTAG Region in 2007
and 2010 a
----------------------------------------------------------------------------------------------------------------
Without tier 2/ With tier 2/ Change due to
sulfur sulfur tier 2/sulfur
----------------------------------------------------------------------------------------------------------------
Design values projected to be in excess of the 8-Hour NAAQS (85 ppb) in 2007
----------------------------------------------------------------------------------------------------------------
Number of Metropolitan Areas.................................... 28 25 -3
Number of Rural Counties........................................ 4 3 -1
1990 Population of Metropolitan Areas and Rural Counties 80 72 -8
(millions).....................................................
----------------------------------------------------------------------------------------------------------------
Design values projected to be in excess of the 8-Hour NAAQS (85 ppb) in 2010
----------------------------------------------------------------------------------------------------------------
Number of Metropolitan Areas.................................... 26 b 18 -8
Number of Rural Counties........................................ 3 3 0
1990 Population of Metropolitan Areas and Rural Counties 78 65 -13
(millions).....................................................
----------------------------------------------------------------------------------------------------------------
a For all cases, this table reflects implementation of ROTR and other measures assumed in the ROTR. For the
``Without Tier 2/Sulfur'' case, the estimates reflect continuation of NLEV beyond 2004.
b Of these 18 areas predicted to remain nonattainment, 10 would be within 5 percent of the 8-hour ozone
standard.
Much larger VOC and NOX emission reductions would occur
in 2020, when the vehicle fleet would be almost fully turned over to
Tier 2 vehicles. The 2020 scenario is designed to help evaluate the
long-term impact of today's proposal on ozone levels, when the majority
of the vehicle fleet would consist of vehicles that meet the standards
being proposed today.
We present three indicators of the benefits of today's proposed
program in 2020. First, as shown in Table III-3, that today's proposal
would reduce NOX emissions in 2020 by over 2,000,000 tons
per year, not counting reductions in California, Hawaii, and Alaska.
The reduction in each nonattainment area would also be very
substantial. Second, we have estimated how much design values in 2020
would change due to today's proposal. For all counties projected to
need emission reductions beyond the ROTR, the average reduction in 2020
design value was 6 ppb, or almost 8 percent of the 8-hour standard
itself. The range of design value reductions was 3 to 12 ppb. These
results included only the region covered by the OTAG ozone model.
Third, when we analyzed the 2020 scenario to take into account the
duration, severity, and geographic extent of high ozone levels, we
found that projected excessive 8-hour ozone levels, defined as grid
cell-days above 85 ppm ozone, were reduced by 43 percent.
The baseline scenario against which the ozone effects of today's
proposed standards in 2020 were compared assumes that no emission
control efforts beyond those assumed in the ROTR are implemented. We
believe this approximation is reasonable because our inventory modeling
shows that in 2020, total human-caused emissions in the absence of
today's proposed program change very little from their 2007 levels. We
subtracted the emission benefits of today's proposed program in 2020
from those baseline emissions to approximate the emissions that would
result in 2020.
We expect the requirement to achieve attainment with the 8-hour
standard will cause states with residual nonattainment areas to adopt
additional controls in pursuit of their attainment obligations. The
increasingly large emission reductions from today's proposal that would
occur over time would be of great value to those areas since these
areas would not need to implement as extensive or stringent additional
controls as would otherwise be the case. Furthermore, once an area
reaches attainment, it must adopt a SIP revision containing a strategy
to maintain the standard thereafter. The reductions from today's
proposal would help such areas overcome any loss of reductions due to
less-than-expected effectiveness from other controls, provide a safety
margin against the chance of new ozone violations, provide room for
population and economic growth to cause increases in emissions
[[Page 26019]]
from other sources with less need for the maintenance plan to increase
the stringency of controls on those other sources, and possibly even
allow selective relaxation of other control programs.
Because the ozone modeling for 2020 did not account for the
additional measures that states will adopt to attain and maintain the
ozone standard, an attainment vs. nonattainment distinction does not
apply in 2020. Instead, the changes that today's proposal would achieve
in 2020 precursor emissions and in predicted ozone concentrations are
more appropriate indicators of the benefits of the Tier2/Sulfur program
than would be a count of the areas that have design values move from
above to below the ozone standard.
These ozone results for 2007, 2010, and 2020 represent the best
modeling currently available to us, but should be considered
approximate. The Regulatory Impact Analysis documents all the methods
and assumptions used. The results presented are estimates of the future
that only apply to the OTAG region rather than the entire area that
would be subject to today's proposal. As previously mentioned, there
would also be ozone benefits outside this region, particularly for
nonattainment areas in California and for Phoenix, Arizona. We expect
to revise our ozone effects estimates prior to the final rule to
reflect further improvements in estimates of emissions from both mobile
and stationary sources.
In addition to the emission-reduction and ozone-reduction benefits
discussed above that we expect will result from the proposed rule, we
have done a separate analysis of economic benefits (and costs)
associated with the expected ozone reductions from today's proposed
program (see Section IV.D.5. below and the RIA).
C. Particulate Matter
1. Particulate Matter Presents Substantial Public Health Risks
Particulate matter (PM) is produced as a direct result of human
activity and natural processes, and it is also formed through chemical
and physical processes in the atmosphere. Natural sources include
windblown dust, salt from dried sea spray, fires, and volcanoes, as
well as so-called secondary particles formed from the transformation of
natural emissions of SOX, NOX, and VOCs. Human
sources include industrial activities, agriculture, road dust, and
soot, as well as secondary particles produced from gases such as
SOX, NOX, and VOCs that are emitted primarily
from combustion processes. PM includes fine particles with a diameter
smaller than 2.5 microns (also called PM2.5) and coarse
particles with larger diameters. Coarse particles are predominantly
from non-combustion sources and are dominated by soil dust and sea
salt. They remain in the atmosphere a relatively short period of time.
Fine particulate includes carbon-based particles emitted directly from
combustion processes but consists predominantly of secondary particles,
such as sulfate-based particles (produced from SOX),
nitrate-based particles (produced from NOX), and carbon-
based particles created through transformation of VOC emissions. Mobile
sources can reasonably be estimated to contribute to ambient secondary
nitrate, sulfate and carbonaceous PM in proportion to their
contribution to total NOX, SO, and VOC emissions.
In 1997, 8 million Americans were living in 13 counties that
exceeded the recently revised PM10 standard, and
PM10 problems are projected to persist in the absence of
further actions to control PM10 levels. Table III-8 presents
estimates of the extent of PM10 and PM2.5
nonattainment in the future. In the NAAQS RIA, we projected that in
2010, eleven counties with a combined 1990 population of about 10
million people would not be in attainment with the revised
PM10 standards.21 About half of the affected
population lives outside of California. In the same analysis, 102
counties were projected to violate the new PM2.5 NAAQS, with
a combined 1990 population of about 55 million people. About 75 percent
of the affected population lives outside of California. (More
information about this analysis and its uncertainties may be found in
the NAAQS RIA and the Tier 2 Report to Congress.) Ambient PM reductions
from more stringent motor vehicle or fuel standards would primarily
affect areas outside of California, because California has its own
motor vehicle emission control program. California areas would also
benefit, however, through the temporary travel and permanent migration
of out-of-state vehicles into California, as discussed above.
---------------------------------------------------------------------------
\21\ The methods used to project PM concentrations in 2010 from
1990 emissions and ambient concentration data introduce several
sources of uncertainty. Also, the PM2.5 values are
predicted from a regression model and hence are subject to the
uncertainty associated with this model. Other uncertainties exist
regarding emission inventory estimates from human and natural
sources, monitoring data, and the models used to account for
physical and chemical processes in the atmosphere. Even with the
anticipated delivery of more comprehensive modeling techniques, the
scarcity of speciated ambient PM data in both urban and rural areas
to evaluate model behavior will continue to compromise the certainty
of the best model-derived conclusions.
Table III-8.--Projected 2010 PM10/PM2.5 Nonattainment Counties and
Populations
------------------------------------------------------------------------
Outside
California California
------------------------------------------------------------------------
Violating Original PM10 NAAQS
------------------------------------------------------------------------
Number of Counties............................ 33 12
1990 Population (millions).................... 11 7
------------------------------------------------------------------------
Violating Revised PM10 NAAQS
------------------------------------------------------------------------
Number of Counties............................ 5 6
1990 Population (millions).................... 5 5
------------------------------------------------------------------------
Violating New PM2.5 NAAQS
------------------------------------------------------------------------
Number of Counties............................ 92 10
1990 Population (millions).................... 42 13
------------------------------------------------------------------------
A significant number of areas are projected to exceed the
PM10 NAAQS in 2010 with existing emission controls,
indicating that further PM and PM-precursor emission reductions will be
needed. Because the bulk of PM emissions from motor vehicles are fine
particles, any reduction in particulate emissions from motor vehicles
aimed at reducing PM10 levels would also reduce ambient
levels of PM2.5. As mentioned above, the number of counties
projected to violate the new PM2.5 NAAQS is much larger than
that for the revised PM10 standards. Tier 2/Sulfur standards
that reduce particulate emissions for the purposes of facilitating
attainment with the PM10 NAAQS could also benefit areas with
elevated PM2.5 levels.
2. Reducing Emissions From Cars and Light Trucks Would Reduce Ambient
Levels
Today's proposal would reduce PM levels by reducing direct PM
emissions from cars and light trucks, and by reducing emissions of
sulfur and nitrogen oxides that are converted to PM in the atmosphere.
Direct PM emissions would be reduced in two ways. First, reductions in
gasoline sulfur levels would reduce PM emissions from gasoline
vehicles. Second, the more stringent PM standard included in today's
proposal would reduce PM emissions from cars and light trucks equipped
with diesel engines. Diesel engines are used in a small fraction of
current cars and light trucks, but this
[[Page 26020]]
fraction could grow as discussed in III.C.3. below.
With no growth in diesel sales, we project today's action would
reduce direct PM emissions from cars and light trucks mainly due to the
introduction of low-sulfur gasoline. Sulfur-based particles account for
a substantial portion of the particulate matter emitted by gasoline-
powered vehicles. More stringent PM emission standards are not
anticipated to alter PM emissions from gasoline vehicles but would
result in reductions in diesel PM emissions. The overall effect of
today's proposal under this assumption would be to reduce direct
exhaust PM emissions from cars and light trucks by 60 percent in 2007
and by 62-63 percent in 2015 and beyond. Tables III-9 and III-10 show
the contribution of cars and light trucks to total PM10 and
PM2.5 emissions, and the reductions that would be obtained
from today's proposal. The contribution of cars and light trucks to
either PM inventory will generally be higher in urban areas than on a
nationwide basis, and will vary from area to area. In 2007, for
example, cars and light trucks contribute 1.3 percent to the nationwide
PM10 inventory (excluding natural sources and fugitive
dust). For comparison, this percentage is estimated to be 4.4 percent
in Atlanta and 1.9 percent in the New York City metropolitan area.
Later in this section we discuss the possibility that sales of
diesel-powered vehicles might increase from current levels, making the
effect of the more stringent PM standard in this proposal larger.
Table III-9.--Direct exhaust PM10 Emissions From Cars and Light Trucks as Percent of Total Emissions, and
Reductions Due to Tier 2/Sulfur Controla,b
----------------------------------------------------------------------------------------------------------------
Light-duty
Light-duty percent of Light-duty
Year tons without total without tons reduced
tier 2 tier 2 by tier 2
----------------------------------------------------------------------------------------------------------------
2007............................................................ 39,209 1.3 23,379
2010............................................................ 41,412 1.4 25,239
2015............................................................ 46,064 1.4 28,674
2020............................................................ 51,102 1.5 32,031
----------------------------------------------------------------------------------------------------------------
a For all cases, this table reflects continuation of current diesel engine usage in the light truck fleet and
implementation of ROTR and other measures assumed in the ROTR.
b The emission estimates shown exclude natural sources of PM and fugitive dust. They also do not include
California (which has its own vehicle and fuel standards), Alaska, or Hawaii. Today's proposal would have
additional emission benefits in these states.
Table III-10.--Direct exhaust PM2.5 Emissions From Cars and Light Trucks As Percent of Total Emissions, and
Reductions Due to Tier 2/Sulfur Control a,b
----------------------------------------------------------------------------------------------------------------
Light-duty
Light-duty percent of Light-duty
Year tons without total without tons reduced
tier 2 tier 2 by tier 2
----------------------------------------------------------------------------------------------------------------
2007............................................................ 36,365 1.7 21,687
2010............................................................ 38,409 1.8 23,410
2015............................................................ 42,724 1.9 26,595
2020............................................................ 47,397 2.0 29,707
----------------------------------------------------------------------------------------------------------------
a For all cases, this table reflects continuation of current diesel engine usage in the light truck fleet and
implementation of ROTR and other measures assumed in the ROTR.
b The emission estimates shown exclude natural sources of PM and fugitive dust. They also do not include
California (which has its own vehicle and fuel standards), Alaska, or Hawaii. Today's proposal would have
additional emission benefits in these states.
Even larger PM reductions would result from the reductions in the
sulfur oxides (SOX), NOX, and VOC emissions that
give rise to secondary PM that would result from today's proposal. The
reduction in ambient PM levels that would come from the proposed
reductions in these precursor emissions is about 6 to 7 times as large
as the reduction from lower emissions of direct PM. Essentially all
secondary PM is fine PM and hence is included in estimates of both
PM10 and PM2.5.
We described the effect of today's proposal on VOC and
NOX emissions above in Section III.B. Today's proposal also
would reduce SOX emissions from cars and light trucks by
dramatically lowering the level of sulfur in gasoline, since gaseous
SOX emissions are dependent entirely on fuel sulfur level.
In the absence of today's proposal, we project that SOX
emissions from cars and light trucks will increase steadily in
conjunction with VMT growth, from approximately 216,000 tons in 2005 to
300,000 tons in 2020--an increase of almost 40 percent (total
nationwide SOX emissions from all sources was 20,000,000
tons in 1997). Today's proposal would reduce SOX emissions
from all gasoline-powered engines, including cars, light trucks, heavy-
duty gasoline vehicles, and gasoline-powered nonroad engines, in any
year by 90 percent, once all gasoline meets the proposed sulfur limit.
The same percentage reductions in SOX emissions would occur
in subsequent years. The absolute emission reduction increases with
time, however, due to growth in VMT and nonroad engine use. Table III-
11 shows the impact of today's proposal on SOX emissions.
[[Page 26021]]
Table III-11.--SOx Emissions From Cars and Light Trucks as Percent of Total Emissions, and Reductions Due to
Tier 2/Sulfur control a
----------------------------------------------------------------------------------------------------------------
Light-duty
Light-duty percent of Light-duty
Year tons without total without tons reduced
tier 2 tier 2 by tier 2
----------------------------------------------------------------------------------------------------------------
2007............................................................ 225,673 1.2 202,748
2010............................................................ 240,694 1.3 216,437
2015............................................................ 270,174 1.4 242,964
2020............................................................ 299,959 1.6 269,756
----------------------------------------------------------------------------------------------------------------
a The emission estimates shown do not include California (which has its own vehicle and fuel standards), Alaska,
or Hawaii. Today's proposal would have additional emission benefits in these states.
3. Today's Proposal Would Limit the Potential Health Risks From
Increased Diesel Engine Use in Cars and Light Trucks
Of particular concern from a PM perspective is the possibility that
diesels will become more prevalent in the light-duty truck fleet. This
development is a reasonable possibility since vehicle and engine
manufacturers have indicated their intent to sell more diesel-powered
light-duty trucks and in some cases have made capital investments to
implement these plans. The Partnership for a New Generation of Vehicles
(PNGV), a public-private research and development effort that has been
pursuing several promising technologies for greatly improved vehicle
fuel economy combined with low emissions, has identified improved
diesel engines as a technology likely to be able to deliver large fuel
economy improvements in the near future, by about 2004. In order to
assess the potential impact of increased diesel sales penetration on
PM2.5 emissions, we analyzed benefits from our proposed Tier
2 PM standards under a scenario in which the use of diesel engines in
light trucks increases rapidly, by five percentage points per year from
2001 through 2010, when diesels would account for 50 percent of light-
duty truck sales; beyond 2010, diesel sales were assumed to be stable
at 50 percent of the light-truck market. Table III-12 presents the
results of our analysis of this scenario.
This scenario of increased diesels would result in dramatic
increases in direct PM2.5 emissions from cars and light
trucks, if there is no change in the PM standards for light trucks. The
increase in diesel exhaust PM2.5 emissions would more than
overcome the reduction in direct PM2.5 attributable to the
sulfur reduction in gasoline. Assuming no change in the existing PM
standards for light trucks, our analysis of this scenario shows that
direct PM2.5 emissions in 2020 would be approximately
140,000 tons, nearly three times the 47,000 tons projected in the base
diesel sales case from Table III-10. The portion of the
PM2.5 inventory attributable to cars and light trucks would
climb steadily, reaching almost 6 percent in 2020 instead of the 2
percent shown in Table III-10 for a scenario where diesel engines do
not increase their presence in the light truck fleet. In some cities
with relatively high vehicle use and lower industrial emissions, the
car and truck contribution would be even higher.
This increase would be accompanied by increases in the mortality
and morbidity associated with PM2.5 exposure. Fortunately,
the standards being proposed today would result in a steady decrease in
total direct PM2.5 from cars and light trucks despite a
possible increase in diesel engines in light trucks. Direct PM
emissions in 2020 with today's proposal would be about 25,000 tons per
year, less than at present.
If this scenario for increased diesel engines in light trucks were
to occur, today's proposal would reduce diesel PM2.5 by over
90 percent in 2020. Stated differently, by 2020 today's proposal would
reduce over 113,000 tons of the potential increase in PM emissions from
passenger cars and light trucks. The result would be less direct
PM2.5 than is emitted today, because the increase in diesel
PM would be more than offset by the reduction in gasoline PM.
Table III-12.--Direct Exhaust PM2.5 Emissions From Light Duty Vehicles and Reductions Due to Tier 2/Sulfur
Control, With Greater Diesel Engine Sales a,b
----------------------------------------------------------------------------------------------------------------
Light-duty Light-duty
Year exhaust tons exhaust tons Light-duty
without tier 2 with tier 2 tons reduced
----------------------------------------------------------------------------------------------------------------
2007............................................................ 52,907 22,478 30,429
2010............................................................ 72,626 22,542 50,084
2015............................................................ 109,622 23,275 86,347
2020............................................................ 138,177 24,754 113,424
----------------------------------------------------------------------------------------------------------------
a For all cases, this table reflects implementation of ROTR and other measures assumed in the ROTR and an
increase in diesel-powered light truck market share from 5 percent of light truck sales in 2001 to 50 percent
in 2010 and beyond.
b The emission estimates shown exclude natural sources of PM and fugitive dust. They also do not include
California (which has its own vehicle and fuel standards), Alaska, or Hawaii. Today's proposal would have
additional emission benefits in these states.
4. Today's Proposal Would Have Substantial PM Benefits
In general, we project that today's proposal would reduce both
direct and secondary PM from cars and light trucks substantially,
regardless of the future market share for diesel engines in the light-
duty fleet. The larger part of the reduction is due to large reductions
in VOC, NOX, and SOX emissions, with
corresponding reductions in secondary PM formation.
Low sulfur fuel would greatly reduce direct PM emissions and
sulfate-based secondary PM formation from SOX emissions from
gasoline vehicles, while tailpipe PM standards are projected to
mitigate excess PM emissions from diesel vehicles, even at very
aggressive rates of diesel vehicle sales growth. Substantial reductions
in NOX
[[Page 26022]]
emissions would carry over to reductions in indirect PM. These
reductions would help reduce the number of areas with PM10
and PM2.5 levels in excess of national standards, reduce the
severity of PM nonattainment in other areas, and help areas facing PM
maintenance challenges stay in attainment.
The magnitude of the PM reductions from today's proposal in a given
area depends on conditions such as the contribution of light-duty
vehicles to the local PM, SOX, NOX, and VOC
inventory; the contribution of light-duty vehicles to the PM,
SOX, NOX, and VOC inventories in upwind areas;
local and upwind ammonia inventories (involved in secondary PM
formation); control measures being implemented on both local and upwind
sources of PM and its precursors, and local meteorology. We have
incorporated these factors into the air quality modeling used to
develop the benefit/cost analysis presented in Section IV.D.5., which
includes the economic benefits of the direct and secondary PM
reductions expected to result from today's proposal.
The PM modeling results from that analysis suggest that if all cars
and trucks used in 2010 met the emission standards being proposed
today, significant PM reductions would result in urban and substantial
PM reductions would result in much of the continental U.S. The annual
average level of both PM10 and PM2.5 was
projected to decline by 0.25 to 0.64 micrograms per cubic meter
(/m3) in many cities; average levels were projected
to decline by 0.1 to 0.25 /m3 throughout most of
the country east of the Great Plains, Nebraska, and parts of Colorado,
Arizona, and other western states. Similarly, daily maximum PM levels
22 were projected to decline substantially, with many cities
projected to see declines of 0.75 to 4.5 /m3 and
over half the continental U.S. projected to experience declines of 0.25
to 0.75 /m3. Note that this analysis assumed no
growth in sales of diesel-powered light trucks. It also did not account
for the direct PM reductions that would be achieved when the small
number of diesel-powered trucks already being sold now will reduce
their PM emissions to meet the lower proposed PM standard.
---------------------------------------------------------------------------
\22\ Daily maximum PM levels are the PM levels (averaged over 24
hours) for days that are projected to be in the 98th or 99th
percentile when ranked by their PM2.5 and PM10
levels, respectively.
---------------------------------------------------------------------------
D. Other Criteria Pollutants: Carbon Monoxide, Nitrogen Dioxide, Sulfur
Dioxide
This proposal would help reduce levels of three other pollutants
for which NAAQS have been established: carbon monoxide (CO), nitrogen
dioxide (NO2), and sulfur dioxide (SO2). The
extent of nonattainment for these three pollutants is small, so the
primary effect of today's proposal would be to provide areas concerned
with maintaining their attainment status a greater margin of safety. As
of 1998, every area in the United States has been designated to be in
attainment with the NO2 NAAQS. As of 1997, only one area
(Buchanan County, Missouri) did not meet the primary SO2
short-term standard, due to emissions from the local power plant. In
1997, only 6 of 537 monitoring sites reported ambient CO levels in
excess of the CO NAAQS; all six sites were located in California, which
has established its own vehicle and fuel emission standards.
The reductions in SO2 precursor emissions from today's
proposal are essentially equal to the SOX reductions
described in Section III.B. and III.C., respectively. The impact of
today's proposal on NO2 emissions depends on the specific
emission control technologies used to meet the standards being proposed
today. However, essentially all of the NOX emitted by cars
and light trucks converts to NO2 in the atmosphere;
therefore, it is reasonable to assume that today's proposal would
substantially reduce ambient NO2 levels by the same
proportion. Today's proposal also would require light trucks to meet
more stringent CO standards; we will evaluate the impact of these
standards more fully before publishing our final rule. The analysis of
economic benefits and costs found in Section IV.D.-5. does not account
for the economic benefits of the CO reductions expected to result from
today's proposal.
E. Visibility
Visibility impairment occurs as a result of the scattering and
absorption of light by particles and gases in the atmosphere. It is
most simply described as the haze that obscures the clarity, color,
texture, and form of what we see. The principal cause of visibility
reduction is fine particles between 0.1 and 1 m in size. Of
the pollutant gases, only NO2 absorbs significant amounts of
light; it is partly responsible for the brownish cast of polluted
skies. While the contribution of NO2 to visibility
impairment varies from area to area, it is generally responsible for
less than ten percent of visibility reduction.
The CAA requires EPA to protect visibility, or visual air quality,
through a number of programs. These programs include the national
visibility program under Sections 169a and 169b of the Act, the
Prevention of Significant Deterioration program for the review of
potential impacts from new and modified sources, and the secondary
NAAQS for PM10 and PM2.5. The national visibility
program established in 1980 requires the protection of visibility in
156 mandatory federal Class I areas across the country (primarily
national parks and wilderness areas). More than 65 million visitors
travel each year to these parks and wilderness areas. The CAA
established as a national visibility goal, ``the prevention of any
future, and the remedying of any existing, impairment of visibility in
mandatory federal Class I areas in which impairment results from
manmade air pollution.'' The Act also calls for state programs to make
``reasonable progress'' toward the national goal. In addition, a recent
national opinion poll on the state of the national parks found that
more than 80 percent of Americans believe air pollution affecting these
parks should be cleaned up for the benefit of future
generations.23
---------------------------------------------------------------------------
\23\ ``National Parks and the American Public: A National Pubic
Opinion Survey on the National Park System,'' Summary Report,
National Parks and Conservation Association, June 1998.
---------------------------------------------------------------------------
There has been improvement in visibility in the western part of the
country over the last ten years. However, visibility impairment remains
a serious problem in Class I areas. Visibility in the East does not
seem to have improved. As one part of addressing this national problem,
EPA has proposed that states be required to adopt and implement
effective plans for protecting and improving visibility in Class I
federal areas (including 156 major national parks and wilderness
areas), integrated with plans to achieve the revised ozone and PM
standards.
Today's proposal should result in visibility improvements due to
the reduction in local and upwind PM and PM precursor emissions. Since
mobile source emissions contribute to the formation of visibility-
reducing PM, control programs that reduce the mobile source emissions
of direct and secondary PM would have the effect of improving
visibility. The Grand Canyon Visibility Transport Commission's final
recommendations report 24 found that
[[Page 26023]]
reducing total mobile source emissions is an essential part of any
program to protect visibility in the Western U.S. The Commission found
that motor vehicle exhaust is responsible for about 14 percent of
human-caused visibility reduction (excluding road dust). A substantial
portion of motor vehicle exhaust comes from cars and light trucks. In
light of that impact, the Commission's recommendations in 1996
supported federal Tier 2/Sulfur standards, as EPA is proposing today.
More recently, a number of Western Governors noted the importance of
controlling mobile sources as part of efforts to improve visibility in
their comments on the Regional Haze Rule and on the need to protect the
16 Class I areas on the Colorado Plateau. In their joint letter dated
June 29, 1998, they stated that, ``* * * the federal government must do
its part in regulating emissions from mobile sources that contribute to
regional haze in these areas. * * *'' and called on EPA to make a
``binding commitment * * * to fully consider the Commission's
recommendations related to the * * * federal national mobile source
emission control strategies.'' These recommendations included Tier 2
vehicle standards and reductions in gasoline sulfur levels.
---------------------------------------------------------------------------
\24\ ``Recommendations for Improving Western Vistas,'' Report of
the Grand Canyon Visibility Transport Commission to the United
States Environmental Protection Agency, June 10, 1996.
---------------------------------------------------------------------------
As an indication of how important car and light truck emissions can
be to fine PM and visibility, the recent Northern Front Range Air
Quality Study has reported findings that indicate that cars and light
trucks are responsible for 39 percent of fine PM at a site within the
metropolitan Denver area, and for 40 percent at a downwind rural site.
This contribution includes both direct PM and indirect PM formed from
sulfur dioxide and NOX from these vehicles.
The analysis of economic benefits and costs found in Section
IV.D.5. accounts for the economic benefits of the visibility
improvements expected to result from today's proposal.
F. Air Toxics
Emissions from cars and light trucks include a number of air
pollutants that are known or suspected human or animal carcinogens such
as benzene, formaldehyde, acetaldehyde, 1,3-butadiene, and diesel
particulate matter, or that are known or suspected to have other, non-
cancer health impacts. For several of these pollutants, motor vehicle
emissions are believed to account for a significant proportion of total
nation-wide emissions. All of these compounds are present in exhaust
emissions; benzene is also found in evaporative emissions from
gasoline-fueled vehicles.
The health effects of diesel particulate are of particular
relevance to this rulemaking, because of the possibility for increased
diesel-powered truck sales and our proposal for a more stringent PM
standard that would apply to these trucks. While we have not finalized
our decision about the carcinogenicity of diesel exhaust particulate,
we are in the process of addressing this question. Several other
agencies and international organizations have already made such a
determination, including the California Air Resources Board (ARB). Our
own quantitative risk assessment for diesel particulate is still in
draft form,25 and is presently being revised to address the
comments of a peer review panel of the Clean Air Science Advisory
Committee.
---------------------------------------------------------------------------
\25\ EPA's diesel health assessment (Health Assessment Document
for Diesel Emissions, SAB Review Draft, U.S. Environmental
Protection Agency, Washington, DC. EPA/600/8-90/057C, February
1998.) can be found at the following EPA website: http://
www.epa.gov/ncea/diesel.htm. The Clean Air Science Advisory
Committee's review of that assessment (CASAC Review of the Draft
Diesel Health Assessment Document, U.S. Environmental Protection
Agency Science Advisory Board, Washington, DC EPA-SAB-CASC-99-001.)
can be found at the following SAB website: http://www.epa.gov/sab/.
---------------------------------------------------------------------------
Because our assessment for diesel particulate is not complete, we
are not presenting absolute estimates of how potential cancer risks
from diesel particular could be affected by today's proposal. However,
we can give a qualitative or relative discussion. Diesel engines are
used in a very small portion of the cars and light-duty trucks in
service today. By far, heavy duty highway and nonroad diesel engines
are the larger source of diesel PM. Engine and vehicle manufacturers
have projected that diesel engines are likely to be used in an
increasing share of light trucks, and some manufacturers have announced
capital investments to build such engines.
If these projections are valid and the proportion of light-duty
trucks powered by diesel engines increases, the potential health risks
from diesel PM could increase substantially. Light trucks could become
a larger source of diesel PM than heavy-duty diesel trucks. We estimate
that if the percentage of light duty diesel truck sales were to
increase to 50 percent of light-duty truck sales by 2010, the increased
presence of light duty diesel trucks on the nation's roads could
increase the potential cancer risks associated with PM emissions from
all diesel-powered highway vehicles (including heavy-duty diesel
trucks, diesel buses, and light-duty diesel vehicles) by approximately
130 percent as of 2020, under the current light-duty diesel PM
standards. Though the actual levels of diesel engine use may be
considerably different than the projections used in both analyses, the
analyses are useful in illustrating the potential impact of increased
diesel engine use in light trucks.
Today's proposal would limit the increase in the potential cancer
risks from cars and light trucks associated with any potential increase
in light-duty diesel sales. We have estimated that in 2020, today's
proposal would limit the increase in total highway diesel PM emissions
due to growth in light truck diesels to 24 percent, in contrast to the
more than doubling that would occur without our proposal for a tighter
PM standard for light trucks. The comparison in terms of potential
cancer risk from car and light truck diesel PM likely would closely
follow this emissions comparison.
The VOC emission reductions resulting from today's proposal would
further reduce the potential cancer risk posed by air pollutants other
than diesel PM emitted by cars and light trucks, since many of these
pollutants are themselves VOCs. The analysis of economic benefits and
costs found in Section IV.D.5. does not account for the economic
benefits of the reduction in cancer risk from air toxics that could
result from today's proposal, because we have not yet completed our
study of this issue or engaged in a peer-reviewed assessment of the
baseline air toxics risks (including a final quantitative risk
assessment of the diesel particulate risks) or of the reductions that
would be achieved by today's proposal. Therefore, the estimates
included in the Draft RIA should be considered preliminary. A peer-
reviewed assessment is planned and may be completed in time to be
available for incorporation into the impact analysis for the final
rule. EPA will place this document in the docket as soon as it is
available for public review.
Section 202(l)(2) of the Clean Air Act requires EPA to establish
regulations for the control of hazardous air pollutants, or air toxics,
from motor vehicles. The regulations may address vehicle emissions or
fuel properties that influence emissions, or both. We will issue a
proposal to address this requirement in September of this year, and a
final rule in July 2000.
G. Acid Deposition 26
Acid deposition, or acid rain as it is commonly known, occurs when
SO2
[[Page 26024]]
and NOX react in the atmosphere with water, oxygen, and
oxidants to form various acidic compounds that later fall to earth in
the form of precipitation or dry deposition of acidic particles. It
contributes to damage of trees at high elevations and in extreme cases
may cause lakes and streams to become so acidic that they cannot
support aquatic life. In addition, acid deposition accelerates the
decay of building materials and paints, including irreplaceable
buildings, statues, and sculptures that are part of our nation's
cultural heritage. To reduce damage to automotive paint caused by acid
rain and acidic dry deposition, some manufacturers use acid-resistant
paints, at an average cost of $5 per vehicle--a total of $61 million
per year if applied to all new cars and trucks sold in the U.S. The
general economic and environmental effects of acid rain are discussed
at length in the Draft RIA.
---------------------------------------------------------------------------
\26\ Much of the information in this section was excerpted from
the EPA document, Human Health Benefits from Sulfate Reduction,
written under Title IV of the 1990 Clean Air Act. Amendments, U.S.
EPA, Office of Air and Radiation, Acid Rain Division, Washington, DC
20460, November 1995.
---------------------------------------------------------------------------
Acid deposition primarily affects bodies of water that rest atop
soil with a limited ability to neutralize acidic compounds. The
National Surface Water Survey (NSWS) investigated the effects of acidic
deposition in over 1,000 lakes larger than 10 acres and in thousands of
miles of streams. It found that acid deposition was the primary cause
of acidity in 75 percent of the acidic lakes and about 50 percent of
the acidic streams, and that the areas most sensitive to acid rain were
the Adirondacks, the mid-Appalachian highlands, the upper Midwest and
the high elevation West. The NSWS found that approximately 580 streams
in the Mid-Atlantic Coastal Plain are acidic primarily due to acidic
deposition. Hundreds of the lakes in the Adirondacks surveyed in the
NSWS have acidity levels incompatible with the survival of sensitive
fish species. Many of the over 1,350 acidic streams in the Mid-Atlantic
Highlands (mid-Appalachia) region have already experienced trout losses
due to increased stream acidity. Emissions from U.S. sources contribute
to acidic deposition in eastern Canada, where the Canadian government
has estimated that 14,000 lakes are acidic. Acid deposition also has
been implicated in contributing to degradation of high-elevation spruce
forests that populate the ridges of the Appalachian Mountains from
Maine to Georgia. This area includes national parks such as the
Shenandoah and Great Smoky Mountain National Parks.
The SOX and NOX reductions from today's
proposal would help reduce acid rain and acid deposition, thereby
helping to reduce acidity levels in lakes and streams throughout the
U.S. These reductions would help accelerate the recovery of acidified
lakes and streams and the revival of ecosystems adversely affected by
acid deposition. Reduced acid deposition levels would also help reduce
stress on forests, thereby accelerating reforestation efforts and
improving timber production. Deterioration of our historic buildings
and monuments, and of buildings, vehicles, and other structures exposed
to acid rain and dry acid deposition, also would be reduced, and the
costs borne to prevent acid-related damage may also decline.
While the reduction in sulfur and nitrogen acid deposition would be
roughly proportional to the reduction in SOX and
NOX emissions, respectively, the precise impact of today's
proposal would differ across different areas. Each area is affected by
emissions from different source regions, and the mobile source
contribution to the total SOX and NOX emission
inventory will differ across different source regions. Nonetheless, the
projected impact of today's proposal on SOX and
NOX emission inventories provides a rough indicator of the
likely effect of today's proposal on acid deposition. As discussed in
Section III.D. above, today's proposal would reduce SOx emissions by
1.6 percent and NOX emissions by 12.5 percent in 2020.
The analysis of economic benefits and costs found in Section
IV.D.5. was not able to account for the economic benefits of the
reduction in acid deposition expected to result from today's proposal.
H. Eutrophication/Nitrification
Nitrogen deposition into bodies of water can cause problems beyond
those associated with acid rain. Elevated levels of nitrate in drinking
water pose significant health risks, especially to infants. The
Ecological Society of America has included discussion of the
contribution of air emissions to increasing nitrogen levels in surface
waters in a recent major review of causes and consequences of human
alteration of the global nitrogen cycle in its Issues in Ecology
series.27 Long-term monitoring in the United States, Europe,
and other developed regions of the world shows a substantial rise of
nitrogen levels in surface waters, which are highly correlated with
human-generated inputs of nitrogen to their watersheds. These nitrogen
inputs are dominated by fertilizers and atmospheric deposition.
---------------------------------------------------------------------------
\27\ Vitousek, Peter M., John Aber, Robert W. Howarth, Gene E.
Likens, et al. 1997. Human Alteration of Global Nitrogen Cycle:
Causes and Consequences. Issues in Ecology. Published by Ecological
Society of America, Number 1, Spring 1997.
---------------------------------------------------------------------------
Human activity can increase the flow of nutrients into those waters
and result in excess algae and plant growth. This increased growth can
cause numerous adverse ecological effects and economic impacts,
including nuisance algal blooms, dieback of underwater plants due to
reduced light penetration, and toxic plankton blooms. Algal and
plankton blooms can also reduce the level of dissolved oxygen, which
can also adversely affect fish and shellfish populations. This problem
is of particular concern in coastal areas with poor or stratified
circulation patterns, such as the Chesapeake Bay, Long Island Sound, or
the Gulf of Mexico. In such areas, the ``overproduced'' algae tends to
sink to the bottom and decay, using all or most of the available oxygen
and thereby reducing or eliminating populations of bottom-feeder fish
and shellfish, distorting the normal population balance between
different aquatic organisms, and in extreme cases causing dramatic fish
kills.
Collectively, these effects are referred to as eutrophication,
which the National Research Council recently identified as the most
serious pollution problem facing the estuarine waters of the United
States (NRC, 1993). Nitrogen is the primary cause of eutrophication in
most coastal waters and estuaries.28 On the New England
coast, for example, the number of red and brown tides and shellfish
problems from nuisance and toxic plankton blooms have increased over
the past two decades, a development thought to be linked to increased
nitrogen loadings in coastal waters. Airborne NOX
contributes from 12 to 44 percent of the total nitrogen loadings to
United States coastal water bodies. For example, approximately one-
quarter of the nitrogen in the Chesapeake Bay comes from atmospheric
deposition.
---------------------------------------------------------------------------
\28\ Much of this information was taken from the following EPA
document: Deposition of Air Pollutants to the Great Waters-Second
Report to Congress, Office of Air Quality Planning and Standards,
June 1997, EPA-453/R-97-011.
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Excessive fertilization with nitrogen-containing compounds can also
affect terrestrial ecosystems. 29 Research suggests that
nitrogen fertilization can alter growth patterns and change the balance
of species in an ecosystem. In
[[Page 26025]]
extreme cases, this process can result in nitrogen saturation when
additions of nitrogen to soil over time exceed the capacity of the
plants and microorganisms to utilize and retain the nitrogen. This
phenomenon has already occurred in some areas of the U.S.
---------------------------------------------------------------------------
\29\ Terrestrial nitrogen deposition can act as a fertilizer. In
some agricultural area, this effect can be beneficial.
---------------------------------------------------------------------------
Deposition of nitrogen from cars and light trucks contributes to
these problems. As discussed in Section III.B. above, today's proposal
would reduce total NOX emissions by 12.5 percent in 2020.
These reductions should reduce drinking water nitrate levels by
reducing the amount of nitrate deposited from the atmosphere onto
drinking water sources or onto the watersheds of drinking water sources
by similar amounts. The NOX reductions would also reduce the
eutrophication problems associated with atmospheric deposition of
nitrogen into watersheds and onto bodies of water, particularly in
aquatic systems where atmospheric deposition of nitrogen represents a
significant portion of total nitrogen loadings. Since air deposition
accounts for 12-44 percent of total nitrogen loadings in coastal
waters, the 12.5 percent reduction in NOX from today's
proposal are projected to reduce nitrogen loadings by 1.5-5.5 percent.
To put these reductions in perspective, the reductions expected in the
Chesapeake Bay area would amount to about 6 percent of the total
reduction in nitrogen loading needed to maintain the reduction in
nutrient loads agreed to by the signatory states in the Chesapeake Bay
Agreement (40 percent of ``controllable by the year 2000).
The analysis of economic benefits and costs found in Section
IV.D.5. does not account for the economic benefits of reduced drinking
water nitrate levels and reduced terrestrial nitrogen deposition
expected to result from today's proposal, if implemented. The analysis
does, however, account for the economic benefits of reduced
eutrophication.
I. Conclusion: Cleaner Cars and Light Trucks Are Critically Important
to Improving Air Quality
Despite continued progress in reducing emissions from cars and
light trucks, these vehicles will continue to contribute a substantial
share of the ozone and PM precursors in current and projected
nonattainment areas, and in upwind areas whose emissions contribute to
downwind nonattainment, unless additional measures are taken to reduce
their emissions. These vehicles will also continue to contribute to the
ambient PM that affects visibility in Class I federal areas and some
urban areas. Emissions from cars and light trucks also play a
significant role in a wide range of health and environmental problems,
including known and potential cancer risks from inhalation of air
pollutants (a problem that could become more significant if sales of
diesel-powered cars and light trucks were to increase), health risks
from elevated drinking water nitrate levels, acidification of lakes and
streams, and eutrophication of inland and coastal waters.
Today's proposal would reduce NOX, VOC, CO, PM, and
SOX emissions from these vehicles substantially. These
reductions would help reduce ozone levels nationwide and reduce the
extent and severity of violations of both the 1-hour and 8-hour ozone
standards. These reductions would also help reduce PM levels, both by
reducing direct PM emissions and by reducing emissions that give rise
to secondary PM. The NOX and SOX reductions would
help reduce acidification problems, and the NOX reductions
would help reduce eutrophication problems and drinking water nitrate
levels. The PM standards proposed today would help improve visibility
and would help mitigate the adverse health effects due to possible
increases in light-duty diesel engine sales.
Section IV.D.5. of this preamble describes the comprehensive
analysis EPA has made of the net economic benefit of the requirements
we are proposing today. In that analysis, we have quantified many of
the public health and environmental benefits of the actions on an
annual, national scale. Estimates of the economic value of these
effects have been made for as many of the effects as possible, and
compared to the cost of compliance. This rulemaking is the first
instance in which EPA has conducted such a cost-benefit analysis for a
set of proposed vehicle emission standards.
IV. What Are We Proposing and Why?
In the previous section, we showed why many states need as much
emission reduction as is reasonably possible from LDVs and LDTs--plus
reductions from other sources--if they are to reach and maintain
compliance with the 1-hour and 8-hour ozone NAAQS. We also pointed out
that these reductions would also be important in addressing PM and
other air quality and environmental problems in every major region of
the country.
In this section, we describe the comprehensive vehicle/fuel program
we are proposing to respond to these serious air quality needs.
Specifically, we discuss:
Our reasons for proposing a comprehensive vehicle and fuel
program, including why stringent LDV and LDT standards are feasible in
conjunction with low sulfur gasoline.
Our proposed vehicle-related requirements and our
rationales for proposing them.
Our proposed fuel-related requirements and our rationales.
Our projections of the economic impacts, cost
effectiveness, and monetized environmental and health benefits of the
proposed program.
Other program design options we have considered.
A. Why Are We Proposing Vehicle and Fuel Standards Together?
1. Feasibility of Stringent Standards for Light-Duty Vehicles and
Light-Duty Trucks.
a. Gasoline Fueled Vehicles. We believe that the standards being
proposed today for gasoline-fueled vehicles are well within the reach
of existing control technology. Our proposed determination of
feasibility is based on the use of catalyst-based strategies that are
already in use and are well proven on the existing fleet of vehicles.
In fact, as you will see below, many current engine families are
already certified to levels at or below the proposed new Tier 2
requirements. All of the certification and research testing discussed
below was performed on low-sulfur test fuel (nominally 30 ppm).
Certainly, larger vehicles and trucks, which are heavier and have
larger frontal areas, will face the biggest challenges. However,
conventional technology will be sufficient for even these vehicles,
especially in light of the extra leadtime we have provided before LDT3s
and LDT4s have to meet Tier 2 levels. We are also proposing to change
the test conditions for these trucks from ``adjusted loaded vehicle
weight'' to ``loaded vehicle weight.'' Adjusted loaded vehicle weight,
suitable for commercial truck operation, loads the truck to half of its
full payload. Loaded vehicle weight, on the other hand, represents curb
weight plus 300 pounds. The proposed change more accurately reflects
how these vehicles are used and makes heavy LDT testing consistent with
passenger car and light LDT testing. This change will make it
substantially easier for the heavier trucks to meet our proposed
standards.
Emission control technology has evolved rapidly in recent years.
Emission standards applicable to 1990 model year vehicles required
roughly 90% reductions in exhaust HC and CO
[[Page 26026]]
emissions and a 75% reduction in NOX emissions compared to
uncontrolled emissions. Today, some vehicles currently in production
are well below these levels, showing overall emissions reductions of
all three of these pollutants. These vehicles' emissions are well below
those necessary to meet the current federal Tier 1 and even California
Low-Emission Vehicle (LEV) standards. The reductions have been brought
about by ongoing improvements in engine air-fuel management hardware
and software plus improvements in catalyst designs, all of which are
described fully in the Draft RIA.
The types of changes being seen on current vehicles have not yet
reached their technological limits and continuing improvement will
allow both LDVs and LDTs to meet the proposed standards. The Draft RIA
describes a range of specific techniques that we believe could be used.
These range from improved computer software and engine air-fuel
controls to increases in precious metal loading and other exhaust
system/catalyst system improvements. All of these technologies are
currently used on one or more production vehicle models. There is no
need to invent new approaches or technologies. The focus of the effort
is primarily development, application, and optimization of these
existing technologies.
We can gain significant insight into the difficulty of meeting the
proposed new standards by looking at current full-life certification
data. There are at least 48 engine family-control systems combinations
certified in 1999 at levels below the Tier 2 NOX standard of
0.07 g/mi. Of these, 35 also have hydrocarbon levels of 0.09 g/mi or
below. Looking at a somewhat higher threshold to identify vehicles
certified near the proposed standard, there are an additional 113 car
and light truck families certified at levels between 0.07 g/mi and 0.10
g/mi NOX.
All of the above vehicles are already able, or close to being able,
to certify to our proposed standards. The further reductions needed are
those to provide an ample safety margin, or cushion, between the
certified level and the emission standard. The degree of compliance
margin required is a function of a variety of factors designed to
provide the manufacturer a high confidence that production vehicles
will meet the standards in-use over their useful life. Historically,
these determinations are manufacturer specific, with cushions generally
growing smaller as standards decline (reflecting more precision and
repeatability in vehicle performance as more sophisticated controls are
developed). The 1999 certification data reflects compliance cushions
from as little as 20 percent below the standard to as high as 80
percent below the standard.
The cushion to be expected for Tier 2 vehicles is difficult to
establish, although some manufacturers claim a cushion of 50 percent
below the standard would be needed. We believe that manufacturers would
strive to use the smallest cushions possible in order to minimize the
impacts of the standards on their vehicles. Looking at 1999
certification data from this perspective and using a threshold of 0.04
g/mi NOX, there are fully 22 engine family-control system
configurations at or below the 0.04 g/mi level (one of which is a
LDT4). Thus, even at such low levels, current technology is already
demonstrating the performance that would be necessary to meet the
proposed standards.
Since the most difficult compliance effort would be faced by the
larger LDTs, we have undertaken a technology demonstration program
aimed at lowering the emissions of a large 1999 LDT3 vehicle. This
vehicle has a high horsepower engine, four wheel drive, and a curb
weight of 4,500 pounds (GVWR 30 of 6,100 lbs). The exhaust
system of the vehicle was modified to incorporate two close-coupled and
two underfloor catalytic converters. The catalytic converters were aged
to full useful life conditions using the accelerated aging methods
described by Theiss.31 For further details of the
modifications to this vehicle, please refer to the draft RIA.
---------------------------------------------------------------------------
\30\ Gross Vehicle Weight Rating. The curb weight of the vehicle
plus its maximum recommended load of passengers and cargo.
\31\ Theiss, J.R., ``Catalytic Converter Diagnosis Using the
Catalyst Exotherm,'' SAE Technical Paper Series, Paper No. 942058,
SAE Fuels and Lubricants Meeting and Exposition, Baltimore, MD,
October 17-20, 1994.
---------------------------------------------------------------------------
In our initial work we made no attempts to alter the calibration of
the electronic engine controls. In this configuration, the vehicle
achieved emissions levels of 0.060 0.002 g/mi
NOX and 0.09 0.01 g/mi NMHC. Thus, by these
straightforward modifications to the catalyst system based upon
existing catalyst hardware, this vehicle was able to reach the proposed
Tier 2 levels. In order to achieve additional reductions in the test
vehicle's emissions, we are planning further work consisting largely of
elimination of fuel cut-offs during decelerations, slight increases in
EGR, and a minor degree of air injection during cold-start. However,
given the amount of leadtime before any of the proposed Tier 2
standards would begin, we believe that the work already done clearly
shows the feasibility of our proposal, even for large light-duty
trucks.
Figure IV.A.-1 shows the results of our testing in comparison to
the California LEV-1 standards applicable to this vehicle, and the
proposed Tier 2 standards.
BILLING CODE 6560-50-P
[[Page 26027]]
[GRAPHIC] [TIFF OMITTED] TP13MY99.001
BILLING CODE 6560-50-C
[[Page 26028]]
One of the challenges facing larger truck catalyst systems is
overtemperature protection. Because of this, our work on this vehicle
included temperature evaluation of the catalyst under maximum load
conditions. We found that the original fuel calibration for the truck
provided sufficient enrichment under wide-open-throttle conditions to
prevent exceeding the catalyst bed temperature limits (950
to 1000 deg.C) specified by the manufacturer of the catalytic
converters. We conducted chassis dynamometer testing over the
aggressive US06 cycle with the dynamometer inertia greatly increased to
simulate full GVWR load conditions (6,100 lbs) for the pickup. Catalyst
bed temperatures did not exceed 850 deg.C at any point during the
testing.
In addition to the EPA work, others have conducted several test
programs recently that help demonstrate the feasibility of our proposed
levels. The Coordinating Research Council (CRC), automobile
manufacturers, and the American Petroleum Institute (API) all tested a
number of light-duty vehicles capable of complying with the California
LEV or ULEV standards as part of an evaluation of the effects of sulfur
levels on emissions. Of the vehicles tested, seven met or nearly met
the Tier 2 design targets, and all were below the proposed 0.07 g/mi
NOX and 0.09 g/mi NMOG standards.
Another program sponsored by MECA took two LDVs (a Crown Victoria
and a Buick LeSabre) and one LDT2 (a Toyota T100) certified to the
federal Tier 1 standards and replaced the original catalytic converters
with more advanced catalytic converters, thermally aged to roughly
50,000 miles. With these systems and some related emission control
modifications, all three vehicles' emissions were well below our
proposed 50,000 mile standards (0.05 g/mi NOX, 0.075 g/mi
NMOG), and the Buick and the Toyota LDT2 met our estimated design
targets for those standards.
Finally, the California Air Resources Board (ARB) tested six
different production LEV light-duty vehicle models. Two of the six
models met the proposed Tier 2 design targets for NMOG and
NOX. After installing low mileage advanced catalytic
converters and making some minor adjustments, all of the vehicles had
emission levels well below the proposed Tier 2 NMOG and NOX
design targets. ARB also tested several Ford Expeditions (LDT4)
equipped with advanced catalytic converters. By adjusting several
parameters, they were able to reduce NOX emissions to 0.06
g/mi and NMOG to 0.07 g/mi with a catalyst aged to 50,000 miles of use.
Neither the MECA nor the ARB test programs modified the basic
engine calibrations of the vehicles tested. It is very likely that such
recalibration could reduce emissions even further. Therefore, we
consider these actual test results to be a conservative estimate of the
capability of these advanced catalytic converters. This is especially
true for the Ford Expedition testing by ARB, where the engine software
appeared to modify its own calibration with the new catalyst,
counteracting some of the advantages of the new catalyst.
A more expanded analysis of the feasibility of the proposed
standards for gasoline fueled vehicles can be found in the Draft RIA,
considering the types of changes that will allow manufacturers to
extend effective new controls to the entire fleet of affected vehicles.
That analysis includes discussion of gasoline direct-injection engines,
as well as the feasibility of the proposed CO, formaldehyde and
evaporative emission standards. The conclusion of all of our analyses
is that the proposed standards would be feasible for gasoline-fueled
vehicles operated on low-sulfur gasoline. As gasoline-fueled vehicles
represent the overwhelming majority of the light-duty vehicle and truck
population, EPA proposes to find that the proposed standards would be
feasible overall for LDVs and LDTs.
b. Diesel Vehicles. As outlined above, we have decided to propose
standards that are intended to be ``fuel neutral.'' In today's
document, we propose to find that the Tier 2 standards are
technologically feasible and cost-effective for light-duty vehicles and
light-duty trucks overall, based on the discussion in Section IV.A.1.a.
above. Under the principal of fuel neutrality, all cars and light
trucks, including those using diesel engines, would be required to meet
the proposed Tier 2 standards. EPA believes that the proposed program,
including the phase-in periods, would facilitate the advancement of
clean diesel engine technologies. EPA further believes that in the long
term the standards would be within reach for diesel-fueled vehicles in
combination with appropriate changes to diesel fuel to facilitate
aftertreatment technologies.
As with gasoline engines, manufacturers of diesels have made
abundant progress over the past 10 years in reducing engine-out
emissions from diesel engines. In heavy trucks and buses, PM emission
standards, which were projected to require the use of exhaust
aftertreatment devices, were actually met with only engine
modifications. NOX emissions from heavy trucks and buses
sold starting in 2002 will also reflect deep reductions from emission
levels typical of engines produced in the mid-1980's. Indeed, emissions
and performance of lighter diesel engines are rapidly approaching the
characteristics of gasoline engines, while retaining the durability and
fuel economy advantages that diesels enjoy. Against this background of
continuing progress, we believe that the technological improvements
that would be needed could be made in the time that would be available
before diesels would have to meet the new Tier 2
standards.32
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\32\ We generally expect that manufacturers would take advantage
of the flexibilities in today's proposal to delay the need for
diesel vehicles to meet the final Tier 2 levels until late in the
phase-in period. Because diesel vehicles represent a very small
percentage of the LDV/LDT market, diesels would not fall under the
final Tier 2 standards until 2009, giving manufacturers a relatively
large amount of leadtime. As discussed below, we are issuing an
Advance Notice of Proposed Rulemaking intended to solicit comment on
the need for reduced sulfur in diesel fuel in order to meet these
standards. We also believe that the proposed interim standards would
be feasible for diesels by 2004, with or without the fuel change,
given the flexibilities associated with those standards.
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While reductions in ``engine-out'' emissions, including
incorporation of EGR strategies, will continue to be made, increasing
emphasis is being placed on various aftertreatment devices for diesels.
This is because further reductions in engine-out emissions will be
unlikely, by themselves, to allow diesels to comply with the proposed
Tier 2 standards for NOX and PM. Rather, diesels would
require the use of highly effective aftertreatment devices.
For NOX emissions, potential aftertreatment technologies
include lean NOX catalysts, NOX adsorbers and
selective catalytic reduction (SCR). Lean NOX catalysts are
still under development, but generally appear capable of reducing
NOX emissions by about 15-30%. This efficiency is not likely
to be sufficient to enable compliance with the proposed Tier 2
standards, but it could be used to meet the interim standards that
would begin in 2004.
NOX adsorbers appear to be up to 90% efficient at
removing NOX from the exhaust. Efficiency in this range is
likely to be sufficient to enable compliance with the proposed Tier 2
standards. NOX adsorbers temporarily store the
NOX and thus the engine must be run periodically for a brief
time with excess fuel, so that the stored NOX can be
released and converted to nitrogen and oxygen using a conventional
three-way
[[Page 26029]]
catalyst, like that used on current gasoline vehicles.
There is currently a substantial amount of development work being
directed at NOX adsorber technology. While there are
technical hurdles to be overcome, progress is continuing and it is our
judgement that the technology should still be available by the time it
would be needed for the proposed Tier 2 standards.
One serious concern with current NOX adsorbers is that
they are quickly poisoned by sulfur in the fuel. Some manufacturers
have strongly emphasized their belief that, in order to meet the Tier 2
levels, low sulfur diesel fuel would also be required to mitigate or
prevent this poisoning problem. One solution would be to reduce sulfur
to very low levels. Another solution would be to reduce sulfur
somewhere below current levels and develop a way to periodically remove
the sulfur from the adsorber. In any event, this technique, if used,
would also require low sulfur diesel fuel.
SCR has been demonstrated commercially on stationary diesel engines
and can reduce NOX emissions by 80-90%. This efficiency
would be sufficient to enable compliance with the proposed Tier 2
standards. However, SCR requires that the chemical urea be injected
into the exhaust before the catalyst to assist in the destruction of
NOX. The urea must be injected at very precise rates, which
is difficult to achieve with an on-highway engine, because of widely
varying engine operating conditions. Otherwise, emissions of ammonia,
which have a very objectionable odor, can occur. Substantial amounts of
urea are required, meaning that vehicle owners would have to replenish
their vehicles' supply of urea frequently. As the engine and vehicle
will operate satisfactorily without the urea (only NOX
emissions would be affected), some mechanism would be needed to ensure
that vehicle owners maintained their supply of urea. Otherwise, little
NOX emission reduction would be expected in-use.
Regarding PM, applicable aftertreatment devices tend to fall into
two categories: oxidation catalysts and traps. Diesel oxidation
catalysts can reduce total PM emissions by roughly 15-30%. They would
need to be used in conjunction with further reductions in PM engine-out
emissions in order to meet the proposed Tier 2 standards. Diesel
particulate traps, on the other hand, can eliminate up to 90% of diesel
PM emissions. However, some of the means of accomplishing the
regeneration of particulate traps involve catalytic processes that also
convert sulfur dioxide in the exhaust to sulfate. These techniques, if
used, would also require a low sulfur fuel.
Since we have noted that some of the options for diesel
aftertreatment may require lower sulfur diesel fuel than is currently
available, the question of diesel fuel quality improvement arises.
Manufacturers have argued that low sulfur diesel fuel will be required
to permit diesels to meet the proposed new standards. While we believe
that low sulfur diesel fuel would likely be required to enable diesel
engines to meet the proposed Tier 2 standards, this proposal does not
include provisions for such fuel. We need additional information about
the specific aftertreatment solutions that could be used to meet the
standards, the effectiveness of these approaches in reducing PM and
NOX emissions and their sensitivity to diesel sulfur, and
improvements or alternatives that might reduce the impacts of fuel
sulfur.
To deal more thoroughly with this matter, we are issuing an
Advanced Notice of Proposed Rulemaking on a parallel path with today's
Tier 2 proposal. As a part of that process, EPA will assess the effect
of low-sulfur fuel on the ability of diesels to meet Tier 2 standards
for LDVs and LDTs. It will also consider the issue of the relation of
diesel fuel quality to future standards for heavy-duty on-highway
diesel engines and nonroad diesel engines. Our plans for this Advanced
Notice are discussed further in section IV.C. below. In any case, we
believe that the standards proposed today are appropriate and feasible
overall for LDVs and LDTs.
2. Gasoline Sulfur Control Is Needed To Support the Proposed Vehicle
Standards
As we discussed in the previous section, we believe that the
stringent standards we propose are needed to meet air quality goals are
feasible for LDVs and LDTs. At the same time, we believe that for these
standards to be feasible for gasoline LDVs and LDTs, low sulfur
gasoline must be made available. The following paragraphs explain why
we think gasoline sulfur control must accompany Tier 2 vehicle
standards.
Catalyst manufacturers generally use low sulfur gasoline in the
development of their catalyst designs. Vehicle manufacturers then equip
their vehicles with these catalysts and EPA certifies them to the
exhaust emission standards, usually based on testing the manufacturer
does using low sulfur gasoline. However, fundamental chemical and
physical characteristics of exhaust catalytic converter technology
generally result in a significant degradation of emission performance
when these vehicles use gasoline with sulfur levels common in most of
the country today. This sensitivity of catalytic converters to gasoline
sulfur varies somewhat depending on a number of factors, some better
understood than others. Clearly, however, as we discuss in the
following paragraphs, gasoline sulfur's impact is large, especially in
vehicles designed to meet very low emission standards like those
proposed today.
This is the reason EPA has decided to propose a comprehensive
approach to addressing emissions from cars and light trucks, including
provisions to get low sulfur gasoline into the field in the same time
frame needed for Tier 2 vehicles. (We discuss the related fact that the
sulfur impact on catalyst performance is not fully reversible in
Section IV.C. below, in the context of EPA's preference for a
nationwide versus a regional gasoline sulfur control program, and in
the Draft RIA.)
a. How Does Gasoline Sulfur Affect Vehicle Emission Performance? We
know that gasoline sulfur has a negative impact on vehicle emission
controls. Vehicles depend on the catalytic converter to reduce
emissions of HC, CO, and NOX. Sulfur and sulfur compounds
attach or ``adsorb'' to the precious metal catalysts that are required
to convert these emissions. Sulfur also blocks sites on the catalyst
designed to store oxygen that are necessary to optimize NOX
emissions conversions. While the amount of sulfur contamination can
vary depending on the metals used in the catalyst and other aspects of
the design and operation of the vehicle, some level of sulfur
contamination will occur in any catalyst.
Sulfur sensitivity is impacted not only by the catalyst formulation
(the types and amounts of precious metals used in the catalyst) but
also by factors including the following:
the materials used to provide oxygen storage capacity in
the catalyst, as well as the general design of the catalyst,
the location of the catalyst relative to the engine, which
impacts the temperatures inside the catalyst,
the mix of air and fuel entering the engine over the
course of operation, which is varied by the engine's computer in
response to the driving situation and affects the mix of gases entering
the catalyst from the engine, and
the speeds the car is driven at and the load the vehicle
is carrying, which
[[Page 26030]]
also impact the temperatures experienced by the catalyst.
Since these factors vary for every vehicle, the sulfur impact
varies for every vehicle to some degree. There is no single factor that
guarantees that a vehicle will be very sensitive or very insensitive to
sulfur. We now believe that there are not (and will not be in the
foreseeable future) emission control devices available for gasoline-
powered vehicles that can meet the proposed Tier 2 emission standards
that would not be significantly impaired by gasoline with sulfur levels
common today.
b. How Large Is Gasoline Sulfur's Effect on Emissions? High sulfur
levels have been shown to significantly impair the emission control
systems of cleaner, later technology vehicles. The California LEV
standards and Federal NLEV standards, as well as California's new LEV-
II standards and our proposed Tier 2 standards, require catalysts to be
extremely efficient to adequately reduce emissions over the full useful
life of the vehicle. Recent test programs conducted by the automotive
and oil industries show that LEV and ULEV vehicles can experience, on
average, a 40% increase in NMHC and 134% increase in NOX
emissions when operated on 330 ppm sulfur fuel (approximately the
current national average sulfur level) compared to 30 ppm sulfur fuel.
This level of emissions increase is significant enough on its own
to potentially cause a vehicle to exceed the proposed full useful life
emission standards when operated on sulfur levels that are
substantially higher than the levels proposed today, even with the
margin of safety that auto manufacturers generally include. Average
sulfur levels in the U.S. are currently high enough to significantly
impair the emissions control systems in new technology vehicles, and to
potentially cause these vehicles to fail emission standards required
for vehicles up through 100,000 miles (or more) of operation.
For older vehicles designed to meet Tier 0 and Tier 1 emission
standards, the effect of sulfur contamination is somewhat less. Still,
testing shows that gasoline sulfur increases emissions of NMHC and
NOX by almost 17% when one of these vehicles is operated on
gasoline containing 330 ppm sulfur compared to operation on gasoline
with 30 ppm sulfur. Thus, Tier 0 and Tier 1 vehicles can also have
higher emissions when they are exposed to sulfur levels substantially
higher than the proposed sulfur standard. This increase is generally
not enough to cause a vehicle to exceed the full useful life emission
standards in practice, but it can result in in-use emissions increases
since the vehicle could emit at levels higher than it would if it
operated consistently on 30 ppm sulfur gasoline.
Gasoline sulfur control to 30 ppm would achieve about 700,000 tons
of NOX reductions per year from LDVs and LDTs by 2020. This
represents about a third of the national NOX emission
reductions otherwise available from these vehicles. Without these
potential emission reductions, many states would face the potentially
unmeetable challenge of finding enough other cost-effective sources of
NOX emission reductions to address their ozone nonattainment
and maintenance problems.
Other implications of continued use of high-sulfur gasoline include
the following:
Other important potential air quality benefits would not
be realized throughout the country, including reduction in direct
emissions of sulfur dioxide, secondary formation of nitrate PM from
NOX emissions, reductions in regional haze, reductions in
air toxics emissions and other pollution problems described in Section
III above.
The immediate and very significant improvements that lower
sulfur gasoline would bring in the emissions performance of vehicles
already on the road would not occur.
Advanced emission control technologies now being
developed, all of which appear equally or even more sensitive to
gasoline sulfur levels than current technologies, would not be
available to the U.S. vehicle market (for example, very fuel efficient
technologies like gasoline direct injection technology and fuel cells).
Finally, any interference with onboard emission control
system diagnostic (OBD) systems that high-sulfur gasoline causes would
remain in the absence of a low-sulfur gasoline program.
3. A Comprehensive Vehicle/Fuel Approach Is Therefore Necessary
Based on this information, we have concluded that sulfur levels in
gasoline must be reduced to enable these catalysts to operate properly
and for the needed air quality benefits of this program to be achieved.
In today's action, therefore, we are proposing a comprehensive,
integrated program of stringent vehicle emission standards in
combination with stringent gasoline sulfur standards. The proposal is
carefully designed to address the need for refiners to make low-sulfur
gasoline available at very nearly the same time as auto makers begin
selling large numbers of Tier 2 vehicles. We have tried to take into
account all potential areas of interaction between the vehicle and
gasoline sulfur parts of the proposal, and as a result we believe that
the overall proposed program would achieve the expected environmental
goals while minimizing the economic and administrative burdens on the
affected industries. We encourage all commenters to consider and
discuss the interrelationships among the elements of the program when
they comment on individual provisions.
B. Our Proposed Program for Vehicles
We have held a series of meetings with the various stakeholders
impacted by this action. We have seriously considered their input in
developing our proposal and believe the program laid out below and the
areas upon which we are seeking comment are responsive to their
concerns. One part of this input was provided by a broad representation
of the LDV/LDT manufacturing industry, represented by the Alliance of
Automobile Manufacturers, and offered constructive recommendations on a
number of elements of a vehicle emission control program. We have
considered many of their ideas and issues in the design of the proposed
program and we are seeking comment on a number of others. The
``Alliance'' proposal is documented in the docket in a letter to EPA
dated March 26, 1999.
The next sections of the preamble describe our proposal in detail.
1. Overview of the Proposed Vehicle Program
The vehicle-related part of today's proposal covers a wide range of
standards, concepts, and provisions that affect how vehicle
manufacturers would develop, certify, produce, and market Tier 2
vehicles. This Overview subsection provides readers with a broad
summary of the major vehicle-related aspects of the proposal. Readers
for whom this Overview is sufficient may want to move on to the
discussion of the key gasoline sulfur control provisions (Section
IV.C.). Readers wishing a more detailed understanding of the proposed
vehicle provisions can continue beyond the Overview to deeper
discussions of key issues and provisions (Sections IV.B.-2, 3, and 4)
as well as discussions of additional provisions (Section V.A.). Readers
should refer to the regulatory language found at the end of this
preamble for a complete compilation of the proposed requirements.
a. Introduction. Today's proposal for Tier 2 vehicle standards
incorporates concepts from the federal NLEV program. The program takes
the
[[Page 26031]]
corporate averaging concept and other provisions from NLEV but changes
the focus from NMOG to NOX. The emission standard ``bins''
used for this average calculation are different in several respects
from those of the California LEV II program, yet we have designed them
to allow harmonization of federal and California vehicle technology. As
discussed below, the Tier 2 corporate average NOX level to
be met through these requirements ultimately applies to all of a
manufacturer's LDVs and LDTs (subject to two different phase-in
schedules) regardless of what fuel is used.
In the discussions below, we propose different Tier 2 phase-in
schedules for two different groups of vehicles as well as two different
sets of interim standards for 2004 and later model year vehicles not
yet phased-in to the Tier 2 standards. To understand how the program
would work, it is necessary first to understand EPA's classification
system for light-duty vehicles and trucks.
The light duty category of motor vehicles includes all vehicles and
trucks under 8500 pounds gross vehicle weight rating, or GVWR (i.e.,
vehicle weight plus rated cargo capacity). Table IV.B.-1 shows the
various light duty categories. In the discussion below, we make
frequent reference to two separate groups of light vehicles: (1) LDV/
LLDTs, which include all LDVs and all LDT1s and LDT2s; and (2) HLDTs,
which include LDT3s and LDT4s.
Table IV.B.-1.--Light Duty Vehicles and Trucks; Category Characteristics
------------------------------------------------------------------------
Characteristics
------------------------------------------------------------------------
LDV.................................... A passenger car or passenger
car derivative seating 12
passengers or less.
Light LDT (LLDT)....................... Any LDT rated at up through
6,000 lbs GVWR. Includes LDT1
and LDT2.
Heavy LDT (HLDT)....................... Any LDT rated at greater than
6,000 lbs GVWR, but not more
than 8,500 lbs GVWR. Includes
LDT3 and LDT4.
------------------------------------------------------------------------
As discussed below, the Tier 2 program would take effect in 2004,
with full phase in occurring by 2007 for LDV/LLDTs and 2009 for HLDTs.
During the phase-in years of 2004-2008, vehicles not certified to Tier
2 requirements would meet interim requirements that would also employ a
bins system, but with less stringent corporate average NOX
standards.
References to California LEV II Program
Throughout this preamble, we make reference to California's LEV II
program and its requirements. The LEV II program was approved by the
California ARB at a hearing of November 5, 1998. Numerous draft
documents were prepared by ARB staff in advance of that hearing and
made available to the public. Some of those documents have now been
modified as a result of changes to the proposed program made at the
hearing and due to comments received after the hearing.
However, when this NPRM was assembled for signature, the documents
related to the LEV II program had still not been finalized. In fact, a
15 day public review of the program was scheduled for April 15-30,
1999. After that review, ARB expected to be able to formally adopt the
program and issue final documents without significant change.
We have placed copies of the latest available documents, some of
which we used in the preparation of this NPRM, in the docket. You may
also obtain these documents and other information about California's
LEV II program from ARB's web site: (www.arb.ca.gov/regact/levii/
levii.htm).
In the regulatory text that follows this preamble, we propose to
incorporate by reference a number of documents related to LEVII and
California test procedures under LEVII. ARB expects to finalize the LEV
II program without significant changes before we issue a final rule. We
will review any changes to the final version of the LEV II program and
its supporting documents and consider them for inclusion in the federal
program when we prepare our final rule.
b. Corporate Average NOX Standard. The program we are
proposing today would ultimately require each manufacturer's average
NOX emissions over all of its Tier 2 vehicles each model
year to meet a NOX standard of 0.07 g/mi. Manufacturers
would have the flexibility to certify Tier 2 vehicles to different sets
of exhaust standards that we refer to as ``bins,'' but would have to
choose the bins so that their corporate sales weighted average
NOX level for their Tier 2 vehicles was no more than the
0.07 g/mi. (We discuss the bins in the next subsection.)
The value of a corporate average standard is that the program's air
quality goals would be met while allowing manufacturers the flexibility
to certify some models above and some models below the standard. Each
manufacturer would determine its year-end corporate average
NOX level by computing a sales-weighted average of the
NOX standards from the various bins to which it certified
any Tier 2 vehicles. The manufacturer would be in compliance with the
standard if its corporate average NOX emissions for its Tier
2 vehicles met the 0.07 g/mi level.
c. Tier 2 Emission Standard ``Bins''. We are proposing seven
emission standard bins, each one a set of standards to which
manufacturers could certify their vehicles. (Table IV.B.-2. in Section
IV.B.-4.a. below shows all the standards associated with each bin.)
Several bins have the same values as the California LEV II program.
Further, we added three bins that are not a part of the California
program to increase the flexibility of the program for manufacturers.
As further discussed in Section IV.B.4. below, we believe these extra
bins would help provide incentives for manufacturers to produce
vehicles with emissions below 0.07 g/mi NOX.
The corporate average concept using the seven bins would provide a
program that gets the same emission reductions we would expect from a
straight 0.07 g/mi standard for all vehicles because all NOX
emissions from Tier 2 vehicles in bins above 0.07 g/mi would need to be
offset by NOX emissions from Tier 2 vehicles in bins below
0.07 g/mile. This focus on NOX allows NMOG emissions to
``float'' in that the fleet NMOG emission rate depends on the mix of
bins used to meet the NOX standard. However, you can see by
examining the bins we are proposing, that any combination of vehicles
meeting the 0.07 g/mi average NOX standard would have
average NMOG levels at or below 0.09 g/mi. In addition, there will be
overall improvements in NMOG since Tier 2 incorporates HLDTs, which are
not covered by the NLEV program.
d. Schedules for Implementation. We recognize that the Tier 2
standards pose greater technological challenges for larger light duty
trucks than for LDVs and smaller trucks. We believe that additional
leadtime is appropriate for HLDTs. HLDTs have historically been subject
to the least stringent vehicle-based standards. Also, HLDTs were not
subject to the voluntary emission reductions implemented for LDVs,
LDT1s and LDT2s in the NLEV program. Consequently we have designed
separate phase-in programs for the two groups. Our phase-in approach
would provide HLDTs with extra time before they would need to begin
phase-in to the Tier 2 standards and also provide two additional years
for them to fully comply. Figure IV.B-1 provides a graphical
representation of how the phase-in of the Tier 2 program would work for
all vehicles. This figure shows several aspects of the proposed
program:
Phase-in/phase-out requirements of the interim programs;
[[Page 26032]]
Phase-in requirements of new evaporative standards;
Years that could be included in alternative phase-in
schedules;
Years in which manufacturers could bank NOX
credits through ``early banking''; and
``Boundaries'' on averaging sets in the Tier 2 and interim
programs.
We discuss each of these topics in detail below and make numerous
references to Figure IV.B-1.
BILLING CODE 6560-50-P
[[Page 26033]]
[GRAPHIC] [TIFF OMITTED] TP13MY99.002
BILLING CODE 6560-50-C
[[Page 26034]]
i. Implementation Schedule for LDVs and LLDTs
We are proposing that the Tier 2 standards take effect beginning
with the 2004 model year for light duty vehicles and trucks at or below
6000 pounds GVWR (LDV/LLDTs). We are proposing that manufacturers would
phase their vehicles into the Tier 2 program beginning with 25 percent
of LDV/LLDT sales that year, 50 percent in 2005, 75 percent in 2006,
and 100 percent in 2007. Manufacturers would be free to choose which
vehicles were phased-in each year. However, in each year during (and
after) the phase-in, the manufacturer's average NOX for its
Tier 2 vehicles would have to meet the 0.07 g/mi corporate average
standard. This phase-in schedule would provide between five and eight
years of leadtime for the manufacturers to bring all of their LDV/LLDT
production into compliance. These vehicles constitute nearly 90 percent
of the light duty fleet.
To increase manufacturer flexibility and provide incentives for
early introduction of Tier 2 vehicles, we are proposing that
manufacturers could use alternative phase-in schedules that would
require 100 percent phase-in by 2007, but would recognize the benefits
of early introduction of Tier 2 vehicles, and allow manufacturers to
adjust their phase-in to better fit their own production plans.
ii. Implementation Schedule for HLDTs
To provide greater leadtime for HLDTs we are proposing that the
Tier 2 phase-in schedule would start later and end later than that for
LDVs and LLDTs. In our proposal 50 percent of each manufacturer's HLDTs
would be required to meet Tier 2 standards in 2008, and 100 percent
would have to meet Tier 2 standards in 2009. As with the LDV/LLDTs, the
Tier 2 HLDTs would have to meet a corporate average NOX
standard of 0.07 g/mi. This delayed phase-in schedule would provide
manufacturers with nine years of lead time before they would need to
bring any HLDTs into compliance with Tier 2 standards. As for the LDV/
LLDTs above, to encourage early introduction of Tier 2 HLDTs and to
provide manufacturers with greater flexibility, we are proposing that
manufacturers could use alternative phase-in schedules that would still
result in 100% phase-in by 2009.
We request comment on the appropriateness of this separate schedule
for HLDTs.
e. LDVs and LDTs Not Covered by Tier 2. The two groups of vehicles
(LDV/LLDTs and HLDTs) will be approaching the Tier 2 standards from
quite different emission ``backgrounds.'' LDV/LLDTs will be at NLEV
levels, which require NOX emissions of either 0.3 or 0.5g/mi
on average 33, while HLDTs will be at Tier 1 levels facing
NOX standards of either 0.98 or 1.53 g/mi, depending on
truck size. These Tier 1 NOX levels for HLDTs are very high
relative to our 0.07 g/mi Tier 2 NOX average. To address the
disparity in emission ``backgrounds'' while gaining air quality
benefits from vehicles during the phase-in period, we are proposing
separate sets of interim standards for the two vehicle groups during
the phase-in period. The provisions described below would apply in 2004
for all LDVs and LDTs not certified to Tier 2 standards. The
relationship of the interim programs to the final Tier 2 standards is
shown in Figure IV.B-1.
---------------------------------------------------------------------------
\33\ The NLEV program imposes NMOG average standards that would
lead to full useful life NOX levels of about 0.3 g/mi for
LDV/LDT1s and 0.5 g/mi for LDT2s.
---------------------------------------------------------------------------
i. Interim Standards for LDV/LLDTs
Beginning with the 2004 model year, all new LDVs and LLDTs not
incorporated under the Tier 2 phase-in would be subject to an interim
corporate average NOX standard of 0.30 g/mi. This is the
nominal LEV NOX emission standard for LDVs and LDT1s under
the NLEV program. This interim program would hold LDVs and LLDTs not
covered by the Tier 2 standards during the phase-in to NLEV levels and
bring about NOX emission reductions from LDT2s . By
implementing these interim standards for LDVs and LLDTs we will ensure
that the accomplishments of the NLEV programs are continued. Because
the Tier 2 standards are phased-in beginning in the 2004 model year,
the interim standards for LDVs and LLDTs apply to fewer vehicles each
year, i.e., they are ``phase-out'' standards. Figure IV.B-1 shows the
maximum percentage of LDVs and LLDTs that would normally be subject to
the interim standards each year.
As the interim program for LDV/LLDTs is designed to hold these
vehicles to NLEV levels, it employs bins derived from the NLEV program.
These bins are shown in Tables IV.B.-6 and -7.
ii. Interim Standards for HLDTs.
Our interim standards for HLDTs would begin in 2004. The Interim
Program for HLDTs would set a corporate average NOX standard
of 0.20 g/mi that would be phased in between 2004 and 2007. The interim
HLDT standards, like those for LDV/LLDTs would be built around a set of
bins (See Tables IV.B.-8 and -9).
As shown in Figure IV.B.-1, the phase-in would be 25 percent in the
2004 model year, 50 percent in 2005, 75 percent in 2006, and 100
percent in 2007. The program would remain in effect through 2008 to
cover those HLDTs not yet phased into the Tier 2 standards (a maximum
of 50%). Vehicles not subject to the interim corporate average
NOX standard during the 2004-2006 phase-in years would be
subject to the least stringent bin (Bin 5) so their NOX
emissions would be effectively capped at 0.60 g/mi. These vehicles
would be excluded from the calculation to determine compliance with the
interim 0.20 g/mi average NOX standard.
This proposed approach would implement standards significantly
lower than the Tier 1 NOX standards currently applicable to
these vehicles. While manufacturers already certify many HLDTs at or
below these levels, we believe these interim standards represent a
reasonable step toward the Tier 2 standards and would provide
meaningful control in the near term relative to current levels and Tier
1. This approach would allow more time for manufacturers to bring the
more difficult HLDTs to Tier 2 levels while achieving real reductions
from those HLDTs that may present less of a challenge.
iii. Interim Programs Would Provide Reductions over Previous Standards
As was the case with the primary Tier 2 bin structure, the bin
structure for the interim programs would focus on NOX and
yet should provide further reductions in NMOG beyond the NLEV program
(See Tables IV.B.-6,7,8 and 9). This is because the interim programs
would reduce emissions from LDT2s and HLDTs compared to their previous
standards. Without the interim standards, HLDTs could be certified as
high as 0.46 g/mi or 0.56 g/mi, the Tier 1 NMHC levels. With the
interim standards, however, exhaust NMOG should average approximately
0.09 g/mi for all non-Tier 2 LDV/LLDTs. and 0.25 g/mi or less for
HLDTs.
iv. Alternative Approach for Interim Standards
An alternative flexible approach for reducing the emissions from
vehicles and trucks prior to their phase-in to Tier 2 standards would
be to employ a declining NOX average, or perhaps separate
declining NOX averages for LDV/LLDTs and HLDTs. In this
approach, manufacturers would certify vehicles to their choice of bins,
but
[[Page 26035]]
would have to meet an average NOX standard (or standards)
that became lower each year. Manufacturers could bank NOX
credits in early years of such a program for use in later years when
the standard tightened. We request comment on the benefits,
implications and drawbacks of such an approach. Commenters should
address the issues of (1) what added flexibility does this approach
provide beyond that provided by the bins and phase-in approach proposed
above, (2) how to handle potential windfall credits that could arise in
the early years under such an approach, (3) how a standard that changes
each year would impact technology phase-in and phase-out, and (4)
whether such an approach would require the implementation of declining
average standards for the other exhaust pollutants.
f. Generating, Banking, and Trading NOX Credits. As
described above, we are proposing that manufacturers average the
NOX emissions of their Tier 2 vehicles and comply with a
corporate average NOX standard. In addition, we are
proposing that when a manufacturer's average NOX emissions
fall below the corporate average NOX standard, it could
generate NOX credits that it could save for later use
(banking) or sell to another manufacturer (trading). NOX
credits would be available under the Tier 2 standards, the interim
standards for LDVs and LLDTs, and the interim standards for HLDTs.
These NOX credit provisions would facilitate compliance with
the fleet average NOX standards and would be very similar to
those currently in place for NMOG emissions under California and
federal NLEV regulations.
A manufacturer with an average NOX level for its Tier 2
vehicles in a given model year below the 0.07 gram per mile corporate
average standard would generate Tier 2 NOX credits that it
could use in a future model year when its average NOX might
exceed the 0.07 standard. Manufacturers would calculate their corporate
average NOX emissions and then compute credits based on how
far below 0.07 g/mi the corporate average fell.
Manufacturers would be free to retain any credits they generate for
future use or to trade (sell) those credits to other manufacturers.
Credits retained or purchased could be used by manufacturers with
corporate average Tier 2 NOX levels above 0.07 g/mi.
Manufacturers could certify LDVs and LLDTs to Tier 2 standards as early
as the 2001 model year and receive NOX credits for their
efforts. They could use credits generated under these ``early banking''
provisions after the Tier 2 phase-in begins in 2004 (2008 for HLDTs).
Banking and trading of NOX credits under the interim
non-Tier 2 standards would be similar, except that a manufacturer would
determine its credits based upon the 0.30 or 0.20 gram per mile
corporate average NOX standard applicable to vehicles in the
interim programs. There would be no provisions for early banking under
the interim standards and manufacturers would not be allowed to use
interim credits to address the Tier 2 NOX average standard.
Interim credits from LDVs/LLDTs and interim credits from HLDTs could
not be used interchangeably due to the differences in the interim
corporate average NOX standards. We seek comment on allowing
exchanges of credits between the LDV/LLDT interim program and the HLDT
interim program.
Banking and trading of NOX credits and related issues
are discussed in greater detail in Section IV.B.-4.d. below.
2. Why Are We Proposing the Same Set of Standards for Tier 2 LDVs and
LDTs?
Before we provide a more detailed description of the proposed
vehicle program, two overarching principles of today's proposal are
worth explaining in some detail. The first of these is our proposal to
bring all LDVs and LDTs under the same set of emission standards.
Historically, LDTs--and especially the heavier trucks in the LDT3 and
LDT4 categories--have been subject to less stringent emission standards
than LDVs (passenger cars). In recent years the proportion of light
truck sales has grown to approximately 50 percent. Many of these LDTs
are minivans, passenger vans, sport utility vehicles and pick-up trucks
that are used primarily or solely for personal transportation; i.e.,
they are used like passenger cars and there are more annual vehicle
miles of travel as a result.
As vehicle preferences have increasingly shifted from passenger
cars to light trucks there has been an accompanying increase in
emissions over what otherwise would have occurred, because of the
increase in miles traveled and the less stringent standards for LDTs as
compared to LDVs. As Section III. above makes clear, reductions in
these excess emissions (and in other mobile and stationary source
emissions) are seriously needed. Since both LDVs and LDTs are within
technological reach of the standards in the proposed Tier 2 bin
structure, we are proposing to equalize the regulatory useful life
periods for LDVs and LDTs and to apply the same Tier 2 exhaust emission
standard bins to all of them.
Once the phase in periods end for all vehicles in 2009,
manufacturers would include all LDVs and LDTs together in calculating
their corporate average NOX levels.34 As
mentioned above and described in more detail in Section IV.B.-4. below,
manufacturers could choose the emission bin for any test group of
vehicles provided that on a sales weighted average basis, the
manufacturer met the average NOX standard of 0.07 g/mi for
its Tier 2 vehicles that year.
---------------------------------------------------------------------------
\34\ Because of the different phase-in percentages and phase in
schedules for the two groups, we are proposing that during the
duration of the phase-in (through 2008) manufacturers would average
Tier 2 LDV/LLDTs separately from HLDTs.
---------------------------------------------------------------------------
Some have suggested that a program with different requirements
would be needed for heavy LDTs. Recognizing that compliance will be
most challenging for HLDTs, the delay in the start of the phase-in and
the additional phase-in years for those vehicles would allow
manufacturers to delay the initial impact of the Tier 2 standards until
the 2008 model year. This represents four additional model years of
leadtime beyond the time when passenger cars and LDT1s and LDT2s would
have achieved Tier 2 standards in substantial numbers. We believe this
phase-in and other provisions of this proposal respond to these
concerns. However, we request comments on the need for different
standards for these vehicles. Specifically, we request comment on
different levels for NMOG standards for these vehicles, including how
NMOG standards less stringent than our proposed standards might affect
the technological challenges presented by the proposed NOX
standards.
Considerations for a 2004 Technology Review
EPA is seeking comment on whether it should conduct a technology
review of the Tier 2 standards in the future. As part of the input
received from stakeholders while developing this proposal, the Alliance
of Automobile Manufacturers suggested that the proposal include
consideration of a technology review, principally designed to assess
the status of Tier 2 technology development. As discussed above, we
recognize that HLDTs will face the greatest technological challenge in
complying with our proposed standards. Some manufacturers have
suggested that the approach of applying the same standard to cars and
light-duty trucks presents sufficient challenge as to raise serious
uncertainty about compliance for the larger vehicles, even in the 2008
[[Page 26036]]
time frame. In addition to the concerns expressed regarding the time
frame for implementation of the more stringent standards for HLDTs in
2008, manufacturers have indicated that there are questions of
feasibility for introduction of advanced technologies for improved fuel
economy, such as lean burn, fuel cell, and hybrid electric technology.
The review could assess the feasibility of the standards relative
to the state of technology development for HLDTs. Further, the review
could consider gasoline and diesel fuel quality and its impact on the
effectiveness of aftertreatment, and whether lower sulfur levels are
necessary for HLDTs to meet the Tier 2 standards. We may also examine
the feasibility of the standards for vehicles using technologies to
advance fuel economy. In addition, the review could consider whether
additional air quality improvements are necessary and the feasibility
of additional reductions of vehicle emissions to achieve such air
quality improvements. EPA believes that serious consideration of this
concept is warranted and if it determines such a review to be
appropriate, the best time to conduct such a review may be in the 2004
time frame, before the final Tier 2 standards go into effect for HLDTs.
EPA could conduct such a review to assess the feasibility, timing
and stringency of the standards relative to the state of technology
development. In doing so, EPA would determine whether or not there was
a need to formally consider a change in the final Tier 2 standards. If
such a change were determined to be necessary, EPA would conduct a
formal rulemaking, including conducting public hearings.
As part of the technology review, EPA would seek advice from all
appropriate stakeholders and could engage a peer review process. In
addition, such a process, if undertaken, could include public notice
and opportunity for comment on the review, including the holding of
public hearings by EPA. One way to structure the process would include
the establishment of an advisory panel under the Clean Air Act Advisory
Committee to provide assessment of the state of technology and the
feasibility of the standards. The Committee could recommend appropriate
action for the Administrator based on their findings. The Administrator
would then determine if any changes were needed to adjust the Tier 2
standards for HLDTs, advanced technologies, or the fuel parameters. We
request comment on the need for a technology review, scope of the
review and on the design of the process and its timing.
3. Why Are We Proposing the Same Standards for Both Gasoline and Diesel
Vehicles?
The second overarching principle of our vehicle proposal is to
apply the same Tier 2 standards to all light vehicles, regardless of
the fuel they are designed to use. The same exhaust emission standards
and useful life periods we are proposing today would apply whether the
vehicle is built to operate on gasoline or diesel fuel or on an
alternative fuel such as methanol or natural gas. Diesel engines used
in LDVs and LDTs tend to be used in the same applications as their
gasoline counterparts, and thus we believe they should meet the same or
very similar standards.
Manufacturers have expressed concerns that diesel-fueled vehicles
would have difficulty meeting NOX and particulate matter
levels like those contained in today's proposal. Clearly, these
standards would be challenging. As discussed in Section IV.A.-1. above,
we expect that the proposed Tier 2 NOX and NMOG standards
would be challenging for gasoline vehicles, but that major
technological innovations would not be required. For diesels, however,
the proposed NOX and PM standards would likely require
applications of new types of aftertreatment with, perhaps, changes in
diesel fuel. We anticipate that manufacturers that chose to build
diesel vehicles would adopt aftertreatment technologies such as
NOX storage catalysts and continuously regenerating
particulate traps to meet Tier 2 requirements.
Today, diesels comprise less than one-half of one percent of all
LDV/LDT sales. While this is a small fraction, the potential exists for
diesels to gain a considerable market share in the future. All one need
do is review the dramatic increase in recent years of diesel engine use
in the lightest category of heavy duty vehicles (8500-10,000 pounds
GVWR) to see the potential for significant diesel engine use in LDTs,
and perhaps LDVs, in the future. Just ten ago years diesels made up
less than 10 percent of this class of vehicles. In 1998, this fraction
approached 50 percent.
The potential impact of large-scale diesel use in the light-duty
fleet underscores the need for the same standards to apply to diesels
as for other vehicles. Given the health concerns associated with diesel
PM emissions (see Section III. above), we believe that it is prudent to
address PM emissions from diesel LDVs and LDTs while their numbers are
relatively small. In this way the program can minimize the PM impact
that would accompany significant growth in this market segment while
allowing manufacturers to incorporate low-emission technology into new
light-duty diesel engine designs.
4. Key Elements of the Proposed Vehicle Program
The previous subsections IV.B.-1., 2., and 3. provided an overview
of today's proposed vehicle program and the two overarching principles
that it is built on. This subsection elaborates on the major vehicle-
related elements of today's proposal. Later in this preamble, Section
V.A. discusses the rest of the proposed vehicle provisions.
a. Basic Exhaust Emission Standards and ``Bin'' Structure. The
program we are proposing today contains a basic requirement that each
manufacturer meet, on average, a full useful life NOX
standard of 0.07 g/mi for all its Tier 2 LDVs and LDTs. Manufacturers
would have the flexibility to choose the set of standards that a
particular test group 35 of vehicles must meet. For a given
test group of LDVs or LDTs, manufacturers would select a set of full
useful life 36 standards from the same row (``emission bin''
or simply ``bin'') in Table IV.B.-1. below. Each bin contains a set of
individual NMOG, CO, HCHO, NOX, and PM standards. The
vehicles would have to comply with each of those standards and would
also be subject to the corresponding bin of intermediate useful life
standards, if applicable, found in Table IV.B-2. For technology
harmonization purposes, our proposed
[[Page 26037]]
emission bins include all of those adopted in California's LEV II
program.37
---------------------------------------------------------------------------
\35\ A ``test group'' is the basic classification unit proposed
for certification of light-duty vehicles and trucks under EPA
certification procedures for the CAP2000 program. This preamble
assumes that manufacturers will be certifying under the provisions
of the CAP2000 program. ``Test group'' is a broader classification
unit than ``engine family'' used prior to the implementation of the
CAP2000 program. We discuss the CAP2000 program in more detail in
section V.A.9. of this preamble.
\36\ The regulatory ``useful life'' value for Tier 2 vehicles is
specifically addressed in Section V.A.2. of this preamble. Full
useful life is proposed to be 10 years or 120,000 miles for all
vehicles except LDT3s and LDT4s, for which it is 11 years or 120,000
miles. Intermediate useful life, where standards are applicable, is
5 years or 50,000 miles.
\37\ EPA's current standards for Clean Fuel Vehicles are less
stringent than the proposed Tier 2 standards. See 40 CFR 88.104-94.
The Tier 2 standards would supercede the current CFV standards, and,
if EPA adopts the standards proposed today, the Agency intends to
undertake a rulemaking to revise the CFV standards accordingly.
Table IV.B.-2.--Tier 2 Light-Duty Full Useful Life (120,000 mile) Exhaust Emission Standards
[Grams per mile]
----------------------------------------------------------------------------------------------------------------
Bin No. NOX NMOG CO HCHO PM
----------------------------------------------------------------------------------------------------------------
7............................... 0.20 0.125 4.2 0.018 0.02
6............................... 0.15 0.090 4.2 0.018 0.02
5............................... 0.07 0.090 4.2 0.018 0.01
4............................... 0.07 0.055 2.1 0.011 0.01
3............................... 0.04 0.070 2.1 0.011 0.01
2............................... 0.02 0.010 2.1 0.004 0.01
1............................... 0.00 0.000 0.0 0.000 0.00
----------------------------------------------------------------------------------------------------------------
Table IV.B.-3.--Light-Duty Intermediate Useful Life (50,000 mile) Exhaust Emission Standards
[Grams per mile]
----------------------------------------------------------------------------------------------------------------
Bin No. NOX NMOG CO HCHO PM
----------------------------------------------------------------------------------------------------------------
7.............................. 0.14 0.100 3.4 0.015 ..............
6.............................. 0.11 0.075 3.4 0.015 ..............
5.............................. 0.05 0.075 3.4 0.015 ..............
4.............................. 0.05 0.040 1.7 0.008
----------------------------------------------------------------------------------------------------------------
Under a ``bins'' approach, a manufacturer may select a set of
emission standards (a bin) to comply with, and a test group must meet
all standards within that bin. Ultimately, the manufacturer must also
ensure that the emissions of a targeted pollutant-- NOX in
this case--from all of its vehicles taken together meet a ``corporate
average'' emission standard. This corporate average emission standard
ensures that a manufacturer's production yields the required overall
emission reductions. (See Section IV.B.-4.c. below for more discussion
of the corporate average NOX standard.)
In addition to the Tier 2 standards described above, we are also
proposing interim standards derived from the LDV/LDT1 NLEV standards to
cover all non-Tier 2 LDVs and LLDTs during the Tier 2 phase-in. We are
proposing separate interim standards for HLDTs. (We describe the
interim standards in detail in Section IV.B.4.e. below.)
i. Why Are We Proposing Extra Bins?
Compared to the CalLEV II program, our Tier 2 proposal includes
additional bins. The California program contains no bins that would
allow NOX levels above the 0.07 g/mi level of LEVs.
Therefore, under the California program, no engine family can be
certified above LEV levels, even with the application of offsetting
credits. We propose to add two bins above the LEV bin (Bins 6 and 7)
and another below the LEV bin (Bin 3) to provide manufacturers with
additional flexibility to reduce costs and to account for greater
technological challenges faced in getting certain vehicles to levels of
0.07 g/mi NOX or less.
During the Tier 2 phase-in years (through 2006 for LDV/LLDTs and
2008 for HLDTs), we are also proposing that the bins from the
applicable interim program would be available. Vehicles certified to
these levels could, at the manufacturer's option, be included in
calculating the Tier 2 corporate average NOX level. This
would enhance the flexibility of the program by providing manufacturers
with three additional bins having NOX standards above 0.07
g/mi. Since a manufacturer could elect these bins under the interim
program anyway, there would be no impact on air quality. The interim
program and the interim bins for non-Tier 2 vehicles are described in
detail in section IV.B.4.e.
The additional bins would also provide an incentive for
manufacturers to produce vehicles below 0.07 g/mi of NOX. We
believe this incentive would exist because manufacturers would have
some vehicles (especially larger LDTs) that they might find more cost
effective to certify to levels above the 0.07 g/mi average standard.
However, to do this they would have to offset those vehicles in our
NOX averaging system with vehicles certified below 0.07 g/
mi, and the 0.04 g/mi bin would provide greater opportunity to do this.
Thus, the extra bins would serve two purposes; they would provide
additional flexibility to manufacturers to address technological
differences and costs, and they would provide those manufacturers with
incentives to produce cleaner vehicles and thus advance emission
control technology.
We are proposing a bins approach and the proposed bins because we
believe they would provide adequate and appropriate emission reductions
and manufacturer flexibility. In addition, this structure will help to
accelerate technological innovation. We request comment on the
appropriateness of the proposed bin structure and whether the levels
proposed are appropriate. Also, we request comment on whether we should
include up to two additional bins between bin 5 (NOX = 0.07)
and bin 6 (NOX = 0.15). Our proposed bin structure is
intended to assure that nearly all vehicles comply with a
NOX standard of 0.07 g/mi. These additional bins would
provide greater flexibility for manufacturers who may find it more
cost-effective to produce some vehicles slightly above 0.07 but would
have difficulties meeting a 0.07 g/mi average NOX standard
if they had to certify them to a NOX level of 0.15 g/mi. We
request specific comment on whether we should
[[Page 26038]]
establish these bins and if so what standards for each pollutant we
should include. As we indicated above, we believe that the existence of
bins above 0.07 g/mi NOX provide an incentive for
technological advancement. We request comment as to whether these
additional bins would limit this incentive in any way.
On the other hand, Bin 7 is intended primarily to aid manufacturers
during the transition to Tier 2 standards. We request comment on
whether this bin should be eliminated when the Tier 2 phase-in is
completed (after 2007 for LDV/LLDTs and after 2009 for HLDTs).
b. The Proposed Program Would Phase in the Tier 2 Vehicle Standards
over Several Years
i. Primary Phase-In Schedule
We are proposing to phase in the Tier 2 standards for LDVs/LLDTs
over a four year period beginning in 2004 and we are proposing a
delayed two year phase-in beginning in 2008 for HLDTs. These phase-in
schedules are shown in Tables IV.B.-2 and are also shown separately in
Tables IV.B.-4 and 5. We believe the flexibility of this dual phase-in
approach is appropriate because the proposed Tier 2 program would
encompass all light-duty vehicles and trucks and would result in
widespread applications of upgraded and improved technology across the
fleet. The program would require research, development, proveout, and
certification of all light-duty models, and manufacturers would need
longer lead time for some vehicles, especially HLDTs. Also,
manufacturers might wish to time compliance with the Tier 2 standards
to coincide with other changes such as the roll out of new engines or
new models. In order to begin the introduction of very clean vehicles
as soon as possible while avoiding imposing unnecessary inefficiencies
on vehicle manufacturers, we believe a practical but aggressive phase-
in schedule like the one we are proposing effectively balances air
quality, technology, and cost considerations.
In each year, manufacturers would have to ensure that the specified
fraction of their U.S. sales 38 met Tier 2 standards for
evaporative emissions (discussed in Section IV.B.-4.f. below) and
exhaust emissions, including Supplemental Federal Test Procedure (SFTP)
standards (discussed in Section V.A.-3. below), as well as the
corporate average Tier 2 NOX standard. Manufacturers would
have to meet the Tier 2 exhaust requirements (i.e., all the standards
of a particular bin plus the SFTP standards) using the same vehicles.
Vehicles not covered by the Tier 2 standards during the phase-in years
(2004-2008) would have to meet interim standards described in Section
IV.B.-.4.e. below and the existing evaporative emission as well as the
applicable SFTP standards.
---------------------------------------------------------------------------
\38\ For Tier 2 vehicles (and for interim vehicles), the term
``U.S. sales'' means, for a given model year, those sales in states
other than California and any states that have adopted the
California program.
---------------------------------------------------------------------------
Manufacturers could elect to meet the percentage phase-in
requirements for evaporative and exhaust emissions using two different
sets of vehicles. We believe that because of interactions between
evaporative and exhaust control strategies, manufacturers would
generally address the Tier 2 evaporative phase-in with the same
vehicles that they used to meet the exhaust phase-in. However, the
primary focus of today's proposal is on exhaust emissions, and the
flexibility for manufacturers to use different sets of vehicles in
complying with the phase-in schedule for evaporative standards and for
the exhaust standards would have no environmental down side that we are
aware of. It is possible that some exhaust emission improvements might
even occur sooner than they otherwise would if a manufacturer were able
to move ahead with the roll-out of a model with cleaner exhaust
emissions without having to wait for the development of suitable
evaporative controls to be completed for that model.
Table IV.B.-4.--Primary Phase-in Schedule for Sales of Tier 2 LDVs and
LLDTs
------------------------------------------------------------------------
Required
percentage of
light-duty
Model year vehicles and
light light-
duty trucks
------------------------------------------------------------------------
2004.................................................... 25
2005.................................................... 50
2006.................................................... 75
2007.................................................... 100
------------------------------------------------------------------------
Table IV.B.-5.--Primary Phase-in Schedule for Sales of Tier 2 HLDTs
------------------------------------------------------------------------
Required
percentage of
Model year heavy light-
duty trucks
------------------------------------------------------------------------
2008.................................................... 50
2009.................................................... 100
------------------------------------------------------------------------
According to the proposed phase-in approach, vehicle sales would be
determined according to the ``point of first sale'' method outlined in
the NLEV rule. Vehicles with points of first sale in California or a
state that had adopted the California LEV II program would be excluded
from the calculation. The ``point of first sale'' method recognizes
that most vehicle sales will be to dealers and that the dealers' sales
will generally be to customers in the same geographic area. While some
sales to California residents (or residents of states that adopt
California standards) may occur from other states and vice-versa, we
believe these sales will be far too small to have any significant
impact on the air quality benefits of the Tier 2 program.
ii. Alternative Phase-In Schedule
While our primary proposal is based upon a phase-in of 25%, 50%,
75% and 100% of sales over the 2004, 2005, 2006 and 2007 model years,
respectively (or 50% and 100% in 2008 and 2009 for HLDTs), we are
proposing to permit alternative phase-in schedules as an option to
provide additional flexibility to manufacturers. The alternative phase-
in schedule provisions are structured to provide incentive to
manufacturers to introduce Tier 2 vehicles before 2004 (or 2008 for
HLDTs).
Under this alternative, manufacturers that introduced vehicles
earlier than required could earn the flexibility to make offsetting
adjustments, on a one-for-one basis, to the phase-in percentages in
later years. However, they would still need to reach 100% of sales in
the 2007 model year (2009 for HLDTs). Manufacturers would have the
option to use this alternative to meet phase-in requirements for LDV/
LLDTs and/or HLDTs. They could use separate alternative phase-in
schedules for exhaust and evaporative emissions, or an alternative
phase-in schedule for one set of standards and the primary (25/50/75/
100%) schedule for the other.
An alternative phase-in schedule would be acceptable if it passed a
specific mathematical test. We have designed the test to provide
manufacturers benefit from certifying to the Tier 2 standards early
while ensuring that significant numbers of Tier 2 vehicles would be
introduced during each year of the alternative phase-in schedule. To
test an alternative schedule, a manufacturer would sum its yearly
percentages of Tier 2 vehicles beginning with model year 2001 and
compare the resulting sum to the sum that results from the primary
phase-in schedule. If an alternative schedule scored as high or higher
than the base
[[Page 26039]]
option, then the alternative schedule would be acceptable.
For LDV/LLDTs, the final sum of percentages would have to equal or
exceed 250--the sum that results from a 25/50/75/100 percent phase-in.
For example, a 10/25/50/65/100 percent phase-in that began in 2003
would have a sum of 250 percent and would be acceptable. In this
example, each Tier 2 vehicle sold early (i.e. in 2003) would permit the
manufacturer to sell one less Tier 2 vehicle in the last phase-in year
(2006). A 10/20/40/70/100 percent phase-in that began the same year
would have a sum of 240 percent and would not be acceptable. For HLDTs,
the sum would have to equal or exceed 150 percent.
To ensure that significant numbers of Tier 2 vehicles are
introduced in the 2004 time frame, manufacturers would not be permitted
to use alternative phase-in schedules that delayed the implementation
of the Tier 2 LDV/LLDT requirements, even if the sum of the phase-in
percentages met or exceeded 250. Such a situation could occur if a
manufacturer delayed implementation of its Tier 2 production until 2005
and began a 75/85/100 percent phase-in that year. To protect against
this possibility, we are proposing that in any alternate phase-in
schedule, a manufacturer's phase-in percentages from the 2004 and
earlier model years sum to at least 25%.
The mathematical technique to evaluate alternative phase-in schemes
is somewhat similar to that used in our NLEV rule and in California
rules. We request comment on its appropriateness for this application.
We also request comment on other approaches that might serve to provide
incentive to manufacturers to introduce Tier 2 vehicles early, and to
provide additional flexibility, while at the same time assuring that
environmental gains equivalent to or greater than those of the primary
phase-in option are produced. We have considered whether it would be
appropriate to provide a ``multiplier'' that would serve to increase
the value of the percentage of vehicles introduced before 2004 (2008
for HLDTs) in the mathematical test described above. Such a multiplier
might start at 1 for 2004-2007 vehicles and increase for each year
prior to 2004 (2008 for HLDTs). We request comment as to whether such a
multiplier would be appropriate and whether it would produce real
environmental gains by speeding the introduction of Tier 2 vehicles
into the fleet.
All of the discussion on alternative phase-in schedules to this
point has been premised on 100% compliance in 2007 (2009 for HLDTs). We
request comment as to whether alternative phase-in schedules should be
structured in such a way that, if a manufacturer introduced Tier 2
vehicles in excess of the minimum required during the phase-in years,
that manufacturer could extend its phase-in beyond 2007 or 2009.
Commenters should address the time period beyond 2007 or 2009 that
would be appropriate as well as how EPA would determine the fraction of
vehicles that could be delayed until that time.
Phase-in schedules, in general, add little flexibility for
manufacturers with limited product offerings. A manufacturer with only
one or two test groups can not take full advantage of a 25/50/75/100
percent or similar phase-in. However for manufacturers that meet EPA's
definition of ``small volume manufacturer,'' we are proposing elsewhere
in this preamble that those manufacturers be exempt from the phase-in
schedules and would simply have to comply with the final 100%
compliance requirement. Still, we request comment on how alternative
phase-in schedules might be structured to provide flexibility and
incentive for early introduction to smaller manufacturers.
Later in this preamble (in Section V) we request specific comment
on whether we should include a scheme to provide extra NOX
credits for manufacturers that introduce Tier 2 vehicles early.
Commenters to the above discussion on alternate phase-in schedules
should address whether a provision for extra NOX credits
might be a more appropriate way to provide inducements to smaller
manufacturers to introduce Tier 2 vehicles early. Commenters should
consider the interactions such extra credits might have with alternate
phase-in schedules, particularly in situations where a ``multiplier,''
as described above, might be applied.
c. Manufacturers Would Meet a ``Corporate Average'' NOX
Standard. While the manufacturer would be free to certify a test group
to any bin of standards in Table IV.B.-2, it would have to ensure that
the sales-weighted average of NOX standards from all of its
test groups of Tier 2 vehicles met a full useful life standard of 0.07
g/mi. Using a calculation similar to that for the NMOG corporate
average standard in the California and NLEV programs, manufacturers
would determine their compliance with the corporate average
NOX standard at the end of the model year by computing a
sales weighted average of the full useful life NOX standards
from each bin. Manufacturers would use the following formula:
Corporate Average NOX = (Tier 2 NOX
std for each bin) x (sales for each bin) total Tier 2 sales
Manufacturers would exclude vehicles sold in California or states
adopting California LEV II standards from the calculation. As indicated
above, manufacturers would compute separate NOX averages for
LDV/LLDTs and HLDTs through the year 2008.
The corporate average NOX standards of the primary Tier
2 program and the interim programs for LDVs/LLDTs and HLDTs would
ensure that expected fleet-wide emission reductions are achieved. At
the same time, the corporate average standards allow us to permit the
sale of some vehicles above the levels of the average standards to
address the greater technological challenges some vehicles face and to
reduce the overall costs of the program. We discuss how manufacturers
could generate, use, and buy or sell NOX credits under the
proposed program in the next subsection.
Given the corporate average NOX standards, we do not
believe a corporate average NMOG standard as used by California is
essential because meeting the corporate average NOX standard
would automatically bring the NMOG fleet average to approximately LEV
levels. However, we request comment on the need for such a corporate
average NMOG standard, as well as suggestions and rationales for what
that standard, if any, should be. Commenters are encouraged to address
any interactions with the bin structure, if appropriate.
d. Manufacturers Could Generate, Bank, and Trade NOX
Credits.
i. General Provisions
As mentioned in the Overview above, we are proposing that
manufacturers with year-end corporate average NOX emissions
for their Tier 2 vehicles below 0.07 g/mi could generate Tier 2
NOX credits. Credits could be saved (banked) for use in a
future model year or for trading (sale) to another manufacturer.
Manufacturers would consume credits if their corporate average
NOX emissions were above 0.07 g/mi.
We are proposing the Tier 2 standards to apply regardless of the
fuel the vehicle is designed for, and there would be no restrictions on
averaging, banking or trading of credits across vehicles of different
fuel types. Consequently, a gasoline fueled LDV might help a
manufacturer generate NOX credits in one year that could be
banked for the next year when they could be used to average against
NOX emissions of a diesel fueled LDT.
Because of the split phase-in and the different interim programs we
are
[[Page 26040]]
proposing for the two different groups of vehicles (LDV/LLDTs and
HLDTs), we are also proposing to require that manufacturers compute
their corporate Tier 2 NOX averages separately for LDV/LLDTs
and HLDTs through 2008. Credit exchanges between LDVs/LLDTs and HLDTs
would not be allowed nor would credit exchanges across the interim
program and Tier 2 program be allowed. These restrictions would end
with the 2009 model year at which time both phase-ins and all interim
standards will have ended and the program would permit free averaging
across all Tier 2 vehicles. In the context of the whole program we are
proposing, we are concerned that allowing cross-trading between interim
and Tier 2 vehicles would reduce the expected benefits of the program
and delay fleet turnover to Tier 2 emission levels. For this reason we
are not proposing to allow such exchanges. We seek comment on this
issue.
ii. Averaging, Banking, and Trading of NOX Credits Would
Fulfill Several Goals
There are several reasons why we believe the proposed provisions
for averaging, banking, and trading of NOX credits (ABT)
would be valuable.
ABT allows us to consider a more stringent emission
standard than might otherwise be appropriate under the CAA, since ABT
reduces the cost and improves the technological feasibility of
achieving the standard.
ABT enhances the technological feasibility and cost
effectiveness of the proposed standard, helping to ensure that the
standard would be attainable earlier than would otherwise be possible.
ABT would provide manufacturers with additional product
planning flexibility and the opportunity for a more cost effective
introduction of product lines meeting the new standard.
ABT would create an incentive for early introduction of
new technology, allowing certain engine families to act as trail
blazers for new technology. This could help provide valuable
information to manufacturers on the technology prior to manufacturers
needing to apply the technology throughout their product line. The
early introduction of new technology would also further improve the
feasibility of achieving the standard and could also provide valuable
information for use in other regulatory programs that may benefit from
similar technologies (e.g., heavy-duty vehicle standards).
EPA views the proposed ABT provisions as environmentally neutral
because the use of credits by some vehicles would be offset by the
generation of an equal number of credits generated by other vehicles.
However, when coupled with the new standards, ABT could have
environmental benefits because it could allow the new standards to be
implemented earlier than would otherwise be appropriate under the Act.
iii. How Manufacturers Would Generate and Use NOX Credits
As described in the previous subsection, and subject to the phase-
in restrictions described in that subsection, manufacturers would
determine their year-end corporate average NOX emission
level by computing a sales-weighted average of the NOX
standard from each bin to which the manufacturer certified any LDVs or
LDTs. The manufacturer would round this average to one more decimal
place than in the corporate average NOX standard. Tier 2
NOX credits would be generated when a manufacturer's average
was below the 0.07 gram per mile corporate average NOX
standard, according to this formula:
NOX Credits = (0.07 g/mi--Corporate Average
NOX) x Sales
The manufacturer could then use these NOX credits in
future years when its corporate NOX average was above 0.07,
or it could trade (sell) the credits to other manufacturers. The use of
NOX credits would not be permitted to address Selective
Enforcement Auditing or in-use testing failures.
The enforcement of the NOX averaging standard would
occur through the vehicle's certificate of conformity. A manufacturer's
certificate of conformity would be conditioned upon compliance with the
averaging provisions. The certificate would be void ab initio if a
manufacturer failed to meet the corporate average NOX
standard and did not obtain appropriate credits to cover their
shortfalls in that model year or in the subsequent model year (see
proposed deficit carryforward provision below). Manufacturers would
need to track their certification levels and sales unless they produced
only vehicles certified to bins containing NOX levels of
0.07 g/mi or below and did not plan to bank NOX credits.
iv. Manufacturers Could Earn and Bank Credits for Early NOX
Reductions
To provide manufacturers with greater flexibility and with
incentives to certify, produce and sell Tier 2 vehicles as early as
possible, we are proposing that manufacturers could utilize alternative
phase in schedules. (See IV.B.4.b.ii above.) Under such schedules, a
manufacturer could certify vehicles to bins having NOX
standards of 0.07 g/mi or below in years prior to the first required
phase-in year and then phase its remaining vehicles in over a more
gradual phase-in schedule that would still lead to 100% compliance by
2007 (2009 for HLDTs). To the extent that a manufacturer's corporate
average NOX level of its ``early Tier 2'' vehicles was below
0.07 g/mi, the manufacturer could bank NOX credits for later
use. Manufacturers would compute these early credits by calculating a
sales-weighted corporate average NOX emission level of their
Tier 2 vehicles, as in the basic Tier 2 program described above.
These credits would have all the same properties as credits
generated by vehicles subject to the primary phase-in schedule. These
credits could not be used in the NLEV, Tier 1 or interim program for
non-Tier 2 vehicles in any way. However, the NMOG emissions of these
vehicles (LDVs and LLDTs only) could be used in the calculation of the
manufacturer's corporate average NMOG emissions under NLEV through
2003.
To provide manufacturers with maximum flexibility in the period
prior to 2004, when LDV/LLDT useful lives will still be at 100,000
miles, we are proposing that manufacturers could choose between the
Tier 2 120,000 mile useful life or the current 100,000 mile useful life
requirement for early Tier 2 LDV/LLDTs. (HLDTs already have a 120,000
mile useful life.) Early LDV/LLDT NOX credits for 100,000
mile useful life vehicles would have to be prorated by 100,000/120,000
(5/6) so that they could be properly applied to 120,000 mile Tier 2
vehicles in 2004 or later.
We are proposing that early banking of HLDT NOX credits
could not begin until the 2004 model year. This provides a four year
period during which early credits could be generated for use in the
2008/2009 HLDT Tier 2 phase-in. We are concerned that allowing
generation of early HLDT credits in years prior to 2004 could result in
credits that are largely windfall credits. Still, we recognize that
vehicles that meet the Tier 2 standards early represent an
environmental benefit and we request comment on the need for and
appropriateness of allowing early banking of HLDT credits before the
2004 model year.
We recognize that vehicles generating early NOX credits
may be doing so without the emissions benefit of low sulfur fuel, and
thus these vehicles may not achieve the full in-use emission reduction
for which they received credit. When these credits are used to
[[Page 26041]]
permit the sale of higher-emitting vehicles, there may be a net
increase in emissions. We believe that the benefits of early
introduction of Tier 2 technology described above are significant
enough that they are worth the risk of some emission losses that might
occur if and when the early credits are used. Also, we believe that
some fuel sulfur reductions will occur prior to 2004 as refiners
upgrade their refineries or bring new refining capacity on stream in
anticipation of the 2004 requirements and take advantage of the phase-
in proposed in the gasoline sulfur ABT program (described in Section
IV.C. below). We request comment on all aspects of early introduction
of Tier 2 vehicles and the proposed provisions for early NOX
credits.
v. NOX Credits Would Have Unlimited Life
We are not proposing to apply the California schedule of
discounting unused credits that was adopted for NMOG credits in the
NLEV program. This schedule serves to limit credit life throughout the
program by reducing unused credits to 50, 25 and 0 percent of their
original number at the end of the second, third and fourth year,
respectively, following the year in which they were generated. Because
of the declining corporate average NMOG standards in that program,
California has decided, and we agree, that it is prudent to limit the
lives of credits to prevent manufacturers from being able to accumulate
credits and then apply them in such a way as to delay the impact of
declining standards. But in this proposed federal program, once the
proposed phase-in period ends in model year 2009, all light duty
vehicles and trucks would comply on average with a fixed Tier 2
NOX standard.
Credits would allow manufacturers a way to address unexpected
shifts in their sales mix and yet would prevent the program from being
abused to allow emission increases by design, since emissions would be
capped by the levels in the least stringent bin. The NOX
emission standards in the Tier 2 and interim programs are quite
stringent and do not present easy opportunities to generate credits.
The degree to which manufacturers invest the resources to achieve extra
NOX reductions provides true value to the manufacturer and
the environment. We do not want to take measures to reduce the
incentive for manufacturers to bank credits nor do we want to take
measures to encourage unnecessary credit use. Consequently we are
proposing that Tier 2 NOX credits would have unlimited
lives. We request comment on the need for discounting of credits or
limits on credit life and what those discount rates or limits, if any,
should be.
vi. NOX Deficits Could Be Carried Forward
When a manufacturer has a NOX deficit at the end of a
model year--that is, its corporate average NOX level is
above the required corporate average NOX standard--we are
proposing that the manufacturer be allowed to carry that deficit
forward into the next model year. Such a carry-forward could only occur
after the manufacturer used any banked credits. If the deficit still
existed and the manufacturer chose not to or was unable to purchase
credits, the deficit could be carried over. At the end of that next
model year, the deficit would need to be covered with an appropriate
number of NOX credits that the manufacturer generated or
purchased. Any remaining deficit would be subject to an enforcement
action.
To prevent deficits from being carried forward indefinitely, the
manufacturer would not be permitted to run a deficit for two years in a
row.39 We believe that it is reasonable to provide this
flexibility to carry a deficit for one year given the uncertainties
that light duty vehicle and truck manufacturers face with changing
market forces and consumer preferences, especially during the
introduction of new technologies. These uncertainties can make it hard
for manufacturers to accurately predict sales trends of different
vehicle models. We request comment on this provision.
---------------------------------------------------------------------------
\39\ Because of the limited duration of the interim programs, we
are proposing that a manufacturer could carry a credit deficit in
the interim program forward until the 2006 model year (2008 for
HLDTs). The interim program, in its entirety, lasts only five years
and therefore we see little risk of prolonged deficits.
---------------------------------------------------------------------------
e. Interim Standards.
i. Interim Standards for LDV/LLDTs
The NLEV program referenced throughout this discussion is a
voluntary program in which all major manufacturers have opted to
produce LDVs and LLDTs to tighter standards than those required by
EPA's Tier 1 regulations. Under the NLEV program, manufacturers must
meet an NMOG average outside of California that is equivalent to
California's current intermediate-life LEV requirement--0.075 g/mi for
LDVs and LDT1s (0.10 g/mi for LDT2s). Currently, NLEV requirements
apply only to LDVs and LLDTs, not to HLDTs.
The NLEV program is effective beginning in the northeastern states
in 1999 and in the remaining states in 2001, except that the program
does not apply to vehicles sold in California or in states that adopted
California's LEV program. The program runs at least through 2003 and
can run through model year 2005.
Given the Tier 2 phase-in we are proposing, not all LDV/LLDTs
covered under NLEV will be subject to Tier 2 standards in the 2004 to
2006 period. Unless EPA adopts a program for full Tier 2 compliance in
2004 (i.e., without a phase-in), these vehicles could revert to Tier 1
standards. The NLEV program, moreover, is a voluntary program that
contains several provisions that restrict EPA's flexibility and that
could lead to a manufacturer or a covered Northeastern state leaving
the program in or prior to 2004. To resolve these concerns we are
proposing interim standards for all non-Tier 2 LDV/LLDTs for the 2004-
2006 model years. Our interim standards would replace the NLEV program,
which would then terminate at the end of 2003. The transition from NLEV
to Tier 2 should be smooth because the interim standards are derived
from the NLEV standards for LDVs and LDT1s and would ensure that all
LDVs, LDT1s and LDT2s that are not certified to Tier 2 levels during
the 2004-2006 phase-in period remain at levels at least as stringent as
NLEV levels. The standards would also arguments prebring the emission
standards for LDT2s into line with those for the LDVs and LDT1s. We
propose to align the useful life periods for interim standards with
those of the Tier 2 standards (full useful life of 120,000 miles,
intermediate useful life of 50,000 miles, as discussed in Section V.A.-
2 below)
Tables IV.B.-6 and IV.B.-7 below present interim standards we are
proposing for LDVs and LLDTs not covered by Tier 2 standards during the
phase in period.
[[Page 26042]]
Table IV.B.-6.--Full Useful Life (120,000 mile) Interim Exhaust Emission Standards for LDV/LLDTs
[Grams per mile]
----------------------------------------------------------------------------------------------------------------
Bin No. NOX NMOG CO HCHO PM
----------------------------------------------------------------------------------------------------------------
5............................... 0.60 0.156 4.2 0.018 0.06
4............................... 0.30 0.090 4.2 0.018 0.06
3............................... 0.30 0.055 2.1 0.011 0.04
2............................... 0.07 0.090 4.2 0.018 0.01
1............................... 0.00 0.00 0.0 0.000 0.0
----------------------------------------------------------------------------------------------------------------
Table IV.B.-7.--Intermediate Useful Life (50,000 mile) Interim Exhaust Emission Standards for LDV/LLDTs
[Grams per mile]
----------------------------------------------------------------------------------------------------------------
Bin No. NOX NMOG CO HCHO PM
----------------------------------------------------------------------------------------------------------------
5............................... 0.40 0.125 3.4 0.015 ..............
4............................... 0.20 0.075 3.4 0.015 ..............
3............................... 0.20 0.040 1.7 0.008 ..............
2............................... 0.05 0.075 3.4 0.015 ..............
----------------------------------------------------------------------------------------------------------------
We are proposing a corporate average full useful life
NOX standard of 0.30 g/mi for this interim program. LDV/
LLDTs, which will already be at NLEV levels, should readily be able to
meet this average NOX standard. Although we have not shown
it in the tables of interim standards above, we are also proposing that
all of the bins shown for the Tier 2 program (see Tables IV.B.-2 and -
3) could be used in the interim program. Thus if a manufacturer had
vehicles certified to Tier 2 bins that it did not need to comply with
the Tier 2 NOX average standard and phase in percentage, it
would have the additional option to use them in the interim program. We
request comment as to whether the number of bins provided in the
interim program and their emission levels are appropriate.
The 0.30 g/mi corporate average NOX standard (and the
bins of standards in the above two tables) would apply only to non-Tier
2 LDV/LLDTs and only for the 2004-2006 model years. Manufacturers would
compute, bank, average, trade, account for, and report NOX
credits via the same processes and equations described in this preamble
for Tier 2 vehicles, substituting the 0.30 g/mi corporate average
standard for the 0.07 g/mi corporate average standard in the basic
program. Also, EPA would condition the certificates of conformity on
compliance with the corporate average standard, as described for Tier 2
vehicles. These NOX credits would be good only for the 2004-
2006 model years and would only apply to the interim non-Tier 2 LDV/
LLDTs. Credits would not be subject to any discounts, and credit
deficits from the 2004 and 2005 model year could be carried forward,
provided they were covered with appropriate credits by the end of the
2006 model year. NMOG credits from the NLEV program could not be used
in this interim program in any way. Credits generated under this
interim program would not be applicable to the Tier 2 NOX
average standard of 0.07 g/mi because of our concern that a windfall
credit situation could occur. This could happen because credits are
relatively easy to generate under a 0.30 g/mi standard compared to
generating credits under a 0.07 g/mi standard. The application of
credits earned under the interim standard to the Tier 2 standards could
significantly delay the fleet turnover to Tier 2 vehicles. The
requirements of the interim program would be monitored and enforced in
the same fashion as for Tier 2 vehicles.
For the reasons cited above, we believe it is appropriate to extend
interim, NLEV-like standards beyond 2003 as a mandatory program and to
bring all LDVs and LLDTs within its scope. Manufacturers have already
demonstrated their ability to make LDVs and LLDTs that comply at levels
well below these standards, and, as the interim standards for LDV/LLDTs
are essentially ``phase-out'' standards, we are not proposing any
alternative phase-in schedules or early banking provisions for
NOX credits from the interim LDV/LLDTs.
We request comment on all aspects of the interim standards for LDVs
and LLDTs.
ii. Interim Standards for HLDTs.
We are also proposing interim standards to begin in 2004 for HLDTs.
These vehicles are not included in the NLEV program and will be subject
only to the Tier 1 standards prior to model year 2004. Tier 1 standards
permit NOX emissions of 0.98 g/mi for LDT3s and 1.53 g/mi
for LDT4s.
The interim standards for HLDTs would apply beginning in the 2004
model year and would phase-in through the 2007 model year, as shown in
Figure IV.B.-1. The proposed interim program is based on a corporate
average full-life NOX standard of 0.20 g/mi. Manufacturers
would comply with the corporate average HLDT NOX standard by
certifying their interim HLDTs to any of the full useful life bins
shown in Table IV.B.-8. Where applicable, manufacturers would also
comply with the intermediate useful life standards shown in Table
IV.B.-9. Interim HLDTs not needed to meet the phase-in percentages
during model years 2004-2006 would have to be certified to the
standards of one of the bins in Table IV.B.-8 (and -9), but would not
be included in the calculation to demonstrate compliance with the 0.20
g/mi average. Thus, the emissions of all interim HLDTs would be capped
at a NOX value of 0.60 g/mi.
As with LDV/LLDTs, manufacturers would also have the flexibility to
use any of the Tier 2 bins shown in Tables IV.B.-2 and IV.B.-3 as
additional bins for interim HLDTs. At the end of each model year,
manufacturers would determine their compliance with the 0.20
NOX standard by calculating a sales weighted average of all
the bins to which they certified any interim HLDTs, excluding those not
needed to meet the phase-in requirements during 2004-2006.
We believe these interim standards are necessary and reasonable for
HLDTs. While these trucks make up a fairly small portion of the light-
duty fleet (about 11%), their current standards under Tier 1 are far
less stringent than the NLEV standards that apply to current model year
LDVs and LLDTs.
[[Page 26043]]
Given the delayed phase-in we are proposing for HLDTs, we believe it is
appropriate to bring about some interim reductions from these vehicles.
Further, manufacturers have already demonstrated their ability to meet
these interim standards with HLDTs. These standards are a reasonable
first step toward the Tier 2 program and would provide meaningful
reductions in the near term relative to current certification levels
under the Tier 1 emission standards.
Table IV.B.-8.--Full Useful Life (120,000 mile) Interim Exhaust Emission Standards for HLDTs
[Grams per mile]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bin No. NOX NMOG CO HCHO PM
--------------------------------------------------------------------------------------------------------------------------------------------------------
5................................................... 0.60 0.230 4.2 0.018 0.06
4................................................... 0.30 0.180 4.2 0.018 0.06
3................................................... 0.20 0.156 4.2 0.018 0.02
2................................................... 0.07 0.090 4.2 0.018 0.01
1................................................... 0.0 0.0 00.0 0.000 0.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table IV.B.-9.--Intermediate Useful Life (50,000 mile) Interim Exhaust Emission Standards for HLDTs
[Grams per mile]
----------------------------------------------------------------------------------------------------------------
Bin No. NOX NMOG CO HCHO PM
----------------------------------------------------------------------------------------------------------------
5............................... 0.40 0.160 3.4 0.015 ..............
4............................... 0.20 0.140 3.4 0.015 ..............
3............................... 0.14 0.125 3.4 0.015 ..............
2............................... 0.05 0.075 3.4 0.015 ..............
----------------------------------------------------------------------------------------------------------------
Given that the interim HLDT standards are ``phase-in'' standards
through 2007 (as opposed to the interim LDV/LLDT standards, which are
``phase-out'' standards), we are proposing that manufacturers could
employ alternative phase-in schedules as proposed for the Tier 2
standards and described in detail in section IV.B.4.b.ii. of this
preamble. These schedules provide manufacturers with greater
flexibility and we believe they also provide incentive for
manufacturers to introduce advanced emission control technology at an
earlier date. Alternative phase-in schedules would have to provide 100%
phase-in by the same year as the primary phase-in schedule (2007).
Because we are concerned about the possibility of windfall credits from
some vehicles that might easily meet the 0.20 corporate average
NOX standard, we are not proposing to permit the generation
of credits from interim HLDTs prior to the 2004 model year, although we
request comment on this issue.
f. More Stringent Proposed Light-Duty Evaporative Emission
Standards. We are proposing to adopt a set of more stringent
evaporative emission standards for all Tier 2 light-duty vehicles and
light-duty trucks. The standards we are proposing in Table IV.B.-10
represent, for most vehicles, more than a 50% reduction in diurnal plus
hot soak standards from those that will be in effect in the years
immediately preceding Tier 2 implementation. The higher standards for
HLDTs provide allowance for greater non-fuel emissions related to
larger vehicle size.
Table IV.B.-10.--Proposed Evaporative Emission Standards [Grams per
test]
------------------------------------------------------------------------
Supplemental
3 day 2 day
Vehicle class diurnal + diurnal +
hot soak hot soak
------------------------------------------------------------------------
LDVs and LLDTs............................... 0.95 1.2
HLDTs........................................ 1.2 1.5
------------------------------------------------------------------------
Evaporative emissions from light-duty vehicles and trucks represent
nearly half of the light duty VOC inventory projected for the 2007-2010
time frame, according to MOBILE5 projections. We are proposing today to
reduce the light-duty evaporative emission standards applicable to
diurnal and hot soak emissions by more than 50 percent for most
vehicles. Manufacturers are currently certifying to levels that are, on
average, about half of the current standards, and in many cases, much
less than half the standards. Thus, meeting these proposed standards
appears readily feasible. Even though manufacturers are already
certifying at levels much below the current standard, we believe that
reducing the standards will result in emission reductions as all
manufacturers seek to certify with adequate margins to allow for in-use
deterioration. Further, we believe that tighter standards will prevent
``backsliding'' toward the current standards as manufacturers pursue
cost reductions.
As mentioned in section IV.B.-4.b above, we are proposing to phase
in the Tier 2 evaporative standards by the same mechanism as the Tier 2
exhaust standards; e.g., 25/50/75/100 percent beginning in 2004 for
LDV/LLDTs and 50/100 percent beginning in 2008 for HLDTs. (as shown in
Figure IV.B.-1) As for the proposed exhaust standards, alternative
phase-in plans would also be available.
The evaporative emissions standards we are proposing are the same
as those that manufacturers' associations proposed during the
development of California's LEV II proposal; California ultimately did
not adopt these standards. We request comment on all aspects of these
proposed evaporative standards and their likely impact on in-use
evaporative emission levels. We also request comment on adopting the
evaporative emissions standards and phase-in schedule that California
adopted (representing about a 75 percent reduction from the standards
that will otherwise be in place).
C. Our Proposed Program for Controlling Gasoline Sulfur
When we discussed gasoline sulfur control with the American
Petroleum Institute, the National Petrochemical and Refiners
Association, and other representatives of the oil industry, they laid
out several major points for us to consider in development of our
proposal:
[[Page 26044]]
A regional approach to gasoline sulfur control would be
more appropriate than a nationwide program. Gasoline sulfur control
should be targeted primarily at the areas of greatest environmental
need.
Within the regions, gasoline sulfur standards should be
uniform. State fuel initiatives different from any federal regional
standards could result in supply disruption and price volatility and
should be avoided.
Adequate lead time would be critical to a successful
implementation. Implementing gasoline sulfur control over the next few
years involves a number of demands and uncertainties. For example, the
technology that is the lowest cost and more cost effective requires
sufficient time to develop.
Permitting and construction of all of these refineries in
just four years would be a major challenge. Therefore, streamlining of
the permitting process could help address lead time concerns.
If sulfur levels in diesel fuel were also going to be
reduced (or any other changes to gasoline or diesel fuel required)
industry would need to know soon so investment discussions could be
coordinated.
We have seriously considered the oil industry's input in developing
our proposal. While we are not proposing a regionally-based program, as
discussed below, we believe the nationwide program we are proposing
would provide flexibility in response to many of these concerns about
uncertainty and would provide uniformity on a national basis.
The next section of the preamble describes in more detail the
industry proposal and our response to their approach, including the
concepts of national versus regional scope and the level of the
standard. We recognize that refineries face many uncertainties and
constraints, including potential future regulation of diesel sulfur
that would affect the timing of their ability to meet the proposed
gasoline sulfur levels. Consequently, also in this section we propose
and request comment on two provisions, a sulfur averaging, banking and
trading program and permit streamlining, designed to provide
flexibility, to increase lead time, and to ease concern about how other
uncertainties would affect decision making concerning gasoline sulfur
control.
1. Oil Industry Proposal
During the development of this proposal, a large part of the oil
refining industry, represented by the American Petroleum Institute
(API) and the National Petrochemical and Refiners Association (NPRA),
offered a series of constructive recommendations for the design of a
gasoline sulfur control program. These proposals, which have
progressively addressed more and more of the concerns we had raised
about such a program, have a key element in common--the suggestion that
different levels of gasoline sulfur control be applied to different
regions of the country. These industry representatives observe that
some areas of the country need the emission reductions to be achieved
from Tier 2 LDVs and LDTs more than others, and that the gasoline
distribution system can supply different gasolines to different
geographical regions.
The most recent proposal from these members of the oil industry
would provide gasoline meeting an average sulfur level of 150 ppm
(capped at 300 ppm) to a large region of the U.S. This proposal would
cover all states east of the Mississippi river, plus Missouri,
Louisiana, and the eastern half of Texas (and any RFG areas in the
West), and would begin in 2004.40, 41 The
remainder of the country (excluding California) would receive gasoline
meeting a 300 ppm average (450 ppm cap). Further reductions in sulfur
levels in eastern states, to a 30 ppm average/80 ppm cap, would be
required starting in 2010, unless a study performed in 2004-06
demonstrated no air quality need for further sulfur reductions. If this
study found an air quality need for additional reductions, EPA would
make recommendations about the appropriate sulfur levels (if different
from the proposed 30/80 ppm levels) and the area to receive this lower
sulfur gasoline (if different from the region receiving the 150 ppm
average in 2004). The industry representatives thus characterized the
2010 standards as ``rebuttable,'' standards because EPA could have to
initiate additional regulatory actions to implement the final 2010
standards.
---------------------------------------------------------------------------
\40\ The industry representatives offered to meet these
standards earlier if Tier 2 vehicles were introduced before 2004.
\41\ While a majority of oil companies have approved this
proposal, not every U.S. refiner supports all of the provisions
summarized here.
---------------------------------------------------------------------------
The arguments presented by the members of the oil industry for why
this regional program would be reasonable include a consideration of
the technical needs of the vehicles and the ability of refining
industry to meet the requirements. Based on testing and analyses
performed by oil companies and their trade associations, they
concluded:
Automakers can select from a range of design factors to
reduce sulfur sensitivity, including engine design, catalyst size,
catalyst location, control of air/fuel mixtures, the types and amounts
of precious metals used in the catalyst;
Vehicles can be designed to fully reverse the sulfur
effect while meeting both Tier 2 and SFTP emission standards, even if
operated for a long time (1,000 miles) on high sulfur fuel;
This division of the country into two sulfur regions
``matches cost to consumers with benefits,'' since the areas with the
greatest air quality need would get the lower sulfur gasoline, while
consumers and refiners located in areas without substantial air quality
need would not have to pay the higher costs resulting from the lower
levels; and
The regions, as defined, would optimize gasoline
distribution based on the existing distribution system, thus reducing
the potential for supply shortfalls or other difficulties.
Following the same methodology we used to estimate the future
emissions and emissions reductions that would result from our combined
Tier 2/gasoline sulfur proposal (presented above in Section III), we
estimated the emissions that would occur from a program that combined
our proposed Tier 2 vehicle standards with the gasoline sulfur program
proposed by the oil industry.42 As explained below, we
believe vehicles meeting the proposed Tier 2 standards that
consistently use the higher sulfur gasoline would emit at higher levels
than those that consistently use 30 ppm sulfur gasoline, and that
vehicles that travel between the East and West (as defined by the oil
industry proposal) would experience an irreversible (permanent) loss in
as much as 50 percent of the emissions performance after being exposed
to high sulfur levels. As a result, our analysis shows somewhat higher
total emissions for the program incorporating the oil industry's
proposal than would occur if this sulfur effect did not occur. Since
the ``rebuttable standard'' leaves open the possibility that the
eastern region will not receive 30 ppm sulfur levels in 2010 and beyond
(upon a finding of no air quality need for further reductions), we
analyzed that scenario as well. Table IV.C.-1 shows the NOX
emissions we
[[Page 26045]]
calculated for select years for these two scenarios, compared to our
proposal.
---------------------------------------------------------------------------
\42\ As explained in this section, because of sulfur's effect on
emissions, we do not believe we could finalize the proposed Tier 2
vehicle standards with sulfur levels averaging significantly above
30 ppm. However, for the purposes of this analysis we did not change
the modeled Tier 2 vehicle standards.
Table IV.C.-1.--Nationwide NOX Emissions from Tier 2 Standards and Oil Industry Proposed Gasoline Sulfur Program
----------------------------------------------------------------------------------------------------------------
Total NOX tons
-----------------------------------------------
Oil industry
Oil industry proposal, 2010
Year proposal 2004: standard
EPA proposal 150/300 a rebutted 2004:
2010: 30/300 150/300 a
2010: 150/300
----------------------------------------------------------------------------------------------------------------
2007............................................................ 2,423,000 2,821,000 2,821,000
2010............................................................ 1,859,000 2,021,000 2,292,000
2015............................................................ 1,242,000 1,424,000 1,701,000
2020............................................................ 1,023,000 1,221,000 1,508,000
----------------------------------------------------------------------------------------------------------------
a Sulfur average in East/sulfur average in West.
The industry's proposals have been valuable in helping EPA and all
the major stakeholders focus on key issues of the design of gasoline
sulfur control options. We have seriously considered these proposals as
well as the responses of others to the proposals. We have paid
particularly close attention to the issue of the reversibility of
gasoline sulfur's emissions impacts, since the environmental benefits
to be gained from a regional sulfur program in combination with
national Tier 2 vehicle standards hinge on the degree to which the
negative impact of high sulfur levels can be reversed when a vehicle is
operated later on low sulfur gasoline. We encourage comments on the
appropriateness and feasibility of a regional gasoline sulfur program
such as the one recommended by the oil industry (in combination with
national Tier 2 vehicle standards as proposed today). We are
particularly interested in analyses of the environmental and economic
consequences of such a proposal.
In addition, others have raised the idea of an alternative
temporary regional gasoline sulfur control program. Under this program,
which would last from 2004 through 2008, gasoline refined in PADD IV
(generally covering the Rocky Mountain states and representing about 5
percent of U.S. gasoline production) would meet an average sulfur
standard of 150 ppm with a 300 ppm cap while the remainder of the
country would meet a 30 ppm average beginning in 2004. Gasoline refined
in PADD IV would have to comply with the 30 ppm average/80 ppm cap
beginning in 2009.
This approach would provide the smaller refineries in this region
with additional time to make the significant capital investments to
desulfurize gasoline. In part because of the smaller scale of the PADD
IV refineries, we estimate that the cost of desulfurization would be
larger for these refineries than the estimated average cost of meeting
a 30 ppm standard.
While the Rocky Mountain region's air quality problems are
generally less severe than those in many other parts of the country, we
believe that the emission reductions provided by today's proposed
program would still be important, for several reasons.
The Denver and Salt Lake City areas will have ozone levels
in the 2007 time frame within 15 percent of the national ambient
standards and would benefit from the lowest possible gasoline sulfur
levels to assist their efforts to maintain their ozone attainment
status.
Other benefits of the proposed program would also be
forgone during the interim period, as discussed above, including the
lower secondary PM emissions, improved visibility, and reduced toxic
emissions.
Irreversible damage to vehicle emission control systems in
those vehicles that have been fueled in this region at any time during
their life would occur.
PADD IV gasoline is marketed outside the borders of PADD
IV.
The vehicle emission standards would be more difficult to
enforce if there were an extended period when vehicles were exposed to
gasolines of more than one sulfur level.
We seek comment on the appropriateness of this approach, including
consideration of the cost, air quality, and public health impacts as
compared to our proposal.
As discussed below, however, we are not proposing a gasoline sulfur
control program that incorporates a regional element. We have not been
able to satisfy our concerns with the irreversibility of the sulfur
effect, since it is not clear that vehicle or catalyst design changes
will solve the problem and since we do not believe that the effect is
negligible. Without a national low sulfur gasoline program, the air
quality benefits of our program would be reduced, particularly in the
initial years when the emissions reductions will be most required to
help many states achieve attainment with the National Ambient Air
Quality Standards. A national program providing low sulfur gasoline
everywhere could ensure that the vehicles designed to meet the proposed
Tier 2 standards achieved the desired emissions performance, that the
investments made by car buyers in cleaner technology would be
justified, and that the needed emissions reductions occurred beginning
as early as 2004.
2. Why EPA Believes Gasoline Sulfur Program Must be Nationwide
As explained in Section IV.C.3. below, we are proposing that our
gasoline sulfur control program apply throughout the country, rather
than in a more limited geographic area along the lines of what the oil
industry has proposed. In determining the appropriate geographic scope
for our proposed program, we considered the implications for the
emission control hardware of Tier 2 vehicles, based on the degree to
which the sulfur impact on catalysts may be reversible. We considered
the degree to which sulfur will impact advanced technology engines and
aftertreatment systems. We weighed the impact that sulfur has on
onboard diagnostic systems, and what that may mean for state inspection
and maintenance programs. We evaluated the environmental implications
beyond the ozone benefits to be realized. We also considered the
ability of the entire refining industry to control gasoline
[[Page 26046]]
sulfur at essentially the same time. After review of all of these
issues, it is our judgement that a national program is appropriate and
reasonable. The following sections explore these issues in more detail.
a. Sulfur's Negative Impact on Tier 2 Catalysts Is Irreversible. We
have reviewed data from several test programs designed to characterize
both the effect of high sulfur levels on vehicle emissions and the ease
and completeness with which this effect was eliminated or ``reversed''
once the vehicle was operated on low sulfur gasoline. These test
programs were performed by auto manufacturers, oil companies, emission
control equipment manufacturers and their various associations. All of
the vehicles included in these test programs met either EPA Tier 1 or
California LEV emission standards and were not designed to comply with
either EPA or California supplemental federal test procedure (SFTP)
standards. The SFTP standards are intended to better address and
control emissions under driving conditions not captured when compliance
with our FTP-based exhaust emissions standards is demonstrated, such as
operation with the air conditioning turned on or driving at very high
rates of acceleration and vehicle speeds (hereafter referred to simply
as aggressive driving). This is an important factor in assessing sulfur
reversibility, because in contrast to the vehicles that have been
tested to date, Tier 2 vehicles would have to meet more stringent
exhaust emission standards and would have to meet these standards over
the wider variety of operating conditions included in the SFTP
provisions. Hence, they would have to be designed to meet the emission
standards under all such operating conditions; these design changes may
influence the ease with which the sulfur effect is reversed, as
explained below.
The vehicles tested exhibited a wide range of reversibility, for
reasons that are not fully understood. The LEVs tested in these
programs showed, on average, that the effect of operation on high
sulfur fuel was reversed after operation on low sulfur fuel if
aggressive driving conditions occurred once the vehicle was switched to
low sulfur fuel. Roughly 85% of the increase in NMOG and NOX
emissions resulting from high sulfur levels was reversible after
operation on low sulfur fuel coupled with more moderate urban driving.
(CO emissions were somewhat less reversible under these conditions.)
Individual vehicles showed a wide range of responses, however. For
example, many vehicles showed substantial irreversibility for one
pollutant (NOX or NMOG) while very high reversibility for
the other. In some cases, only half of the initial emission increase
due to high sulfur could be removed by driving on low sulfur fuel.
Catalyst temperature, the mixture of air and fuel in the engine and the
design of the catalyst are all believed to be important factors that
affect the reversibility of the sulfur impact. However, to date, no one
has been able to demonstrate the specific contributions of these
various factors. Also, no one has been able to design a catalyst with
both high conversion efficiencies and no or very low sensitivity to
sulfur.
These data indicate that the effect of high sulfur levels on
emissions from current LEV models driven over a wide variety of
operating conditions appears to be partially reversible, particularly
if the vehicle is periodically driven aggressively. However, were these
vehicles required to meet the SFTP standards, we believe that the
degree of reversibility would have been substantially worse.
Studies of the adsorption and removal of sulfur on catalysts have
demonstrated that wide variations in the mixture of air and fuel
entering the engine (alternating between having a shortage to having an
excess of oxygen) directionally help to remove sulfur from the
catalytic surface. When driven aggressively, the mixture of air and
fuel in the engines of most current vehicles (those not certified to
SFTP standards) is quite variable, because precise control of the
mixture of air and fuel is primarily done to control emissions. Meeting
the SFTP standards will ensure that manufacturers carefully control the
mixture of air and fuel over essentially all in-use driving conditions.
This absence of widely varying mixtures of air and fuel could therefore
inhibit the removal of sulfur from the catalyst once operation on high
sulfur fuel ceased. Thus, we project that the sulfur effect on vehicles
meeting both the LEV and SFTP standards (vehicles sold after 2000) and
vehicles meeting the Tier 2 standards (which will include low exhaust
emissions and low SFTP emission standards, too) will be less reversible
than the effect shown on the vehicles included in the test programs
discussed here.
Another factor that may substantially influence sulfur
reversibility is the amount of time the catalyst is exposed to high
sulfur fuel. With only a few exceptions, the vehicles in the test
programs mentioned above were only driven on high sulfur fuel for a few
miles (well under 100) before low sulfur fuel was reintroduced. This
appears to limit the extent to which sulfur could permanently disable
the effectiveness of the catalyst. However, one vehicle was tested with
an aged catalyst system (to simulate a vehicle near the end of the
useful life of 100,000+ miles) and driven for extended mileage (more
than 1,000 miles) on high sulfur fuel before being retested on low
sulfur fuel. (As with the other vehicles, this test vehicle was not
designed to be SFTP-compliant; SFTP compliance could further complicate
the ability of a vehicle to reverse the sulfur effect.) For this
vehicle, only 50% of the NOX emission effect of high sulfur
fuel was reversed upon operation on low sulfur fuel. This is much less
than the 85-100% reversibility found with short term exposure to
sulfur. Thus, we project that in-use emissions performance of Tier 2
vehicles operated for some time on high sulfur fuel (as would occur if
a regional sulfur control program permitted high sulfur levels in a
large geographic area) might be substantially compromised. For example,
in-use emissions of passenger cars designed to meet the 0.07 g/mi
NOX standard and operate on 30 ppm gasoline would actually
be increased by about 50 percent if they were operated on 300 ppm
gasoline at any point in their life. Such vehicles might only recover
half of the emissions performance otherwise expected, perhaps even less
once SFTP compliant designs are incorporated. Furthermore, we believe
this effect would be essentially permanent; continued operation with
low sulfur gasoline would be unlikely to improve the emissions
performance.
The Draft RIA presents our complete evaluation of sulfur
irreversibility, based on the data we have obtained to date. We
encourage comments on this analysis. Furthermore, we are seeking
comment on and will be considering the studies described in Appendix B
of the Draft RIA, plus any new information developed or received before
a final decision. We welcome any additional data characterizing the
irreversibility of the sulfur effect, including what vehicle or
catalyst design factors may make exposure to sulfur more or less
reversible.
The preceding discussion focused on the irreversibility of the
sulfur impact on emissions from current gasoline engine technologies.
There are new technologies under development, which could be sold in
the U.S. in the middle of the next decade (the same time that Tier 2
vehicles are being introduced), which also appear to be very sensitive
to sulfur and largely unable to reverse this sulfur impact. One of
these
[[Page 26047]]
technologies is the direct injection gasoline (GDI) engine. These
engines utilize much more air than is needed to burn the fuel, unlike
conventional gasoline engines that operate under conditions where only
just enough air to completely burn the fuel is introduced into the
engine. This GDI technology allows these engines to be up to 25% more
fuel efficient than current gasoline engines and to emit up to 20% less
carbon dioxide. GDI engines are currently being introduced in both
Japan and Europe (which have or will soon require low sulfur
gasolines). Because of the significant operating differences with GDI
engines, these vehicles will likely require emission control technology
substantially different from that used on conventional gasoline
engines. For example, a GDI engine may require a NOX
adsorber to meet the proposed Tier 2 NOX standard. High fuel
sulfur levels quickly and permanently degrade the performance of these
NOX adsorbers. Thus, to enable the sale of advanced, high
efficiency GDI engines in the U.S. under the Tier 2 standards, it
appears that low sulfur gasoline would have to be available nationwide
by the time this technology becomes available.
The fuel cell is another promising propulsion system that is being
developed for possible introduction to consumers early in the next
century. Fuel cells are being designed to operate on a variety of
fuels, including gasoline and diesel fuel. The basic fuel cell
technology is highly sensitive to sulfur. Almost any level of sulfur in
the fuel will disable the fuel cell. One possible solution is to
install a technology that essentially filters out the sulfur before it
enters the fuel cell. However, such sulfur ``guards'' are costly and
could not practically be used like a disposable filter (requiring the
vehicle owner to change the sulfur guard frequently, much like changing
an oil filter) in situations where constant exposure to high sulfur
levels occurs. (Even exposure to relatively low sulfur levels will
likely require periodic replacement of the sulfur guard to ensure
adequate protection for the fuel cell.) Therefore, the amount of sulfur
in the fuel must be limited to that which can be removed by one or at
most two sulfur guards over the life of the vehicle. Thus, in order for
fuel cells operating on gasoline to be feasible in the U.S., low sulfur
fuels would have to be available nationwide by the time this technology
becomes available.
b. Sulfur Has Negative Impacts on OBD Systems and I/M Programs. As
discussed in more detail in the RIA, EPA believes that sulfur in
gasoline can adversely impact the onboard diagnostic (OBD) systems of
current vehicles as well as vehicles meeting the proposed Tier 2
standards. This is an important factor supporting the need for a
national sulfur control program. EPA's onboard diagnostics (OBD)
regulations require that all vehicles be equipped with a system that
monitors, among other things, the performance of the catalyst and warns
the owner if the catalyst is not functioning properly. The OBD catalyst
monitor is designed to identify those catalysts with pollutant
conversion efficiencies that have been reduced to the extent that
tailpipe emissions would exceed a specified multiple of the applicable
hydrocarbon emissions standard. For California LEV and federal NLEV
vehicles, that multiple is 1.75 times the applicable hydrocarbon
emissions standard; for federal Tier 1 vehicles, that multiple is 1.5
times the applicable hydrocarbon standard added to the 4,000 mile
emission level.
We want to ensure that OBD systems operate correctly, and thus the
possibility that gasoline sulfur may interfere with these systems was
another consideration when evaluating the need for a national sulfur
program. Our evaluation of sulfur's effect on OBD systems was
summarized in a staff paper in 1997.43 We concluded that
sulfur can affect the decisions made by the OBD systems. Sulfur appears
to affect the oxygen sensor downstream of the catalyst, which is used
in the OBD systems, and it is not clear that the conditions that seem
to reverse sulfur's effect on the catalyst will also reverse any sulfur
impact on the downstream oxygen sensors. Indirectly, sulfur impacts OBD
systems because it can impair a catalyst that would otherwise be
operating satisfactorily, thereby triggering the OBD warning lights.
While this would be indicate a properly operating OBD system, auto
manufacturers have expressed the concern that consumers using high
sulfur fuel may experience OBD warnings much more frequently than they
would if operating on low sulfur gasoline, and that this could lead to
a loss of consumer confidence in or support for OBD systems. Consumers
may then ignore the OBD warning system and drive a potentially high
emitting vehicle (which may have nothing to do with exposure to
sulfur), contributing even more to air quality problems. Another
possible scenario is that the OBD system may be impaired by sulfur in
such a way that it does not register an improperly functioning
catalyst, even if the catalyst is impaired for reasons unrelated to
exposure to sulfur. This would defeat the purpose of OBD systems.
---------------------------------------------------------------------------
\43\ U.S. EPA, ``OBD & Sulfur Status Report: Sulfur's Effect on
the OBD Catalyst Monitor on Low Emission Vehicles,'' March 1997,
updated September 1997.
---------------------------------------------------------------------------
The NLEV program provides manufacturers the opportunity to request
extra preconditioning of vehicles that they believe may be negatively
impacted by high sulfur levels, when such vehicles may be included in
in-use testing by EPA. We consider such requests on a case-by-case
basis. One manufacturer has already requested, and received approval
for, a special preconditioning cycle to remove any sulfur from the
catalyst of a specific vehicle model, should that vehicle model be
included in any in-use testing. We are concerned that a regional
gasoline sulfur program would increase the likelihood that
manufacturers would be compelled to request special preconditioning
cycles for test programs, and believe that the one request we have
granted already is indicative of the potential problems that would
arise under a regional gasoline sulfur program. While the use of a
special preconditioning cycle can protect the manufacturer from
liability for high in-use emissions resulting purely from exposure to
high sulfur, the in-use emissions from these vehicles would still be
higher than expected based on the certified design.
To the extent that future catalysts are more sensitive to sulfur as
emission standards become more stringent, the impact of sulfur on
catalysts and catalyst monitors becomes proportionately more critical.
The more stringent the Tier 2 vehicle emission standards are, the more
stringent the OBD malfunction thresholds will be, because those
thresholds are expressed as multiples of the applicable hydrocarbon
emission standard. Therefore, even if the sulfur effect on future
technology vehicles were equivalent in absolute terms to the effect on
current technology vehicles, would become more significant in relative
terms on those future technology vehicles. Because of this (and our
concern about how reversible the effect of sulfur may be), we are
concerned that a regional sulfur program could create widespread
problems with OBD catalyst monitors for vehicles traveling outside of
the low sulfur region. A regional sulfur program would likely result in
higher emissions from Tier 2 vehicles in high sulfur regions, and may
also result in more OBD-identified catalyst failures in those areas. We
are not aware of a technical solution to this problem.
[[Page 26048]]
The geographic scope of a sulfur control program also has
implications for inspection and maintenance (I/M) programs. A regional
sulfur control program could affect I/M programs located outside of the
sulfur control region. The emissions measured in these I/M programs
would likely be higher than those measured in the low sulfur region,
possibly necessitating the use of unique emission cut points for Tier 2
vehicles registered in the higher sulfur region. I/M programs located
outside of the sulfur control area would need to consider the
possibility that the presence of OBD failure codes may be caused
primarily by the use of high sulfur fuels, and may have to provide for
a catalyst regeneration procedure to try to reverse the sulfur buildup
to get a reading of how the catalyst is operating. This could lead to
unequal treatment of vehicles located in different regions of the
country based solely on their exposure to sulfur, unnecessarily
complicating I/M programs. Furthermore, many I/M areas intend to rely
heavily on OBD checks rather than emission checks in the future, making
the correlation of OBD checks to the emissions from the vehicles very
important. Therefore, the potential scenario of increased emissions
without OBD detections (due to sulfur-fouled catalyst monitors) would
make OBD a less attractive I/M tool in areas with high sulfur fuel. A
national program, even one providing limited, temporary exemptions for
small refiners, would avoid many of these concerns.
c. Sulfur Reductions Would Ensure Lower Emissions of Many
Pollutants. One of the major arguments supporting a regional program is
that such a program could be targeted at the majority of areas needing
ozone controls by getting the NOX and VOC reductions in the
areas with the greatest ozone pollution problems. However, as our
estimates of the total emission reductions to be achieved through the
combined Tier 2/gasoline sulfur program show (presented above in
Section III), there are substantial NOX and VOC reductions
to be attained nationwide with our proposal. In Table IV.C.-1 above, we
estimated that our national sulfur control proposal would result in 9-
22% fewer NOX emissions compared to the regional sulfur
program proposed by the oil industry, presuming that we implemented
Tier 2 vehicle standards consistent with today's proposal and depending
on the year in which the emissions reduction is evaluated. The higher
emissions from a regional program would be due to the reduced emissions
performance of vehicles (Tier 2 and others) located in the West where
higher sulfur levels would be permitted and the loss of emissions
performance for vehicles located in the East that travel to the West
(or are relocated from the West) and are expected to suffer
irreversible catalyst damage due to the higher sulfur levels in the
West. Even in 2010 and beyond, when the oil industry's proposed program
would result in sulfur levels consistent with our proposal in the East,
Tier 2 vehicles located in the West or traveling from West to East
would see substantial reductions in emissions performance. Furthermore,
if the oil industry's proposed 2010 standard were not implemented (on
the basis of the findings of the study they propose for 2004-06), the
difference in emissions reductions between our proposal and the oil
industry proposal climbs to 16-47% fewer NOX emissions.
Hence, the ozone benefits of this proposal would be somewhat smaller if
a regional gasoline sulfur program were adopted.44
---------------------------------------------------------------------------
\44\ See the Draft RIA for information on the evaluation of this
and other alternatives.
---------------------------------------------------------------------------
While the benefits of reducing ozone precursors through gasoline
sulfur reductions are generally limited to a nonattainment area (as
well as areas trying to maintain their attainment status, including
those within 15% of the NAAQS standard and upwind locations that
contribute transported ozone precursors into those areas), reductions
in emissions of other pollutants have broader geographic benefits, as
discussed in Section III. For example, sulfur reductions would help
reduce emissions of particulate matter, providing some benefit to PM
nonattainment areas (which may or may not coincide with ozone
nonattainment areas) as well as areas with visibility problems. Sulfur
reductions will also have benefits for areas across the country with
acid deposition problems. Furthermore, sulfur reduction, by enabling
tighter Tier 2 standards and by improving the emissions performance of
the vehicles already on the road, will lead to fewer NMOG emissions,
since, as explained in the Draft RIA, NMOG emissions are also impacted
by gasoline sulfur (although to a lesser extent than NOX
emissions). Some of the NMOG emissions reduced are air toxics. As
described in Section III above, air toxics, also known as hazardous air
pollutants, or HAPs, contribute to a variety of human health problems.
Thus, a national sulfur reduction program would achieve larger benefits
than a regional program, and people living in the region with higher-
sulfur gasoline would not get the full benefits of reduced air toxics
emissions and could suffer adverse health consequences.
d. The Refining Industry Can Control Gasoline Sulfur. While
evaluating the merits of a national gasoline sulfur program, in
addition to considering the technical requirements for vehicles to meet
the proposed Tier 2 standards and the potential air quality benefits
that could be realized, we also considered the ability of refiners to
reduce gasoline sulfur in essentially every gallon of gasoline by 2004.
Based on this evaluation, we believe it is technically feasible for
refiners to meet the proposed standards and that it is possible for
them to do so in the proposed time frame. A summary of our analysis is
presented here; we refer the reader to the Draft RIA for more details.
Technologies that enable refiners to significantly reduce the level
of sulfur in gasoline have been available for many years. California
began requiring low sulfur gasoline (30 ppm average/80 ppm cap) in
1996.45 Refiners in California are currently producing
gasoline that averages around 20 ppm sulfur. In addition, low sulfur
gasoline standards similar to our proposal are, or soon will be,
implemented by countries in Asia and Europe, and by Canada. These
programs provide additional evidence that desulfurization technologies
are available to meet a low sulfur gasoline standard, and that the
majority of refiners in the industry can reasonably be expected to
install and operate these technologies if given a reasonable amount of
lead time.
---------------------------------------------------------------------------
\45\ Prior to that date, gasoline in California was capped at
300 ppm sulfur.
---------------------------------------------------------------------------
When considering the implications of a sulfur standard, U.S.
refiners can be grouped into two major groups: those already producing
gasoline that meets, or nearly meets, the proposed requirements, and
those that would have to make processing changes to comply. The
majority of refiners currently producing relatively low sulfur gasoline
today (roughly 15 percent of domestic production) could meet the
proposed gasoline sulfur standard with no or very little additional
capital investment, and at most a small increase in operating cost.
These refiners have achieved their current sulfur levels using
traditional sulfur removal technologies, or, in some cases, with
refinery configurations that can accommodate very low sulfur crude
oils.
Two examples of these traditional technologies are hydrotreating or
hydrocracking the feed to the fluidized catalytic cracker unit (FCC),
the unit in
[[Page 26049]]
the refinery that produces the largest fraction of gasoline blendstock.
These processes are capital intensive and demand large amounts of
hydrogen and other utilities, resulting in high operating expenses.
Another example is desulfurization of the gasoline stream coming from
the FCC unit. Treating the FCC gasoline stream has the advantage of
lower capital and operating costs than treating the FCC feed. The major
concern with this approach is that the octane value of this gasoline
blendstock is reduced at the same time that sulfur is reduced,
particularly when the sulfur is being reduced to low levels. This lost
octane must be made up by increasing the production of high-octane
blendstocks from other units of the refinery, or by the addition of
oxygenates. Making up this octane loss adds significantly to the cost
of desulfurizing FCC gasoline. We seek comment on any implications of
this proposal of recent activities in California relating to the
oxygenate MTBE, and of refiners' possible use of oxygenates other than
MTBE to make up any octane loss.
Based on current sulfur levels, we believe the majority of U.S.
refiners would have to install at least one desulfurization processing
unit to lower gasoline sulfur to the proposed levels. Since
installation of traditional desulfurization technologies could be quite
costly for most refiners, we have been very encouraged to see the
recent development of several improved desulfurization processes that
are now available at reduced capital investment and operating costs
(and which avoid the octane loss that increases the costs of
traditional technologies). Examples of these technologies are CDHydro
and CDHDS (licensed by the company CDTECH) and OCTGAIN 220 (licensed by
Mobil Oil).46 These technologies use conventional refining
processes combined in new ways, with improved catalysts and other
design changes that minimize the undesirable impacts (such as the
substantial loss in octane) and maximize the effectiveness of the
desulfurization approach. Since these processes provide less costly
ways to reduce gasoline sulfur, we presume that they would be used by
most refiners to meet the proposed gasoline sulfur standard, and have
based our economic assessment (summarized in Section IV.D. below) on
that presumption.
---------------------------------------------------------------------------
\46\ In addition to these technologies, other companies have
told us that they are working on developing their own
desulfurization technologies. Furthermore, there have been recent
advances in an approach called biodesulfurization, which employs
bacteria that selectively desulfurizes petroleum. We believe
refiners will have an increasing number of technology options to
meet our proposed standards.
---------------------------------------------------------------------------
Some in the refining industry have told us that since there have
not been long-term commercial demonstrations of these newer
technologies, they would not consider these technologies to be viable
and, if faced with our proposed requirements in 2004, they might select
the more traditional sulfur reduction processes, resulting in a higher
cost to produce low sulfur gasoline. While we understand the hesitation
on the part of some in the oil industry to invest in these improved
sulfur reduction technologies, we believe many, if not all, of their
concerns would be addressed in the next few years. The industry would
have four years to prepare to meet our proposed gasoline sulfur
requirements. Refiners have been provided a similar amount of time to
comply with fuel programs in the past (highway diesel fuel sulfur
control, reformulated gasoline under the complex model) and some have
told us that three to four years is adequate to allow them to meet
gasoline sulfur standards similar to those proposed today. Refiners
would have time to grow more comfortable with the improved processes
after they have obtained additional data and information from the
vendors that license these technologies. Refiners would be able to have
their FCC gasolines tested in vendors' pilot plant facilities, which
would provide each refiner with more specific information on how the
process would function in their particular refineries. Furthermore, we
have been informed that there will soon be demonstrations of at least
two of the improved desulfurization technologies in existing
refineries; the entire industry will benefit from these efforts.
We have heard concerns that small refiners, particularly those in
the Rocky Mountain region, would bear proportionately higher economic
burdens if they were required to produce gasoline meeting the same
sulfur levels as larger refineries located in the Gulf Coast and East.
The severity of these economic impacts could result in unreasonably
high gasoline prices, potential refinery closures, and supply
shortages, according to those raising the concerns. Our analysis,
presented here and in the Draft RIA, leads us to conclude that these
severe events would not occur. Furthermore, we have recently received a
study that suggests that, in fact, small refiners in the Rocky Mountain
region will incur costs only slightly higher than the national
average.47 This study concludes that the potential for
refinery closures in this region in response to a gasoline sulfur
regulation is small, and that even if ten percent of gasoline were
negatively impacted there would not be a significant supply shortfall
in the region. We have not yet reviewed this study in detail, and we
encourage comments on the analysis presented in it. However, having
considered the concerns raised about small refiners in general,
including those in the Rocky Mountain region, we are proposing special
provisions for small refiners to address their unique challenges.
---------------------------------------------------------------------------
\47\ MathPro, Inc., ``Likely Effects on Gasoline Supply in PADD
4 of a National Standard for Gasoline Sulfur Content,'' Prepared for
Association of International Automobile Manufacturers,
DaimlerChrysler Corporation, Ford Motor Company, and General Motors
Corporation, March 19, 1999.
---------------------------------------------------------------------------
The advent of the improved desulfurization technologies creates an
opportunity for a stringent, nationwide, and yet relatively low-cost,
sulfur control program. Such a program would still likely be
challenging for many if not most refiners. In the program proposed
today, we have built in a number of flexibilities that would ease the
task of compliance for refiners while maintaining the level of air
quality improvements of a less flexible program. In particular, Section
IV.C.-3 below presents a sulfur averaging, banking, and trading program
that effectively extends the final compliance date by two years. In
consideration of all these factors, we believe that under the proposed
program, all refiners nationwide should be able to produce very low
sulfur gasoline without suffering severe financial consequences.
e. Other Stakeholders Support National Gasoline Sulfur Control. In
addition to our technical arguments for concluding that gasoline sulfur
should be controlled nationwide, we have considered the positions of
other parties. Many stakeholders to our decision have expressed to us
their support for a national sulfur control program. Automakers,
represented by the American Automobile Manufacturers Association (AAMA)
and the Association of International Automotive Manufacturers (AIAM),
have petitioned the Agency to implement a national, low sulfur gasoline
program ``as soon as possible.'' State organizations such as STAPPA/
ALAPCO and the Ozone Transport Commission (OTC) have made similar
resolutions, and many individual states have also voiced support for a
national program. Environmental organizations, such as the American
Lung Association
[[Page 26050]]
and the American Council for an Energy Efficient Economy, favor a
national sulfur control program, as well. The arguments for a national
program presented by these parties include:
High sulfur levels significantly impair the performance of
today's emission control technologies, reducing the emissions benefits
of current and advanced vehicles,
Gasoline sulfur contributes to air quality problems not
directly benefitted by vehicle emission standards (PM, SOX,
hazardous air pollutants),
The sulfur impact on emission controls is largely
irreversible, and
If sulfur levels are not controlled, new, more fuel-
efficient vehicle technologies that are as or more sulfur-sensitive
than today's vehicles will not be introduced in the U.S.
3. Proposed Gasoline Sulfur Standards
We are proposing to require substantial reductions in gasoline
sulfur levels nationwide. Not only would these standards enable the
stringent tailpipe emission standards we're proposing for Tier 2
vehicles and ensure that these low emission levels would be realized
throughout the life of the vehicle, but they would also help to reduce
emissions of pollutants that endanger public health and welfare from
vehicles already on the road, including NLEV vehicles. The following
sections summarize the proposed requirements for gasoline refiners and
importers, special provisions for small refiners, and possible changes
to construction permitting requirements that would enable refiners to
install gasoline desulfurization technology in a timely manner. We also
raise the potential need for changes to diesel fuel to enable diesel
technologies to meet the proposed Tier 2 standards. Section VI.
provides additional information about the compliance and enforcement
provisions that would accompany these proposed requirements. More
detailed information in support of the conclusions presented in this
section of the proposal is found in the draft Regulatory Impact
Analysis.
a. Standards for Refiners and Importers. Our proposed gasoline
sulfur program balances the goal of enabling Tier 2 emission control
technologies with the goal of lowering sulfur as early as the refining
industry can practically achieve the required levels. To accomplish
both of these goals, we are proposing a set of standards combined with
a sulfur averaging, banking, and trading (ABT) program. This proposed
overall program would achieve the desired sulfur levels, on average,
beginning in 2004--the first year Tier 2 vehicles will be sold--while
proposing to allow the use of credits towards compliance with refinery
average standards indefinitely (within the limits of per-gallon caps).
These requirements would apply to all gasoline sold in the
U.S.,48 based on our belief that emissions must be reduced
nationwide to adequately protect public health and the environment and
that Tier 2 vehicles operated everywhere in the U.S. require protection
from the harmful impacts of gasoline sulfur.
---------------------------------------------------------------------------
\48\ Gasoline sold in California that meets California's
standards would be exempt from meeting the proposed standards, due
to our belief tht California gasoline already meets or exceeds these
requirements. See Section VI.B.
---------------------------------------------------------------------------
Table IV.C.-2. presents the proposed standards for gasoline
refiners and importers. The proposal would require all gasoline
refiners and importers to produce gasoline that meets an average
standard of 30 ppm sulfur at the refinery gate on an annual basis,
beginning in 2004. These requirements would apply to all gasoline,
reformulated as well as conventional. In 2004 and beyond this standard
could be met through the use of credits generated as early as 2000 by
refiners who substantially reduce sulfur levels from current (1997-
1998) levels, under the provisions of the proposed sulfur ABT program
discussed below in Section IV.C.3.c. Hence, the actual average sulfur
levels for gasoline in use could be somewhat higher than 30 ppm.
However, to ensure that sulfur levels are being reduced significantly
(for the benefit of Tier 2 vehicles and to achieve the other emissions
benefits of reducing gasoline sulfur), these in-use sulfur levels would
be constrained by maximum corporate pool average standards of 120 ppm
in 2004 and 90 ppm in 2005. These standards would represent the maximum
allowable average sulfur levels for each refiner, measured across all
refineries owned and operated by that refiner, rather than at each
refinery. In 2006 and beyond, there would be no corporate pool average
standard. Every refinery would have to meet the 30 ppm average refinery
gate standard, although refiners could use any banked/purchased credits
to meet this standard (as explained in the ABT discussion below). Thus,
in 2006 and beyond, the majority of gasoline would average 30 ppm,
although some individual refineries could average slightly more or
less.
Table IV.C.-2.--Proposed Gasoline Sulfur Standards for Refiners and Importers [Excluding small refiners]
----------------------------------------------------------------------------------------------------------------
January 1, January 1,
Compliance as of: 2004 2005 January 1, 2006+
----------------------------------------------------------------------------------------------------------------
Refinery Average, ppm...................... a30 a30 a30
Corporate Pool Average, ppm................ 120 90 not applicable
Per-Gallon Cap, ppm........................ b300 180 80
----------------------------------------------------------------------------------------------------------------
a This standard can be met through the use of credits as long as the applicable corporate pool average and per-
gallon caps are not exceeded, as explained in the text.
b This initial per-gallon cap standard begins October 1, 2003.
To ensure that, even as average sulfur levels are reduced in 2004-
2006, gasoline sulfur levels do not exceed a maximum level that we
believe is particularly harmful to Tier 2 vehicles, we are also
proposing ``caps'' on the sulfur content of every batch of gasoline
produced or imported into the country. As shown in Table IV.C.-2, these
caps decline over time, ultimately resulting in a per-gallon limit of
80 ppm in 2006 and beyond. Since Tier 2 vehicles would be sold prior to
the start of calendar year 2004, the actual date when the initial
sulfur cap standard would take effect at the refinery is October 1,
2003. We are also proposing caps on the sulfur content of gasoline sold
at the retail level or otherwise distributed downstream of the
refinery, as explained in Section VI.B.
For purposes of compliance, we propose that a joint venture, in
which two or more refiners own and operate one or more refineries, be
treated as separate refining corporations under the proposed gasoline
sulfur requirements.
[[Page 26051]]
Hence, a refinery owned by a joint venture would be included in the
corporate pool calculations of the joint venture, and would not be
allowed to be included with other refineries owned by one of the
parties to the joint venture in the corporate pool calculations for
that party. Given the large number of joint ventures that have been
announced recently in the oil industry, we believe this would be an
equitable way to handle compliance for joint venture refineries.
Furthermore, this approach would increase the number of companies that
can generate and trade sulfur credits; a more limited number of multi-
refinery companies would tend to bank and trade credits within rather
than across corporations. We welcome comments on alternatives to this
approach, such as requiring the majority owner in a joint venture to
include the jointly owned refinery in his compliance calculations. If
you recommend such an approach, please discuss how joint ventures that
have (nearly) equal ownership among the parties should be treated for
compliance and aggregation purposes.
i. Why Begin the Program In 2004?
The primary reason for our proposal to begin the gasoline sulfur
standards in 2004 is that this is the first year that Tier 2 vehicles
would be required to be sold, and these lower sulfur levels would be
needed to avoid significant impairment of the Tier 2 emissions control
technology. Furthermore, vehicles already in the fleet would benefit
and we would like to maximize that benefit by starting the program as
soon as is reasonable. States need the emission reductions that sulfur
control would bring as soon as possible due to their SIP requirements
in 2007 and 2010. This is reinforced by the fact that several states
have already taken the initiative to develop state gasoline sulfur
standards. In fact, since model year 2004 vehicles will likely be on
the market in the fall of 2003, we are proposing to implement the caps
on sulfur levels beginning October 1, 2003. This would help to ensure
that sulfur levels are reduced coincidentally with the sale of Tier 2
vehicles, and would also ensure that sulfur levels throughout the
gasoline distribution system have been reduced by the start of 2004.
We request comment on the feasibility of the compliance dates
summarized in Table IV.C.-2. If these dates are not feasible, what
date(s) would be more appropriate, given that Tier 2 vehicles will be
introduced no later than model year 2004 and our conclusion that
gasoline sulfur reductions must coincide with the introduction of these
vehicles? For example, we request comment on the implications of
implementing the 30 ppm average standard beginning later than 2004,
including potential implication on cost, air quality, and
implementation of the proposed Tier 2 vehicle standards. What other
factors should we consider if you believe that the proposed
implementation dates are not feasible and should be postponed?
We also seek comment on the implications of implementing an average
sulfur standard different than the proposed 30 ppm average standard,
including levels higher and lower than 30 ppm. Specifically, commenters
should address the feasibility of different standards they support, the
time frame in which different average standards could be implemented
(i.e., in 2003, 2004, or 2005), the potential air quality impacts of
such standards, and how such standards would affect the implementation
of the proposed Tier 2 vehicle standards.
ii. How Did We Arrive At the 80 ppm Cap and 30 ppm Average
Standards?
We believe a 30 ppm averaging standard is important and necessary
to enable the emission reductions needed from Tier 2 vehicles. The test
data we have reviewed, referenced in previous sections of this notice
and in the Draft RIA, show that even very low levels of sulfur have
some negative impact on catalyst performance. Most of the data
available to us were generated through testing with minimum sulfur
levels near 30 ppm. We have used this data to conclude that sulfur
levels need to be reduced, and to assess, as part of our analysis, the
technical feasibility of the proposed Tier 2 vehicle standards. The
non-linear relationship between sulfur level and emissions impact (the
lower the sulfur level, the greater the incremental increase in
emissions) suggests that emission reductions would be ensured by sulfur
levels at or near 30 ppm. We believe that requiring the 30 ppm average
standard would be necessary to ensure that vehicles regularly use
gasoline containing very low amounts of sulfur, regardless of where the
vehicles were driven, what time of year it was, or how gasoline
production varied from batch-to-batch in a given refinery.
We also believe that an 80 ppm cap standard would be required to
provide appropriate insurance for maintaining Tier 2 standards in use
and to give automakers an indication of the maximum sulfur levels for
which they would need to design their vehicles. The test data we have
reviewed show that the greatest increase in emissions comes as the
sulfur level is increased from the lowest levels (i.e., 30 ppm). At
higher sulfur levels (i.e., above 100 ppm), the catalyst performance is
impaired to the extent that an additional increase in sulfur content
has a smaller additional impact on emissions. Since the factors that
influence sulfur sensitivity vary from vehicle to vehicle, different
vehicles will experience different impacts from exposure to specific
sulfur levels. None of the data that we have reviewed indicates that a
vehicle can be designed to be completely insensitive to sulfur for all
types of emissions. Furthermore, as discussed in Section IV.C.2., our
concern that roughly half of the sulfur impact on the catalyst would be
irreversible for Tier 2 vehicles (with other vehicles being negatively
affected as well) provides additional arguments for trying to keep the
sulfur cap as close to the average as possible. Hence, to ensure that
Tier 2 vehicles maintain the designed emission performance over the
life of the vehicle, we believe a cap on gasoline sulfur levels would
be necessary, and that 80 ppm would be the appropriate level for this
cap.
Setting a cap also would enhance enforcement of sulfur standards by
setting a maximum level of sulfur that could be checked at all points
in the gasoline distribution process. A sulfur cap significantly lower
than 80 ppm could have the unintended consequence of forcing a sulfur
average lower than the 30 ppm standard, increasing the overall costs of
the program. The proposed level of 80 ppm sulfur for the cap reflects
our balancing of several factors, including the potential air quality
benefits, economic impacts, compliance flexibility, and the
irreversibility of the effects of gasoline sulfur on vehicle emission
controls.
As explained in Section IV.D. below, we believe that the
combination of our proposed gasoline sulfur standards and the proposed
Tier 2 standards would be cost-effective. This judgement about cost-
effectiveness reflects what we believe would be an appropriate balance
between the costs to be borne by the affected industries and the
emissions reductions to be gained. Even though few refiners currently
produce gasoline at or near these levels, as explained in Section
IV.C.2 above there appear to be no significant obstacles to refiners
achieving this level of sulfur control by 2004 (or 2006 if they were to
take advantage of the sulfur ABT program). Unless a substantially
higher average sulfur standard were set or a substantially smaller
fraction of gasoline were affected by our regulations, refiners would
have to make a significant investment in technology to desulfurize
gasoline. Hence the cost to
[[Page 26052]]
refiners would not be substantially reduced if we selected a less
stringent average standard. Furthermore, we believe that a lesser
reduction in gasoline sulfur levels could require us to reduce the
stringency of the proposed Tier 2 standards. A higher average sulfur
level would require less stringent standards or more vehicle hardware
costs; either would reduce the effectiveness of our proposed combined
program.
At the same time, we recognize the need to provide some
flexibilities to refiners in meeting our proposed standards, to ensure
that the program is implemented in an orderly manner, without severe
consequences in the initial months (for example, supply shortages or
substantial spikes). Hence, we have proposed to allow less stringent
caps in 2004 and 2005 (through 2007 under the small refiner provisions
discussed below) to balance the needs of the technology with the
regulatory burden, economic impact, and ability of the refining
industry to reduce sulfur levels in this time frame. Given that Tier 2
vehicles would be phased in over several years and that the vast
majority of gasoline would be capped at 80 ppm by 2006 (when 75% of new
LDV, LDT1, and LDT2 sales would be required to meet the proposed Tier 2
standards), we believe that the potential damage to Tier 2 catalysts
would be minimized. Furthermore, since the gasoline distribution system
is fungible (i.e., gasoline from multiple refiners may be mixed
together, and gasoline produced at one company's refinery may be sold
at another company's retail station), any gasoline that approached the
higher caps in 2004 and 2005 would be highly likely to be diluted by
lower sulfur gasoline, further limiting the potential negative impact
on Tier 2 vehicles.
We have also proposed to permit compliance with the 30 ppm refinery
average with the use of credits indefinitely, not just in the years
during which the corporate average is reduced, as long as the
applicable per-gallon caps are not exceeded. We would like comments on
whether this provision should end, and if so, what date would be
appropriate to require every refinery to meet the 30 ppm standard with
actual production. We also encourage comments on whether corporate
averaging (aggregation of refineries owned by a single entity) should
be allowed for compliance with the 30 ppm standard, in 2004 and 2005
(in addition to corporate averaging to the pool standard) and/or
beginning in 2006.
In light of our technical conclusions about the need for these
standards, and our concerns about the irreversibility of the sulfur
effect, we believe the 30 ppm average/80 ppm cap is the appropriate
sulfur level to enable vehicles to meet the proposed Tier 2 standards
and to maximize the emissions reductions to be achieved from this
program in a cost-effective way. We welcome comments on these
conclusions. We are also interested in any information on the
reversibility of the sulfur impact on NLEV and Tier 2 catalysts that
may supplement our understanding of how reversibility may differ with
exposure to different sulfur levels and how this difference would
impact our selection of the 30/80 standards. We also solicit
information about what, if any engine or catalyst design modifications
could minimize the irreversibility of the sulfur impact and about how
compliance with the SFTP standards could impact irreversibility (for
either NLEV or Tier 2 vehicles).
iii. Should a Near-Zero Gasoline Sulfur Standard Be Considered?
The auto industry, represented by the Alliance of Automobile
Manufacturers, have supported a gasoline sulfur control program that
would require 30 ppm gasoline in 2004 with a further reduction to
``near-zero'' levels (less than 5 ppm) by 2007. They believe that near-
zero sulfur levels would enable the emission control technology that
would ultimately be necessary to meet standards similar to those we are
proposing today. They also believe that very low sulfur gasoline would
significantly increase the emission reductions of the program as
compared to a 30 ppm sulfur program.
We are also aware of concerns that advanced emission control and
fuel efficient technologies, such as gasoline direct injection engines
and automotive fuel cells, may require zero or near-zero sulfur levels
to achieve Tier 2 emission levels over their full useful life (or in
some cases, even to operate for a significant length of time). At the
same time, we're aware that there may be technological solutions to
these problems that may allow these technologies to operate on gasoline
averaging 30 ppm sulfur. For example, it may be possible to regenerate
(remove the sulfur from) the emission control technologies used by
gasoline direct injection engines on an ongoing basis. Similarly, it
may be possible to prevent sulfur from entering a fuel cell through the
use of a sulfur ``guard'' made, for example, of zinc oxide, that might
need to be replaced periodically.
We believe at this time that our proposed Tier 2 standards could be
met with conventional technology if gasoline averaging 30 ppm is
available. Nonetheless, for the reasons put forward by the auto
industry and others, we also believe that it may be desirable in the
long term for all gasoline in the U.S. to average substantially below
30 ppm sulfur. We encourage you to comment on the question of requiring
gasoline sulfur levels under 5 ppm in the 2007 and later time frame. If
you are commenting on this issue, we encourage you to take a broad view
and to discuss all of the following questions in your comments:
What technological options would be opened to
manufacturers of vehicles and emission control hardware if near-zero
sulfur fuel were available?
What additional air quality benefits would be achieved?
What changes in vehicle engines and emission control
technology would be needed to achieve these emission benefits, absent
reductions in gasoline sulfur levels beyond our proposed 30 ppm
standard? What would these changes cost?
What is the maximum sulfur level that advanced
technologies, including gasoline direct injection and automotive fuel
cells, could be designed to withstand if they are to be commercialized
under the proposed Tier 2 standards? In what time frame might
substantial commercialization of these technologies occur?
How feasible is production of near-zero sulfur gasoline
for the refining industry? What technologies would be required? How
would this vary from refinery to refinery? What additional costs,
beyond those expected for a 30 ppm sulfur program, would be incurred?
How would the timing of a near-zero sulfur requirement affect refining
costs?
Would equipment used to make 30 ppm have to be modified or
replaced to make near-zero sulfur gasoline? If so, how would this
affect the time frame in which a near-zero sulfur level in gasoline
could be achieved? Would the time frame for achieving these levels be
different if refiners were not required to meet a 30 ppm standard? Is
there another sulfur concentration that could be easily achieved as an
intermediate level before achieving near-zero levels?
What other issues should we consider in evaluation of
further reductions in gasoline sulfur levels?
iv. Why Are We Proposing Less Stringent Standards for 2004 and
2005?
We are proposing to permit corporate average sulfur levels to be
somewhat higher than 30 ppm, and maximum sulfur levels to be higher
than 80 ppm, under the ABT program in 2004 and 2005. This proposal is
meant to provide greater flexibility for refiners to meet
[[Page 26053]]
our ultimate goal of the 30 ppm standard in an orderly fashion, while
limiting the negative environmental consequences. The temporary nature
of the ABT program would ensure that any negative consequences for Tier
2 vehicles of these higher sulfur levels (120 ppm average in 2004, 90
ppm in 2005) would be minimal. By the time that the majority of new
vehicles sales would be required to meet the Tier 2 standards (2006 and
beyond), average sulfur levels in gasoline would meet the 30 ppm annual
average standard.
We are interested in comment on the corporate pool average values,
and their associated caps. A higher pool average would obviously ease
implementation (e.g., 150 ppm average with an appropriate cap in 2004,
for example), but we have not proposed a higher average because of our
concerns that higher in-use sulfur levels after 2004 are undesirable
for emissions from Tier 2 vehicles. We request that commenters
supporting higher corporate pool average values discuss how such higher
values would affect in-use emission levels of Tier 2 vehicles, as well
as NLEV and Tier 1 vehicles.
We also ask for comment on an alternative approach that would
implement the corporate average requirement for 2004 (120 ppm) but not
require compliance with the 30 ppm standard (with or without credit
use) until 2005. The 120 ppm corporate pool average would continue in
2005 and the 90 ppm corporate pool average would be implemented in
2006, with the requirement to meet the 30 ppm standard (with or without
credits) beginning in 2005 and extending indefinitely, consistent with
the proposed program.
Finally, we request comment on whether refiners should be allowed
to comply with the corporate average standards through the use of
sulfur credits generated under the ABT program (within the limits of
the proposed caps). This would likely render the refinery-specific
standards in 2004 and 2005 unnecessary, and thus refiners would only
have to comply with the per-gallon caps and corporate averages in 2004
and 2005. However, in 2006 and beyond refiners would have to meet the
30 ppm average at every refinery (with limited use of sulfur credits,
to the extent that the 80 ppm cap permits).
We have proposed per-gallon caps of 300 ppm in 2004 and 180 ppm in
2005 at the refinery gate, with slightly higher caps imposed downstream
(as explained in Section VI.B below). We believe that downstream caps
would be necessary to ensure compliance and protect Tier 2 vehicles. At
the same time, we believe caps at the refinery gate would be necessary
to guarantee that the environmental goals of this program were met; the
corporate and refinery averages alone wouldn't provide the full
emissions reductions and environmental benefits we have estimated
because, by themselves, they could allow gasoline with high sulfur
levels in the system as long as the refiner offset any such high sulfur
batches with very low sulfur gasoline. However, there are some
arguments for eliminating the per-gallon standard at the refinery gate
and simply enforcing a per-gallon cap at the retail level (or some
intermediate point downstream). This approach would give refiners and
blenders greater flexibility in blending occasional batches of gasoline
that exceed the proposed cap standards. These refiners/blenders could
sell and transport these high sulfur batches to another party who would
blend down the sulfur level to make gasoline meeting the downstream
caps. One shortcoming of such an approach (removing the per-gallon cap
at the refinery) is that not all gasoline passes through multiple
parties before ending up at the retail level; some refiners ship part
or all of their production directly from refinery to retail outlet. We
welcome comment on whether caps at both the refinery gate and
downstream are appropriate. We also encourage your input on whether the
caps we have proposed to coincide with the corporate average standards
are appropriate. Keep in mind that we need some limitation on sulfur
levels to protect the first Tier 2 vehicles that would begin entering
the marketplace as early as the fall of 2003.
b. Proposed Standards for Small Refiners. As explained in the
regulatory flexibility analysis discussion in Section VIII.B. of this
document, we have considered the impacts of these proposed regulations
on small businesses. As part of this process, we convened a Small
Business Advocacy Review Panel for this proposed rulemaking, as
required under the Small Business Regulatory Enforcement Fairness Act
of 1996 (SBREFA). The Panel was charged with reporting on the comments
of small business representatives regarding the likely implications of
possible control programs, and to make findings on a number of issues,
including:
A description and estimate of the number of small entities
to which the proposed rule would apply;
A description of the projected reporting, recordkeeping,
and other compliance requirements of the proposed rule;
An identification of other relevant federal rules that may
duplicate, overlap, or conflict with the proposed rule; and
A description of any significant alternatives to the
proposed rule that accomplish the objectives of the proposal and that
may minimize any significant economic impact of the proposed rule on
small entities.
The final report of the Panel is available in the docket. The Panel
concluded that small refiners were the group most likely to be
negatively impacted by the proposed program. (The Panel noted that
small gasoline marketers would also have to comply with some portions
of a gasoline sulfur program, but did not recommend any regulatory
relief for this group of small businesses.) Many of the small refiners
the Panel met with indicated their belief that their businesses may
close if relief were not considered due to the substantial capital and
other costs required to reduce sulfur levels to the 30/80 standard. The
Panel recommended that EPA solicit comments on a number of options to
provide relief to small refiners, which include some or all of these
provisions:
Providing small refiners a four-to six-year period during
which less stringent gasoline sulfur requirements would apply; comment
was also recommended on extending this period for up to a total of 10
years.
Basing each small refinery's gasoline sulfur limit on its
individual average sulfur level based on the most recent report(s) to
EPA; and
Granting temporary hardship relief on a case-by-case
basis, following the four-to six-year period of relief common to all
small refiners, based on a showing of economic need.
The Panel stated its belief that additional time would allow
sulfur-reduction technologies to be proven out by larger refiners,
thereby reducing the risks to be incurred by small refiners who choose
to incorporate these technologies. The added time would likely allow
for costs of these desulfurization units to drop, thereby limiting the
economic consequences for small refiners. Nationally, giving small
refiners more time to comply would help ensure that cross-industry
engineering and construction resources would be available. Finally,
extending the compliance deadlines would provide small refiners with
additional time to raise capital for infrastructure changes.
i. What Standards Would Small Refiners Have to Meet Under Today's
Proposal?
[[Page 26054]]
Upon evaluating the impacts of our proposed gasoline sulfur
requirements on small refiners and careful review of the Panel's
recommendations, we have determined that regulatory relief in the form
of delayed compliance dates is appropriate to allow small refiners to
comply without disproportionate burdens. We propose that, for a period
of four years after other refiners must start meeting the standards
proposed in Table IV.C-2, refiners meeting clearly defined company size
criteria be allowed to comply with somewhat less stringent requirements
than those just described for refiners and gasoline importers. We
propose to define a small refiner as any company employing no more than
1,500 employees throughout the corporation, including any subsidiaries,
regardless of the number of individual gasoline-producing refineries
owned by the company or the number of employees at any one refinery.
This number is based on the Small Business Administration definition of
a small refiner for the purposes of regulation.49 The
proposed annual average small refiner standards beginning with 2004 are
shown in Table IV.C-3 below, although the cap standards begin October
1, 2003.
---------------------------------------------------------------------------
\49\ SBA uses a different definition of small refiner for the
purposes of federal procurements of petroleum products, and EPA in
the past has used criteria based on the processing capacity of the
individual refinery and of all refineries owned by one company.
Table IV.C-3.--Proposed Temporary Gasoline Sulfur Requirements for Small
Refiners in 2004-2007
------------------------------------------------------------------------
Temporary sulfur standards
Refinery baseline sulfur level (ppm) (ppm)
------------------------------------------------------------------------
0 to 30................................ Average: 30.
Cap: 80.a
31 to 80............................... Average: no requirement.
Cap: 80.a
81 to 200.............................. Average: baseline level. Cap:
Factor of 2 above the
baseline.a
201 and above.......................... Average: 200 ppm minimum, or
50% of baseline, whichever is
higher, but in no event
greater than 300 ppm.
Cap: Factor of 1.5 above
baseline level.a
------------------------------------------------------------------------
a The cap standard takes effect at the refinery gate October 1, 2003.
We also propose to apply these provisions to any foreign refiner
that can establish that they meet this same definition of small. Since
few if any foreign refiners send all of their gasoline production to
the U.S., allowing eligible small foreign refiners to meet these less
restrictive standards, even on a temporary basis, would be a less
restrictive requirement than it will be for small domestic gasoline
producers since they may be able to send lower sulfur gasoline to the
U.S. without having to incur capital expenses. Furthermore, in many
cases foreign refiners are not subject to the same stringent permitting
and other regulatory requirements that domestic refiners face. At the
same time, we believe many foreign refiners will be installing gasoline
desulfurization equipment because of the various international
requirements that have been proposed and/or finalized (for example, in
Europe, Canada, Japan) that require gasoline sulfur levels to be
reduced to levels similar to our proposed standards and thus these
companies will not avoid all of these costs. In addition, in most cases
we expect importers to be the party responsible for the sulfur level of
imported gasoline, and importers are not eligible for the less
stringent standards applied to small refiners. Hence, the number of
foreign refiners who could benefit (financially and otherwise) from
gaining small refiner status is likely to be very small. However, we
welcome comments on the competitive and other marketplace implications
of this proposal.
We believe that these proposed small refiner standards are
reasonable and that they would not conflict with our overall goals of
reducing gasoline sulfur levels nationwide as soon as possible and of
reducing gasoline sulfur levels sufficiently to enable and protect the
emissions performance of Tier 2 vehicles. Our conclusions are based in
part on the fact that only a very small volume of gasoline will be
eligible for these lesser standards. We have estimated that small
refiners produce approximately 2.5 percent of all gasoline in the U.S.
Furthermore, of the 17 refineries that we have identified as meeting
SBA's definition of small business, nine already have gasoline sulfur
levels less than 90 ppm. Hence, only a very small fraction of the
gasoline sold in the U.S. would take advantage of the higher small
refiner standards through 2007. By the time that a large number of Tier
2 vehicles could have been impacted by residing in or traveling to
areas where higher sulfur fuel is sold, the temporary exemptions for
small refiners would have expired. Furthermore, in most cases, gasoline
produced by small refiners is mixed with substantial amounts of other
gasoline prior to retail distribution (due to the functioning of the
gasoline distribution system), likely resulting in only marginal
increases in overall sulfur levels. Thus, the sulfur level of gasoline
actually used by Tier 2 vehicles should generally be much lower than
that produced by individual small refineries who receive unique
compliance standards through 2007.
As explained above, we are proposing that compliance under the
proposed standards be based on a refiner's being able to show that it
meets specific criteria. If a refiner were able to qualify as a small
refiner under our definition, it would need to then establish a sulfur
baseline for each participating refinery. For small refiners,
compliance with the proposed sulfur regulations would be determined on
the basis of the sulfur baseline for each refinery owned by that
company. The following sections explain these proposed requirements in
more detail, to supplement the information be presented above. We also
explain how small refiners could obtain an additional two-year
exemption upon establishing a hardship case, as well as how small
foreign refiners could establish eligibility for compliance under the
small refiner provisions.
ii. Application for Small Refiner Status.
We are proposing that refiners seeking small refiner status under
our gasoline sulfur program would have to apply to us in writing no
later than June 1, 2002, requesting this status. In this application,
the refiner must demonstrate that as of January 1, 1999, the business
and any subsidiaries, including all refining, distribution, and
marketing activities, as well as any other activities worldwide,
employed 1,500 or fewer employees. We are proposing that in the case of
refineries owned by joint ventures, the total employment of both (all)
companies would be considered in determining whether the 1,500 employee
limit is reached. If a refiner that is not small as of January 1, 1999
subsequently sells part of its business and as a result has fewer than
1500 employees, it would not be eligible for a small refiner status.
These provisions would provide stability to the regulated and
regulatory parties and ensure that no ``gaming'' of the program occurs.
However, we are also proposing that any new refinery built between
January 1, 1999 and January 1, 2001, or a refinery that was not
operational as of January 1, 1999, owned by a refiner that meets our
proposed definition, could apply for small refiner status no later than
June 1, 2002. In this case, we would consider carefully the history of
the refinery and
[[Page 26055]]
the company in determining whether it is appropriate to grant this
refiner small refiner status.
We are also proposing that if a refiner with approved small refiner
status later exceeds the 1,500 employee threshold without merger or
acquisition, its refineries could keep their individual refinery
standards. This is to avoid stifling normal company growth and is
subject to our finding that the refiner did not apply for and receive
the small refiner status in bad faith. An example of an inappropriate
application for small refiner status would be a refiner that
temporarily reduced its workforce from 1,600 employees to 1,495
employees prior to January 1, 1999, and then rehired employees after
the cutoff date. This would be a bad faith attempt to avoid the intent
of the rule. We are requesting comment on this provision.
At any time after June 1, 2002, a refiner with approved small
refiner status could elect to cease complying with the small refiner
standards and, in the next calendar year, begin complying with the
standards specified in Table IV.C-2 and related provisions. However,
this decision would apply to all refineries owned by that refiner and
once a refiner dropped its small refiner status, it would not be
eligible to be reinstated as a small refiner at some later date.
iii. Application for a Small Refiner Sulfur Baseline.
A qualifying small refiner could apply for an individual sulfur
baseline by June 1, 2002 for any refinery owned by the company by
providing a calculation of its sulfur baseline using its average
gasoline sulfur level based on 1997 and 1998 production data, and the
average volume of gasoline produced in these two years. The proposed
regulations specify the information to be submitted to support the
baseline application. The baseline calculations should include any
oxygen added to the gasoline at the refinery. This application would be
submitted at the same time that the refiner applied for small business
status; confirmation of small business status would not be required to
apply to EPA for an individual sulfur baseline. If the baseline were
approved, we would assign standards to each of the company's refineries
in accordance with Table IV.C.-2.
Blenders would not be eligible for the small refiner individual
baselines and standards because they would not have the burden of
capital costs to install desulfurization equipment, which is the
primary reason for allowing small refiners to have a relaxed compliance
schedule.
iv. Volume Limitation on Use of a Small Refinery Standard.
We are proposing that the volume of gasoline subject to the small
refinery's individual standards would be limited to the volume of
gasoline the refinery produced from crude oil, excluding the volume of
gasoline produced using blendstocks produced at another
refinery.50
---------------------------------------------------------------------------
\50\ In addition to gasoline produced from crude oil, a small
refinery's baseline volume would include gasoline produced from
purchased blendstocks where the blendstocks are substantially
transformed using a refinery processing unit.
---------------------------------------------------------------------------
Under this approach, the baseline volume for a small refinery would
reflect only the volume of gasoline produced from crude oil during the
baseline years. In addition, use of the refinery's individual baseline
sulfur level during each calendar year averaging period (beginning with
2004) would be limited to the volume of gasoline that is the lesser of:
(1) 105% of the baseline volume, or (2) the volume of gasoline produced
during the year from crude oil. Any volume of gasoline produced during
an averaging period in excess of this limitation would be subject to
the standards applicable to refiners not subject to a small refiner
standard. In this case, the small refiner's annual average standard
would be adjusted based on the excess volume in a manner similar to the
compliance baseline equation for conventional gasoline under Section
80.101(f) of Part 40 of the Code of Federal Regulations. However, the
small refiner's per-gallon cap standard would not be adjusted.
This limitation would assure that small refiners receive relief
only for gasoline produced from crude oil, the portion of the refinery
operation requiring capital investment to meet lower sulfur standards.
We are requesting comment on this provision and whether an alternative
approach may be more appropriate for the stated purpose.
v. Hardship Extensions Beyond 2007 for Small Refiners.
Beginning January 1, 2008, all small companies' refineries would
have to meet the permanent national sulfur standard of 30 ppm on
average and the 80 ppm cap, except small refineries that apply for and
receive a hardship extension. A hardship extension would provide the
small refiner an additional two years to comply with these national
standards. A hardship extension would need to be requested in writing
and would specify the factors that qualify the refiner for such an
extension. Factors considered for a hardship extension could include,
but would not be limited to, the refiner's financial position; its
efforts to procure necessary equipment and to obtain design and
engineering services and construction contractors; the availability of
desulfurization equipment, and any other relevant factors.
By January 1, 2010 all refiners would be required to meet the
permanent national average standard and cap. We are requesting comment
on the proposed hardship extension, including the factors to be
considered in petitions for extension, and the proposed time periods.
vi. What Alternative Provisions for Small Refiners Are Possible?
We have proposed one type of program to address the needs of small
refiners. We solicit comment on other options so that we can consider
these options as we finalize this rule. We encourage comments. We
request comment on a range of alternatives, including those listed
below, which could be considered when developing unique regulatory
requirements for small refiners. We specifically request that the
comments address not only the economic but also the environmental
implications of the alternative, relative to the program we've
proposed.
Are there alternative or additional criteria that could/
should be used to define a small refiner, such as the volume of crude
oil processed or the volume of gasoline produced (since the gasoline
sulfur standard applies specifically to gasoline)? Other criteria may
also be acceptable, such as a different employee number for
qualification as a small entity, or basing the count on employees
employed in gasoline production only. We welcome your recommendations.
Our desire is to limit the number of companies meeting the small
refiner definition in order to provide regulatory relief only to those
companies that have the economic concerns unique to small businesses.
If you recommend criteria other than number of employees, please
comment on how those criteria can be shown to limit the number of
refineries that will be eligible for the proposed relief.
Are the caps and averages of the proposed interim
standards for small refiners (see Table IV.C.-3) appropriate for the
corresponding individual sulfur baseline levels?
What is an appropriate and sufficient time period for the
proposed small refiner interim standards? Would most qualifying small
refiners be able to meet the 30/80 standards within four years (six if
a hardship extension is granted, which is dependent on the case made by
the individual refiner), as proposed? The Panel report suggested that a
period of six to ten years could
[[Page 26056]]
be desirable to provide sufficient time for small refiners to comply
with the proposed standards. What are the arguments for granting more
than four years of additional time and what are the environmental
implications (and implications for Tier 2 vehicles) of such an
extension?
Should small refineries of multi-refinery companies
(companies too large to meet the proposed small refiner criteria) be
eligible for small refiner interim standards? Should refineries not
producing gasoline as a major product (for example, refineries engaged
primarily in the production of lubricants where gasoline is a small
volume by-product) be eligible for small refiner interim standards
regardless of corporate size/employment?
If a small refiner operates more than one refinery (while
still meeting our proposed small refiner criteria), should that refiner
be permitted to aggregate the sulfur baselines and comply with the
small refiner standards applicable to that aggregate baseline? Under
the sulfur ABT program described below, we are proposing to require
refiners to aggregate data from all of their refineries when
determining compliance with the 2004 and 2005 corporate average
standards (Table IV.C.-2) (but not the refinery gate standards,
although we seek comment on that alternative).
Rather than providing unique standards for qualifying
small refiners, would the need for separate small refiner provisions be
addressed if we were to adopt a regional sulfur program? In Section
IV.C.1. above, we explained our concerns that a regional sulfur program
would not achieve the same emission reductions we project for our Tier
2/gasoline sulfur program. However, some have suggested to us that a
regional program would address the need for small refiner provisions
since the majority of small refiners are thought to sell gasoline in
the West. We know of several refiners that appear to meet our proposed
criteria for being small that sell at least some of their gasoline
production in the eastern U.S. (as defined by the oil industry's
proposed program) and thus a regional program would not cover all small
refiners. We encourage comments on this alternative, particularly from
refiners who could be impacted by such a decision.
Would a more general hardship provision that would be
based on a showing of substantial economic hardship, such a discussed
in Section IV.C.4.c., provide sufficient compliance flexibility to
address the needs of small refiners?
4. Compliance Flexibilities
In addition to the basic standards applicable to refiners that were
explained above, we are proposing two additional programs that will
provide flexibility for refiners when complying with the proposed
standards. The first is the sulfur ABT program mentioned previously.
The second is a program to streamline the construction permitting
process so that refiners can make the required process modifications by
2004.
a. Sulfur Averaging, Banking, and Trading (ABT) Program. We are
proposing that any refiner or importer be allowed to generate, bank,
and trade sulfur credits. A sulfur ABT program would accelerate the
reduction of sulfur in gasoline and provide refiners with additional
flexibility in achieving compliance with the 30 ppm standard in 2004
and beyond. The following paragraphs provide additional information
about our proposed sulfur ABT program, to supplement that presented in
Section IV.C.-3.a above. We encourage comments on the design elements
we have proposed for the sulfur ABT program. If you believe alternative
approaches would make the program more useful to the refining industry,
please share your specific recommendations with us.
i. Why Are We Proposing a Sulfur Averaging, Banking, and Trading
Program?
A sulfur ABT program, if properly implemented, would provide the
opportunity for a win for both the refining industry and the
environment. The flexibility provided by an ABT program could provide
refiners more lead time to bring all of their refineries into
compliance with the 30 ppm standard, by allowing them to use credits
generated at one refinery to delay having to desulfurize gasoline from
another refinery. ABT would provide the opportunity for reduced costs
by allowing the industry the flexibility to average sulfur levels among
different refineries, between companies, and across time. Since, under
banking, early reductions have a value during program implementation,
ABT provides an incentive for technological innovation and the early
implementation of refining technology.
The ABT program could provide meaningful early benefits for the
environment because it would allow the Tier 2 standards to be
implemented earlier than might otherwise have been possible, and
because it would provide direct environmental benefits. The first
direct benefit relates to atmospheric sulfur loads. This benefit is
largely independent of when credits are generated and used. However,
atmospheric deposition and transformation rates of sulfur compounds
tend to vary geographically and seasonally and thus we must consider
whether a broad averaging program would have different pollutant
effects when compared to a more constrained averaging program or a
program without averaging. Any potential negative effects of a broad
ABT program should be mitigated by the geographic distribution of
refineries, the widespread distribution pipelines, and the fungible
nature of gasoline. All of these factors, taken together, lead us to
believe that any negative effect on atmospheric sulfur levels from ABT
(relative to a single 30 ppm average/80 ppm cap in 2004) would be
negligible. It should be noted that this situation is further moderated
by the pool averages and caps proposed for 2004 and 2005, since these
averages and caps would reduce actual gasoline sulfur levels as the ABT
program phases in.
Another environmental benefit is related to the effect of gasoline
sulfur on catalyst performance, as discussed in the draft RIA. Since
catalyst performance depends in part on gasoline sulfur levels, we must
consider whether the emissions benefits (measured in g/mi-per-ppm) of
early sulfur reductions when credits are generated are essentially the
same as the g/mi-per-ppm benefits when the credits are used. The effect
of sulfur on emissions from Tier 0 and Tier 1 vehicles, which will
dominate the fleet in 2000-2005, is approximately the same when sulfur
levels increase from 30 to 150 ppm as it is when sulfur levels increase
from 150 ppm to 330 ppm. In other words, for each ppm increase in
sulfur levels, approximately the same effect on emissions results
regardless of whether the increase is from low levels (e.g., from 30
ppm up to 150 ppm) or from higher levels (e.g., from 150 ppm up to
current average levels). Therefore, the emissions benefits from credits
generated before 2004 would essentially offset the emissions effects of
those credits being used in 2004 and beyond, especially since corporate
pool average sulfur levels could not exceed 120 ppm in 2004 and 90 ppm
in 2005, and sulfur levels will be capped at 80 ppm in 2006 and beyond.
Nonetheless, there remains concern about the sensitivity of later
models (NLEV and Tier 2) to sulfur and about the reversibility of the
effect of higher sulfur levels on catalyst efficiency. More explicitly,
the relatively few Tier 2 vehicles that would see somewhat higher
sulfur levels than 30 ppm in 2004 and 2005 (about three-quarters of
[[Page 26057]]
a model year of production) would not be able to fully recover the loss
in emissions performance due to the higher sulfur levels. Hence, the
corporate averages and caps would be necessary in these interim years.
In 2006 and beyond, the 80 ppm cap and the 30 ppm average refinery
standard, even with the ongoing use of credits to comply with the 30
ppm standard, would keep in-use sulfur levels very close to 30 ppm.
Thus, Tier 2 vehicles sold in 2006 and beyond would receive appropriate
protection from gasoline sulfur.
ABT programs must be designed and implemented carefully to be
certain that they are sensitive to equity and competitive issues in the
industry and do not create the potential for inadvertent emission
increases. In the context of gasoline sulfur control, concerns about
different baseline sulfur levels and different technological
capabilities among refiners must be considered. Even with the proposed
lead time, some refiners would find it easier to achieve reductions
than would others. This is due to a number of factors, including
refinery configuration, product mix (gasoline versus distillates),
crude oil sulfur levels, and the ability to generate capital to fund
the investment. At the same time the program must be designed to
eliminate the possibility of windfall credits and to be sure that the
environmental benefits associated with early sulfur reductions offset
the potential forgone benefits when the credits are used.
The program we are proposing today attempts to strike a balance
among all of these factors. Some of the elements and design features
(such as the eligibility trigger and the baseline requirement) were
included to address concerns such as timing, disparate capabilities
among refineries, and the potential for excessive (``windfall'')
credits. We are seeking comment on options for dealing with all of the
issues we have identified.
The ABT program is voluntary. No refiner or importer qualifying for
credits is required to generate them, use them, or make them available
to others (except as discussed in Section IV.C.4.a.vi. below). The
process for establishing a sulfur baseline and generating and using
credits is outlined below.
ii. How Would Refiners Establish a Sulfur Baseline?
To establish a sulfur baseline against which credits would be
calculated, we propose that by July 1, 2000, each refiner or importer
that wants to generate credits submit two pieces of information to the
Agency. One would be the volume-weighted average sulfur content for
conventional gasoline (CG) for each refinery (or imported by that
importer) for 1997 and 1998. The second would be the annual average
volume of CG produced by that refinery (or imported by the importer) in
those years. 51 52
---------------------------------------------------------------------------
\51\ Since participation in the sulfur ABT program is voluntary,
refines opting not to generate or use sulfur credits do not have to
establish a sulfur baseline for this program.
\52\ We believe that variations in specific gravity, which could
affect the sulfur content of gasoline as determined on a mass basis,
will average out over the year and need not be included in the
calculations. However, we request comment on whether specific
gravity should be considered in the calculation of sulfur baselines
(including whether such data exists for 1997-98) and subsequently,
in calculating credits generated relative to this baseline.
---------------------------------------------------------------------------
Since we expect summer RFG sulfur levels to decrease in 2000 to
approximately 150 ppm (due to the actions refiners will take to meet
the Phase II NOX standards for RFG), we are proposing to set
the individual refinery sulfur baseline for summer RFG at 150 ppm,
regardless of volume produced in 1997 and 1998. Winter RFG production
would be assigned the same sulfur baseline as the refinery's
conventional gasoline, without regard to the volume of winter RFG
produced in 1997-98. Hence, no reporting of RFG sulfur levels or
volumes would be required in setting a sulfur baseline. We encourage
comments on the use of different sulfur baselines for summer and winter
RFG, particularly regarding whether this could create a disincentive to
produce RFG in the summer months. We do not want to jeopardize our RFG
program, but at the same time, we want sulfur credits to reflect
actions taken by refiners above and beyond their current operations
and/or regulatory obligations.
Conventional gasoline produced in 2000 and beyond that exceeded
105% of the CG baseline volume produced at that refinery would be
assigned a sulfur baseline (from which credits would be generated) of
150 ppm. This provision is intended to prevent increases in average
sulfur levels resulting from increases in CG production. A refiner/
importer of conventional gasoline to which oxygenate is added
downstream during 1997-1998 could include the downstream oxygenate
volume in that refinery's CG baseline, if the refiner can substantiate
that oxygenate was added to that gasoline.
A refinery/importer that did not produce/import gasoline during
1997-1998 would be assigned a baseline of 150 ppm each for CG and RFG
for the purposes of sulfur credit generation in 2000 and beyond. This
provision would also apply to blenders of natural gasoline, butane, or
similar non-oxygenated blending components. Such parties would be
considered refiners and would need to meet all requirements, such as
analyzing each batch of the blending component for sulfur prior to its
addition to gasoline. Credits would be based only on the volume of the
blending components. We encourage comments on alternative provisions
for establishing baselines for refiners/importers that could not
establish a 1997-98 sulfur baseline as described above. In particular
would 150 ppm be appropriate, or would a greater or lesser sulfur
content be most equitable and most environmentally neutral? Should this
baseline be tied in some way to the trigger for credit generation in
(as discussed below) 2000-2003?
We request comment on several aspects of this baseline provision.
The 1997-1998 years for the baseline represent the latest available
data and thus best reflects the present state of each refinery's
gasoline sulfur levels. However, we already have established baseline
sulfur levels for 1990 for most refineries. Except for changes related
to RFG, average gasoline sulfur levels have changed little since 1990.
Hence, we request comment on whether that 1990 baseline would be a
suitable substitute. Alternately, we request comment on whether 1997
and 1998 are the appropriate years to average when establishing a
sulfur baseline, given that mandatory use of the Complex Model starting
in 1998 could have led to changes in sulfur levels between 1997 and
1998. Since our purpose in proposing to establish sulfur baselines is
to try to capture current sulfur levels (within a reasonable date of
the 2000 start date for credits to be generated), the sulfur baseline
could be based on a single year's data (for example, 1998) rather than
a two-year average. We proposed a two-year average to try to capture
and accommodate operational fluctuations and changes. However, a single
year's data may adequately capture current sulfur levels.
We are not proposing a formal baseline review and/or approval
process since the proposal envisions a self-certifying process.
Refiners would submit their 1997 and 1998 sulfur baseline data for each
refinery to us, and then would generate credits from that baseline in
2000-2003. If we determined, through a refinery audit or other action,
that the sulfur baseline was calculated with incorrect data, we would
establish a new sulfur baseline and the refinery would subject to that
baseline, even if it meant recalculating
[[Page 26058]]
the number of credits generated in subsequent years. We have used this
baseline review process in other mobile source programs and believe it
works well, but we request comment this approach.
We considered the possibility that, since refiners report annual
production information to EPA, we could issue baselines for each
refinery rather than refiners having to submit them to us. However, we
do not think this is a possible solution because many refiners comply
with our RFG and CG requirements by aggregating the data from all of
their refineries. Thus, the data we currently receive from refiners
would not allow us to establish an individual baseline for every
refinery in the U.S. (unless we went back to 1990 data). However, we
would like comment on whether a more formal sulfur baseline approval
process (say, a letter from the Agency or a date by which approval can
be assumed unless the refiner hears otherwise) would be desirable. Keep
in mind that even with a more formal baseline approval process, the
baseline could be changed at a later date if we found, during an audit
of refinery records, errors in compliance with the proposed baseline
requirements. Hence, any up-front approval would only provide certainty
that, based on the data reported to us, we believe the refiner had
correctly applied the mathematical equations proposed today for
establishing a sulfur baseline.
Some have raised the concern that if imported gasoline were allowed
to be used for credit generation, as we propose today, foreign refiners
might be able to gain an unfair advantage. For example, it is possible
that foreign refiners could simply re-blend their gasoline (without
installing new capital equipment) and send their lowest-sulfur refinery
streams to the U.S. at a lower cost than gasoline produced by domestic
refiners that had to reduce overall sulfur levels through
desulfurization. Since importers, not foreign refiners, would be the
parties assigned a sulfur baseline and eligible for generating credits,
we do not believe foreign refiners would have a strong incentive to
send lower sulfur gasolines to the U.S. We believe that the benefits of
allowing importers to participate in the sulfur ABT program (more
players in the credit trading field, more chance for early reductions
in gasoline sulfur levels) outweigh the potential detriments. However,
we encourage comment on the implications of the decision to allow
imported gasoline to be used for credit generation.
Oxygenate blenders would not be able to participate in this
proposed credit program because they would not be subject to the sulfur
standard. Special provisions would exempt them from having to measure
the sulfur content of the oxygenate they blend and from the
recordkeeping and reporting requirements of the sulfur program, other
than the requirements that apply to all parties that handle gasoline
and gasoline blendstocks downstream of the refinery.
iii. How Would Refiners Generate Credits?
During the period 2000-2003, credits could be generated annually by
any refinery that produced conventional gasoline averaging 150 ppm
sulfur or less on an annual, volume-weighted basis. Credits would be
calculated based on the amount of reduction from the refinery's CG
sulfur baseline.53 Credits could also be generated from
winter RFG based on reductions from the sulfur baseline, if the winter
RFG sulfur level averaged 150 ppm or less (on a seasonal volume-
weighted basis). Similarly, summer RFG would need to have a seasonal
volume-weighted average sulfur level below 150 ppm to be eligible for
credit generation, although credits would only be created based on the
difference between 150 ppm and the summer RFG sulfur average. Thus,
credits would need to be generated separately for conventional gasoline
and RFG. Conventional gasoline produced in excess of 105% of the
baseline volume could only generate credits for sulfur reductions below
150 ppm, not for the cumulative reduction from the baseline sulfur
level. Winter RFG would not be subject to any volume limitations, and
thus refineries could generate credits for any volume of winter RFG
that contains 150 ppm sulfur or less.
---------------------------------------------------------------------------
\53\ If a refinery's baseline average were 150 ppm or less,
credits could only be generated for annual average reduction's below
the baseline level.
---------------------------------------------------------------------------
For example, if in 2002 a refinery reduced its annual average
sulfur level for conventional gasoline from a baseline of 450 ppm to
150 ppm, its sulfur credits would be determined based on the difference
in annual sulfur level (450-150=300 ppm) multiplied by the volume of
conventional gasoline produced (up to 105% of the baseline CG volume).
If this refinery produced more CG than 105% of the baseline volume, it
would only generate credits from that incremental volume if the
incremental gasoline were below 150 ppm. (For example, if the
refinery's 2002 average CG sulfur level were 100 ppm, it would get 150-
100=50 ppm sulfur credits on any volume in excess of 105% of its
baseline CG volume, as well as 450-100=350 ppm for the baseline volume
up to 105%.)
If this same refinery also produced RFG with an annual average
sulfur content of 90 ppm in 2002, it could also receive sulfur credits
calculated based on the difference between 150 ppm and 90 ppm (60 ppm)
times the volume of summer RFG produced plus 360 ppm (450-90) times the
volume of winter RFG produced. A refinery with a sulfur baseline lower
than 150 ppm sulfur would only generate credits relative to reductions
from its baseline, for either CG or winter RFG. Credits from summer RFG
would be based on reductions from 150 ppm.
Several states have implemented or are considering gasoline sulfur
control programs. To avoid double-counting of emission benefits, lower
sulfur gasoline produced to comply with these state programs would not
be eligible for early banking credits under this program.
In 2004 and beyond we propose that credits could only be generated
for actual annual sulfur averages below the 30 ppm standard (combining
conventional and reformulated gasolines), and only for the difference
between the standard and the actual annual sulfur average. (For
example, a refinery producing gasoline in 2004 that averaged 25 ppm
could generate 30-25=5 ppm, while a refinery producing gasoline that
averaged 40 ppm would not be eligible for any credits.)
We encourage comments on this credit generation concept. In
particular, would these formulas permit sufficient credits to be
generated industry-wide to provide adequate credits for use in
compliance in 2004 and beyond? If not, what are the limitations on
credits and what changes could be made to improve the likelihood that
sufficient credits would be generated?
Our proposal to cap volumes on which credits could be generated at
105 percent of baseline levels is intended to preclude the possibility
of closely-located refineries generating credits by moving blendstocks.
This could occur if a refinery with a relatively low baseline level
moved blendstocks to a refinery with relatively higher levels, thus
allowing the somewhat artificial generation of credits. We request
comment on whether such a provision is necessary and whether the 5
percent cap should be increased to as high as 10 percent to reasonably
accommodate normal growth in volume. We raise some potential
alternatives to these provisions in Section IC.C.4.a.vi. below, and
encourage your consideration of all of these issues in your comments.
[[Page 26059]]
iv. How Would Refiners Use Credits?
Credits generated prior to 2004 would have to be used or
transferred by 2007. Credits generated in 2004 and beyond would have to
be used or transferred within five years of the year in which they were
generated. If these credits were traded to another party, they would
have to be used by the new owner within five years of the year of
transfer. Since the transfer could occur any time within five years of
generation, some credits could have a life of up to ten years.
Our proposed ABT program is designed to ease implementation of the
new standards and credits would be of their greatest value during
phase-in periods. ABT is not necessarily intended to permit a refinery
to operate above the standard for a protracted time period. While
limiting credit life might reduce the incentive to generate credits and
could create a ``use or lose'' mentality, the credit program would seem
to be of relatively small value to any refiner/importer that held
credits for five years and did not need to use them. We believe that
limiting credit life is appropriate since we must also consider the
basic reason for ABT and address concerns about our ability and the
ability of the refiners to maintain the integrity of the credit system
over many years. EPA requests comment on credit life including options
such as limiting life by depreciating their value over a period of
years as well as longer or shorter periods of fixed credit value.
We propose that credits could be withdrawn from a refinery's/
importer's credit bank or purchased from another refinery/importer to
bring the annual sulfur average for each refinery down to the 30 ppm
standard beginning in 2004. There would be no geographic constraints on
credit trades. However, as explained in Section IV.C.3.a above, in 2004
no batch of domestically produced or imported gasoline could exceed 300
ppm, and a refinery's/importer's actual annual corporate pool average
sulfur level could not exceed 120 ppm. (A refiner owning more than one
refinery would have to aggregate the respective sulfur levels of
gasoline produced at those refineries for determining compliance with
the 120 ppm standard.) In 2005, gasoline sulfur would be capped at 180
ppm and the corporate pool average could not exceed 90 ppm. The
aggregation requirement would also apply in 2005. As described above,
credits would apply only to compliance with the 30 ppm refinery
standard, not to the corporate pool average or the cap.
A refiner or importer choosing to participate in the ABT program
would be required to file annual reports with the Agency indicating the
applicable baselines or standard(s) in ppm sulfur, the annual
average(s) in ppm sulfur, and the annual volume(s) in gallons (for each
refinery). These calculations would be reported, along with an
accounting of credits banked, transferred (sold), or acquired (bought).
(For 2000-2003, the reports would only cover credits banked and
traded.) The credits would be in units of ppm-gallons.
Thus, for each purchase of credits, as reported on the buyer's
annual report, there should be a corresponding entry on the seller's
annual report. Through the report, refiners would have to demonstrate
that their average sulfur levels (with the use of credits, if
necessary) comply with the 30 ppm standard at each refinery. Refiners
would also have to demonstrate that the combined production from all
refineries meets the corporate average standard. As mentioned above,
the actual corporate averages could not exceed 120 ppm in 2004 and 90
ppm in 2005. The identity of refiners/refineries and importers involved
in these transactions would be reported, along with the registration
numbers assigned to them by the Agency under the RFG/CG program (40 CFR
part 80, Subparts D, E, and F).
In addition, we are concerned that the potential exists for credits
to be generated by one party and subsequently purchased or used in good
faith by another, and later found to have been calculated or created
improperly or otherwise determined to be invalid. In this case, both
the seller and purchaser would have to adjust their sulfur calculations
to reflect the proper credits and either party (or both) could be
deemed in violation of the standards and other requirements if the
adjusted calculations demonstrate noncompliance with an applicable
standard. We have taken this approach in our other fuels enforcement
programs. We welcome comments on this provision. In particular, we
request comment on whether our program should be designed such that
only the seller should be deemed in violation if that party sold
invalid credits and, upon correction for this error, was found to have
violated one or more standards. In general, mobile source ABT programs
hold both parties liable.
For the duration of the credit program, each participating refinery
and importer could make deposits to and withdrawals from its ``bank
account''. All transactions would have to be concluded by the last day
of February after the close of the annual compliance period (2004,
2005, etc.). It would be up to the industry to establish any mechanisms
for linking buyers and sellers. The Agency does not intend to become
involved in this marketplace activity.
We are also proposing to allow refiners to miss the 30 ppm standard
for an individual refinery and to carry forward the credit debt that
would have brought that refinery into compliance in the year the
deficit occurred. This is very similar to provisions proposed today for
auto manufacturers in complying with the averaging provisions Tier 2
standards. Under this provision, the refiner would have to make up the
credit deficit and bring that refinery into compliance with the 30 ppm
standard the next calendar year, or face penalties. This program would
in no way absolve the refiner from having to meet the applicable per-
gallon cap standard. This provision would provide some relief for
refiners faced with an unexpected shutdown or that otherwise were
unable to obtain sufficient credits to meet the 30 ppm standard. We
welcome comment on this provision.
The following Table IV.C.-4 summarizes the compliance dates and
program requirements of this proposed sulfur ABT program. See Section
VI for more specific information, particularly about the dates that the
sulfur caps would apply and the standards that would apply downstream
of the refinery.
BILLING CODE 6560-50-P
[[Page 26060]]
[GRAPHIC] [TIFF OMITTED] TP13MY99.003
BILLING CODE 6560-50-C
v. Could Small Refiners Participate in the ABT Program?
We believe that refiners complying under the small refiner
provisions outlined in the previous section should not be permitted to
use sulfur credits to meet the average standard applicable to their
refineries. We are proposing to exclude small refiners from using
credits to meet the small refiner standards because the small refiner
standards are generally more lenient than the 30 ppm standard and thus
these refiners should have less need for a credit trading program than
the rest of the industry. Furthermore, small refiners, even those
currently producing gasoline near the 30 ppm average, are given an
additional two years (until 2008) to meet the 30 ppm standard compared
to refiners complying under the sulfur ABT program. We want to ensure
that the sulfur levels of the majority of gasoline are reduced on
average, and overall, in 2004 and 2005; permitting small refiners to
meet the more lenient standards through the purchase of credits could
jeopardize that goal by resulting in in-use sulfur levels that are even
greater than the maximum small refiner standard (300 ppm average). If a
small refiner believed it could generate sufficient sulfur credits in
2000-2003, or obtain such credits through purchases from other
refiners, to be able to meet the 30 ppm average and the corporate
averages of 120 ppm in 2004 and 90 ppm in 2005, it should choose not to
participate in the small refiner program and take full advantage of the
sulfur ABT program.
However, small refiners would be permitted to generate and trade
sulfur credits if they reduced sulfur levels early in 2000-2003, per
the requirements outlined above. Furthermore, a small refiner could
sell credits that were generated in 2000-2003 in 2004 and 2005 while at
the same time meeting the small refinery standards. A small refiner
wishing to generate and sell credits would have to establish the
individual refinery sulfur baseline by the deadline specified above for
the ABT program (July 1, 2000) but could wait until June 1, 2002 to
apply for small refiner status. However, the standards assigned to that
refinery (as presented in Table IV.C-3) would be based on the sulfur
level from which credits were generated, not the 1997-98 baseline
sulfur level, since the refiner would have already demonstrated the
ability to meet the lower sulfur level (in this case, 150 ppm or lower
on an annual average basis).
At any time, a small refiner could ``opt out'' of the small refiner
program and, beginning the next calendar year, comply with the
standards in Table IV.C-2. The refiner would have to notify us of this
change in compliance program. Once a small refiner left the small
refiner program, however, we propose that it would not be eligible to
re-enter the small refiner program. We encourage comments on this
provision.
The sulfur ABT program could provide an alternative to offering any
small refiner standards, if small refiners were capable of complying
with the proposed pool average standards and caps in 2004 and 2005 just
as larger refiners could. In this case, all refiners, large or small,
could obtain credits necessary to meet the 30 ppm average standard for
the two intervening years. However, EPA recognizes that this may not be
the best response to the needs of small refiners, and has proposed, as
a result of the SBREFA Panel process, alternate standards in section
IV.C.3.b of this document. Indeed many small refiners expressed concern
during the Panel process that an ABT program would not address their
needs. However, we welcome comments on the pros and cons of using the
sulfur ABT program to provide regulatory relief for small refiners in
lieu of additional regulatory standards unique to small refiners.
vi. What Alternative Implementation Approaches Are Possible?
As we were developing this proposal, members of the oil industry
and others expressed concern that the ABT program as described above
may not be of great value in providing flexibility in complying with
the 30 ppm standard in 2004. Several different concerns have been
expressed.
Industry representatives have asserted that the opportunity to
generate early credits is limited because the proposed lead time would
be too short to implement enough of the refinery operational changes
and capital investments needed to achieve sulfur reductions before
2004. Additionally, the industry is concerned that relying on early
credits generated with what is perhaps the best long-term
technology(ies) is problematic because the preferred technology(ies) is
new and
[[Page 26061]]
does not yet have a proven performance record. Their concern is further
exacerbated by the uncertainty in the diesel fuel sulfur
picture, the MTBE /oxygenates situation developing in California, and
the DI petition discussed below, as well as ongoing state initiatives
to reduce sulfur in gasoline before this action is decided upon.
When credits are generated, there is a fear that those that
generate them will hoard them, particularly refiners that operate
several refineries. And when credits are made available for trade, they
may not become publicly available in enough time for them to be
considered by others in their capital investment planning, so
essentially all refineries would have to take steps to implement 30 ppm
technology by 2004. These issues may be of special concern to those
moderate sized refiners that are too large to qualify as small entities
but do not have enough refineries or refineries of the right gasoline
production volume to internally optimize their operations under the ABT
program.
Given these uncertainties about credit availability, the refiners
may need additional flexibility as a means to provide relief to those
that make a good faith effort to comply but are precluded by
circumstances beyond their control. These may include unanticipated
technological and commercial concerns, credit availability problems, or
force majeure type events.
We have examined this issue of credit availability and our
analysis, which is presented in the Draft RIA, indicates that credits
should be available by 2004 for the 2004/5 phase-in. This is based on
the fact that the 300 ppm cap in 2004 would require that all refineries
with a baseline above 300 ppm reduce sulfur by 2004. And, while they
could choose to just achieve 300 ppm, some would need greater
reductions to comply with the 120 ppm corporate pool average standard
and all would be facing increasingly more stringent requirements in
2005 and beyond. Quite simply, we believe that good business sense
would dictate that once a hardware investment is made the refinery
would shoot for 30 ppm or less. As the analysis shows, this approach
implemented over just three years would yield compliance with the 120
ppm corporate pool average and would generate ample credits. We
requested comment on our analysis in the Draft RIA and the underlying
analytical approach.
EPA is proposing the ABT program described above in order to
increase the refiners'/importers' confidence that they could comply in
2004. And, while our analysis indicates that credits would be available
for 2004/2005 compliance, we realize that the ABT program might not
meet its objective if the industry did not have confidence that credits
would be available in enough time and in sufficient quantities to
enable them to make economically efficient investment decisions. It is
our desire to provide the industry as much flexibility as possible to
ease implementation and phase-in while still meeting the objectives of
the program as described above. Toward that end we are asking for
comment on several variations on the above proposal that might increase
its overall value as a means to provide flexibility in meeting the
proposed standards. These can be divided into four categories: (1)
Modifications to the design elements of the proposed ABT program, (2) a
compliance supplement pool, (3) an allowance-based system, and (4)
reserved credits. As constructed below, the compliance supplement pool,
an allowance-based system, and reserved credits could be implemented in
varying ways to complement the early ABT program. EPA asks comments on
the cost and air quality impact implications of these concepts, which
are described in more detail below.
Potential Modifications to Proposed ABT Program
Modifications to the base program to increase the potential
availability of credits and the time over which these credits could be
used might increase the effectiveness of the proposed ABT program.
These changes could potentially affect both the near-term when the
program was phasing-in and the long term when the 30 ppm standard was
fully implemented.
The 150 ppm trigger value is designed to ``level the playing
field'' between companies with relatively low baselines and those with
relatively high baselines. Those with high baselines could potentially
generate more credits than those with lower baselines, but at a
somewhat greater cost since achieving 150 ppm or less becomes
increasing more difficult with higher sulfur gasoline. Those with
baselines closer to 150 ppm may be able to generate fewer credits, but
generate them more easily.
However, requiring that gasoline be below 150 ppm before credits
could be generated might preclude credit generation from higher sulfur
gasolines that could achieve large, real reductions in sulfur. The size
of the potential credit pool could be increased, perhaps dramatically,
if the trigger were relaxed or eliminated. We would like comment on
trigger values higher than 150 ppm for CG and winter RFG. We would also
request comment on expressing the trigger as a percent reduction from
baseline levels (e.g., 10-25%) rather than as an absolute value. In
addition, we request comment on a hybrid concept under which credits
would be generated for CG and winter RFG depending on initial 1997/1998
baseline sulfur levels (gasoline less than 150 ppm sulfur would
qualify, gasoline between 150 ppm and 350 ppm sulfur would need a 10-15
percent reduction, and gasoline greater than 350 ppm sulfur would need
a 15-20 percent reduction to qualify.) It would be helpful for those
suggesting the ``no-trigger'' approach to also address the issue of
equity among refiners with different baselines.
In combination with comments on the trigger, we also ask for
comment on the proposed phase-in approach. The 300 ppm cap effective
October 1, 2003 and the timing for the 30 ppm average standard would
both be important factors affecting the transition to low-sulfur
gasoline. Our analysis of the potential availability of credits
(discussed above and presented in the Draft RIA) indicates that most of
the credits needed to smooth out the transition would be generated by
low-sulfur winter RFG. Our analysis also assumes that a substantial
number of credits would be generated by refiners investing in
technology capable of producing 30 ppm gasoline prior to 2004 to ensure
compliance with the 300 ppm cap. If refiners take another approach to
meeting the 300 ppm cap (i.e., one that does not result in significant
credit generation), fewer excess credits would be available. However,
as long as some refiners invest in 30 ppm technology before 2004, we
believe sufficient credits would be available. We encourage comment on
our proposed phase-in approach.
Specifically, should the interim phase-in program be extended by an
additional year to provide an even smoother transition to the 30 ppm
standard (e.g., 120/300, 105/210, 90/180 for 2004, 2005, and 2006)?
Should the time frame for the 30 ppm average standard be shifted to
2005, for example, while retaining the 120/300 ppm caps for 2004, to
provide more time for transition to the 30 ppm standard? Should credits
expire after 2007 (as proposed) or would a shorter (or longer) credit
life be appropriate?
We are also seeking comment on a concept that would provide an
incentive to introduce clean technology early. Under this concept, any
sulfur credits generated before 2004 would be banked at a rate of 1.5
to 2.0 times the amount generated, if the annual average for that
[[Page 26062]]
refinery were equal to or less than 30 ppm and if the credits resulted
from the implementation of gasoline sulfur reduction technology
(hardware) not previously used at that refinery. This multiplier would
not be available for credits generated from modest operational changes
or product separation at the refinery or downstream. Calculation of the
un-multiplied credits would be at the refinery level. Neither domestic
refiners nor importers could qualify by segregating product or product
streams either from their refinery(ies) or in the case of importers
from one or more offshore refineries. Also, while refiners/importers
could get sulfur credits under ABT through the use of allowable
oxygenates, these could not be used as part of the basis for achieving
the 30 ppm average. EPA seeks comment on the need for and utility of
such an approach and on whether it is appropriate to encourage
implementation of sulfur control technology in this manner.
Compliance Supplement Pool
To address concerns about credit supply and the timeliness of the
availability of credits, and as a way of providing additional
flexibility, particularly to refiners that encounter unexpected
problems in complying, we are considering the concept of a government-
created and -operated compliance supplement pool for the sulfur ABT
program. Under this concept, the government would create a pool of
additional credits that could be provided to refiners/importers. This
pool would build refiner confidence that a supply of credits would be
available in the market and that credits could in fact be considered as
part of the business plan for 2004-2005 compliance. Credits from this
pool could first be made available in the 2000-2001 time frame and
perhaps in subsequent years and could only be used in 2004-2005. This
program would supplement the 2000-2003 early credit approach under ABT.
There are a number of issues related to implementing such a
program. The size of the pool potentially available for use in 2004 and
2005 would be a critical issue. A larger pool would lower the chance
that a refiner/importer could not get credits, but would reduce the
environmental benefits of the overall program. Clear rules on the
availability of credits would need to be established at the outset so
that refiners/importers could make correct investment decisions. In
addition, EPA would not want a compliance supplement pool to supplant
the need for each refiner to make aggressive efforts to comply in the
appropriate time or for a pool to create a disincentive for refiners to
generate early credits. If credits from early reductions were available
at a reasonable price, EPA would prefer that refiners/importers
purchase such credits rather than looking to a compliance supplement
pool. EPA seeks comment on the appropriate size of a compliance
supplement pool in light of these factors.
The conditions under which a refiner/importer would be eligible for
credits are important. For example, the pool could be made available
only to refiners that had demonstrated that they had made a good faith
effort to comply with the 2004 requirements, but, due to circumstances
beyond their control could not do so. Providing credits to a refiner
that failed to make good faith efforts to procure and install the
technology would create the wrong incentives and could be unfair to
competitors that had invested resources to comply.
Options for distributing credits in the pool might include granting
credits as rewards to those that generated some early reductions,
distribution based primarily or solely on need, equal distribution to
all, pro-rata distribution based on volume, making credits available at
a fixed price, or a credit auction. These approaches could be
considered singly or in combination. For example, the majority of the
compliance supplement pool could be distributed based on need, with due
consideration of the effect of lack of credits on gasoline supply in a
given area. In this case, the remaining portion might be set aside and
auctioned off to provide a price signal and a certain source of
credits.
It would seem that any such compliance pool should be administered
by the government or its agent, but decisions on credit applications
would include a public process. As part of our deliberations on this
concept we need to decide whether credits could be used to meet the
interim corporate pool averages (120/90 ppm) or just the 30 ppm
standard or both. Unlike credits generated by refiners/importers
reducing actual sulfur levels, any credits under this program would
expire after 2005.
Credits from the compliance supplement pool would be government-
created and not derived from actual reductions in gasoline sulfur. If
credits from the compliance supplement pool were distributed at little
or no cost to the receiver, such an approach might create an inequity
between those using credits and those who invested in technology to
reduce sulfur. As a means to address the potential environmental
effects of these government credits and to correct financial inequities
among refiners/importers, we seek comment on a provision that would
require those awarded these credits from the compliance supplement pool
to repay them. The credits to be used for repayment could be generated
internally in 2004-2006, purchased surplus credits from other refiners/
importers, or simply unused credits originally distributed from the
compliance supplement pool. These credits would have to be repaid by
the expiration of the period to close credit balances under the interim
program (2006, taking into account the one-year credit debt carry-
forward provision).
If, as mentioned above, credits were sold at a fixed price or
auction, several issues would arise. Should payment be through monetary
means? If so, what is EPA's authority to engage in such monetary
transactions, and what would be done with any proceeds? There is also
an issue with regard to a requirement to both buy credits for cash and
then also repay with credits. Alternatively, credits could be allocated
based on a determination that a refiner/importer needs the credits, in
conjunction with a determination regarding the refiner's/importer's
ability and willingness to repay the credits to the pool in the future
at a rate greater than 1:1. A credit auction could be held in a similar
way, that being the willingness of the bidder to repay the credits in
the future at a rate greater than 1:1. In these approaches, a refiner/
importer seeking credits might be willing to repay them at a rate of
say 1.2:1, thus essentially offering or bidding a 20 percent premium.
This could be done as a one-time premium or perhaps as a discount at
the time the credits are issued from the pools. Under this system no
money exchange would be required. This would simplify set-up of the
compliance supplement pool, allow refiners to conserve capital for
purposes of capital investment, and create an environmental return for
the compliance supplement pool. In addition, it would result in credits
being provided to refiners/importers that need them, and that are
expected to achieve additional environmental benefits in the future by
generating or purchasing excess credits.
The ``reasonableness'' of the price of credits is critical to any
approach requiring repayment from those entities using these credits.
We request comment and suggestions on ways to establish reasonable
credit prices. For example, as an upper bound, EPA might
[[Page 26063]]
set a credit price based on information received during the rulemaking
on the cost of sulfur removal for different technologies.
EPA also seeks comment on whether refiners/importers that used
credits from the compliance supplement pool should be excused from the
repayment of some or all of the credits if they could demonstrate that
it was not feasible for them to generate credits themselves and
insufficient credits were available at a reasonable price. Finally, EPA
seeks comment on how to ensure that refiners/importers that used
credits from the compliance supplement pool would in fact repay those
credits. One option would be to hold such refiners/importers liable for
failure to meet the sulfur standards over the averaging period during
which they relied on credits from the compliance supplement pool, if
such credits were not repaid in time. EPA seeks comment on this option,
as well as other alternatives that would ensure that compliance
supplement pool credits were repaid.
EPA has some experience with the compliance supplement pool
approach as part of the NOX SIP Call (ROTR) discussed in
Section III above. In this process, a compliance supplement pool was
created to address concerns raised by industry about how the
requirements might affect the reliability of the supply of electric
power. The size of the NOX compliance supplement pool was
created based on an EPA projection of what compliance shortfalls might
result if problems developed in implementing the control technology.
The NOX SIP Call pool may be allocated through direct
distribution based on need or as a reward for early reductions.
Allowance-Based System
In the context of gasoline sulfur, a traditional allowance program
would provide more confidence in the availability of ``credits''
(surplus allowances) by creating sulfur budgets that the industry
(refiners and importers) would be required to meet during the 2004-5
phase-in and perhaps beyond. This budget would be created on a mass
basis using gasoline volume and the applicable regulatory standard.
This budget would then have to be allocated to individual refiners and
importers. If an individual refinery or importer had sulfur levels
below its allocation this would create surplus allowances that could be
traded. Allowances for 2004 and later would be made available in 2001.
This would facilitate the development of a market in allowances, since
those planning to beat the requirements for 2004/5 could market their
allowances early. This could significantly contribute to the certainty
that surplus allowances would be available in time for consideration by
others in their 2004 business planning.
While there are other possibilities, it would seem reasonable to
allocate the budgets to individual refiners/importers in the 2004 and
later time period based upon their individual percentages of the
gasoline market. To be consistent with other aspects of this proposal
this could be done at the corporate level in 2004/5 and at the
individual refinery/importer level in 2006 and later.
One major benefit of such an approach is that refiners/importers
could trade part or all of their 2004 and later allowances for future
use without EPA involvement and those purchasing these allowances could
do so early enough to allow a more orderly and reasoned set of capital
investment decisions. Also, since it would be allowances, not credits,
that would be traded, the seller could be held solely responsible for
failure to meet its budget without involving the buyer. The trading of
allowances would be relatively unencumbered. Allowances could be used
to meet the budgets allocated under the regulatory standard.
This approach would provide increased flexibility and certainty, it
is not clear that a large number of surplus allowances would be
created, since surplus allowances would only exist relative to a budget
based on the 30 ppm standard. Obviously the number of allowances
created in 2004 and 2005 could be increased if the budget were based on
a value higher than the 30 ppm regulatory standard, but this would
require a fundamental change in overall program design. Alternatively,
the number of surplus allowances might be increased if the allowances
program were started earlier. For example, refiners/importers could be
allocated budgets beginning in 2001 based on the product of their 1997/
1998 sulfur baselines in ppm (with appropriate adjustments for RFG
Phase II) and their gasoline volume. Any reductions in the average
sulfur levels or volume from the baseline level during that 2001-2003
time period would result in surplus allowances.
While the idea of pre-2004 allowances has merit, it requires the de
facto implementation of a standard before 2004 (since each refiner's/
importer's budget would in effect be a standard), in order to establish
allowances. And, in contrast to the ABT program where participation is
voluntary and no requirements exist before 2004, an allowance system
would require refiners subject to the allowance program to hold
sufficient allowances to cover their calculated mass emissions starting
in 2001.
In principle, an allowance system could be designed to incorporate
all of the features of an ABT credit system as described above. We are
interested in comment on the viability of such an allowance program as
an alternative to the traditional ABT program and whether such a
program would have to be mandatory for all refiners/importers in order
to be effective. For example, could we structure an allowance program
such that the refiner opts into if it intends to generate or use
allowances or opts out of if it does not? We are also interested in
comment on the parameters of such a program, including the appropriate
budget levels, methods for distributing the budgets to refiners/
importers, and whether allowances could be used to meet the corporate
pool averages, the regulatory standard, or both. As with the ABT
program, we would like to hear your views on the years over which such
a program should apply (e.g., should it start in 2001?, should it
extend beyond 2005?), as well as the other regulatory requirements that
should apply in each year.
We also request comment on whether the allowance program could be
established as a supplement to the credit program. If an allowance
program is implemented along with a compliance supplement pool and/or
early ABT we are interested in comments on how to make credits fully
exchangeable among the programs. We are also interested in comments on
how the programs could/should be integrated. For example, could we let
a refiner/importer generate early ABT credits and at the same time sell
2004-2005 allowances?
Reserved Credits
EPA is also aware of concerns regarding whether refiners that
earned or received credits would make them available in a timely manner
to those that needed them, particularly to small- to mid-sized
refiners/importers. If an adequate number of credits were not available
in a timely manner and for a reasonable price, small- to mid-size
refiners would have no choice but to pursue near term capital
investment to comply in 2004. This might be the appropriate course for
many of these refineries, but we do not think it is appropriate for
them to be precluded from the same flexibility as larger refineries.
We are seeking comment on whether we should require that a set
percentage (e.g., 1015%) of all credits generated in early ABT (2000-
2003), awarded
[[Page 26064]]
through the compliance supplement pool, or earned through the
allowance-based approach either must be retired or offered for trade
outside of the refining company that originally generated or was
granted them. Under such a provision, refiners/importers would be
required to set aside a percentage of credits/allowances they generate,
but could choose whether to retire them or offer them for sale at a
fair market price to another refiner/importer. Regardless of which
option the refiner/importer chose, the results would be beneficial--the
environment would benefit if credits are retired, and credit
availability would improve if the refiner chose to sell credits. We are
also interested in your views as to how this objective might be
accomplished.
EPA also asks comment on the disposition of credits that were put
up for trade one or more times during the period 2004-2006 but did not
sell during that period. This could be the case if a credit owner
offered credits for sale at a price in excess of fair market value and
thus they were not purchased by another party or if credit supply
significantly exceed demand. In this kind of situation, should the
credits be retired or revert to the generator at a full or reduced rate
(e.g., 50%) for future use in compliance determinations? We request
comment on whether such a provision for reserved credits would be
needed by small- to mid-sized refiners and whether the reservation of
10-15 percent of credits would be sufficient to address the concerns.
We also seek comment on whether such a pool should be supplemented by
the government through an auction to ensure that the pool size is
adequate and whether such a pool could be useful in helping to
establish a market price for company owned credits.
b. Refinery Air Pollution Permitting Requirements. As discussed
previously in this document, this proposed program would result in
significant emission reductions from reducing sulfur in gasoline
nationally, through the emission reductions from the current fleet of
vehicles and ensuring the efficacy of new technologies in future
vehicles. In order to achieve this environmental benefit as soon as
possible, we want to be sure the public is aware of the full range of
available methods for expediting permits required for refinery process
changes to reduce gasoline sulfur. Expedited permitting also will
facilitate refiners' ability to generate sulfur credits, under today's
proposed sulfur Averaging, Banking and Trading program, described in
the previous section.
There are two key Clean Air Act permitting programs that refiners
must comply with when making changes at their existing facilities to
implement gasoline sulfur control--the New Source Review (NSR) program
and the Title V operating permit program. Typically, both of these
programs are administered by state/local permitting agencies, with EPA
oversight. While the basic requirements of these programs are dictated
by the Clean Air Act and EPA regulations, the specific requirements of
each state/local permitting program may vary.
We recognize that compliance with these air permitting requirements
is an integral component in any plan to implement the gasoline sulfur
control program under the schedule proposed today. To help refiners
meet the permit requirements, below we discuss the possible mechanisms
to address the substantive requirements of the major NSR and Title V
programs, including possible opportunities to streamline and expedite
the processing of permit applications. Finally, we conclude this
section by discussing possible tools that we are currently testing in
the experimental Pollution Prevention in Permitting Program (P4), which
promotes permit streamlining and flexibility for Title V operating
permits, along with increased pollution prevention activities. We
encourage commenters to provide suggestions for additional
opportunities to streamline the permitting process to accommodate the
implementation of the proposed gasoline desulfurization requirements
for the refining industry sector.
The American Petroleum Institute (API) has sent a letter to EPA
outlining its concerns about the potential impact of various permitting
requirements on the industry's ability to meet future gasoline sulfur
standards, as well as their suggested options for permit
streamlining.54 This letter is included in the docket for
this rulemaking. We are aware that individual refineries are in
different situations regarding the modification to current operation
that would be needed to meet the proposed sulfur standard and the
regulatory requirements applicable to those modifications. Based on the
limited information available at present, some refineries may not
increase emissions significantly, and others may find it most
economical to make on-site emission reductions at the plant to avoid
emission increases. Accordingly, we request comment on the extent to
which the various mechanisms to streamline the permitting process
discussed in this section are in fact needed or useful. We request that
commenters supporting such streamlining describe the specific refiner
situations in which they believe streamlining is needed, and encourage
them to provide any suggestions for additional opportunities to
streamline the permit process to expedite refineries' preparation to
meet the proposed sulfur standards.
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\54\ Letter from William F. O'Keefe, Executive Vice President,
American Petroleum Institute, to Bruce Jordan, U.S. EPA, Office of
Air Quality Planning and Standards, dated February 12, 1999 (Docket
item IIG-304).
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i. New Source Review Program.
The New Source Review (NSR) program,55 as it applies to
existing major sources of air pollution, requires that a
preconstruction permit be issued before a source begins construction of
any project that would result in a significant net emissions increase.
With respect to NSR, we anticipate that refineries will fall into one
of two categories if the proposed sulfur standards are implemented. The
first category consists of those refineries that would be able to avoid
major NSR by demonstrating that the physical and operational changes
needed to reduce gasoline sulfur do not result in a net emission
increase of the quantity that would require a major NSR permit. Major
NSR would not apply where: (1) The proposed changes would not result in
an emissions increase at the refinery; (2) the increase is, in and of
itself, less than ``significant'' 56; or (3) the refinery
``nets'' the project out of review. In most cases, even where a
refinery change to accommodate the production of lower sulfur gasoline
does not trigger the major source NSR program, the project still will
be subject to a state's general, or ``minor,'' NSR
program.57 The second category consists of those refineries
that would experience a significant net emissions increase as a result
of process changes necessary to accommodate gasoline sulfur control
and, therefore, will trigger major NSR applicability and the attendant
permit process (e.g., nonattainment NSR or Prevention of Significant
Deterioration). Accordingly, such facilities must obtain a major source
preconstruction permit prior to making these process changes.
---------------------------------------------------------------------------
\55\ See 40 CFR 51.165, 40 CFR 51.166, 40 CFR 52.21, 42 U.S.C.
7475, and 42 U.S.C. 7503.
\56\ EPA's and state/local regulations for major NSR define
``significance'' levels for various pollutants.
\57\ This permitting program applies to the construction or
modification of any stationary source. See 40 CFR 51.160 and 42
U.S.C. 7410(a)(2)(C).
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As described previously in today's document, there are several
types of process changes refineries could make to meet the proposed
gasoline sulfur
[[Page 26065]]
levels. Traditional sulfur removal technologies include installing a
hydrocracker upstream, or a hydrotreater upstream or downstream, of the
fluidized catalytic cracker (FCC) unit, the unit that produces the
largest fraction of gasoline. There also are improved desulfurization
technologies, CDHydro and CDHDS (licensed by the company CDTECH) and
OCTGAIN 220 (licensed by Mobil Oil). These technologies use
conventional refining processes combined in new ways, with either
improved catalysts or other design changes to maximize gasoline
desulfurization effectiveness with minimal negative effects, such as
octane loss. To different degrees, all these technologies involve the
use of a furnace and, thus, have the potential to increase pollutants
associated with combustion, such as NOX, VOCs, PM, CO, and
SO2. The addition of these technologies also could result in
equipment leaks of petroleum compounds, which could increase emissions
of VOCs and other pollutants. It also is possible that the increased
removal of sulfur from the gasoline stream might require increased
capacity of a number of refinery processes, such as the sulfur recovery
unit (SRU), which converts hydrogen sulfide into elemental sulfur and
is associated with SO2 emissions. The emission increase
associated with a desulfurization project will vary from refinery to
refinery, depending on a number of source-specific factors, such as the
specific refinery configuration, choice of desulfurization technology,
amount of gasoline production, and type of fuel used to fire the
furnace.
While we do not have sufficient information at this time to
estimate the number of refineries nationwide that will trigger major
NSR, we believe it could be substantial, given that over 100 refineries
in the country would be required to make desulfurization process
changes under today's proposal. Estimates from one vendor indicate that
its desulfurization process could result in emission increases that are
considered ``significant'' in severe ozone nonattainment areas (i.e.,
greater than 25 tons/year of NOX and VOC), which would
trigger major source nonattainment NSR review. Since the significance
threshold generally is lower in certain nonattainment areas (i.e.,
those nonattainment areas classified as serious and above for ozone),
refineries located in those nonattainment areas may be the most likely
to trigger major NSR review. There are many refineries located in ozone
nonattainment areas (e.g., parts of the Gulf Coast).
NSR Applicability Principles
A refiner's ability to avoid triggering major NSR by keeping
emission increases below the major NSR applicability cutoffs will
depend primarily on the case-by-case circumstances of each refinery.
Nevertheless, numerous means by which a source can otherwise legally
avoid major NSR permitting are available to all refineries for
consideration and possible use. In addition, as discussed below, the
Agency is prepared to work with refineries to explore the use of
certain NSR applicability mechanisms (i.e., plant wide applicability
limits or ``PALs''), where appropriate.
To the extent needed, we intend to work with state/local permitting
authorities to provide assistance with the proper application of the
NSR rules on an expedited basis for permits involving refinery
desulfurization projects. We want to ensure that applicability
decisions are made at the earliest possible opportunity and consider
the full spectrum of options available so that a refiner can adjust, or
possibly reconfigure, planned desulfurization projects so as to prevent
significant emission increases and thereby avoid major NSR within the
framework of the current regulations. In addition, timely applicability
decisions will provide added certainty as to the applicable NSR
requirements and, where a major NSR permit is needed, how to best to
expedite the issuance of a permit.
Depending on the nature of the physical or operational changes
necessary to accommodate desulfurization projects, the NSR
applicability process for major modifications can be a complex and time
consuming exercise. The NSR regulatory provisions require that a
proposed physical change result in a significant net emissions increase
in order for the change to be considered a modification and therefore
subject to NSR. We expect that there likely will be questions regarding
which, and how, existing emission units are affected by the change,
including how to calculate the magnitude of the emissions change for
major NSR applicability purposes. We are committed to working with
refiners and state/local air pollution control agencies to clarify and
ensure that, in applicability analyses for gasoline desulfurization
projects, only those emissions increases resulting from the physical or
operational changes necessary to comply with gasoline desulfurization
requirements are included in the applicability analysis.
In doing an applicability analysis for major NSR, refineries should
analyze their past, current, and future operations and emissions to
determine whether it is possible to avoid major NSR based upon their
facility-specific circumstances, including the use of previous emission
reductions at the facility to ``net'' out of NSR. Similarly, sources
might avoid NSR by using Plantwide Applicability Limits (PALs) to cap
emissions. Emissions netting is a term that refers to the process of
considering certain previous and prospective emission changes at an
existing major source to determine if a net emissions increase will
result from the proposed new project. Where the sum total of creditable
increases and decreases across the refinery is less than significant,
major NSR would not apply. In addition, if the proposed emissions
increase from a proposed project (in this case, a project undertaken to
reduce gasoline sulfur levels) is by itself, without considering any
decreases, less than significant, major NSR would also not apply.
PALs may provide another opportunity for refineries to avoid
triggering major NSR applicability. The voluntary, source-specific PAL
is a straightforward, flexible approach to determine whether changes at
an existing major source of air pollution result in a significant net
emissions increase. By restricting (or ``capping'') a facility's
emissions to a level representative of current actual emissions, a PAL
allows a source to change operations and equipment without having to
undergo major NSR permitting. For example, as long as refinery
activities do not result in emissions above the PAL cap level, the
refinery would not be subject to major NSR, regardless of the nature of
the activity. Under a PAL, instead of a case-by-case assessment of
whether a proposed change is subject to or excluded from major NSR, the
refinery manager knows that as long as the refinery stays within its
emissions cap, major NSR will not be triggered. Production units may be
started and stopped, production lines reconfigured, and products
changed and revamped without delay from major NSR permitting.
Because of these advantages, the Agency previously has proposed to
incorporate PALs in all of its NSR regulations (see 61 FR 38250, 38264,
July 23, 1996), and has worked with state permitting authorities to
develop PALs for individual sources. Likewise, the Agency is committed
to exploring the propriety of authorizing PALs for refineries subject
to the final gasoline
[[Page 26066]]
sulfur control rules. We are examining our authorities to assure they
support these approaches. Should it be necessary, EPA stands prepared
to issue final regulations to make PALs available to sources making
changes to comply with these gasoline sulfur control requirements.
We are further committed to investigating with affected refineries
whether a PAL might be a valuable tool for managing a number of other
Clean Air Act requirements. For instance, depending on the relevant
state rules, a PAL also could include terms that allow facility changes
to be made without triggering minor NSR. It is our experience that, in
the cases where PALs have been applied, both industry and air pollution
regulators have benefitted from the regulatory certainty and simplicity
a PAL provides. The use of a PAL can enhance a refinery's ability to
make appropriately designated changes quickly, without having to
evaluate a baseline for each modification, determine the
contemporaneous increases and decreases, and engage in other time-
consuming netting procedures required under the major NSR program on a
case-by-case basis. A PAL also can encourage a source to reduce
emissions voluntarily (e.g., from pollution prevention or other
emission reduction efforts), so that it has sufficient room for growth
(under the PAL) to accommodate increased emissions from future process
changes.
Approaches to Expedite the Processing of NSR Permit Applications
Notwithstanding the availability of the major NSR applicability
principles and mechanisms discussed above, we anticipate that it will
not be possible for all refineries subject to the gasoline
desulfurization requirements to prevent significant emission increases
and avoid major NSR. Additionally, even those facilities that are able
to avoid major NSR likely will be required to obtain a state minor NSR
permit. For facilities subject to major NSR, the timing of permit
issuance could vary depending on many factors, including the complexity
of process changes, the type of permit required, air quality impact,
control technology reviews, and the state's overall permit workload. It
is not uncommon for issuance of a major source preconstruction permit
to take six to 12 months from the receipt of a source's complete permit
application. In addition, determining the applicable permitting
requirements for refineries is often complex, due to the wide array of
emission points and processes.
To help expedite the NSR permitting process, we suggest the
following streamlining approaches. Since state/local governments
typically are the lead permitting agencies, we will work closely with
them on any of these efforts. We solicit comments on the efficacy of
these approaches and opportunities for additional streamlining. We are
particularly interested in understanding whether these permit
streamlining approaches could enable refineries to begin voluntarily
producing lower-sulfur gasoline earlier than the compliance dates
proposed today, so that the environmental benefits may be realized
sooner than 2004 and ABT credits (see previous Section) could be
generated.
Federal guidance on streamlining certain major NSR
permitting requirements, such as control technology and compliance
parameters. Although the major NSR permit is a case- and source-
specific evaluation, we could provide guidance on certain aspects of
refinery projects designed to reduce fuel sulfur that share a common
requirement or circumstance. For example, for refinery projects
permitted in the same time frame, the Lowest Achievable Emission Rate
(LAER) requirement should be the same for identical emissions units
regardless of the location of the individual refinery. In this case, we
could define for the industry what emissions levels would be expected
to meet LAER and provide model permit conditions, including appropriate
monitoring, record keeping, and reporting. Although Best Available
Control Technology (BACT) determinations require case-by-case
considerations, we also could issue guidance setting out a level of
emissions that, in our view, satisfies BACT for the class or category
of emission units associated with refinery desulfurization. We expect
that providing BACT and LAER guidance would help to expedite major
source permitting and add more certainty to the permit process.
Consequently, for any applications processed within a discrete time
frame, a presumptive federal LAER and/or BACT could be established.
Availability of offsets. The major NSR permitting
provisions require that a significant emissions increase of
nonattainment pollutants must be offset by emission reductions from
other sources. We solicit comment on the need for offsets by refineries
making modifications to meet the proposed sulfur standards, and the
expected size or volume of any offsets that may be necessary. In
addition, to the extent offsets may be useful or necessary, EPA
requests comment on whether on-site emissions reductions at the
refinery could be used to avoid the expected emissions increases that
would otherwise occur. We will work with refiners and state/local air
pollution control agencies to explore options and possible new
approaches that would help ensure the availability of offsets. For
example, it may be possible to establish pre-funded offset pools,
designed specifically for offsetting emissions increases resulting from
gasoline desulfurization projects. We believe that the establishment of
preapproved offset banks or pools could greatly expedite permitting in
nonattainment areas.
To help give certainty that offsets will be available, we seek
comment on how and whether emission reductions resulting from vehicles
operated on low sulfur gasoline could be used as offsets by refineries
implementing gasoline sulfur controls. For example, it may be possible
for a state, within a given nonattainment area, to set aside a portion
of the emission reductions expected from vehicles operating on low
sulfur gasoline and dedicate those reductions for use as offsets by
refineries. These offsets would have to meet all the criteria currently
established for being creditable, and could not be ``double-counted''
by the state for other SIP planning purposes. We request comment on the
ability of emission reductions from the use of low sulfur gasoline to
meet the Clean Air Act's criteria for creditable offsets for NSR
purposes. Since securing offsets can be a significant challenge to
sources undergoing major NSR permitting in nonattainment areas, we
believe this approach could substantially speed up, and add certainty
to, the permitting process. We believe this approach is worth
evaluating, given the enormous emission reductions resulting from the
use of low sulfur gasoline, and given that some refineries will trigger
major NSR solely as a result of the process changes needed to produce
this new gasoline. Finally, EPA seeks comment on whether providing the
ability to use the emissions reductions resulting from the use of low
sulfur gasoline in vehicles as offsets for refineries producing low
sulfur gasoline can be limited to this specific situation.
Specifically, EPA requests comment on the concern that providing this
option to refineries would allow the use of such emissions reductions
as offsets for other stationary sources.
As discussed above, we believe that refineries in ozone
nonattainment areas could be the most likely to trigger major NSR
review, based on net emission increases of NOX and/or VOCs.
The proposed Tier 2/gasoline sulfur control program is expected to
result in over
[[Page 26067]]
500,000 tons of NOX reductions and over 100,000 tons of VOC
reductions nationwide in 2004 (the first year of implementation), as
well as substantial reductions in particulate matter and sulfur
dioxide, as described elsewhere in this document and the draft
Regulatory Impact Analysis.58 In a given nonattainment area,
the program could result in hundreds to thousands of tons of
NOX and VOC reductions, depending on the inventory of cars
and light-trucks in the area. For example, for the New York
metropolitan area, EPA projects NOX emission reductions of
7,344 tons and VOC emission reductions of 1,285 tons in 2004 resulting
from the proposed Tier 2/gasoline sulfur control program.59
We anticipate that only a small fraction of these total emission
reductions in a given area would be needed for use as offsets for
refineries implementing gasoline sulfur control projects.
---------------------------------------------------------------------------
\58\ Although these emission reduction estimates are for the
combined Tier 2 emission standards/gasoline sulfur control program,
in 2004, nearly all these emission reductions would be attributed
solely to vehicles fueled by low sulfur gasoline, since vehicles
meeting the Tier 2 emission standards would comprise only a small
fraction of the vehicle fleet.
\59\ See draft Regulatory Impact Analysis, Chapter III.
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Model permits and permit applications. It may be possible
to develop an individual, or series of, model permits or permit
applications for gasoline desulfurization projects. Rather than each
individual refinery having to develop its own permit application from
scratch, a generic permit application form could be developed to
address common issues. To file a major source application, a refinery
would only need to fill in the blanks as they may relate to case-
specific assessments, such as air quality impacts. Similarly, a model
permit could contain all necessary compliance measures avoiding the
time spent in developing individual permit conditions. Model permits or
permit applications would serve as templates, thereby eliminating much
of the time and uncertainty associated with processing each
application.
EPA refinery permitting teams. We could establish a team
of experts to be available as a resource, as needed, to refineries and
state/local agencies to troubleshoot permitting issues that may develop
with individual applications. The team could be made up of EPA
permitting experts empowered to make decisions and resolve issues
quickly.
In addition to the above opportunities to streamline the permitting
process, we encourage states to process a refinery's request to
implement changes at a facility to meet gasoline desulfurization
requirements as a priority and on an expedited basis. Priority
treatment, in combination with the above opportunities to streamline
the process, would ensure that permit applications associated with
gasoline desulfurization changes are processed as expeditiously as
possible. Given the enormous environmental benefits that we estimate
would be achieved as a result of the proposed gasoline sulfur control
requirements, we believe such expedited and special processing is
appropriate.
ii. Title V Operating Permit Program.
We recognize that the changes to be made by refiners to implement
gasoline sulfur controls typically would involve not only NSR
preconstruction permitting requirements but also those of the title V
operating permit program. Title V requires owners or operators of
``major'' and certain other sources to obtain an operating permit--a
document that identifies all emissions units, their applicable
requirements as developed in accordance with the Clean Air Act, and
monitoring and other permit conditions to provide a reasonable
assurance of compliance with each of the applicable requirements on an
ongoing basis. Most of the refiners likely are ``major'' sources
subject to title V, due to their plant-wide level of emissions. As with
other process changes, prior to implementing gasoline sulfur controls,
refiners would need to work with their state, local, or tribal
permitting agency to determine what requirements apply and what changes
might be required to the source's title V permit application or permit
(if one has been issued).
A critical element of any successful title V permitting strategy to
accomplish the necessary desulfurization is how best to integrate the
procedural and substantive requirements of the title V and NSR permit
programs. We believe the title V permitting process provides an
excellent opportunity to accomplish this integration and to impart
greater certainty into the ultimate approvability of a gasoline
desulfurization project under both permit programs. Depending on a
specific permitting authority's program and when the desulfurization
activity would occur relative to the issuance of the refinery's initial
title V permit, the NSR preconstruction permit and the title V permit
processes might be done in parallel or in sequence.
Where the title V permit is issued before the desulfurization
activity commences, this permit must be updated before operation of the
changes that would also be subject to NSR. In this case, we suggest
that the preconstruction permit review process, managed by the
permitting authority, be merged with the title V permit revision
process so as to satisfy the procedural safeguards and the same
substantive requirements of the NSR and title V programs at the same
time.60 If this is done, the title V permit may be
administratively amended to incorporate the contents of the NSR permit
prior to operation of the desulfurization process changes. Where the
appropriate NSR action (major or minor) approving the desulfurization
changes precedes the issuance of a source's initial title V permit, the
applicable NSR process can still be ``enhanced'' to address title V
obligations. Here, in order to determine approvability under both title
V and NSR, the permitting authority can issue a separate title V permit
specifically for the desulfurization project in advance of the title V
permit that will be issued subsequently for the rest of the site.
Finally, if issuance of the title V permit issuance for the entire
source would precede the NSR construction, depending on several
factors, the permitting authority could conduct simultaneous permit
processes to accomplish preconstruction approval of the desulfurization
project and title V approval for the operation of the project in
conjunction with the entire refinery source.
---------------------------------------------------------------------------
\60\ The concept of a merged NSR/title V process refers to the
combination of the title V review process with any otherwise
applicable state preconstruction review process, where such process
satisfies the procedural requirements of the title V's permit
revision, permit review, and public participation provisions.
Example state review processes that may be eligible for merger
include, but are not limited to, preconstruction review of major or
minor NSR, source-specialized State Implementation Plan revisions,
and procedures implementing section 112(g) of the Clean Air Act.
Under a merged process, activities are only presented in a public
forum once, rather than in sequence, to avoid duplication of
process. Upon completion of the merged process, a successful project
would have met all federal permitting requirements, including review
by the public, EPA and affected States, and opportunities for EPA
objection and public petition, and can implement both processes
without delay. Qualifying activities that have received
preconstruction review permits meeting the requirements of 40 CFR
70.7(d)(1)(v) may be incorporated into title V permits as
administrative permit amendments.
---------------------------------------------------------------------------
Beyond synchronizing when the two permit programs would be
implemented, we recommend that permitting authorities take approaches
in the substantive permitting of the desulfurization projects that will
both assure compliance with all applicable air requirements and result
in a more flexible and efficient permit design. We encourage that the
approaches in the
[[Page 26068]]
title V ``White Papers'' 61 be considered to focus both the
content of title V applications and permits. In particular, we
recommend that permitting authorities and owners or operators of
refineries consider the ``streamlining'' of multiple applicable
requirements applying to the same project. Under the streamlining
concept, where multiple applicable requirements apply to the same
emission unit(s), the permitting authority may develop one emission
limit (with associated monitoring, recordkeeping, and reporting) that
assures compliance with all applicable requirements. For example,
several aspects of the control requirements necessary to implement our
maximum available control technology (MACT) and new source performance
standards (NSPS) requirements, State Implementation Plan (SIP), and NSR
programs (including both major and minor NSR, as applicable) could be
considered for streamlining per White Paper Number 2. Where successful,
this streamlining will result in a single control requirement (or
emission limit), coupled with appropriate monitoring, recordkeeping,
reporting, and testing requirements that yield a reasonable assurance
of compliance for all subsumed requirements.62
---------------------------------------------------------------------------
\61\ White Paper for Streamlined Development of Part 70 Permit
Applications, Lydia N. Wegman, Deputy Director, Office of Air
Quality Planning and Standards, U.S. EPA, July 10, 1995 and White
Paper Number 2 for Improved Implementation of the Part 70 Operating
Permits Program, Lydia N. Wegman, Deputy Director, Office of Air
Quality Planning and Standards, U.S. EPA, March 5, 1996.
\62\ See Section II.A. of White Paper Number 2.
---------------------------------------------------------------------------
We also are willing to explore applying to the varying situations
of sulfur removal at refineries certain permit design approaches that
have previously been limited to some permitting pilot projects. In
particular, in partnership with permitting authorities, we have been
working with selected industries at specific sites to conduct Pollution
Prevention in Permitting Project (P4) pilots. These projects respond to
the Administration's goals for reinvention in order to implement
environmental permit programs in a more streamlined fashion, while
assuring required levels of environmental protection. Based on our
prior experience with these regulatory reinvention projects, permit
design options for refiners implementing gasoline desulfurization
projects might include, but are not limited to, any of the following
approaches:
Advance approvals of certain types of changes in title V,
including those subject to minor NSR.# 63
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\63\ Advance approval means that a particular project (or class
of projects) like one to accomplish gasoline desulfurization and its
support activities would be preapproved for title V purposes before
its actual construction, provided that the terms of the title V
permit governing the advance approval are met. The Agency has a
possible non-binding interpretation of the Title V regulations that
would provide for the advance approval of certain new emission units
and control devices. See 63 FR 50279, 50315-20 (Sept. 21, 1998)
(Section IV.L., Permitting and Compliance Options/Change Management
Strategy, in National Emission Standards for Hazardous Air
Pollutants for Source Categories: Pharmaceuticals Production).
---------------------------------------------------------------------------
Provisions that where met would prevent another
requirement from applying (e.g., plant wide applicability limits (as
noted above) to address potential major NSR applicability).
Model permit conditions, such as a presumptive,
streamlined approach to meet all applicable control technology
requirements to expedite permitting decisions, where applicable.
Adding terms to a title V permit so as to preauthorize a
faster permit revision process where one is necessary to add further
details within an approved approach (e.g., the minor instead of
significant permit modification process).
Permitting the worst-case emissions scenario to address
all applicable requirements applying in a range of possible operating
scenarios or to prevent certain requirements from applying.
Permitting alternative compliance options where an owner
or operator of a source needs the flexibility to vary the compliance
approach with changing refinery conditions.
Using pollution prevention approaches to facilitate
compliance with applicable requirements and/or required permit terms.
We recognize that the situations for refineries affected by the
proposed gasoline sulfur control program can vary widely (e.g., sulfur
level in the gasoline, size of the stream, air quality status of the
area, etc.), and that the actual permit approach for an individual
refinery may be a combination of certain options outlined above and
previously for streamlining NSR. Any title V approach must, however,
assure compliance with all applicable requirements linked to the
necessary construction and provide a meaningful opportunity for all
affected parties to review the appropriateness of a proposed approach
as it would apply to a particular site. For example, where new
desulfurization units would be required and would be well controlled so
as to result in emissions below the threshold for triggering major NSR,
then an advance approval of minor NSR requirements in combination with
certain operationally limiting conditions might be an appropriate
strategy. Where the addition of such a unit would trigger major NSR,
then the strategies that combine the reviews and streamline the
requirements of both title V and major NSR offer promise. In a few
cases, reblending of high sulfur gasoline blend stocks, blending in low
sulfur oxygenates, or using sweeter crude oil might be sufficient to
achieve the necessary sulfur reductions and require few, if any,
additional title V permit terms to implement.
iii. EPA Assistance to Explore Permit Streamlining Options and
Solicitation of Comment.
We are committed to exploring the possible approaches described
above. Accordingly, if there is sufficient interest and need, as
expressed in comments on this proposed rule, within the refining
industry and among state permitting authorities, we will hold a P4/
flexible permit workshop focused on the permitting of the refining
industry arising from the gasoline desulfurization program.
Additionally, should a permitting authority and owners or operators of
affected facilities within a common jurisdiction express a desire for a
specific flexible permit project aimed at the development of permit
language to facilitate refinery activities to reduce gasoline sulfur,
then in accordance with already established principles for initiating
similar permit projects, we would be willing to work with a designated
refinery. We intend that the approaches derived from such efforts could
then serve as a template as needed for use by other refineries and
state permitting authorities, provided the approaches are modified to
conform with all applicable state title V and NSR requirements.
We believe that application of one or more of the approaches
described in today's document would reduce any burden of meeting NSR
permit requirements and revisions to title V permit applications or
permits to incorporate the gasoline desulfurization requirements
adopted in the final rule. However, the use of one or more of these
approaches would have accompanying resource requirements. For example,
it is possible that the initial resources required to establish a PAL,
and the attendant monitoring, recordkeeping and reporting requirements,
could involve as much time and resources as associated with a typical
NSR permit. However, once established, a PAL could provide more
flexibility and minimize future resource demands than more traditional
permit approaches. Accordingly, we request that permitting authorities,
owners or operators of affected facilities, and the public comment on
whether use of the
[[Page 26069]]
approaches described in today's document will achieve appropriate
streamlining of controls and requirements arising out of this rule and
meet the objectives of the NSR and title V permitting programs.
c. Should Hardship Relief Be Available? Elsewhere in this document
(Section IV.C.3.b.), we propose a hardship provision that would apply
to small refiners. EPA seeks additional comment on whether it should
adopt a hardship provision allowing for compliance with standards less
stringent than those proposed today during the early years of the
program. While EPA believes that it is feasible for most refiners to
meet the proposed standard by 2004, the Agency is seeking comment on
whether it may be appropriate to allow refiners with substantial
economic hardship circumstances to apply for relief from compliance
with the sulfur standard for a limited time period.
Such a hardship provision would need to contain appropriate
criteria to limit the provision to a narrowly drawn set of
circumstances. This might include criteria such as ability to raise
capital to make necessary refinery investments in time for 2004, given
the current size and ownership of the refinery, the physical
characteristics of the refinery, the volume of gasoline at issue,
ability to purchase credits to comply, and any efforts by the refiner
to limit sulfur that are already underway or have been attempted. The
provision would also need to contain criteria to ensure that it would
not undermine the emissions reduction goals of the Tier 2/sulfur
program and would not allow large amounts of gasoline with sulfur
levels significantly above 30 ppm into the market. For example, this
might include a volume limit on the use of less stringent standards in
hardship circumstances. It would also need to include an endpoint, so
that the relief is short-term and the refinery would then have to meet
the same standard as all other refineries. For example, EPA would not
expect that hardship relief will be needed beyond 2009.
Under such a provision, we expect that refiners would be subject to
a reasonable level of control, albeit less stringent than the proposed
standards. At a minimum, sulfur levels at a particular refinery should
not be permitted to be higher than 1997-1998 baseline levels and in no
event should the average sulfur level be greater than 300 ppm. EPA also
seeks comment on the appropriate time frame for allowing relief in
hardship circumstances. EPA solicits comments on whether any refiners
would encounter significant hardship in meeting the proposed standard.
EPA solicits comment on the implications of any such hardship provision
on small refiners and its relationship to the small refiner provisions
proposed in this document. Finally, EPA seeks comment on the
implications of a hardship provision on the proposed ABT program.
5. Consideration of Diesel Fuel Control
As explained in Section IV.B. above, the proposed Tier 2 standards
would apply to both gasoline- and diesel fuel-fueled vehicles.
Currently very few light-duty vehicles operate on diesel fuel. Given
what we know about gasoline vehicles, we believe it is reasonable to
anticipate that the use of exhaust aftertreatment devices may be
required, and that these technologies may have similar sensitivities to
sulfur that the catalysts used on gasoline engines have. However, we do
not yet have enough information to be able to conclude that diesel
sulfur levels need to be reduced in the same time frame that Tier 2
vehicles are introduced. A decision to require reductions in diesel
sulfur levels could have significant implications for the refining
industry, both because it would likely require capital expenditures
over and above the significant costs that would be incurred in
controlling gasoline sulfur, and because for some refiners concurrent
control of gasoline and diesel sulfur may be the most economical
solution. Hence, due to the implications for automotive manufacturers
and for diesel fuel producers, a decision on whether to require diesel
fuel sulfur reductions needs to be made as soon as possible.
Automobile and diesel engine manufacturers and state air quality
agencies have recently asked us to set new fuel quality requirements
for diesel fuel used in highway vehicles.64 The
manufacturers believe that such requirements, especially controlling
diesel fuel sulfur content to very low levels, could produce large
environmental benefits by enabling dramatically lower-emitting diesel
engines equipped with exhaust aftertreatment devices. The viability of
such technologies would, of course, affect the feasibility of the
proposed Tier 2 emission standards for diesel vehicles. Currently,
highway diesel fuel is regulated under standards we set in 1990. These
standards, which became effective in 1993, limit the concentration of
sulfur in diesel fuel to a maximum of 500 ppm; they also control the
amount of aromatic compounds in the fuel (55 FR 34120, August 21,
1990).
---------------------------------------------------------------------------
\64\ See the following contained in the docket for this
rulemaking: Letter from Robert J. Eaton, Chrysler Corporation, Alex
Trotman, Ford Motor Company and John F. Smith, Jr., General Motors
Corporation, to Vice President Al Gore, July 16, 1998; ``STAPPA/
ALAPCO Resolution on Sulfur in Diesel Fuel,'' October 13, 1998;
Letter from S. William Becker, Executive Director of STAPPA/ALAPCO,
to Carol Browner, Administrator of U.S. EPA, October 16, 1998;
Letter from Jed R. Mandel, Engine Manufacturers Association, to
Margo T. Oge, Director, Office of Mobile Sources, EPA, November 6,
1998.
---------------------------------------------------------------------------
Diesel engine manufacturers have argued that implementing Tier 2
standards without concurrent diesel fuel changes would be unfair to
diesels because diesel fuel quality is worse than gasoline fuel
quality, especially considering that the Tier 2 rulemaking includes
proposed improvements in gasoline quality to enable advanced three-way
catalytic converters. Some argue that, beyond fuel-neutrality
considerations, diesel fuel quality improvement is needed to combat
global warming because it will facilitate the marketing of more diesel
vehicles and, in their opinion, thereby reduce emissions of global
warming gases. Others counter that such benefits are illusory and that
diesel vehicles should be discouraged because diesel exhaust is a
serious health hazard, a hazard that improvements in fuel quality would
do little to mitigate.
To address the issue of diesel fuel changes, we will issue an
Advance Notice of Proposed Rulemaking (ANPRM) in the near future. We
encourage interested parties to review and comment on the issues raised
in the ANPRM. On the basis of this information, if appropriate, we plan
to publish a proposal on standards for diesel fuel in the next several
months. This would provide some degree of clarity regarding our plans
in this area in time to help affected industries to then make their own
plans without undue disruption. This is especially important for the
petroleum refining industry in planning capital outlays to accomplish
sulfur reduction in gasoline, and potentially diesel fuel, at the most
economical point in the refining process.
Several diesel vehicle manufacturers have raised the concern that
unless or until lower sulfur diesel fuel is available, the sulfate
component of diesel PM may be particularly difficult to control to very
low emission levels. They have encouraged us to express the proposed PM
standards in terms of non-sulfate PM to provide manufacturers
flexibility in how they balance the control of sulfate and non-sulfate
PM components.
[[Page 26070]]
We request comment on such an approach, including specific comments
on the following:
Whether or not such an approach could be justified on an
air quality basis, given the potential for very high sulfate PM
emissions due to unrestrained sulfate production in diesel catalytic
converters;
Whether such an approach should be limited to the interim
PM standards and be discontinued when the Tier 2 standards are fully
phased in;
How this approach should be phased out if low-sulfur
diesel fuel were to be phased in; and
Whether a cap on sulfate PM should accompany such an
approach and what value (in grams per mile) would be appropriate for a
cap.
D. What Are the Economic Impacts, Cost Effectiveness and Monetized
Benefits of the Proposal?
Consideration of the economic impacts of new standards for vehicles
and fuels has been an important part of our decision making process for
this proposal. The following sections describe first the costs
associated with meeting the new vehicle standards and the new fuel
standards. This will be followed with a discussion of the cost
effectiveness of the proposal. Lastly, we will discuss the results of a
preliminary benefit-cost assessment that we have prepared.
Full details of our cost analyses, including information not
presented here, can be found in the Draft RIA associated with this
rule. We invite comments on all aspects of these analyses.
1. What Are the Estimated Costs of the Proposed Vehicle Standards?
To perform a cost analysis for the proposed standards, we first
determined a package of likely technologies that manufacturers could
use to meet the proposed standards and then determined the costs of
those technologies. In making our estimates we have relied both on
publicly available information, such as that developed by California,
and confidential information supplied by individual manufacturers.
In general, we expect that the Tier 2 standards will be met through
refinements of current emissions control components and systems rather
than through the widespread use of new technology. Furthermore, lighter
vehicles will generally require less extensive improvements than larger
vehicles and trucks. More specifically, we anticipate a combination of
technology upgrades such as the following:
Improvements to the catalyst system design, structure, and
formulation plus some increase in average catalyst size and loading.
Air and fuel system modifications including changes such
as improved microprocessors, improved oxygen sensors, leak free exhaust
systems, air assisted fuel injection, and calibration changes including
improved precision fuel control and individual cylinder fuel control.
Engine modifications, possibly including an additional
spark plug per cylinder, an additional swirl control valve, or other
hardware changes needed to achieve cold combustion stability.
Increased use of fully electronic exhaust gas
recirculation (EGR).
Increased use of secondary air injection for 6 cylinder
and larger engines.
Heat optimized exhaust pipes and low thermal capacity
manifolds.
Using a typical mix of changes for each group, we projected costs
separately for LDVs, the different LDT classes, and for different
engine sizes (4, 6, 8-cylinder) within each class. For each group we
developed estimates of both variable costs (for hardware and assembly
time) and fixed costs (for R&D, retooling, and certification).
Cost estimates based on the current projected costs for our
estimated technology packages represent an expected incremental cost of
vehicles in the near-term. For the longer term, we have identified
factors that would cause cost impacts to decrease over time. First,
since fixed costs are assumed to be recovered over a five-year period,
these costs disappear from the analysis after the fifth model year of
production. Second, the analysis incorporates the expectation that
manufacturers and suppliers will apply ongoing research and
manufacturing innovation to making emission controls more effective and
less costly over time. Research in the costs of manufacturing has
consistently shown that as manufacturers gain experience in production,
they are able to apply innovations to simplify machining and assembly
operations, use lower cost materials, and reduce the number or
complexity of component parts.65 These reductions in
production costs are typically associated with every doubling of
production volume. Our analysis incorporates the effects of this
``learning curve'' by projecting that the variable costs of producing
the Tier 2 vehicles decreases by 20 percent starting with the third
year of production. We applied the learning curve reduction only once
since, with existing technologies, there would be less opportunity for
lowering production costs than would be the case with the adoption of
new technology.
---------------------------------------------------------------------------
\65\ ``Learning Curves in Manufacturing,'' Linda Argote and
Dennis Epple, Science, February 23, 1990, Vol. 247, pp. 920-924.
---------------------------------------------------------------------------
We have prepared our cost estimates for meeting the Tier 2
standards using a baseline of NLEV technologies for LDVs, LDT1s, and
LDT2s, and Tier 1 technologies for LDT3s and LDT4s. These are the
standards that vehicles would be meeting in 2003. 66 We have
not specifically analyzed smaller incremental changes to technologies
that might occur due to the interim standards between the baseline and
Tier 2. In many cases, we believe these changes will not be significant
based on current certification levels. For others, manufacturers can
use averaging and other program flexibilities to avoid redesigning
vehicles twice within a relatively short period of time. We believe
this is likely to be an attractive approach for manufacturers due to
the savings in R&D and other resources.
---------------------------------------------------------------------------
\66\ Even though the NLEV program ends in the Tier 2 time frame,
we have not included the NLEV program costs or benefits in our
analysis, since EPA analyzed and adopted NLEV previously.
---------------------------------------------------------------------------
For the total annual cost estimates, we projected that
manufacturers will start the phase-in of Tier 2 vehicles with LDVs in
2004 and progress to heavier vehicles until all LDT2s meet Tier 2
standards in 2007. For LDT3s and LDT4s, we projected some sales of Tier
2 LDT3s prior to 2008 for purposes of averaging in the interim program
and that the phase-in of Tier 2 vehicles would end with LDT4s in 2009.
Finally, we have incorporated what we believe to be a high level of
R&D spending at $5,000,000 per vehicle line (with annual sales of
100,000 units per line). We have included this large R&D effort because
calibration and system optimization is likely to be a critical part of
the effort to meet Tier 2 standards. However, we believe that the R&D
costs may be overstated because the projection ignores the carryover of
knowledge from the first vehicle lines designed to meet the standard to
others phased-in later.
The evaporative emissions standards we are proposing today for LDVs
and LDTs are feasible with relatively small cost impacts. We estimate
the cost of system improvements to be about $4 per vehicle, for all
vehicle classes. This incremental cost reflects the cost of moving to
low permeability materials, improved designs or low-loss
[[Page 26071]]
connectors. R&D for the evaporative emissions standard is included in
the R&D estimates given above for the tailpipe standards. We have made
no projections of learning curve reductions for the evaporative
standard.
Table IV.D.-1 provides our estimates of the per vehicle increase in
purchase price for LDVs and LDTs. The near-term cost estimates in Table
IV.D.-1 are for the first years that vehicles meeting the standards are
sold, prior to cost reductions due to lower productions costs and the
retirement of fixed costs. The long-term projections take these cost
reductions into account. We have sales weighted the cost differences
for the various engine sizes (4-, 6-, 8-cylinder) within each category.
Table IV.D.-1.--Estimated Purchase Price Increases Due to Proposed Tier 2 Standards
----------------------------------------------------------------------------------------------------------------
LDV LDT1 LDT2 LDT3 LDT4
----------------------------------------------------------------------------------------------------------------
Tailpipe standards:
Near-term (year 1)......................... $76 $69 $132 $270 $266
Long-term (year 6 and beyond).............. 46 43 99 214 209
Evaporative Standard........................... 4 4 4 4 4
----------------------------------------------------------------------------------------------------------------
2. What Are the Estimated Costs of the Proposed Gasoline Sulfur
Standards?
As explained in Section IV.C., most refiners will have to install
capital equipment to meet the proposed gasoline sulfur standard.
Presuming that refiners will want to minimize the cost involved,
refiners are expected to desulfurize the gasoline blendstock produced
by the fluidized catalytic cracker (FCC) unit. Recent advances have led
to significant improvements in hydrotreating technology by CDTECH and
Mobil Oil (OCTGAIN) that lower the cost of desulfurizing FCC gasoline;
we understand that similar technologies are being developed by other
parties. Since these improved desulfurization technologies represent
the lowest cost options and are expected to be used by most refiners
needing to install desulfurization equipment, we estimated the cost of
desulfurization based on their use.
For our analysis, we estimated the cost of lowering gasoline sulfur
levels in five different regions of the country (Petroleum
Administration Districts for Defense, or PADD), starting from the
current regional average in each PADD down to 30 ppm. We then converted
the regional cost to a national average per-refinery cost, and
calculated a national aggregate cost and cents-per-gallon cost.
Based on this analysis we estimate that, on average, refiners in
the year 2004 would be expected to invest about $45 million for capital
equipment and spend about $16 million per year for each refinery to
cover the operating costs associated with these desulfurization units.
Since this average represents many refineries diverse in size and
gasoline sulfur level, some refineries would pay more and others less
than the average costs. When the average per-refinery cost is
aggregated for all the gasoline expected to be produced in this country
in 2004, the total investment for desulfurization processing units is
estimated to be about $4.7 billion dollars, and operating costs for
these units is expected to be about $1.5 billion per year. We believe
that the $4.7 billion in capital costs would be spread over several
years by the refiners' participation in the proposed averaging,
banking, and trading program.
These capital and operating costs represent our estimates for
domestic costs. While we think that many foreign refiners might incur
capital costs to meet the requirements of our gasoline sulfur program,
particularly in light of similar programs being enacted
internationally, others will argue that most foreign refiners would not
incur new costs as a result of our program because they can simply send
the lowest-sulfur fraction of their current production to the U.S.
Furthermore, some will argue that most foreign refiners do not face the
same permitting limitation and environmental and other regulatory costs
that domestic refiners face, and thus that their costs of producing low
sulfur gasoline will be minimal even if some investment is required.
While we have developed cost estimates with and without consideration
of possible costs attributed to imported gasoline, our estimates of
national and average costs do not include any costs attributed to
foreign refiners.
Using our estimated capital and operating costs we calculated the
average per-gallon cost of reducing gasoline sulfur down to 30 ppm.
Using a capital cost amortization factor based on a seven percent rate
of return on investment, and including no taxes, we estimated the
average national cost for desulfurizing gasoline to initially be about
1.7 cents per gallon. This cost is the cost to society of reducing
gasoline sulfur down to 30 ppm that we used for estimating cost
effectiveness. If we amortize the costs based on a rate of return on
investment of six to ten percent and a tax rate of 39 percent, which
may more closely represent the actual economic situation facing
refiners today, the average national cost for desulfurizing gasoline
down to 30 ppm would be 1.7-1.9 cents per gallon.
We anticipate that these costs will decrease in future years due to
improvements in technology, similar to the learning curve improvements
discussed above for vehicle cost. This improvement is estimated to
result in a 20 percent reduction in operating costs after the second
complete year of use. This estimated rate of improvement is similar to
previous cost reductions observed with desulfurization technologies as
they were being developed.
Additional cost reduction is expected as refiners increase the
throughput (debottleneck) of their refineries to lower their per-gallon
fixed costs. This increase in throughput for the industry as a whole is
termed capacity creep and it is has allowed a shrinking number of U.S.
refineries to handle the increasing demand for refined products. Our
analysis presumes that as an industry, refiners will debottleneck their
refineries at a rate consistent with the forecasted increase in
gasoline demand, which is about 2 percent per year. Thus, the fixed
operating cost, and a portion of the capital costs for these
desulfurization technologies, would decrease over time on a per gallon
basis as the volume of gasoline processed at each refinery increased.
Table IV.D.-2 below summarizes our estimates of per-gallon gasoline
cost increases for the years 2004, 2010 and 2015.
Table IV.D.-2.--Estimated Per-Gallon Cost for Desulfurizing Gasoline in
Future Years
------------------------------------------------------------------------
Cost (cents/
Year gallon)
------------------------------------------------------------------------
2004....................................................... 1.7
2010....................................................... 1.5
2015....................................................... 1.4
------------------------------------------------------------------------
[[Page 26072]]
3. What Are the Aggregate Costs of the Tier 2/Gasoline Sulfur Proposal?
Using current data for the size and characteristics of the vehicle
fleet and making projections for the future, the per-vehicle and per-
gallon fuel costs described above can be used to estimate the total
cost to the nation for the proposed emission standards in any year.
Figure IV.D.-1 portrays the results of these projections.67
BILLING CODE 6560-50-P
[GRAPHIC] [TIFF OMITTED] TP13MY99.004
BILLING CODE 6560-50-C
As can be seen from the figure, the annual cost starts out at just
over $2.5 billion per year and increases over the phase-in period to a
maximum of $3.7 billion in 2008. Thereafter, the annual cost declines
to a level of about $3.5 billion. The effect of projected growth in
vehicle sales and fuel consumption causes a slow, gradual rise in
annual cost to set in after about 2012.
4. How Does the Cost Effectiveness of This Program Compare to Other
Programs?
This section summarizes the cost effectiveness analysis done by EPA
and its results. The purpose of this assessment is to determine whether
reductions from the vehicle and fuel controls are cost effective,
taking into consideration alternative means of attaining or maintaining
the national primary ambient air quality standards. This involves a
comparison of our proposed program not only with past measures, but
with other new measures that might be employed to attain and maintain
the NAAQS. Both EPA and states have already adopted numerous control
measures, and remaining measures tend to be more expensive than those
previously employed. Therefore, there is no single cost effectiveness
level that defines what is acceptable. Rather, as we employ the most
cost effective available measures first, more expensive ones tend to
become necessary over time.
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\67\ Figure IV.D.-1 is based on the amortized costs from Tables
IV.D.-1 and IV.D.-2. Actual capital investments, particularly
important for fuels, would occur prior to and during the initial
years of the program, as described above in section IV.D.2.
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a. What Is the Cost Effectiveness of This Program? We have
calculated the per-vehicle cost effectiveness of the exhaust/gasoline
sulfur standards and the evaporative emission standards, based on the
net present value of all costs and emission reductions over the life of
an average Tier 2 vehicle subject to today's proposal. As described
earlier in the discussion of the cost of this proposal, the cost of
complying with the new standards will decline over time as
manufacturing costs are reduced and amortized capital investments are
recovered. To show the effect of declining cost on the cost
effectiveness, we have developed both near term and long term cost
effectiveness values. More specifically, these correspond to
[[Page 26073]]
vehicles sold in years one and six of the vehicle and fuel programs.
Vehicle cost is constant from year six onward. Fuel costs per gallon
continue to decline slowly in the years past year six; however, the
overall impact of this decline is small and we have decided to use year
six results for our long term cost effectiveness. Chapter V of the
draft RIA contains a full description of this analysis, and you should
look in that document for more details on the results summarized here.
Table IV.D.-3 summarizes the net present value lifetime cost, NMHC
+ NOX emission reduction and cost effectiveness results for
the Tier 2/gasoline sulfur proposal using sales weighted averages of
the costs (both near term and long term) and emission reductions of the
various vehicle classes affected.
Table IV.D.-3 also displays cost effectiveness values based on two
approaches to account for the small reductions in SO2 and
tailpipe emitted sulfate particulate matter (PM) associated with the
reduction in gasoline sulfur. While these reductions are not central to
the proposal and are therefore not displayed with their own cost
effectiveness, they do represent real emission reductions due to the
proposed rule. The first set of cost effectiveness numbers in Table
IV.D.-3 simply ignores these reductions and bases the cost
effectiveness on only the NMHC + NOX reductions from Tier 2/
gasoline sulfur. The second set accounts for these reductions by
crediting some of the cost of the program to SO2 and PM
reduction. The amount of cost allocated to SO2 and PM is
based on the cost effectiveness of SO2 and PM emission
reductions from other EPA actions. You may refer to the RIA for details
about these actions and how the specific allocations were developed.
Table IV.D.-3.--Cost Effectiveness of the Proposed Standards (1997 dollars)
----------------------------------------------------------------------------------------------------------------
Discounted
Discounted Discounted Discounted lifetime cost
lifetime lifetime NMHC lifetime cost effectiveness
Cost basis vehicle and + NOX effectiveness per ton with
fuel costs reduction per ton SO2 and direct
(tons) PM credita
----------------------------------------------------------------------------------------------------------------
Near term cost (production year 1).............. $230 0.108 $2,134 $1,599
Long term cost (production year 6).............. 188 0.109 1,748 1,213
----------------------------------------------------------------------------------------------------------------
a $54 credited to SO2 ($4800/ton), $4 to direct PM ($10,000/ton).
b. How Does the Cost Effectiveness of this Program Compare with
Other Means of Obtaining Mobile Source NOX + NMHC
Reductions? In comparison with other mobile source control programs, we
believe that today's proposal represents the most cost effective new
mobile source control strategy currently available that is capable of
generating substantial NOX + NMHC reductions. This can be
seen by comparing the cost effectiveness of today's program with a
number of new mobile source standards that EPA has adopted in recent
years. Table IV.D.-4 summarizes the cost effectiveness of several
recent EPA actions.
Table IV.D.-4.--C/E of Previously Implemented Mobile Source Programs
------------------------------------------------------------------------
$/ton
Program NOX+NMHC
------------------------------------------------------------------------
2004 Highway HD Diesel stds................................... 300
Nonroad Diesel engine stds.................................... 410-650
Tier 1 vehicle controls....................................... 1,980-2,
690
NLEV.......................................................... 1,859
Marine SI engines............................................. 1,128-1,
778
On-board diagnostics.......................................... 2,228
------------------------------------------------------------------------
(Costs adjusted to 1997 dollars.)
We can see from the table that the cost effectiveness of the Tier
2/gasoline sulfur standards falls within the range of these other
programs. Engine-based standards (the 2004 highway heavy-duty diesel
standards, the nonroad diesel engine standards and the marine spark-
ignited engine standards) have generally been less costly than Tier 2/
gasoline sulfur. Vehicle standards, most similar to today's proposal,
have values comparable to or higher than Tier 2/gasoline sulfur.
It is tempting to look at the engine standards and conclude that
more reductions at a similar low cost effectiveness should still be
available. This is especially true for the two largest categories
(highway and nonroad diesel engines) where new standards have been
adopted that were highly cost effective. However, cost effectiveness
was not a limiting consideration in either case. Rather, the level of
the standards selected was based primarily on technical feasibility in
the time available. That is, the maximum level of control that we found
to be feasible in these actions was driven more by what technology we
believed would be available than by cost. It will be important to
consider the potential for further control in these categories as we
move forward.
We do not believe that significant further control is available
from highway or nonroad diesel engines through more stringent standards
at the same cost effectiveness that these standards realized, in the
time frame proposed. Based on current knowledge, the next generation of
controls for these diesel engines would require advanced after-
treatment devices, still in the research and development phase. Such
controls have not yet been employed and when they become available will
be more costly and will have difficulty functioning without changes to
diesel fuel. We fully expect that, as the development of new technology
progresses and cost declines, future new standards for both of these
source categories will be developed. But we also expect that the cost
effectiveness of future standards will be higher and is not likely to
be significantly less than the cost effectiveness of today's proposal.
On the light duty vehicle side, the last two sets of standards were
Tier 1 and NLEV, which had cost effectiveness comparable to or higher
than Tier 2/gasoline sulfur. Compared to engines, these levels reflect
the advanced (and more expensive) state of vehicle control technology,
where standards have been in effect for a much longer period than for
engines. In fact, considering the increased stringency of the Tier 2
standards,68 it is remarkable that the cost effectiveness of
Tier 2/gasoline sulfur is in the same range as these actions. Based on
these results, Tier 2/gasoline sulfur appears to be a logical and
consistent next step in vehicle control.
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\68\ Tier 2/gasoline sulfur will yield about a 75% reduction in
NOX emissions compared to NLEV vehicles.
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In conclusion, we believe that the Tier 2/gasoline sulfur proposal
is a cost effective program for mobile source NOX + NMHC
control. We are unable to
[[Page 26074]]
identify another mobile source control program that would be more cost
effective than Tier 2/gasoline sulfur for making substantial further
progress in reducing NOX + NMHC emissions.
c. How Does the Cost Effectiveness of this Proposed Program Compare
with Other Known Non-Mobile Source Technologies for Reducing
NOX + NMHC? In evaluating the cost effectiveness of the Tier
2/gasoline sulfur proposal, we also considered whether our proposal is
cost effective in comparison with alternative means of attaining or
maintaining the NAAQS other than mobile source programs. As described
below, we have concluded that Tier 2/gasoline sulfur is cost effective
considering the anticipated cost of other technologies that will be
needed to help attain and maintain the NAAQS.
For purposes of estimating the cost of implementing the new ozone
and PM NAAQS, the Agency assumed certain baseline controls and compiled
a list of additional known technologies that could be considered in
devising emission reductions strategies.69 Through this
broad review, over 50 technologies were identified as reducing
NOX or VOC. The average cost effectiveness of these
technologies varied from hundreds of dollars a ton to tens of thousands
of dollars a ton. The Agency selected from this list all those
technologies that could be applied with an average cost effectiveness
of $10,000/ton or less, and showed that substantial progress toward
attainment could be made when operating within that limit.
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\69\ ``Regulatory Impact Analyses for the Particulate Matter and
Ozone National Ambient Air Quality Standards and Proposed Regional
Haze Rule,'' Appendix B, ``Summary of control measures in the PM,
regional haze, and ozone partial attainment analyses,'' Innovative
Strategies and Economics Group, Office of Air Quality Planning and
Standards, U.S. Environmental Protection Agency, Research Triangle
Park, NC, July 17, 1997.
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While many areas still remained in nonattainment under the NAAQS
analysis, we assumed that other methods would be identified in the
future that on average could help achieve the NAAQS at $10,000 per ton
or less. We believe that Tier 2/gasoline sulfur is one of those
methods. In fact, it will deliver critical further reductions that are
not readily obtainable by any other means known to the Agency. By way
of comparison, if all of the technologies identified for the NAAQS
analysis costing less than $10,000/ton were implemented nationwide,
they would produce NOX emission reductions of about 2.9
million tons per year. The Tier 2/gasoline sulfur proposal by itself
will generate about 2.8 million tons per year once fully implemented.
To obtain significant further reductions using the other technologies
identified in the NAAQS analysis rather than Tier 2/gasoline sulfur
could mean adopting measures costing well beyond $10,000/ton. Given the
continuing need for further emission reductions, we believe that Tier
2/gasoline sulfur control is clearly a cost effective approach, in
addition to those technologies assumed for the NAAQS analysis, for
attaining and maintaining the NAAQS.
We recognize that the cost effectiveness calculated for Tier 2/
gasoline sulfur is not strictly comparable to a figure for measures
targeted at nonattainment areas, since Tier 2/gasoline sulfur is a
nationwide program. However, there are several additional
considerations that have led us to conclude that Tier2/gasoline sulfur
is cost effective considering alternative means of attaining and
maintaining the NAAQS.
First, given the fact that Tier 2/gasoline sulfur is at most only
20 percent as costly per ton as the NAAQS figure for additional control
measures, we believe that there can be little doubt that the cost
effectiveness of Tier 2/gasoline sulfur is well within the cost
effectiveness range that the NAAQS cost analysis anticipated for
unspecified additional technologies that will be needed to attain the
NAAQS--technologies that the analysis noted might be applied in limited
areas or nationwide. Furthermore, as a national program, Tier 2/
gasoline sulfur can be implemented as a single unified rule without the
need for individual action by each of the states. Moreover, as noted
above, for states to obtain further substantial emission reductions
beyond those identified in the NAAQS could mean adopting measures
costing well beyond $10,000/ton, something that few areas of the
country to date have done.
In dealing with the question of comparing local and national
programs, it is also relevant to point out that, because of air
transport, the need for NOX control is a broad regional
issue not confined to non-attainment areas only. To reach attainment,
future controls will need to be applied over widespread areas of the
country. In the analyses supporting the recent NOX standards
for highway diesel engines,70 we looked at this question in
some detail and concluded that the regions expected to impact ozone
levels in ozone nonattainment areas accounted for over 85% of total
NOX emissions from a national heavy-duty engine control
program. Similarly, NOX emissions in attainment areas also
contribute to particulate matter nonattainment problems in downwind
areas. Thus, the distinction between local and national control
programs for NOX is less important than it might appear.
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\70\ Final Regulatory Impact Analysis: Control of Emissions of
Air Pollution from Highway Heavy-Duty Engines, September 16, 1997.
---------------------------------------------------------------------------
Finally, the statute indicates that in considering the cost
effectiveness of Tier 2/gasoline sulfur EPA should consider not only
attainment, but also maintenance of the standards. Tier 2/gasoline
sulfur--unlike nonattainment area measures--will achieve attainment
area reductions that, among other effects, will help to maintain air
quality that meets the NAAQS. These reductions relate not only to the
ozone and PM NAAQS, but also to SO2 and NO2, and
to CO.
In summary, given the array of controls that will have to be
implemented to make progress toward attaining and maintaining the
NAAQS, we believe that the weight of the evidence from alternative
means of providing substantial NOX + NMHC emission
reductions indicates that the Tier 2/gasoline sulfur proposal is cost
effective. This is true from the perspective of other mobile source
control programs or from the perspective of other stationary source
technologies that might be considered.
5. Does the Value of the Benefits Outweigh the Cost of the Proposed
Standards?
While relative cost effectiveness is the principal economic policy
criterion established for these standards in the Clean Air Act (see CAA
202(i)), further insight regarding the merits of the proposed standards
can be provided by benefit-cost analysis. The purpose of this section
is to summarize the methods we used and results we obtained in
conducting a preliminary analysis of the economic benefits of the
proposed standards, and to compare these economic benefits with the
estimated costs of the proposal. In summary, the results of our
analysis indicate that the economic benefits of the proposed standards
will likely exceed the costs of meeting the standards by a substantial
margin, and the significant uncertainties underlying the analysis are
unlikely to alter this outcome of positive net benefits.
a. What Is the Purpose of this Benefit-Cost Comparison? Benefit-
cost analysis (BCA) is a useful tool for evaluating the economic merits
of proposed changes in environmental programs and policies. In its
traditional application, BCA
[[Page 26075]]
estimates the economic ``efficiency'' of proposed changes in public
policy by organizing the various expected consequences and representing
those changes in terms of dollars. Expressing the effects of these
policy changes in dollar terms provides a common basis for measuring
and comparing these various effects. Because improvement in economic
efficiency is typically defined to mean maximization of total wealth
spread among all members of society, traditional BCA must be
supplemented with other analyses in order to gain a full appreciation
of the potential merits of new policies and programs. These other
analyses may include such things as examinations of legal and
institutional constraints and effects; engineering analyses of
technology feasibility, performance and cost; or assessment of the air
quality need.
In addition to the narrow, economic efficiency focus of most BCAs,
the technique is also limited in its ability to project future economic
consequences of alternative policies in a definitive way. Critical
limitations on the availability, validity, or reliability of data;
limitations in the scope and capabilities of environmental and economic
effect models; and controversies and uncertainties surrounding key
underlying scientific and economic literature all contribute to an
inability to estimate the economic effects of environmental policy
changes in exact and unambiguous terms. Under these circumstances, we
consider it most appropriate to view BCA as a tool to inform, but not
dictate, regulatory decisions such as the ones reflected in today's
proposal.
Despite the limitations inherent in BCA of environmental programs,
we considered it useful to estimate the potential benefits of today's
proposed standards both in terms of physical changes in human health
and welfare and environmental change, and in terms of the estimated
economic value of those physical changes. The BCA presented herein
should be considered preliminary, however, due to limitations in the
data and models available for analysis in advance of today's proposal.
Additional, more refined analysis will be conducted prior to issuance
of final standards. This post-proposal analysis will take account of
public comments on the proposed standards and this BCA and will also
make use of more extensive and refined data and models currently being
developed. Our expectation is that the more extended and refined
economic analysis conducted prior to final rulemaking will further help
inform and guide decisions on the appropriateness of the final rules.
Toward this end, we are presenting this preliminary BCA and requesting
public comments on the assumptions, data, and modeling efforts
supporting the analysis and its results, and the appropriate
interpretations and uses of those results.
b. What Was Our Overall Approach to the Benefit-Cost Analysis? The
basic question we sought to answer in the preliminary BCA was: ``What
are the net yearly economic benefits to society of the reduction in
mobile source emissions likely to be achieved by today's proposed
standards?'' In designing an analysis to answer this question, we
adopted an analytical structure and sequence similar to that used in
the so-called ``section 812 studies'' 71 to estimate the
total benefits and costs of the entire Clean Air Act. Moreover, we used
many of the same data sets, models, and assumptions actually used in
the Section 812 studies and/or the recent Regulatory Impact Analyses
(RIAs) for the Particulate Matter and Ozone National Ambient Air
Quality Standards and for the NOX SIP Call (also known as
the Regional Ozone Transport Rule, as discussed in Section III
above).72 By adopting the major design elements, data sets,
models, and assumptions developed for the recent RIAs, we have largely
relied on methods that have already received extensive review by the
public and by other federal agencies. Furthermore, the data sets
adopted from the Section 812 studies have received extensive review by
the independent Science Advisory Board and by the public.
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\71\ The ``section 812 studies'' refers to (1) USEPA, Report to
Congress: The Benefits and Costs of the Clean Air Act, 1970 to 1990,
October 1997 (also known as the ``section 812 Retrospective); and
(2) the first in the ongoing series of prospective studies
estimating the total costs and benefits of the Clean Air Act,
expected to be published later in 1999.
\72\ Regulatory Impact Analysis for the NOX SIP Call,
FIP, and Section 126 Petitions'' September 1998, EPA-452/R-98-003.
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As described in more detail in the Draft RIA for today's proposal,
this overall analytical design involves the following sequential steps:
1. Identify the technologies likely to be used to comply with the
proposed standards
2. Estimate the costs society would incur to employ the
technologies
3. Estimate the emissions reductions achieved by application of the
technologies
4. Estimate the change in air quality conditions resulting from the
estimated emissions reductions
5. Estimate the changes in human health and well-being and
environmental quality associated with the estimated changes in air
quality
6. Estimate the economic value of the estimated changes in human
health, human welfare, and environmental outcomes
7. Compare the resulting estimate of economic benefits with the
estimated costs, and calculate the net monetized benefits of the
proposed standards
8. Evaluate the uncertainty surrounding the estimate of net
monetized benefit by developing ranges of results that reflect the key
underlying scientific, economic, data, and modeling uncertainties
c. What Are the Significant Limitations of the Benefit-Cost
Analysis? Every BCA examining the potential effects of a change in
environmental protection requirements is limited to some extent by data
gaps, limitations in model capabilities (such as geographic coverage),
and uncertainties in the underlying scientific and economic studies
used to configure the benefit and cost models. Deficiencies in the
scientific literature often result in the inability to estimate changes
in health and environmental effects, such as potential increases in
premature mortality associated with increased exposure to carbon
models. Deficiencies in the economics literature often result in the
inability to assign economic values even to those health and
environmental outcomes that can be quantified, such as changes in lung
function caused by increased exposure to ozone. While these general
uncertainties in the underlying scientific and economics literatures
are discussed in detail in the RIA and its supporting documents and
references, the key uncertainties that have a bearing on the results of
the preliminary BCA of today's proposed standards are:
1. The exclusion of potentially significant benefit categories
(e.g., health and ecological benefits of incidentally controlled
hazardous air pollutants)
2. Scientific uncertainties regarding whether the observed
statistical relationship between exposure to elevated particulate
matter and incidences of adverse health effects reflects a causal
relationship (especially premature mortality and chronic bronchitis)
3. Scientific uncertainty regarding the potential existence of a
concentration threshold below which adverse health effects of exposure
to particulate matter might not occur
4. Scientific uncertainty regarding whether tropospheric ozone
exposure contributes to premature mortality
In addition to these uncertainties and shortcomings that pervade
all analyses of criteria air pollutant control
[[Page 26076]]
programs, a number of limitations apply specifically to the preliminary
BCA of today's proposed rules. Though we used the best data and models
currently available, we were required to adopt a number of simplifying
assumptions and to use data sets that, while reasonably close, did not
match precisely the conditions and effects expected to result from
implementation of the standards proposed today. For example, the year
2010 emissions data sets available for use in this analysis do not
fully reflect the emissions reductions expected to be achieved by other
recently-enacted standards and by expected near-future control
programs, such as additional measures aimed at full attainment of the
new fine particulate matter National Ambient Air Quality Standards. In
addition, we have used the year 2010 as a proxy for the time (actually
circa 2040) when all non-complying vehicles would be fully retired from
the fleet and full implementation of today's proposed standards would
be finally achieved, requiring adjustments described more fully in the
next section. The key limitations and uncertainties unique to the
preliminary BCA of today's proposed rules, therefore, include:
1. A mismatch between the 2010 air quality base year adopted for
the BCA and the eventual timing of fleet turnover
2. Potential mis-estimation of future year emissions inventories,
such as those associated with nonroad vehicle emissions and with
measures aimed at attaining and maintaining compliance with newly
revised ambient air quality standards
3. Uncertainties associated with the extrapolation of air quality
monitoring data to distant sites required to capture the effects of the
proposed standards on all affected populations
Despite these additional important uncertainties, which are
discussed in more detail or referenced in the Draft RIA, we believe the
preliminary BCA does provide a reasonable indication of the potential
range of net economic benefits of the standards proposed today. This is
because the analysis focuses on estimating the economic effects of the
changes in air quality conditions expected to result from today's
proposed rules, rather than focusing on developing a precise prediction
of the absolute levels of air quality likely to prevail at some
particular time in the future. An analysis focusing on the changes in
air quality can give useful insights into the likely economic effects
of emission reductions of the magnitude expected to result from today's
proposed rule.
d. How Did We Perform the Benefit-Cost Analysis? As summarized
above, the analytical sequence begins with a projection of the mix of
technologies likely to be deployed to comply with the new standards,
and the costs incurred and emissions reductions achieved by these
changes in technology. The program proposed today has various cost and
emission related components, as described earlier in this section.
These components would begin at various times and in some cases would
phase in over time. This means that during the early years of the
program there would not be a consistent match between cost and
benefits. This is especially true for the vehicle control portions of
the proposal, where the full vehicle cost would be incurred at the time
of vehicle purchase, while the fuel cost along with the emission
reductions and benefits would occur throughout the lifetime of the
vehicle. To deal with this question, we might have wished to perform a
per-vehicle analysis corresponding to the cost effectiveness analysis
described above. However, the modeling used for benefits estimates
cannot be done on a per-vehicle basis, so we have instead used an
annual cost and annual benefit approach.
To develop a representative benefit-cost number, we need to have a
stable set of cost and emission reductions to use. This means using a
future year where the fleet is fully turned over and there is a
consistent annual cost and annual emission reduction. For today's
proposal this stability wouldn't occur until well into the future.
However, for the purpose of the benefit calculations, we have no
available baseline data set beyond the year 2010. We have therefore
made adjustments to allow use of 2010 as a surrogate for a future year
in which the fleet consists entirely of Tier 2 vehicles.
For emissions, we calculated reductions by treating 2010 as if the
fleet had already turned over. We did this by applying the control case
emission factor from a fully turned over fleet year (from the year
2040) to the fleet mileages for this year. Clearly, this approach does
not, nor is it intended to, predict actual expected emission reductions
for 2010. This is not its purpose. It is intended to portray the
characteristics of the vehicle fleet after it is fully turned over,
within the constraint that 2010 was the latest year for which we could
perform an analysis.
The resulting analysis represents a snapshot of benefits and costs
in a future year in which the light-duty fleet consists entirely of
Tier 2 vehicles. As such, it depicts the maximum emission reductions
(and resultant benefits) and among the lowest costs that would be
achieved in any one year by the program on a ``per mile'' basis. (Note,
however, that net benefits would continue to grow over time beyond
those resulting from this analysis, but only because of growth in
vehicle miles traveled.) Thus, based on the long-term costs for a fully
turned over fleet, the resulting benefit-cost ratio will be close to
its maximum point (for those benefits that we have been able to value).
Costs to be compared to the monetized value of the benefits were
also developed for a fleet the size of the year 2010 fleet. For this
purpose we used the long term cost once the capital costs have been
recovered and the manufacturing learning curve reductions have been
realized, since this most closely represents the makeup of a fully
turned over fleet.
We also made adjustments in the costs to account for the fact that
there is a time difference between when some of the costs are expended
and when the benefits are realized. The vehicle costs are expended when
the vehicle is sold, while the fuel related costs and the benefits are
distributed over the life of the vehicle. We resolved this difference
by using costs distributed over time such that there is a constant cost
per ton of emissions reduction and such that the net present value of
these distributed costs corresponds to the net present value of the
actual costs.
The resulting adjusted costs are somewhat greater than the expected
actual annual cost of the program, reflecting the time value
adjustment. Thus, both because of the assumption of a fully turned over
fleet and because of the time value adjustment, the costs presented in
this section do not represent expected actual annual costs for 2010.
Rather, they represent an approximation of the steady-state cost per
ton that would likely prevail in 2015 and beyond. The benefit cost
ratio for the earlier years of the program would be expected to be
lower than that based on these costs, since the fleet-adjusted costs
are larger in the early years of the program while the benefits are
smaller.
Finally, at the time that we undertook the development of the
benefit estimates for this rule, we did not have quantitative estimates
of the VOC emission reductions that would result from the evaporative
emission standards in the proposal. Therefore, the benefit estimates do
not include the value of the evaporative emission standard. Consistent
with this, the program cost estimates also exclude the evaporative
emission control cost. Since the evaporative emission reductions and
costs are both relatively small compared to the rest of the program,
they are not
[[Page 26077]]
expected to significantly affect the overall cost-benefit ratio.
In order to estimate the changes in air quality conditions that
would result from these emissions reductions, we developed two
separate, year 2010 emissions inventories to be used as inputs to the
air quality models. The first, baseline inventory reflects the best
available approximation of the county-by-county emissions for
NOX, NMHC, and SO2 expected to prevail in the
year 2010 in the absence of the standards proposed today. To generate
the second, control case inventory, we first estimated the change in
vehicle emissions, by pollutant and by county, expected to be achieved
by the 2010 control scenario described above. We then took the baseline
emissions inventory and subtracted the estimated reduction for each
county-pollutant combination to generate the second, control case
emissions inventory. Taken together, the two resulting emissions
inventories reflect two alternative states of the world and the
differences between them represent our best estimate of the reductions
in emissions that would result from our control scenario.
With these two emissions inventories in hand, the next step was to
``map'' the county-by-county and pollutant-by-pollutant emission
estimates to the input grid cells of two air quality models and one
deposition model. The first model, called the Urban Airshed Model
(UAM), is designed to estimate the tropospheric ozone concentrations
resulting from a specific inventory of emissions of ozone precursor
pollutants, particularly NOX and NMHC. The second model,
called the Climatological Regional Dispersion Model Source-Receptor
Matrix model (S-R Matrix), is designed to estimate the changes in
ambient particulate matter and visibility that would result from a
specific set of changes in emissions of primary particulate matter and
secondary particulate matter precursors, such as SO2,
NOX, and NMHC. Also, separate factors relating nitrogen
emissions to watershed deposition were developed using the Regional
Acid Deposition Model (RADM). By running both the baseline and control
case emissions inventories through these models, we were able to
estimate the expected 2010 air quality conditions and the changes in
air quality conditions that would result from the emissions reductions
expected to be achieved by the standards proposed today.
After developing these two sets of year 2010 air quality profiles,
we used the same health and environmental effect models used in the 812
studies to calculate the differences in human health and environmental
outcomes projected to occur with and without the proposed standards.
Specifically, we used the Criteria Air Pollutant Modeling System
(CAPMS) to estimate changes in human health outcomes, the Agricultural
Simulation Model (AGSIM) to estimate changes in yields of a selected
few agricultural crops, and a Household Soiling Damage function to
estimate the value of reduced household soiling due to particulate
matter. In addition, the benefits of reduced visibility impairment were
estimated using the same overall methodology used in the 812 studies,
updated to reflect recent advancements in the literature. Finally, we
developed estimates of the effect of changes in nitrogen deposition to
sensitive estuaries using methodologies applied in the PM/Ozone NAAQS
RIA (1997) and in the recent NOX SIP Call rulemaking. (These
benefits models and methodologies are described in detail in the RIAs
associated with these actions.) Several air quality-related health and
environmental benefits, however, could not be calculated for the
preliminary BCA of today's proposed standards. Changes in human health
and environmental effects due to changes in ambient concentrations of
carbon monoxide (CO), gaseous sulfur dioxide (SO2), gaseous
nitrogen dioxide (NO2), and hazardous air pollutants could
not be included, though some of these may be included in the extended
analysis to be conducted for the final rule.
To characterize the total economic value of the reductions in
adverse effects achieved across the lower 48 states,73 we
used the same set of economic valuation coefficients and models used in
the section 812 studies and the recent NOX SIP Call RIA to
convert each type of adverse effect into a dollar value equivalent. The
net monetary benefits of today's proposed standards were then
calculated by subtracting the estimated costs of compliance from the
estimated monetary benefits of the reductions in adverse health and
environmental effects.
---------------------------------------------------------------------------
\73\ Though California is included based on the expectation that
reductions in surrounding states will achieve some benefits in
California, this analysis does not assume additional reductions in
California emissions beyond those already achieved by prevailing
standards.
---------------------------------------------------------------------------
In the final step of the analysis, we estimated the range of net
benefit estimates that might occur if important but uncertain
underlying factors were allowed to vary. By conducting this
``uncertainty analysis,'' we sought to demonstrate how much the overall
net benefit estimate might vary based on the particular uncertainties
underlying the estimates for human health and environmental effect
incidence and the economic valuation of those effects. To accomplish
this, we calculated a range of possible monetized benefit estimates
using two sets of assumptions surrounding the modeling techniques.
The method for presenting uncertainty, referred to here as the
sensitivity approach, identifies the uncertain variables that appear to
most strongly influence the overall uncertainty in the monetized
benefit estimate. These included, among others, (1) The potential that
a concentration threshold exists below that adverse PM-related health
effects may not occur, (2) alternative methods for valuing mortality,
(3) the potential contribution of tropospheric ozone to premature
mortality, (4) alternative methods for valuing reduced cases of chronic
bronchitis, (5) the extent to which agricultural crops included in our
benefits model are resistant to damage from tropospheric ozone, (6)
alternative approaches for valuing visibility. After identifying these
key variables, we defined lower bound and upper bound values for each
variable and combined these into a Low Case and a High Case. This
approach allowed us to demonstrate the sensitivity of the total
benefits to uncertainties in important variables. For example, there is
no compelling scientific evidence that a PM concentration threshold
exists below that adverse health effects do not occur. However, there
is also no scientific evidence ruling out the potential existence of a
threshold. As a result, there are no data available that would support
estimating the probability that a threshold exists at any particular PM
concentration. Under these circumstances, using the sensitivity
approach allows us to demonstrate the effect of assuming different
levels for a PM threshold.
This uncertainty calculation method does not provide a definitive
or complete picture of the true range of monetized benefits estimates.
This approach, as implemented in this preliminary BCA, does not reflect
important uncertainties in earlier steps of the analysis, including
estimation of compliance technologies and strategies, emissions
reductions and costs associated with those technologies and strategies,
and air quality and deposition changes achieved by those emissions
reductions. Nor does this approach provide a full accounting of all
potential benefits (or disbenefits) associated with the Tier 2
standards, due to data or methodological
[[Page 26078]]
limitations. Therefore, the uncertainty range is only representative of
those benefits that we were able to quantify and monetize.
e. What Were the Results of the Benefit-Cost Analysis? The
preliminary BCA for the proposed standards reflects a single year
``snapshot'' indicative of the relative yearly benefits and costs
expected to be realized once the proposed standards have been fully
implemented and non-compliant vehicles have all been retired. By
necessity, we chose to model the year 2010 because essential data on
emissions and air quality were available for this year, but not for
later years, even though the complete turnover of the fleet to Tier 2
compliant vehicles will not occur until well after 2010. Consequently,
these results are best viewed as a representation of yearly benefits
and costs over the long-term and should not be interpreted as
reflecting actual benefits and costs likely to be realized for the year
2010 itself. Benefits of the amounts shown here are likely to be
realized in the 2015-2020 time frame. In reality, near-term costs will
be higher than long-run costs as vehicle manufacturers and oil
companies invest in new capital equipment and develop and implement new
technologies. In addition, near-term benefits will be lower than long-
run benefits because it will take a number of years for Tier 2-
compliant vehicles to fully displace older, more polluting vehicles.
However, as described earlier, we have adjusted the cost estimates
upward to compensate for this discrepancy in the timing of benefits and
costs and to ensure that the benefits and costs are calculated on a
consistent basis. Because of this adjustment, the cost estimates also
should not be interpreted as reflecting the actual costs expected to be
incurred in the year 2010. Actual program costs can be found in Section
IV.D.3.
Earlier in this section, we described in more detail our approach
to estimating and adjusting our cost estimates, based upon the long-run
costs expected to be incurred in future years after the initial capital
and technology investments have been made. The resulting adjusted cost
values are given in Table IV.D.-5. Since the long term costs are not
representative of the per vehicle costs in the early phases of the
program, we also estimated an adjusted cost based on the near term cost
effectiveness value. Using the near term cost effectiveness value of
$2134/per ton, the adjusted cost would be $4.3 billion. While no actual
in-use fleet could consist entirely of vehicles experiencing this near
term cost, this value does present an upper bound on the cost figure.
Table IV.D.-5.--Adjusted Cost for Comparison to Benefits
------------------------------------------------------------------------
Adjusted
cost
Cost basis (billions
of dollars)
------------------------------------------------------------------------
Long term.................................................. 3.5
------------------------------------------------------------------------
With respect to the benefits, several different measures of
benefits can be useful to compare and contrast to the estimated
compliance costs. These benefit measures include: (a) The tons of
emissions reductions achieved, (b) the reductions in incidences of
adverse health and environmental effects, and (c) the estimated
economic value of those reduced adverse effects. Calculating the cost
per ton of pollutant reduced is particularly useful for comparing the
cost effectiveness of proposed new standards or programs against
existing programs or alternative new programs achieving reductions in
the same pollutant or combination of pollutants. The cost-effectiveness
analysis presented earlier in this preamble provides such calculations
on a per-vehicle basis. Considering the absolute numbers of avoided
adverse health and environmental effects can also provide valuable
insights into the nature of the health and environmental problem being
addressed by the rule as well as the magnitude of the total public
health and environmental gains potentially achieved by the proposed
rule. Finally, when considered along with other important economic
dimensions--including environmental justice, small business financial
effects, and other outcomes related to the distribution of benefits and
costs among particular groups--the direct comparison of quantified
economic benefits and economic costs can provide useful insights into
the overall estimated net economic effect of the proposed standards.
Table IV.D.-6 presents our range of estimates of both the estimated
reductions in adverse effect incidences and the estimated economic
value of those incidence reductions. Specifically, the table lists the
avoided incidences of individual health and environmental effects, the
pollutant associated with each of these endpoints, and the range of
estimated economic value of those avoided incidences. For several
effects, particularly environmental effects, direct calculation of
economic value in response to air quality conditions is performed,
eliminating the intermediate step of calculating incidences. Table
IV.D.-7 supplements Table IV.D.-6 by listing those additional health
and environmental benefits that could not be expressed in quantitative
incidence and/or economic value terms. A full appreciation of the
overall economic consequences of today's proposed standards requires
consideration of all benefits and costs expected to result from the new
standards, not just those benefits and costs that could be expressed
here in dollar terms.
Table IV.D.-6.--Avoided Incidence and Monetized Benefits Associated With the Tier 2 Rule for a Range of
Assumption Sets
----------------------------------------------------------------------------------------------------------------
Avoided incidence (cases/ Monetary benefits (millions
year) 1997$)
Endpoint -----------------------------------------------------------------
Low a High b Low High
----------------------------------------------------------------------------------------------------------------
PM:
Mortality (long-term exp.--ages 30+)...... 832 2,416 2,275 14,256
Mortality (long-term exp.--infants)....... .............. 10 ............... 56
Chronic bronchitis........................ 3,885 3,914 281 1,354
Hosp. Admissions--all respiratory (all 504 836 4.6 7.6
ages)....................................
Hosp. Admissions--congestive heart failure 127 138 1.5 1.7
Hosp. Admissions--ischemic heart disease.. 146 159 2.2 2.4
Acute bronchitis.......................... 984 4,072 0.1 0.2
Lower respiratory symptoms (LRS).......... 19,782 37,437 0.3 0.5
Upper respiratory symptoms (URS).......... 3,093 3,387 0.1 0.1
Work loss days (WLD)...................... 233,000 415,000 23.8 42.3
Minor restricted activity days (MRAD)..... 1,856,000 3,370,000 87.7 159.3
[[Page 26079]]
Household soiling damage.................. .............. .............. 60.1 60.1
Ozone:
Mortality (short-term; four U.S. studies). .............. 388 ............... 2,312
Hospital admissions--all respiratory (all 549 736 5.3 7.1
ages)....................................
Any of 19 acute symptoms.................. 54,101 71,545 1.3 1.7
Decreased worker productivity............. .............. .............. 43.0 60.4
Agricultural crop damage.................. .............. .............. -1 301
Visibility.................................... .............. .............. 165 701
Nitrogen Deposition........................... .............. .............. 200 200
-----------------------------------------------------------------
Total (PM + ozone + visibility + N .............. .............. 3,150 19,525
deposition)..............................
----------------------------------------------------------------------------------------------------------------
a The low assumption set assumes effects from PM do not occur below concentrations of 15 g/m3, that all
mortality and chornic bronchitis effects occur within the same year of the PM reduction (see Section 7.a. of
the Draft RIA for a discussion of this uncertainty), utilizes the value of statistical life year lost
approach, ozone-related mortality and PM-related infant mortality are not included in the benefits estimate,
chronic bronchitis valued with the cost of illness approach, plantings of commodity crop cultivars are assumed
to be insensitive to ozone, does not value residential visibility benefits, and uses the lower-bound estimate
of ``willingness to pay'' for recreational visibility to reflect variation.
b The high assumption set assumes a PM threshold of background, utilizes the value of a statistical life
approach, both ozone-related mortality and PM-related mortality are included in the estimation of benefits,
chronic bronchitis valued with a willingness-to-pay approach, plantings of commodity crop cultivars are
assumed to be sensitive to ozone, and full accounting for recreational and residential visibility benefits.
Table IV.D.-7.--Additional, Non-monetized Benefits of Proposed Tier 2 Standards
----------------------------------------------------------------------------------------------------------------
Pollutant Nonmonetized adverse effects
----------------------------------------------------------------------------------------------------------------
Particulate Matter................ Large Changes in Pulmonary Function.
Other Chronic Respiratory Diseases.
Inflammation of the Lung.
Chronic Asthma and Bronchitis.
Ozone............................. Changes in Pulmonary Function.
Increased Airway Responsiveness to Stimuli.
Centroacinar Fibrosis.
Immunological Changes.
Chronic Respiratory Diseases.
Extrapulmonary Effects (i.e., other organ systems).
Forest and other Ecological Effects.
Materials Damage.
Carbon Monoxide................... Premature Mortality.
Decreased Time to Onset of Angina.
Behavioral Effects.
Other Cardiovascular Effects.
Developmental Effects.
Sulfur Dioxide.................... Respiratory Symptoms in Non-Asthmatics.
Hospital Admissions.
Agricultural Effects.
Materials Damage.
Nitrogen Oxides................... Increased Airway Responsiveness to Stimuli.
Decreased Pulmonary Function.
Inflammation of the Lung.
Immunological Changes.
Eye Irritation.
Materials Damage.
Acid Deposition.
Hazardous Air Pollutants.......... All Human Health Effects.
Ecological Effects.
----------------------------------------------------------------------------------------------------------------
These results indicate that, based on the particular assumptions,
models, and data used in this preliminary BCA, the range of monetary
benefits realized after full turnover of the fleet to Tier 2 vehicles
would be approximately 3.2 billion to 19.5 billion dollars per year.
Comparing this estimate of the economic benefits with the adjusted cost
estimate indicates that the net economic benefit of the proposed
standards to society could be from a net cost of 0.4 billion to a net
benefit of 16.0 billion dollars per year.
The breadth of the ranges of net economic benefit estimates
presented in this preliminary BCA reinforces our conclusion that these
BCA results may be indicative of potential overall economic effects,
but they should by no means dictate whether or not the standards
proposed today should be promulgated.
f. What Additional Efforts Will Be Made Following Proposal? While
we believe that the preliminary BCA provides a strong indication that
the standards proposed today will yield positive overall economic
benefits, we
[[Page 26080]]
believe it is important to do additional analysis prior to the final
decision regarding these standards. In particular, we plan to develop
an updated and extended set of emissions inventories, and to expand the
range of pollutant-specific effects to include the benefits of
reductions in carbon monoxide (CO), sulfur dioxide (SO2),
nitrogen dioxide (NO2), and perhaps hazardous air
pollutants. We will also carefully review the public comments submitted
on the preliminary BCA and review each of the assumptions and methods
used in light these public comments and the advice of the Science
Advisory Board charged with reviewing these and other methods being
used in the pending section 812 Prospective Study Report to Congress.
E. Other Program Design Options We Have Considered
In addition to the proposed program combining Tier 2 vehicle
standards and gasoline sulfur controls, we have considered two other
major alternatives to a comprehensive vehicle/fuel program. This
section identifies these two alternatives and seeks comment on specific
aspects of each.
1. Corporate Average Standards Based on NMOG or NMOG+NOX
We have described in great detail in previous sections of this
preamble why NOX is our main pollutant of concern for this
rulemaking. Based on this conclusion, we are proposing a Tier 2 program
that is centered around a full useful life corporate average
NOX standard (0.07 g/mi). Our proposed interim program for
non-Tier 2 vehicles is also centered around a corporate average
NOX standard (0.30 or 0.20
g/mi, depending on vehicle type).
California's program, by contrast, is centered on corporate average
NMOG standards. We recognize that for Tier 2 vehicles we could also set
up the bins of emission standards and impose an average NMOG standard
in a similar fashion. A program centered on corporate average NMOG
standards could even be defined in such a way that NOX
emissions would be indirectly driven down to the levels we have defined
with our proposed Tier 2 standards. Such an approach would provide more
consistency with California's program, and would be consistent with our
own NLEV program. However, we believe it is best, for the federal
program, to use a NOX average standard.
With a NOX average standard we can better tailor the
various aspects of the program to reduce the pollutant with which we
are most concerned. Thus, our averaging, banking and trading program
has been set up to provide NOX credits for early compliance
with the Tier 2 NOX average standard and to provide
additional NOX credits for manufacturers certifying to
extended useful lives. Also, the NOX average standard allows
us to set up bins in such a way as to provide manufacturers with
incentives to strive for additional NOX reductions.
Although the use of an average NOX requirement conflicts
with California's requirements, we do not believe any additional burden
is imposed on manufacturers. Under an NMOG averaging requirement,
manufacturers would still have to compute separate NMOG averages for
their California and Federal vehicles. This would be no smaller burden
than computing an NMOG average for California vehicles and a
NOX average for Federal vehicles. We request comment on the
appropriateness and burden of our NOX averaging standards
and on what benefits, if any, might be afforded by an NMOG standard for
the federal program in lieu of the proposed NOX average.
2. More Stringent Tier 2 NOX and Gasoline Sulfur Standards
We considered whether average NOX levels even lower than
0.07 g/mi (which would likely result in lower NOX standards
for all of the Tier 2 certification bins and substantially limit the
number of vehicles certified at NOX emissions levels
significantly higher than 0.07 g/mi) might be possible and cost
effective in a scenario where sulfur levels in gasoline would be
reduced to an average level on the order of 10 ppm (with perhaps a 20
ppm cap). Manufacturers have requested that California consider such a
``near zero'' sulfur limit to help them to meet the mandatory bins in
the CAL LEV II program, which are more stringent than what would be
required in the proposed Tier 2 program. We believe our proposed Tier 2
standards can be met with the proposed gasoline sulfur standards.
However, tighter Tier 2 standards could require even lower gasoline
sulfur limits.
We selected our proposed Tier 2 standards and gasoline sulfur
levels based on air quality need, technical feasibility, and cost
effectiveness. Hence, we believe the proposed requirements are
reasonable and are as stringent as is warranted. However, in
consideration of the alternative discussed here, we request comment on
the ability of manufacturers to produce vehicles meeting a corporate
average NOX emission level substantially lower than 0.07 g/
mi. How would the cost of producing such a vehicle differ from the
costs estimated for the proposed Tier 2 vehicles? How sensitive would
such a vehicle be to the sulfur level of gasoline, and what sulfur
level would be required? How soon could manufacturers be expected to be
able to comply with a lower NOX standard, given that they
will be producing LEVII vehicles for California beginning in 2004?
We also request comment on the magnitude of additional sulfur
reduction that would be necessary to reduce average full useful life
NOX to levels significantly below 0.07 g/mi, and whether
such low levels of sulfur can be met with the technology EPA expects
refiners to use to meet the requirements we are proposing today. We
request comment on the costs of such sulfur reductions and the timing
needed to acquire and implement any additional refinery controls. If
refiners invest today to achieve 30 ppm average sulfur levels, will
those investments be rendered obsolete by a future sulfur requirement
of a near-zero average, or would the technologies complement one
another? How much time would refiners need to comply with a near-zero
sulfur standard following compliance with a 30 ppm standard?
V. Additional Elements of the Proposed Vehicle Program and Areas
for Comment
The section describes several additional provisions of the vehicle
proposal and issues on which we are requesting comment that were not
previously discussed in this preamble.
A. Other Vehicle-Related Elements of the Proposal
1. Proposed Tier 2 CO, HCHO and PM Standards
Table IV.B.-1 in Section IV.B.4.a. above presented the proposed
Tier 2 standards for carbon monoxide (CO), formaldehyde (HCHO), and
particulate matter (PM). The following paragraphs discuss our selection
of these specific standards for proposal.
a. Carbon Monoxide (CO) Standards. Beyond aligning carbon monoxide
(CO) standards for all LDVs and LDTs, and allowing harmonizing with
California vehicle technology, reduction in CO emissions is not a
primary goal of the Tier 2 program. Thus the CO standards we are
proposing for all Tier 2 LDVs and LDTs are essentially the same as
those from the NLEV program for LDVs and LDT1s. These standards would
harmonize with CalLEV II CO standards except at California's SULEV
level (EPA Bin 2). This lone divergence would not pose additional
burden to
[[Page 26081]]
manufacturers because the proposed federal Tier 2 CO standards for
these vehicles would be less stringent than California's. Our proposed
interim standards during the phase-in of Tier 2 standards would apply
these same CO standards.
As we indicated in the Tier 2 Report to Congress, the number and
severity of CO NAAQS violations have decreased greatly in recent years.
Presently, CO exceedances occur primarily during cold weather. The need
for more stringent cold CO standards is a subject of a separate EPA
study that is now underway. Consequently, in this rulemaking we propose
to simply align CO standards for all categories with those applicable
to LDVs and LDT1s under NLEV. This alignment is consistent with our
goal of bringing all LDVs and all categories of LDTs under common
standards that allow for technology to be harmonized to the extent
possible with California.
We believe that technological changes to bring LDT2s and HLDTs
74 under tighter NMOG standards should easily ensure
compliance with the CO standards at no additional cost. In fact,
certification data on current model year LDTs indicate that there are
LDTs in all categories that can already meet the LDV/LDT1 NLEV CO
standard.
---------------------------------------------------------------------------
\74\ As defined earlier, the category called HLDT, or heavy
light-duty truck, includes all LDTs greater than 6000 pounds GVWR.
This term includes the categories LDT3 and LDT4.
---------------------------------------------------------------------------
We recognize that the vast majority of CO emissions are from motor
vehicles and that increases in population in some areas combined with
increases in vehicle miles traveled could lead to additional incidences
of CO nonattainment. Consequently, we request comment on the need for
and implications of tighter CO standards for any category of vehicles
affected by today's document.
b. Formaldehyde (HCHO) Standards. Similar to our approach to the
proposed CO standards, we are proposing to align all Tier 2 LDVs and
LDTs under the formaldehyde standards for LDVs and LDT1s from the NLEV
program. For new bins below Bin No. 4, we propose to adopt the CalLEV
II standards for formaldehyde. HLDTs, which are not subject to the NLEV
program, would become subject to HCHO standards for the first time
under the provisions of this rulemaking. The Tier 2 formaldehyde
standards would be essentially replicated in the interim standards we
are proposing for LDVs and LDTs.
Formaldehyde is a component of NMOG but is primarily of concern for
methanol-fueled vehicles, because it is chemically similar to methanol
and is likely to occur when methanol is not completely burned in the
engine. HLDTs are not included under the NLEV program and will
therefore not face formaldehyde standards as LDVs and LLDTs will in
2001 (1999 in the northeast states). We believe it is appropriate to
bring HLDTs under HCHO standards in this rulemaking. Applying
formaldehyde standards to HLDTs would be consistent with our goals of
aligning standards for all LDVs and LDTs regardless of fuel type and
harmonizing technologically with California standards wherever possible
and reasonable and the burden would be minimal.
Consequently, we are proposing to include formaldehyde standards
for HLDTs under the Tier 2 program as well as under the interim
programs. We note that HCHO is actually a component of NMOG, and as
with CO, we expect that all vehicles able to meet the Tier 2 or interim
NMOG standards (including methanol-fueled vehicles) would readily
comply with the HCHO standards.
c. Particulate Matter (PM) Standards. We are proposing to adopt
tighter PM standards, although in this case only full useful-life
standards. For Tier 2 vehicles, we are proposing a 0.01 g/mi standard
for all categories at the Tier 2 (Bin 5) level or below (except ZEV
which, of course, is 0.0). To provide manufacturers with additional
flexibility, we are proposing a 0.02 g/mi PM standard for vehicles that
certify to Bins 6 or 7 standards.
For non-Tier 2 LDV/LLDTs during the phase-in period, we are
proposing a PM standard of 0.06 g/mi for Bins 4 and 5. The other
standards would be 0.04 for Bin 3 and 0.01 for Bin 2. For non-Tier 2
HLDTs, similar standards would apply except that the highest bin would
have a PM standard of 0.06 g/mi, gradually decreasing in the other bins
to 0.01
g/mi (Bin 2).
PM standards are primarily a concern for diesel-cycle vehicles, but
they also apply to gasoline and other otto-cycle vehicles. We propose
to continue to permit otto-cycle vehicles to certify to PM standards
based on representative test data from similar technology vehicles. We
request comment on the degree to which these standards would affect the
certification of diesel-fueled vehicles.
2. Useful Life
The ``useful life'' of a vehicle is the period of time, in terms of
years and miles, during which a manufacturer is formally responsible
for the vehicle's emissions performance. For LDVs and LDTs, there have
historically been both ``full useful life'' values, approximating the
average life of the vehicle on the road, and ``intermediate useful
life'' values, representing about half of the vehicle's life. We are
proposing several changes to the current useful life provisions for
LDVs and LDTs.
a. Mandatory 120,000 Mile Useful Life. We are today proposing to
equalize full useful life values for all 2004 and later model year LDVs
and LDTs at 120,000 miles. This value would apply to Tier 2 and interim
non-Tier 2 vehicles. California, in its LEV II program, has adopted
full useful life standards for all LDVs and LDTs of 10 years or 120,000
miles, whichever occurs first. We are proposing that the time period
for federal LDV/LLDTs would be 10 years, but it would remain at 11
years for HLDTs consistent with the Clean Air Act.75
Intermediate useful life values, where applicable, would remain at 5
years or 50,000 miles, whichever occurs first. Where manufacturers
elect to certify Tier 2 vehicles for 150,000 miles to gain additional
NOX credits, as discussed below, the useful life of those
vehicles would be 15 years and 150,000 miles. We are not proposing to
harmonize with California on the mandatory useful life for evaporative
emissions of 15 years and 150,000 miles, but rather we are proposing
that this useful life be mandatory for evaporative emissions only when
a manufacturer elects optional 150,000 mile exhaust emission
certification.
---------------------------------------------------------------------------
\75\ Section 202(h) of the Clean Air Act specifies a useful life
of 11 years/120,000 miles for HLDTs. California is able to use a 10
year figure because it has a waiver under section 209 of the Act to
implement its own emission control program when such program is
found to be at least as protective of public health and welfare ``in
the aggregate'' as the federal program.
---------------------------------------------------------------------------
b. 150,000 Mile Useful Life Certification Option. We are proposing
to adopt a provision to provide additional NOX credit in the
fleet average calculation for vehicles certified to a useful life of
150,000 miles. In our proposal, a manufacturer certifying an engine
family to a 150,000 mile useful life would incorporate those vehicles
into its corporate NOX average as if they were certified to
a full useful life standard 0.85 times the applicable 120,000 mile
NOX standard. To use this option, the manufacturer would
have to agree to (1) certify the engine family to the applicable
120,000 mile exhaust and evaporative standards at 150,000 miles for all
pollutants; and (2) increase the mileage on the single extra-high
mileage in-use test vehicle from a minimum of
[[Page 26082]]
90,000 miles to a minimum of 105,000 miles.
Congress, in directing EPA to perform the Tier 2 study, also
directed EPA to consider changing the useful lives of LDVs and LDTs.
Manufacturers have made numerous advances in quality, materials and
engineering that have led to longer actual vehicle lives and data show
that each year of a vehicle's life, people are driving more miles.
Current data indicate that passenger cars are driven approximately
120,000 miles in their first ten years of life. Trucks are driven
approximately 150,000 miles. Current regulatory useful lives are 10
years/100,000 miles for LDV/LLDTs and 11 years/120,000 miles for HLDTs.
We project based on our Tier 2 model that approximately 13 percent of
light-duty NOX and 11 percent of light-duty VOCs is produced
between 100,000 and 120,000 miles. Given the trend toward longer actual
vehicle lives and increases in annual mileage, we believe that it is
reasonable to propose extension to the regulatory useful life
requirements.
Additionally, 41 percent of light-duty NOX and 59
percent of light-duty VOC is produced beyond 120,000 miles. Based on
this data, we believe it is also appropriate to propose incentives to
manufacturers to certify their vehicles to extended useful lives beyond
120,000 miles. This is why we are proposing, as discussed above, to
provide additional NOX credits for Tier 2 vehicles certified
to a useful life of 150,000 miles.
3. Light Duty Supplemental Federal Test Procedure (SFTP) Standards
Supplemental Federal Test Procedure (SFTP) standards require
manufacturers to control emissions from vehicles when operated at high
rates of speed and acceleration (the US06 test cycle) and when operated
under high ambient temperatures with air conditioning loads (the SC03
test cycle). The existing light duty SFTP requirements begin a three
year phase-in in model year 2000 for Tier 1 LDV/LLDTs . For HLDTs, SFTP
requirements begin a similar phase-in in 2002. Intermediate and full
useful life standards exist for all categories. SFTP standards do not
apply to diesel fueled Tier 1 LDT2s and HLDTs. Table V.A.-1 shows the
full useful life federal SFTP requirements applicable to Tier 1
vehicles.
Table V.A.-1.--Full Useful Life Federal SFTP Standards Applicable to Tier 1 Vehicles
----------------------------------------------------------------------------------------------------------------
NMHC + NOX CO (g/mi) b
Vehicle category (weighted g/ -----------------------------------------------
mi) a US06 SC03 Weighted
----------------------------------------------------------------------------------------------------------------
LDV/LDT1 (gasoline)............................. 0.91 11.1 3.7 4.2
LDV/LDT1 (diesel)............................... 2.07 11.1 .............. 4.2
LDT2............................................ 1.37 14.6 5.6 5.5
LDT3............................................ 1.44 16.9 6.4 6.4
LDT4............................................ 2.09 19.3 7.3 7.3
----------------------------------------------------------------------------------------------------------------
a Weighting for NMHC+NOX and optional weighting for CO is 0.35 x (FTP)+0.28 x (US06)+0.37 x (SC03).
b CO standards are stand alone for US06 and SC03 with option for a weighted standard.
The NLEV program includes SFTP requirements for LDVs, LDT1s and
LDT2s. These requirements impose the Tier 1 intermediate and full
useful life SFTP standards on Tier 1 and TLEV vehicles, but impose only
4000 mile standards on LEVs and ULEVs.76 NLEV SFTP standards
for LEVs and ULEVs are shown in Table V.A.-2. These standards do not
provide for a weighted standard for NMHC+NOX or for CO, but
rather employ separate sets of standards for the US06 and SC03 tests.
Also, while the NLEV SFTP standards apply to gasoline and diesel
vehicles, they do not include a standard for diesel particulates (PM).
\76\ This disparity in useful lives arose because neither EPA
nor CARB had full useful life SFTP standards for LEVs or ULEVs when
the NLEV program was adopted. Since a major requirement of the NLEV
program was harmony with California standards, EPA adopted the
California SFTP standards in place for the NLEV time frame (2001 and
later).
Table V.A.-2.--SFTP Standards for LEVs and ULEVs in the NLEV Program
----------------------------------------------------------------------------------------------------------------
US06 SC03
---------------------------------------------------------------
NMHC+NOX (g/ NMHC+NOX (g/
mi) CO (g/mi) mi) CO (g/mi)
----------------------------------------------------------------------------------------------------------------
LDV/LDT1........................................ 0.14 8.0 0.20 2.7
LDT2............................................ 0.25 10.5 0.27 3.5
----------------------------------------------------------------------------------------------------------------
Since no significant numbers of vehicles certified to SFTP
standards below TLEV levels will enter the fleet until 2001,
manufacturers have raised concerns regarding significant changes to the
SFTP program before its implementation. At this point, it seems
reasonable not to increase SFTP stringency for the Tier 2 program, but
we are proposing to substitute SFTP standards adjusted for intermediate
and full useful life deterioration where there are currently only 4000
mile standards.
Full useful life standards for Tier 2 vehicles are consistent with
our mandate under the Clean Air Act. The 4000 mile standards exist in
the federal program only because they were adopted in the NLEV
program--a voluntary program under which California requirements were
adopted nationwide. We derived the full and intermediate useful life
standards by applying deterioration allowances proposed for our MOBILE
6 model to the existing 4000 mile standards for LDVs and LLDTs. For
HLDTs we applied similarly derived deterioration allowances to
California's LEV I SFTP standards for MDV2s and MDV3s, which are the
corresponding categories to LDT3s and LDT4s in the California program.
The full and intermediate useful life SFTP standards we are proposing
are shown in Tables V.A.-3
[[Page 26083]]
and V.A.-4. These standards would apply to all Tier 2 vehicles
including Tier 2 LDT3s and LDT4s.
Table V.A.-3.--Proposed Full Useful Life Supplemental Emission Standards
[(SFTP Standards (grams/mile)]
----------------------------------------------------------------------------------------------------------------
USO6 NMHC+NOX USO6 CO SCO3 NMHC+NOX SCO3 CO
----------------------------------------------------------------------------------------------------------------
LDV/LDT1........................................ 0.2 11.1 0.26 4.2
LDT2............................................ 0.37 14.6 0.39 5.5
LDT3............................................ 0.53 16.9 0.44 6.4
LDT4............................................ 0.78 19.3 0.62 7.3
----------------------------------------------------------------------------------------------------------------
Table V.A.-4.--Proposed Intermediate Useful Life Supplemental Emission Standards
[(SFTP Standards)(grams/mile)]
----------------------------------------------------------------------------------------------------------------
USO6 NMHC+NOX USO6 CO SCO3 NMHC+NOX SCO3 CO
----------------------------------------------------------------------------------------------------------------
LDV/LDT1........................................ 0.16 9.0 0.22 3.0
LDT2............................................ 0.30 11.6 0.32 3.9
LDT3............................................ 0.45 11.6 0.36 3.9
LDT4............................................ 0.67 13.2 0.51 4.4
----------------------------------------------------------------------------------------------------------------
Because our proposed interim standards for LDV/LLDTs (see section
VI.A.3.d. above) are derived from NLEV standards, we believe that the
SFTP standards we are proposing for Tier 2 vehicles should also apply
to the interim non-Tier 2 LDV/LLDTs. However, we propose that TLEV
vehicles (EPA interim Bin 5 in Table IV.B.-6), which are not subject to
new SFTP standards under NLEV, could continue to meet Tier 1 SFTP
standards, and HLDTs under the interim programs could continue to meet
Tier 1 SFTP standards that do not fully phase in until the 2004 model
year.
LDT3 and LDT4 SFTP standards do not currently apply to diesels.
Further, the standards applicable to Tier 1 diesel LDVs and LDT1s are
less stringent than gasoline standards and do not apply to the SC03
cycle. We are proposing to apply the approach we are using with other
standards in this document to the Tier 2 and interim SFTP standards.
Consequently, we are proposing that Tier 2 and interim LDVs and LDTs
with diesel or gasoline engines comply with the same
NMHC+NOX and CO SFTP limits. We are also requesting comment
on the appropriate SFTP PM standards for diesel vehicles. We believe it
would be appropriate to establish a margin between 10% and 50% above
the applicable FTP PM standard to serve as the SFTP standard. As an
example of how EPA has recently used such a margin, in recent consent
decrees, heavy-duty engine manufacturers have agreed not to exceed
emission levels 1.25 times the applicable exhaust standards (including
PM standards) when engines are operated over a wide range of operating
conditions. We request comment on the appropriate standard for PM in
the SFTP.
4. LDT Test Weight
Historically, HLDTs (LDT3s and LDT4s) have been emission tested at
their adjusted loaded vehicle weight (ALVW), while LDVs, LDT1s, and
LDT2s have been tested at their loaded vehicle weight (LVW). ALVW is
equivalent to the curb weight of the truck plus half its maximum
payload, while LVW is equivalent to the curb weight of the truck plus a
driver and one adult passenger (300 pounds). As we are proposing in
this document to equalize standards and useful lives across LDVs and
all categories of LDTs, we believe it is appropriate to test all the
vehicles under the same conditions. Therefore, consistent with the
CalLEV II program, we are proposing to test HLDTs at their loaded
vehicle weight. We recognize that removing all but 300 pounds of load
from these trucks during the test provides them with a somewhat
``easier'' test cycle than they currently have. However, the standards
we are proposing for HLDTs under Tier 2, are considerably more
stringent than the Tier 1 standards. Further, one of our reasons for
bringing HLDTs under the same standards as passenger cars is that these
trucks include many vans and sport utility vehicles that are often used
as passenger cars with just one or two passengers. Consequently, we
believe it is appropriate to test them at LVW.
5. Test Fuels
As discussed elsewhere in this preamble, the NLEV program was
adopted virtually in its entirety from California's program. Because
California's standards were developed around the use of California
Phase II reformulated gasoline (RFG) as the exhaust emission test fuel,
we adopted California Phase II test fuel as the exhaust emission test
fuel for gasoline-fueled vehicles in the federal NLEV program, although
we recognized at the time that vehicles outside of California would be
unlikely to operate on that fuel in use.
We believe that it is best to establish compliance with standards
based on the fuel that the vehicles will operate upon. However, we also
believe that the major exhaust emission related issues between
California Phase II fuel and federal test fuel are related to sulfur
and we do not believe the other differences between the two fuels will
significantly impact NMOG, CO or NOX exhaust emissions in
Tier 2 (or interim) gasoline fueled vehicles.
In this document, we are proposing to reduce the sulfur in federal
test fuel to reflect the reductions in sulfur we are proposing for
commercial gasoline. Currently, federal test gasoline is subject to a
limit of 0.10 percent by weight. We are proposing to amend that to an
allowable range of 30 to 80 ppm (0.003 to 0.008 percent by weight). We
also propose that vehicles be certified and in-use tested using federal
test fuel. However, where vehicles are certified for 50 state sale, and
where other testing issues do not arise, we are proposing to accept the
results of testing done for California certification on California
Phase II fuel. We would reserve the right to perform or require in-use
testing on
[[Page 26084]]
federal fuel. Where vehicles are only certified for non-California
sale, we propose to require certification and in-use testing on federal
fuel. We request comments with supporting emission data on all aspects
of these two possible test fuels.
Because differences exist between the California and federal
evaporative emission testing procedures, we propose to continue to
require the use of federal certification fuel as the test fuel in
evaporative emission testing. Under current programs, where California
and federal evaporative emission standards are nearly identical,
California accepts evaporative results generated on the federal
procedure (using federal test fuel), because available data indicates
the federal procedure to be a ``worst case'' procedure. The evaporative
standards California has adopted for their LEV II program are more
stringent than those we are proposing in this document. We request
comment and supporting emission test data on whether vehicles certified
to CalLEV II evaporative standards using California fuels will
necessarily comply with the federal Tier 2 evaporative standards,
including ORVR standards, when tested with federal test fuel.
6. Changes to Evaporative Certification Procedures to Address Impacts
of Alcohol Fuels
Current certification procedures, including regulations under the
CAP2000 program,77 allow manufacturers to develop their own
durability process for calculating deterioration factors for
evaporative emissions. The regulations (Sec. 86.1824-01) permit
manufacturers to develop service accumulation (aging) methods based on
``good engineering judgement'', subject to review and approval by EPA.
The manufacturer's durability process must be designed to predict the
expected evaporative emission deterioration of in-use vehicles over
their full useful lives. We are proposing to require that these aging
methods include the use of alcohol fuels to address concerns that
alcohol fuels increase the permeability and thus the evaporative losses
from hoses and other evaporative components.
---------------------------------------------------------------------------
\77\ The Compliance Assurance Program, CAP2000, was proposed in
an NPRM (63 FR 39654, July 23, 1998). The final rule was signed on
March 15, 1998. As today's NPRM went forward for signature, the
CAP2000 final rule had not been published, so no citation for the
final rule is available. You should check our web site (http://
www.epa.gov/omswww/) for the most current information on publication
of the CAP2000 rule takes effect in the 2000 model year.
---------------------------------------------------------------------------
We have reviewed data indicating that the permeability, and
therefore the evaporative losses, of hoses and other evaporative
components can be greatly increased by exposure to fuels containing
alcohols.78 Alcohols have been shown to promote the passage
of hydrocarbons through a variety of different materials commonly used
in evaporative emission systems. Data from component and fuel line
suppliers indicate that alcohols cause many elastomeric materials to
swell, which opens up pathways for hydrocarbon permeation and also can
lead to distortion and tearing of components like ``O'' ring seals.
Ethers such as MTBE and ETBE have a much smaller effect. Alcohol-
resistant materials such as fluoroelastomers are available and are
currently used by manufacturers to varying extents.
---------------------------------------------------------------------------
\78\ Numerous SAE papers examine the permeability of fuel and
evaporative system materials as well as the influence of alcohols on
permeability. See, for example SAE Paper #s 910104, 920163, 930992,
970307, 970309, 930992, and 981360, copies of which are in the
docket for this rulemaking.
---------------------------------------------------------------------------
Alcohols do not impact evaporative components and hoses
immediately, but rather it may take as long as one year of exposure to
alcohol fuels for permeation rates to stabilize. The end result in
higher permeation and increased in-use evaporative emissions.\79\
---------------------------------------------------------------------------
\79\ Ibid.
---------------------------------------------------------------------------
Today, roughly 10% of fuel sold in the U.S. contains alcohol,
mainly in the form of ethanol, and such fuels are often offered in
ozone nonattainment areas. We believe it is appropriate to ensure that
evaporative certification processes expose evaporative components to
alcohols and do so long enough to stabilize their permeability.
Therefore, we are proposing to amend evaporative certification
requirements to require manufacturers to develop their deterioration
factors using a fuel that contains the highest legal quantity of
ethanol available in the U.S.
To implement this change, we are proposing to modify the Durability
Demonstration Procedures for Evaporative Emissions found at
Sec. 86.1824-01. Our proposal would require manufacturers to age their
systems using a fuel containing the maximum concentration of alcohols
allowed by EPA in the fuel on which the vehicle is intended to operate,
i.e., a ``worst case'' test fuel. (Under current requirements, this
fuel would be about 10% ethanol, by volume.) We are also proposing to
modify the Durability Demonstration Procedures to require manufacturers
to ensure that their aging procedures are of sufficient duration to
stabilize the permeability of the fuel and evaporative system
materials.
It is our desire to find an alternative way by which a manufacturer
could document or demonstrate that its tanks, hoses, connectors and
other evaporative components are made of materials whose permeability
is not significantly affected by alcohols. Successful manufacturers
would not have to use alcohol fuel in certification. There are a
variety of test methods to evaluate permeation losses from materials,
components or subassemblies described in the literature.80
However, from our discussions with component and materials suppliers,
we conclude that there is currently no consensus test procedure or
standard available that we could rely on to establish whether a fuel/
evaporative system is likely to be sufficiently impermeable to alcohol
fuels. We request comment on the availability and appropriateness of
such procedures and standards and we request comment on the need for
and benefits of certification enhancements to account for the effects
of alcohols in fuels. We also seek comment on whether certification
test fuel for evaporative emissions should include 10% ethanol.
---------------------------------------------------------------------------
\80\ Ibid.
---------------------------------------------------------------------------
7. Other Test Procedure Issues
California's LEV II program implements a number of minor changes to
exhaust emissions test procedures. We have evaluated these changes and
found that, for tailpipe emissions, the California test procedures fall
within ranges and specifications permitted under the Federal Test
Procedure.
With regard to HEVs and ZEVs, we believe that these vehicles will
be predominantly available in California, or that they will typically
be first offered for sale in California, because of California's ZEV
requirement, which promotes the sale of HEVs and ZEVs. Where
manufacturers market HEVs or ZEVs outside of California, it is likely
that they will market the same vehicles in California. Consequently, we
intend to incorporate by reference California's exhaust emission test
procedures for HEVs and ZEVs.81 We request comment on the
appropriateness of this proposed incorporation and an emission
allowance for HEVs.
---------------------------------------------------------------------------
\81\ California Zero-Emission and Hybrid Electric Vehicle
Exhaust Emission Standards and Test Procedures for 2003 and
Subsequent Model Year Passenger Cars, Light-Duty Trucks and Medium-
Duty Vehicles. September 18, 1998 for the Board Hearing of November
5, 1998.
---------------------------------------------------------------------------
In the NLEV program, we provided a specific formula used by
California that could be used to compute an HEV contribution factor to
NMOG emissions. This formula took into consideration the
[[Page 26085]]
range without engine operation of various types of HEVs and had the
effect of reducing the NMOG emission standard for a given emission bin
(for HEV vehicles only). This would have obvious beneficial effects on
a manufacturer's calculation of its corporate NMOG average.
The technology of HEVs is under rapid change and we do not believe
that we can design a formula now that will accurately predict the
impact of HEVs on corporate average NOX emissions in the
Tier 2 time frame. Consequently, we are including a provision by which
manufacturers could propose HEV contribution factors for NOX
to EPA. If approved, these factors could be used in the calculation of
a manufacturer's fleet average NOX emissions and would
provide a mechanism to credit an HEV for operating with no emissions
over some portion of its life.
These factors would be based on good engineering judgement and
would consider such vehicle parameters as vehicle weight, the portion
of the time during the test procedure that the vehicle operates with
zero emissions, the zero emission range of the vehicle, NOX
emissions from fuel-fired heaters and any measurable NOX
emissions from on-board electricity production and storage.
The final NLEV rule (See 62 FR pg 31219, June 6, 1997) incorporates
by reference California's NMOG measurement procedure and adopts
California's approach of using Reactivity Adjustment Factors (RAFs) to
adjust vehicle emission test results to reflect differences in the
impact on ozone formation between an alternative-fueled vehicle and a
vehicle fueled with conventional gasoline. While we intend to bring all
LDVs and LDTs under NMOG standards beginning in 2004 and while we
desire to harmonize with California when practical and reasonable, we
are not proposing to allow the use of RAFs for Tier 2 vehicles and
interim non-Tier 2 vehicles. As has been discussed elsewhere in this
preamble, the NLEV program is a special case in which California
standards and provisions were adopted virtually in their entirety. In
the preamble to the final NLEV rule (See 62 FR 31203), we expressed our
reservations about the use of RAFs. We also addressed our reservations
about the use of reactivity factors developed in California in a
program that spans a range of climate and geographic locations across
the United States in the final rule on reformulated gasoline (RFG) (see
59 FR 7220). We are concerned about the validity of RAFs to predict
ozone formation nationwide and have asked the National Academy of
Sciences to look at the scientific evidence in support of the use of
these factors nationwide. We expect to receive their report prior to
making our final decisions about the Tier 2 standards.
Recognizing that we are not proposing a corporate average NMOG
standard, and that RAFs impact only the calculation of NMOG emissions,
we request comment on all aspects of RAFs including the impact of not
using them on the severity of our proposed standards, their validity to
predict ozone formation nationwide, and any impact the lack of RAFs may
have on alternative fueled vehicles.
In its LEV II program, California is also implementing a number of
changes to evaporative emission test procedures.82 Many of
these changes address the evaporative emission testing of hybrid
electric vehicles. We are generally not proposing to adopt California's
changes, because California uses different test temperatures and
different test fuel in its evaporative emission testing of gasoline
vehicles than we use in the federal program. The preamble to the final
NLEV rule (See 62 FR 31227) explains that California and EPA are
reviewing an industry proposal to streamline and reconcile the
California and federal procedures. That work has not been completed.
However, where California proposes procedures specific to HEVs and
ZEVs, we do intend to adopt those procedures, except that our testing
would occur at lower temperatures, and use a fuel determined by EPA to
be representative of federal usage (for HEVs only). Given the small
number of HEVs and ZEVs likely to be sold in states other than
California early in the Tier 2 program, and given the small quantities
of fuel likely to be used by HEVs in any event, we request comment on
the appropriateness of simply accepting California evaporative results
for HEVs and ZEVs to show compliance with the less stringent federal
evaporative standards. We also request comment on whether any or all of
the changes California has adopted for evaporative emission testing
should be adopted into federal testing requirements.
---------------------------------------------------------------------------
\82\ California Evaporative Emission Standards and Test
Procedures for 2001 and Subsequent Model Motor Vehicles; September
18, 1998. Prepared for the November 5, 1998 Hearing of the
California Air Resources Board.
---------------------------------------------------------------------------
8. Small Volume Manufacturers
Our proposal includes the following flexibilities intended to
assist all manufacturers in complying with the stringent proposed
standards without harm to the program's environmental goals: (1) A four
year phase-in of the standards for LDV/LLDTs; (2) a delayed phase-in
for HLDTs; (3) the freedom to select from specific bins of standards;
(4) a standard that can be met through averaging, banking and trading
of NOX credits; (5) provisions for NOX credit
deficit carryover; and (6) provisions by which a manufacturer may
generate additional NOX credits.
These flexibilities would apply to all manufacturers, regardless of
size, and in general we believe they eliminate the need for more
specific provisions for small volume manufacturers. However, we are
proposing one additional flexibility for small volume
manufacturers.83 Our proposal would exempt small volume
manufacturers from the 25%, 50% and 75% Tier 2 phase-in requirements
applicable to the 2004, 2005 and 2006 LDV/LLDTs and the 50% phase-in
requirement applicable to 2008 HLDTs. Instead, small volume
manufacturers would simply comply with the appropriate 100% requirement
in the 2007 or 2009 model year. Our proposal would also exempt small
volume manufacturers from the 25%, 50% and 75% phase-in requirements
applicable to interim HLDTs in 2004-2006. Instead, small volume HLDT
manufacturers would simply comply with the interim standards, including
the corporate average NOX standard, in 2007 for 100% of
their vehicles. During model years 2004-2006, these same small volume
manufacturers would comply with any of the interim bins of HLDT
standards for 100% of their HLDTs.84
---------------------------------------------------------------------------
\83\ We define small volume manufacturers to be those with total
U.S. sales of less than 15,000 highway units per year. Independent
commercial importers (ICIs) with sales under 15,000 per year would
be included under this term.
\84\ For a graphical illustration of the phase-ins through time,
see Figure IV.B.-1.
---------------------------------------------------------------------------
Also, we will continue to apply the federal small volume
manufacturer provisions, which provide relief from emission data and
durability showing and reduce the amount of information required to be
submitted to obtain a certificate of conformity. In addition, the
CAP2000 program contains reduced in-use testing requirements for small
volume manufacturers. Under section V.B.1. below, we describe and
request comment on possible additional special provisions for
certifiers that qualify as small businesses.
Our proposal to exempt small volume manufacturers from the Tier 2
phase-in requirements eliminates a dilemma that the phase-in
percentages might pose to a manufacturer that has a limited product
line, i.e., how to address percentage phase-in requirements if the
[[Page 26086]]
manufacturer makes vehicles in only one or two test groups. We have
proposed similar provisions for small entities in other rulemakings.
Approximately 15-20 manufacturers that currently certify vehicles, many
of which are independent commercial importers (ICIs), would qualify.
These manufacturers represent just a fraction of one percent of LDVs
and LDTs produced. We do not believe that this provision would have any
measurable impact on air quality.
9. Compliance Monitoring and Enforcement
a. Application of EPA's Compliance Assurance Program, CAP2000. The
CAP2000 program (final rule signed March 15, 1998; Federal Register
cite not yet available) streamlines and simplifies the procedures for
certification of new vehicles and would also require manufacturers to
test in-use vehicles to monitor compliance with emission standards. The
CAP2000 program was developed jointly with the State of California and
involved considerable input and support from manufacturers. As the name
implies, it can be implemented as early as the 2000 model year.
In today's document, we are proposing that the Tier 2 and the
interim requirements would be implemented subject to the requirements
of the CAP2000 program. Certain CAP2000 requirements would be slightly
modified to reflect changes to useful lives, standard structure and
other aspects of the Tier 2 program, but we are proposing no major
changes to fundamental principles of the CAP2000 program.
Although we are proposing changes to useful lives in this document,
we are not proposing to amend the 50,000 mile minimum mileage used in
manufacturer in-use verification testing or in-use confirmatory testing
under the CAP2000 program at this time. The CAP2000 in-use program is
not yet implemented and we believe it is appropriate to allow
manufacturers to gain experience with procuring and testing vehicles at
the 50,000 mile level before making significant changes. However, where
one vehicle from each in-use test group would have a minimum mileage of
75,000 miles under the CAP2000 program, we are proposing, consistent
with California, to change that figure to 90,000 miles for Tier 2
vehicles.
We may, in our own in-use program, procure and test vehicles at
mileages higher than 50,000 and pursue remedial actions (e.g. recalls)
based on that data. We may also use that data as the basis to initiate
a rulemaking to make changes in theCAP2000 in-use requirements, if the
data indicate significant non-conformity at higher mileages.
b. Compliance Monitoring. We plan no new compliance monitoring
activities or programs for Tier 2 vehicles. These vehicles would be
subject to the certification and manufacturer in-use testing provisions
of the CAP2000 rule. Also, we expect to continue our own in-use testing
program for exhaust and evaporative emissions. We will pursue remedial
actions when substantial numbers of properly maintained and used
vehicles fail any standard in either in-use testing program.
We retain the right to conduct Selective Enforcement Auditing of
new vehicles at manufacturer's facilities. In recent years, we have
discontinued SEA testing of new light-duty vehicles and trucks, because
compliance rates were routinely at 100%. We recognize that the need for
SEA testing may be reduced by the low mileage in-use testing
requirements of the CAP2000 program. However, we expect to re-examine
the need for SEA testing as standards tighten under the NLEV and Tier 2
programs.
We have established a data base to record and track manufacturers'
compliance with NLEV requirements including the corporate average NMOG
standards. We expect to monitor manufacturers' compliance with the Tier
2 and interim corporate average NOX standards in a similar
fashion and also to monitor manufacturers' phase-in percentages for
Tier 2 vehicles.
c. Relaxed In-Use Standards for Tier 2 Vehicles Produced During the
Phase-in Period. As we have indicated numerous times in this preamble,
the Tier 2 standards we are proposing would be challenging for
manufacturers to achieve, and some vehicles would pose more of a
challenge than others. Not only would manufacturers be responsible for
assuring that vehicles can meet the standards at the time of
certification, they would also have to ensure that the vehicles could
comply when tested in-use by themselves under the provisions of the
CAP2000 program, and by EPA under its in-use (``Recall'') test program.
With any new technology, or even with new calibrations of existing
technology, there are risks of in-use compliance problems that may not
appear in the certification process. In-use compliance concerns may
discourage manufacturers from applying new technologies or new
calibrations. Thus, it may be appropriate for the first few years, for
those bins most likely to require the greatest applications of effort,
to provide assurance to the manufacturers that they will not face
recall if they exceed standards by a specified amount.
We are proposing, for Tier 2 vehicles only, that for the first two
years after a test group meeting a new standard is introduced, that
test group be subject to more lenient in-use standards. These ``in-use
standards'' would apply only to Tier 2 Bins 5 and below, only for the
pollutants indicated, and only for the first two model years that a
test group was certified under that bin. The in-use standards would not
be applicable to any test group first certified to a new standard after
2007 for LDV/LLDTs or after 2009 for HLDTs.
The in-use standards we are proposing are shown in Table V.A.-5
below.
Table V.A.-5.--In-use Compliance Standards for Tier 2 Vehicles (g/mi)
[Certification standards shown for reference purposes]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Durability NOX
Bin No. period (miles) NOX In-use certification NMOG in-use NMOG certification
--------------------------------------------------------------------------------------------------------------------------------------------------------
5, 4........................................... 50,000 0.07 0.05 N/a 0.075, 0.04.
5, 4........................................... 120,000 0.10 0.07 N/a 0.090, 0.055.
3.............................................. 120,000 0.06 0.04 N/a 0.070.
2.............................................. 120,000 0.03 0.02 0.02 0.010.
--------------------------------------------------------------------------------------------------------------------------------------------------------
We believe manufacturers should and will strive to meet the Tier 2
certification standards for the full useful lives of the vehicles, but
we recognize that the existence of such in-use standards poses some
risk that a
[[Page 26087]]
manufacturer might aim for the in-use standard in its design efforts
rather than the certification standard, and thus market less durable
designs. We do not believe that risk to be significant. We believe that
such risks are more than balanced by the gains that could result from
earlier application of new technology or new calibration techniques
that might occur in a scenario where in-use liability is slightly
reduced. Further, we believe that the in-use standards will be of short
enough duration that any risks are minimal.
We note that the in-use provisions proposed above are similar to
those included in California's LEV II program. We request comment on
all aspects of the proposed in-use standards including the
appropriateness of and need for separate in-use compliance standards
for the early years of the Tier 2 program.
d. Enforcement of the Tier 2 and Interim Corporate Average
NOX Standards. Under the proposed programs, manufacturers
could either report that they met the relevant corporate average
NOX standard in their annual reports to the Agency or they
could show via the use of NOX credits that they have offset
any exceedence of the corporate average NOX standard.
Manufacturers would also report their NOX credit balances or
deficits.
The averaging, banking and trading program would be enforced
through the certificate of conformity that the manufacturer would need
to obtain in order to introduce any regulated vehicles into commerce.
The certificate for each test group would require all vehicles to meet
the applicable Tier 2 emission standards from the applicable bin of the
Tier 2 program, and would be conditioned upon the manufacturer meeting
the corporate average NOX standard within the required time
frame. If a manufacturer failed to meet this condition, the vehicles
causing the corporate average NOX exceedence will be
considered to be not covered by the certificate of conformity for that
engine family. A manufacturer would be subject to penalties on an
individual vehicle basis for sale of vehicles not covered by a
certificate. These provisions would also apply to the interim corporate
average standards.
As outlined in detail in the preamble to the final NLEV rule, EPA
would review the manufacturer's sales to designate the vehicles that
caused the exceedence of the corporate average NOX standard.
We would designate as nonconforming those vehicles in those test groups
with the highest certification emission values first, continuing until
a number of vehicles equal to the calculated number of noncomplying
vehicles as determined above is reached. In a test group where only a
portion of vehicles would be deemed nonconforming, we would determine
the actual nonconforming vehicles by counting backwards from the last
vehicle produced in that test group. Manufacturers would be liable for
penalties for each vehicle sold that is not covered by a certificate.
We are proposing in today's action to condition certificates to
enforce the requirements that manufacturers not sell NOX
credits that they have not generated. A manufacturer that transferred
NOX credits it did not have would create an equivalent
number of debits that it would be required to offset by the reporting
deadline for the same model year. Failure to cover these debits with
NOX credits by the reporting deadline would be a violation
of the conditions under which EPA issued the certificate of conformity,
and nonconforming vehicles would not be covered by the certificate. EPA
would identify the nonconforming vehicles in the same manner described
above.
In the case of a trade that resulted in a negative credit balance
that a manufacturer could not cover by the reporting deadline for the
model year in which the trade occurred, we propose to hold both the
buyer and the seller liable. This is consistent with other mobile
source rules, except for the NLEV rule as discussed below. We believe
that holding both parties liable will induce the buyer to exercise
diligence in assuring that the seller has or will be able to generate
appropriate credits and will help to ensure that inappropriate trades
do not occur.
In the NLEV program we implemented a system in which only the
seller of credits would be liable. In the preamble to the final NLEV
rule (See 62 FR 31216), we explained that a multiple liability approach
would be unnecessary in the context of the NLEV program given that the
main benefit to a multi-party liability approach would be to ``protect
against a situation where one party sells invalid credits and then goes
bankrupt, leaving no one liable for either penalties or compensation
for the environmental harm.'' Our preamble stated further that EPA
would not necessarily take the same approach for ``other differently
situated trading programs.''
The NLEV program was implemented to be a relatively short duration
program, during which time we could expect relative stability in the
industry. Also, given that NLEV is a voluntary program of lower than
mandated standards, we did not expect that the smallest manufacturers
would opt in. These are the companies whose stability is most in
jeopardy in a dynamic and very competitive worldwide business.
We currently believe that the Tier 2 program and its framework will
remain for many years. We note that the program is not scheduled for
complete phase-in for almost nine years after the publication of this
proposal. All manufacturers, large and small, will ultimately have to
meet the Tier 2 standards. We cannot predict that in the Tier 2 time
frame there will not be companies that leave the market or are divided
between other companies in mergers and acquisitions. Thus we believe it
is prudent to implement a program to provide inducements to the seller
to assure the validity of any credits that it purchases or contracts
for. However, we request comment on whether we should implement a
program that would only deem the seller to be in violation if it sold
credits it could not supply.
10. Miscellaneous Provisions
We are proposing to continue existing emission standards from Tier
1 and NLEV that apply to cold CO, certification short testing,
refueling, running loss, idle CO for LDTs, and highway NOX.
We are not proposing to continue the 50 degree (F) standards and
testing included in the NLEV program. The 50 degree standards are a
part of the NLEV program because that national program adopted
California requirements virtually in their entirety. These standards
had not previously been part of any federal program. We request comment
on the need and the associated burden for any of the standards
mentioned in this paragraph.
B. Other Areas on Which We are Seeking Comment
1. LDV/LDT Program Options
The alternatives for which we seek comment would have impacts on
the level of emission reductions achieved by the program as well as on
the cost and technological impacts of the program. Any decision to
adopt an alternative would have to consider those factors. We welcome
comments on all of the options described below. Commenters should
address cost, technological feasibility and emission impact whenever
possible.
a. Alternatives to Address Stringency of the Standards.
i. Alternative Standards and Implementation Schedules.
We believe that the Tier 2 standards and phase-in schedule
contained in this proposal provide appropriate lead time and
flexibility for manufacturers to
[[Page 26088]]
achieve cost-effective emission reductions in a reasonable time period.
Further, our standards and phase-in schedules are reasonably harmonized
with California's LEV II program to facilitate the sale of 50-state
vehicles and to minimize the administrative burdens involved with
having to meet the requirements of both California and EPA
simultaneously. We believe our proposed fuels provisions will ensure
that appropriate fuels are available to enable Tier 2 vehicles to
provide substantive in-use emission reductions. Some have suggested
delays in the program to 2007 and later. However, many states need
reductions as soon as possible for 2007 NAAQS compliance, so there is a
need for an aggressive but achievable implementation schedule.
Nevertheless, we are interested in reviewing alternative standards,
implementation schedules and averaging schemes. Therefore we request
comment on all aspects of the standards and schedules we are proposing
today, including the interim standards and schedules, and we request
comment on what alternative standards and implementation approaches
might provide comparable emission reductions that are cost-effective in
the same time frame as our proposal.
We recognize that the Tier 2 program as proposed today does not
provide for further reductions in average certification levels after
2008 as California's LEV II program does. We request comment on the
technological feasibility, necessity, cost and likely benefits of
further reductions in corporate average standards after 2009, including
comments on the reduction of the corporate average NOX
standard to a level of approximately 0.05 g/mi in the 2011-2012 time
frame. We also request comment on a traditional, non-averaging standard
of 0.07 g/mi NOX with related standards for NMOG, CO, HCHO,
and PM in the 2011-2012 time frame, applicable to all LDVs and LDTs.
ii. Use of Family Emission Limits (FELs) Rather than Bins.
A bins-based program with an overarching corporate average standard
has worked well in California for many years and is being implemented
nationwide beginning in 1999 under the NLEV program. We believe that a
phased in, bins-based program is the best way to implement the Tier 2
exhaust emission standards and, at the same time, encourage the
development of advanced emission control technology. We believe that
manufacturers of light duty vehicles and trucks are accustomed to such
programs and will appreciate the flexibility and opportunities for 50-
state certification that a bins-based program affords.
We are aware, of course, that in other EPA mobile source emission
programs, we have implemented averaging standards that were not based
upon bins. In these programs, manufacturers declare a family emission
limit (FEL) either above or below the averaging standard set by EPA.
The FEL becomes the standard for that family. Similar to the bins
approach, manufacturers compute a sales weighted average for the
subject pollutant at the end of the model year and then determine
credits generated or needed based on the distance of that average above
or below the standard.
In an FEL based program, every test group can have a different
FEL--essentially there is an unlimited continuum of bins to choose from
(although there is usually an upper limit or cap on the FELs). The FEL
approach adds flexibility and could increase the incentive for cost-
effective improvements in vehicle emissions performance. Under a bins
approach, a manufacturer is limited to step-wise improvements. An FEL
approach could provide incentive for manufacturers to realize smaller,
low cost emissions improvements that could be achieved, for example,
through engine re-calibration.
However, FEL-based programs create other concerns. One concern with
an FEL approach is that it may be viewed as providing too much
flexibility since a manufacturer could request a change in an FEL based
on a change in desired compliance margin above the certification level
or based on concern about its credit balance rather than a change in
technology. In EPA's FEL-based programs, it is not uncommon for a
manufacturer to declare an FEL that is identical to its certification
level. It is also not uncommon for a manufacturer to change its FEL
several times during a model year, based, among other reasons, on the
availability of or need for credits. In a bins approach, such changes
are unlikely, since a change in bins involves more of an increment in
emissions and involves compliance with all pollutants in that bin.
Consequently, a bins approach eases EPA's compliance monitoring burden.
It provides additional assurance that expected emission reductions will
occur in use because some vehicles may ``over-qualify'' for their bin
resulting in greater than expected reductions than if they exactly met
the standard for that bin. Of course, an FEL approach could be modified
to restrict or prohibit changes in certification levels during a model
year.
Also, in an FEL-based program, it may be necessary to establish
corporate average standards for other pollutants besides
NOX. These standards would then require manufacturers to
establish FELs for additional pollutants. In a bins-based program, the
standards for the other pollutants are simply set by the different
bins.
An FEL approach could also lead to additional complexity in
manufacturer in-use testing under the CAP2000 program and in EPA in-use
testing because if FEL changes are made, the issue of which standard to
measure compliance against arises as does the issue of how many
vehicles to test for each different FEL. If we were to adopt an FEL
approach, we would have to consider significant changes to the in-use
provisions of the CAP2000 program to assure that all variations of a
test group were adequately covered by manufacturer in-use testing.
We request comment on the appropriateness and need for an FEL-based
program for the Tier 2 and/or interim standards. Commenters supporting
the use of an FEL-based program should also provide comment as to how
EPA can best manage the issues related to in-use testing and how EPA
can best assure that FEL changes are closely linked to real changes in
vehicle emissions.
iii. Use of Different Averaging Sets.
We chose for our proposal the broadest possible--and therefore most
flexible--averaging set for the Tier 2 vehicles. We are proposing that,
beginning in 2009 when phase-in of all vehicles is complete, all LDVs
and LDTs could be averaged together to meet the corporate average
NOX standard. We believe this approach is appropriate
because it treats LDTs like LDVs, considering that LDTs are used as
passenger cars much of the time. Also, by permitting this broad
averaging, a manufacturer of larger LDTs that might have difficulty
meeting a 0.07 g/mi NOX level can certify the LDTs to Bin 6
or 7 and offset the emissions of these trucks with cars or smaller
trucks that it certifies to levels below 0.07 g/mi.
While we believe our proposed averaging program is appropriate, we
recognize that most manufacturers do not produce larger LDTs and may be
able to meet the corporate average NOX standard of 0.07 g/mi
with less overall effort. Therefore, we request comment as to whether
another approach to averaging might be more appropriate such as a
segregated approach where LDTs are averaged separately from LDVs or
where HLDTs (LDT3s and 4s) are averaged separately from LDV/LLDTs.
[[Page 26089]]
iv. Different Standards for Different Categories of Vehicles.
We have explained several times in this preamble that we believe
the same standards should apply to all LDVs and LDTs because LDTs are
so often used as passenger vehicles, and because the standards are
feasible for all LDVs and LDTs. The technological challenge may be
greater for larger trucks, so our proposal provides additional leadtime
and a later start date for HLDTs to provide more opportunity to resolve
potential problems. However, we recognize that other approaches exist
that could yield comparable environmental benefit. Therefore, we
request comment on other approaches such as one that would employ a
lower corporate average NOX standard for LDV/LLDTs, with a
higher corporate average standard for HLDTs.
v. Consideration of Special Provisions for the Largest LDTs and
Advanced Technology.
California has adopted a provision in its LEV II program, under
which a manufacturer could certify up to 4 percent of its larger LDTs
to a higher NOX standard. These trucks could meet a 0.10 g/
mi NOX standard rather than a 0.07 g/mi NOX
standard, provided they have a payload of at least 2500 pounds.
California chose the figure of 4% because it approximates the fraction
of such trucks in the largest volume manufacturer's fleet.
We have not proposed such an option in the federal program because
we are providing additional lead time and compliance on average for all
cars and trucks beginning in 2009. Nevertheless, we do recognize that
the largest trucks will likely require the greatest application of
emission control technology to comply with Tier 2 standards and we
expect that larger trucks will likely be the last, and the most
difficult, vehicles to phase into the Tier 2 program.
In the context of the flexibilities already proposed for the
federal program, we request comment on the need for and environmental
impact of additional program flexibility for the largest trucks. One
option we have considered would allow manufacturers to exclude a small
fraction (perhaps 4 percent) of their largest Tier 2 trucks (HLDTs)
from the corporate average NOX calculation beginning in 2009
and lasting through approximately model year 2011. These trucks would
still be subject to a NOX standard of 0.20 g/mi and all
other standards and provisions of the Tier 2 program, including the
requirement to fit within a Tier 2 bin for other emission standards.
This provision would provide a less stringent standard for the
heaviest LDTs. We believe these LDTs are the most likely to be used
primarily for work and commercial purposes, while at the same time
having the most difficulty complying with Tier 2 requirements. We
request comment on all aspects of this provision, including whether the
allowable sales fraction (4%) and payload minimum (2500 pounds) set by
California would be appropriate for the federal provision, and whether
such a concept should also be applied to only LDT4s or both LDT3s and
4s. Supporters of such an approach should comment on the appropriate
allowable sales fraction for the interim vehicles.
Some have suggested that a potential way of providing flexibility
for advanced technology vehicles would be to provide bins with less
stringent standards while retaining the stringency of the 0.07
NOX average. These additional bins would augment the current
flexibilities offered to manufacturers. We request comment on this
idea, specifically on including additional bins with NOX
standards up to 0.60 g/mi, with any other modifications that are
appropriate. We also ask comment on whether such bins should be a
temporary part of the Tier 2 program.
vi. Measures to Prevent LDT Migration to Heavy-Duty Vehicle
Category.
Existing regulations define a light-duty truck to be any motor
vehicle rated at 8500 pounds gross vehicle weight rating (GVWR) or less
that has a curb weight of 6000 pounds or less and that has a basic
frontal area of 45 square feet or less, which is:
Designed primarily for purposes of transportation of
property or is a derivation of such a vehicle, or
Designed primarily for transportation of persons and has a
capacity of more than 12 persons, or
Available with special features enabling off-street or
off-highway operation and use.
For the heaviest LDTs, we are concerned that manufacturers may, in
some cases, find it attractive to add GVWR capacity, curb weight or
frontal area to their vehicles such that they would no longer meet one
or more of the criteria to be considered an LDT. The vehicles would
then fall into the heavy-duty category and would be subject to less
technologically challenging standards.
We would like to develop reasonable restrictions to prevent this
``gaming'' of the LDT definition. The ideal restrictions would prevent
migration of LDTs above the limiting criteria, but would not impact
vehicles with legitimate needs to be outside, but close to, the LDT
definition. Our objective is complicated by the fact that many LDTs
currently have derivatives or corresponding models that are over 8500
pounds GVWR.
We have considered various approaches to restrictions on LDTs. Some
of the ideas we have considered are as follows:
Require all complete trucks in the 8500-10,000 pound GVWR
range to meet light-duty standards.
Raise the GVWR cutoff from 8500 pounds to some other
number such as 8750, 9000 or 9500 pounds.
Require manufacturers of vehicles that are above but close
to any of the three size criteria to provide justification that they
cannot accomplish their intended function if built to a lower size
criterion.
Require manufacturers to provide supporting data, surveys,
etc., that vehicles above, but close to, any of the LDT cutoffs are
primarily used for commercial purposes.
We request comment on all aspects of this vehicle migration issue,
including specific comment on the ideas presented above and on other
approaches that might be appropriate. This discussion serves as notice
that we are very likely to finalize a provision to address this vehicle
migration issue. You are encouraged to consider the approaches we have
outlined above and provide specific suggestions on other approaches as
well as comments as to the need for such controls, their feasibility
and their cost.
In the longer term, the best way to address the vehicle migration
issue is to implement standards for complete heavy-duty vehicles that
have a stringency comparable to their HLDT counterparts. In the near
future, we expect to publish an NPRM addressing emissions from
gasoline-fueled heavy-duty engines and vehicles for 2004 and later
model years. As part of that effort we are considering chassis-based
standards for gasoline-fueled complete vehicles between 8,500 and
14,000 lbs GVWR. The degree to which such standards discourage
migration depends upon the relative stringency of the standards. EPA
requests comment on the potential effectiveness of such a strategy in
addressing migration concerns and the timing and level of emission
standards necessary to do so.
vii. Use of Non-conformance Penalties (NCPs).
NCPs are monetary payments that manufacturers can pay to meet an
adjusted standard in lieu of complying with a prescribed emission
standard or set of emission standards. See CAA
[[Page 26090]]
section 206(g). Current regulations at 40 CFR part 86 Subpart L provide
for NCPs for HLDTs, and for heavy-duty engines. However, in order to
establish NCPs for a specific standard or set of standards for these
vehicles and engines, EPA must first determine that (1) substantial
work will be required to meet the standard for which the NCP is
offered; and (2) that there will be a manufacturer that is a
technological laggard in complying with that standard. EPA must also,
through rulemaking, determine compliance costs so that the penalty
rates can be established appropriately.
NCPs were used extensively by manufacturers of on-highway heavy-
duty engines in the late 1980s, prior to the implementation of our
heavy-duty averaging, banking and trading program. Since that time,
their use has been rare. We believe manufacturers have used the
flexibility of an averaging, banking and trading scheme as a preferred
alternative to incurring the monetary losses associated with NCPs.
We are not proposing NCPs for HLDTs in the primary Tier 2 program
or in the interim programs. This is because we believe that the
NOX averaging program we are proposing makes it unlikely
that the criteria for NCPs mentioned above will be met, as
NOX credits from other vehicles may be used to enable HLDTs
to meet the 0.07 g/mi average NOX standard.
We have considered whether NCPs might be appropriate for the Tier 2
diesel particulate standards, for which our proposal contains no
averaging provisions. We are not proposing PM NCPs for those diesel
powered trucks, but we request comment on whether such NCPs would be
appropriate. We believe that appropriate technologies will be available
from component vendors and diesel engine suppliers. We request comment
on the need for and appropriateness of NCPs for any Tier 2 standard for
HLDTs.
viii. Additional NOX Credits for Vehicles Certifying to
Low NOX Levels.
There is currently substantial work underway to develop vehicles
with extremely low emissions. We believe that it is appropriate to
encourage such technology by providing incentives for its use.
Consequently, we are requesting comment as to whether we should
implement a provision by which manufacturers can earn additional
NOX credits for certifying to levels below 0.07 g/mi. As we
envision such a provision, manufacturers would be allowed, in the
calculation of their year end corporate average NOX level,
to multiply the number of vehicles sold which are certified to bins
below 0.07 g/mi NOX by some preset multiplier, or set of
multipliers. For example, the number of vehicles certified to the 0.04
bin might be multiplied by 1.5, those in the 0.02 bin might be
multiplied by 2.0 and those in the 0.0 bin (ZEVs) might be multiplied
by 3.0.
We recognize that such a program would enable manufacturers to use
more credits than actually generated in use, and that the use of these
credits would likely result in some additional NOX
emissions. However, we believe that it may be appropriate to provide
inducements to manufacturers to strive for ever lower NOX
emissions and that these inducements may help pave the way for greater
and/or more cost effective emission reductions from future vehicles. We
request comment on all aspects of such incentive credits. Issues
related to these credits include the value of a multiplier or
multipliers, whether early credits should be subject to the
multipliers, and whether there should be a ``sunset'' provision to
limit the time period in which manufacturers could obtain and/or use
these extra credits. We request comment on a sunset year of 2009, since
it is the end of the proposed Tier 2 program phase-in.
ix. Incentives for Manufacturers to Bank Additional Early NOX
credits.
We are interested in exploring any reasonable approaches that would
provide incentives to manufacturers to produce vehicles meeting the
0.07 g/mi NOX standard earlier than required. We believe
that early certification to this level will help manufacturers gain
experience with new or enhanced technologies on a limited scale before
they must be applied to the entire fleet, and that such experience
would have a positive, although hard to quantify, environmental
benefit.
We have proposed an approach elsewhere in this preamble that
permits manufacturers to utilize alternative phase-in schedules.
Manufacturers that introduce Tier 2 vehicles before the first required
year in the primary phase-in schedule could follow a more flexible
phase-in path to 100% compliance than required under the primary
option. Manufacturers would also be able to generate NOX
credits if these ``early'' vehicles met a corporate average
NOX level of less than 0.07 g/mi.
We have considered whether a mechanism that provided additional
NOX credits could induce manufacturers to introduce more
Tier 2 vehicles sooner than required. Such a mechanism might substitute
a number higher than the 0.07 g/mi NOX standard in the
credit calculation so that the manufacturer would subtract its
corporate average NOX level from, say, 0.10 and then
multiply the difference by the number of Tier 2 vehicles to determine
credits earned. While we believe such a scheme might induce
manufacturers to accelerate the introduction of Tier 2 vehicles, we
have concerns about whether this approach would lead to windfall
credits and whether we would need to employ a discount to compensate
for them. Should the resulting credits have finite or infinite life?
Should we apply such a scheme to LDV/LLDTs only; or should we also
apply it to HLDTs; and should we apply such a scheme to the interim
standards for HLDTs? We request comment on these and all other aspects
of permitting additional NOX credits for Tier 2 and interim
vehicles.
x. Flexibilities for Small Volume Manufacturers and Small
Businesses.
In section V.A.8. above, we propose to waive the Tier 2 phase-in
requirements for small volume manufacturers.85 These
manufacturers, which each produce 15,000 or fewer vehicles per year,
would simply comply with the 100 % requirement in 2007 (2009 for
HLDTs).
---------------------------------------------------------------------------
\85\ A ``small volume manufacturer'' is not necessarily a
``small business''. Rather, ``small volume manufacturer'' is an EPA
term that refers to entities whose annual on-highway sales are
15,000 or fewer vehicles per year. However, most if not all small
businesses covered under this discussion are also ``small volume
manufacturers,'' though most small volume manufacturers are not
small businesses.
---------------------------------------------------------------------------
Some very small volume manufacturers of LDVs and LDT1s and LDT2s
elected not to opt into NLEV and thus will produce Tier 1 vehicles
during the NLEV program. We are seeking comment about the burden that
our interim standards might impose on very small manufacturers in 2004
given that they will have to meet the Tier 2 standards no later than
2007 under today's proposal. Similarly we are concerned about the
burden that the interim standards might impose on any small volume HLDT
manufacturers. We request comment on the need for and appropriateness
of a provision that would waive the interim standards for very small
volume manufacturers who produce, say, less than 1,000 vehicles per
year, or who qualify as small businesses (see below).
The panel convened under the Small Business Regulatory Enforcement
Fairness Act (SBREFA),86 recommended that we seek comment on
five provisions outlined below to ease our
[[Page 26091]]
proposal's impact on small businesses. These provisions, if adopted,
would apply to ``small businesses'' as defined by Small Business
Administration. The size of a ``small business'' varies by industry
type as represented by SIC codes. Tables V.B.-2 and V.B.-3 contain the
SIC codes that could potentially be impacted by the Tier 2 rule and the
maximum number of employees or maximum revenue a business can have to
be considered a small business.
---------------------------------------------------------------------------
\86\ This panel was convened, consistent with SBREFA, by EPA,
the Small Business Administration, and the Office of Management and
Budget to review of the likely impact of Tier 2 requirements on
small businesses.
Table V.B.-2.--SBA Small Business Categories for Small Independent
Commercial Importers
------------------------------------------------------------------------
Size standard
(annual
SIC code Description revenues in
millions)
------------------------------------------------------------------------
7533........................... Auto Exhaust System $5
Repair Shops.
7549........................... Automotive Services.... 5
8742........................... Management Consulting 5
Services.
------------------------------------------------------------------------
Table V.B.-3.--SBA Small Business Categories for Alternative Fuel
Vehicle Converters
------------------------------------------------------------------------
Size standard ($
SIC code Description =annual revenues)
------------------------------------------------------------------------
3592........................ Carburetors, 500 employees.
Pistons, Rings and
Valves.
3714........................ Motor Vehicle Parts 750 employees.
and Accessories.
5172........................ Petroleum Products.. 100 employees.
5984........................ Liquefied Petroleum $5 million.
Gas Dealers.
7549........................ Automotive Services. $5 million.
8742........................ Management $5 million.
Consulting Services.
8931........................ Commercial Physical 500 employees.
Research.
------------------------------------------------------------------------
The vast majority of businesses in these categories are not subject
to these EPA requirements. However, some businesses in these categories
may in fact manufacture LDVs and LDTs or may modify vehicles produced
by others in a manner that will subject them to the requirements
applicable to manufacturers under EPA regulations. For example,
Independent Commercial Importers (ICIs) modify imported motor vehicles
into configurations that they certify to meet federal emission
requirements. Approximately 15-20 small businesses qualified as
manufacturers and received certificates of conformity each year over
the last five years.
For simplicity, and consistency with the report of the SBREFA
panel, we refer to these small businesses as small certifiers in the
following discussion. The requirements to certify continue to apply
only to parties that meet the definition of ``manufacturer.''
Consistent with the recommendations of the SBREFA panel, we request
comment on the following ideas:
For small certifiers that convert imported vehicles to U.S.
standards (independent commercial importers or ICIs) and for small
certifiers that convert vehicles to operate on alternative fuels,
provide a delay in required compliance of two years after the
particular model vehicle is certified to Tier 2 standards by the
original equipment manufacturer.
This provision would provide time for development of appropriate
emission control systems and test data for small businesses who may
need to first obtain a regular production vehicle certified by the OEM
before they can begin work.
Although it was not a specific recommendation of the SBREFA panel,
we are also requesting comment on whether ICIs should be exempted from
the Tier 2 and interim fleet average NOX standards. ICIs may
not be able to predict their sales of vehicles and control their fleet
average emissions because they may be dependant upon vehicles brought
to them by individuals attempting to import uncertified vehicles.
Presently, the NLEV requirements are optional for ICIs and ICIs are
specifically exempted from complying with the fleet average NMOG
standard under the NLEV program. (See 40 CFR 85.1515(c)). Further, a
prohibition in the current ICI regulations specifically bars ICIs from
participating in any emission related averaging, banking or trading
program. (See 40 CFR 85.1515(d)). If we do not amend this prohibition,
the likely outcome would be that ICIs could choose any bin to certify
their vehicles and would pick the least stringent standards.
Given the historically very low sales of ICIs and the probable
challenges that even the least stringent Tier 2 and interim non-Tier 2
bins will impose upon ICIs, we do not expect ICIs to grow significantly
in number or size. Therefore, we do not expect that provisions
exempting or prohibiting ICIs from the fleet average NOX
standard would have any air quality impact. However, we request comment
on all aspects of the applicability of the fleet average NOX
standards to ICIs.
Establish a credit program and provide incentives for large
manufacturers so that they would make credits available to small
certifiers.
This provision would address the problem inherent with any emission
credit trading program that manufacturers holding credits don't have to
trade them. While the panel proposed this option, it did not provide
any thoughts on what type of incentives might be appropriate and
necessary to induce larger manufacturers to supply credits at
reasonable prices to small businesses.
Develop a program to provide credits to small certifiers for taking
older vehicles off of the road (i.e., a scrappage program).
Because older vehicles often have very high emissions, removing one
from use could more than offset the emissions of a new vehicle produced
by a small certifier that was unable to fully comply with the Tier 2
standards. Scrappage programs must be designed so that they remove
vehicles from the fleet that see significant annual mileage. They must
be adequately funded and managed. They must have controls and oversight
to ensure that they don't remove vehicles that would have been scrapped
anyway.
Design a case-by-case hardship relief provision that would delay
required
[[Page 26092]]
compliance for small certifiers that demonstrate that they would face a
severe economic impact from meeting the Tier 2 standards.
We have implemented case-by-case hardship provisions in some rules
subject to specific limiting constraints. Typically, these would
provide that small businesses that have tried all other regulatory
options and apply in writing before they experience nonconformity,
could obtain a 1 year delay in the implementation of the standards. The
small business would have to show that failure to comply was the fault
of external and extenuating circumstances and that inability to sell
the subject vehicles would have a major impact on the company's
solvency.
If the Tier 2 program involves a phase-in of standards, allow small
certifiers to comply at the end of such a phase-in.
As indicated at the beginning of this section, we are proposing
this option for all phase-ins associated with the Tier 2 program
including the phase-in of the Interim standards for HLDTs (see Section
V.A.8. above).
We request comment on the need for, appropriateness and
environmental impact of all of the items proposed by the SBREFA panel.
Also, we request comment on whether any such provisions would be
necessary and appropriate for the interim standards for non-Tier 2
vehicles.
xi. Adverse Effects of System Leaks.
For the emission control system to operate as designed, the air-
fuel (A/F) ratio must stay within strictly prescribed limits that vary
with vehicle/engine operating conditions and engine controls must
respond quickly to the slightest changes in this ratio. Even the
smallest air leak in either the exhaust manifold or exhaust pipe or any
related connection can provide the oxygen sensor incorrect information
on the oxygen content of the exhaust gas it uses to calibrate the
engine A/F ratio.
Some manufacturers have taken steps to address this concern as part
of their overall design process by incorporating features such as
corrosion-free flexible couplings, corrosion-free steel, and improved
welding of catalyst assemblies. EPA is concerned that either as a
result of manufacturing or installation errors or errors in a repair
action, there will be an unintentional and unobserved increase in
emissions and perhaps a failure to meet FTP and a SFTP emission
standards in-use.
EPA seeks comment on design or onboard monitoring requirements that
might be useful to address this concern. EPA would also seek comment on
a provision that would require a manufacturer to demonstrate through
engineering analysis or design that such possibilities have been taken
into account.
xii. Consideration of Other Corporate Averaging Approaches.
We welcome comments on the pros and cons, including regulatory
burden, of establishing a combined NMOG plus NOX corporate
average standard in lieu of either the proposed NOX average
or a California-like NMOG average. We also request comments, if not
provided in response to Section IV.B. above, on the concept of
requiring a declining corporate average NOX standard or a
declining corporate average NMOG standard at the federal level. For
example, we would consider a declining average approach that reduces
NMOG/NOX corporate average emissions by 20-25% over the
period 2008-2012, or nominally to 0.07 NMOG/0.05 NOX. Such a
reduction might involve a reduction in gasoline sulfur levels as
discussed in Section IV.E.2. above. We also seek comment on the idea of
eliminating the averaging concept in 2011 or 2012 and setting the LDV/
LDT standards at the levels of Bin No. 5 in Table IV.B.-2 (0.07 g/mi
NOX plus the other standards). Commenters should address the
cost and feasibility of these approaches.
2. Tighter Evaporative Emission Standards
We considered proposing tighter evaporative emission standards,
including California's LEV II standards for evaporative emissions,
shown in Table V.B.-4 below.
Table V.B.-4.--California's LEV II Evaporative Hydrocarbon Standards
[Grams per test]
------------------------------------------------------------------------
Supplemental
Three day two day
Vehicle class diurnal + diurnal +
hot soak hot soak
standard standard
------------------------------------------------------------------------
LDV............................................ 0.50 0.65
LDT1 AND LDT2.................................. 0.65 0.85
LDT3 AND LDT4.................................. 0.90 1.15
------------------------------------------------------------------------
These standards are based on an evaporative emission test procedure
that is conducted at different temperatures using fuel with lower vapor
pressure than the corresponding federal evaporative test procedure.
Under current evaporative standards, California accepts the results of
federal evaporative testing, because it represents a worst case test.
We do not know whether California's standards are feasible under the
federal test conditions.
We are concerned about evaporative hydrocarbons and we recognize
that they constitute a portion of the mobile source VOC inventory that
will be similar in size to the light duty exhaust contribution when
NLEV exhaust standards are in place. Our proposed standards, which are
found in section IV.B.4.a. above, are roughly in line with current
average certification levels but will nonetheless yield real in-use
evaporative reductions as manufacturers reduce certification levels to
gain safety margins under the new standards. These standards will also
prevent manufacturers from ``backsliding'' from their current low
certification levels upward toward the existing standards as they seek
cost reductions. Our proposed standards will require manufacturers to
capture the abilities of available fuel system materials to minimize
evaporative emissions. Further, we are proposing certification
enhancements to address the impact of alcohol fuels on evaporative
emissions, and we expect that these measures will lead to more uniform
use of lower permeability materials that will result in in-use
reductions in non-attainment areas where alcohol fuels are the most
prevalent.
We request comment on the appropriateness and cost effectiveness of
applying tighter evaporative standards in the federal program.
3. Credits for Innovative VOC, NOX and Ozone Reduction
Technologies Not Appropriately Credited by EPA's Emission Test
Procedures
Compliance with the current and proposed EPA motor vehicle emission
standards is based on the emission performance of a vehicle over EPA's
prescribed test procedure. While this test procedure addresses many of
the aspects of a vehicle's impact on air quality, it does not address
all such impacts. Two developing technologies have been brought to
EPA's attention that have shown significant potential to improve ozone-
related air quality, but that would not do so over the current EPA test
procedure.
The first example is a device that removes ozone from the air as
the vehicle is driven. A major producer of automotive catalysts,
Englehard, has approached both California and EPA with a proposal for a
technology (called Premair) in which vehicle radiators would be coated
with a catalyst that converts ambient ozone to oxygen. In its CalLEVII
program, California has adopted some basic ground rules concerning the
types of information that
[[Page 26093]]
would have to be submitted in order to certify such ozone reduction
technologies and determine the amount of allowable NMOG
credits.87 This determination would be made on a case-by-
case basis. The manufacturer would have to provide an evaluation of the
system's performance and durability, as well as a description of the
on-board diagnostic strategy to monitor the performance of the device
in use. The NMOG credit would be based upon the running of an approved
airshed model, which would determine the amount of NMOG emission
reductions that would produce the same change in one-hour peak ozone as
the use of the ozone reduction device being evaluated.
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\87\ See page II-28 of the following California document for a
full discussion: Proposed Amendments to California Exhaust and
Evaporative Emission Standards and Test Procedures for passenger
Cars, Light-Duty Trucks and Medium Duty Vehicles (``LEV II'') and
Proposed Amendments to California Motor Vehicle Certification,
Assembly-Line and In-Use Test Requirements (``CAP2000''). Released
September 18, 1998 for the Air Resources Board Hearing of November
5, 1998.
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Englehard has asked EPA to develop a similar procedure to that
adopted by ARB and to consider granting their technology a
NOX credit, as well as an NMOG credit. The manufacturer of
the vehicle employing Premair would then have the option of which
credit to use.
There are a number of issues that would have to be resolved before
such credits could be granted, including:
The methods to be used to certify in-use performance over
the useful life of the vehicle,
The requirement for, and the design and certification of,
an onboard diagnostic system to monitor in-use performance, and
Which airshed model to use, including what cities and
episodes to use in modeling the 8-hour peak ozone reduction, and
The methods for determining either the NMOG or
NOX credit, or both.
EPA has placed information provided to date by Englehard in the
docket to this rule, and requests comments on the appropriateness of
such credits, and on the procedures that should be used to determine
those credits, should we proceed.
The second example is an insulated catalyst. The insulation retains
heat for extended periods of time, increasing the catalyst temperature
when the engine is started and reducing the time required for the
catalyst to reach an operational temperature. This technology can
reduce cold start emissions for engine off times (called soaks) of 24
hours or less. The vast majority of engine soaks in-use are less than
24 hours. However, EPA's test procedure only tests emissions at two
fairly extreme soak times: 10 minutes and 12-36 hours. The 10 minute
soak is so short that even an uninsulated catalyst is warm enough to
quickly begin working upon restart. The 36 hour soak is beyond the
practical limit of cost-effective insulating techniques.
In 1994, as part of its proposed SFTP standards, EPA proposed
adding an intermediate soak of 1 hour to the test procedure, due both
to the large number of in-use soaks falling between the current 10
minute and 12-36 hour soaks and to the desire to encourage catalyst
technology that reduced cold start emissions for such intermediate
soaks. EPA did not promulgate this aspect of its SFTP standards, due in
part to concerns about the cost effectiveness of mandating such
controls. However, the efficacy of such technology was not questioned.
Thus, there appears to be little reason to prohibit a manufacturer from
using such technology to reduce in-use emissions in lieu of other
technology needed to meet the proposed Tier 2 standards.
As mentioned above concerning Premair, a methodology would need to
be developed to estimate the impact of an insulated catalyst, or other
any other similar technology, on in-use emissions so that equivalent
NMOG and NOX emission credits could be determined. Also,
procedures for certifying in-use performance and durability and onboard
diagnostics would also have to be addressed. EPA requests comments on
the appropriateness of allowing emission credits for insulated
catalysts and other technologies not appropriately assessed under
current test procedures. EPA also requests comments on the procedures
to be used to develop such credits.
EPA also requests comments on whether the credits granted for
either ozone or emission reduction technologies should be restricted to
the proposed Tier 2 standards, or whether they should also be granted
under the current NLEV standards and the proposed interim standards for
non-Tier 2 vehicles, as well.
4. Need for Intermediate Useful Life Tier 2 Standards
For our Tier 2 and interim standards we have generally proposed
both full useful life and intermediate useful life FTP exhaust emission
standards. (See Tables IV.B.-2, -3, -6,-7,-10 and -11.) We have also
proposed full and intermediate life SFTP standards. (See Tables V.A.-3
and -4.) Intermediate useful life standards are more stringent than
full useful life standards and reflect our experience that better
emission performance can be expected at lower mileages.
We are not proposing intermediate useful life standards for the
three lowest Tier 2 FTP bins, and we are not proposing intermediate
standards for the lowest FTP bin (the Zero Emission Vehicle or ZEV bin)
in any case. This is because the full life standards in those bins are
already so low as to allow little deterioration between a new vehicle
and a vehicle at full useful life.
We request comment on the appropriateness of and need for
intermediate useful life and what the environmental consequences might
be from deleting intermediate useful life standards for all Tier 2
vehicles and from the interim standards bins that match those of the
Tier 2 program.
VI. Additional Proposed Elements and Areas for Comment: Gasoline
Program
Section VI.A. presents two additional issues that have some impact
on our proposed program: whetherstates are preempted from requiring
gasoline sulfur reductions as a result of today's action, and whether
other gasoline properties may also need to be controlled in the future.
We encourage your comment on all of these issues. Section VI.B.
provides additional detailed information about our proposed
requirements for establishing compliance with the gasoline sulfur
standards, as well as how we will enforce these standards. The major
details of our proposed gasoline sulfur control program were explained
in Section IV.C.; the information presented here is supplementary.
A. Other Areas for Comment
The following sections raise additional issues that are relevant to
our decisions regarding gasoline sulfur control and the design of our
gasoline sulfur program. We encourage you to comment on these issues if
they are of interest to you.
1. Would States Be Preempted From Adopting Their Own Sulfur Control
Programs?
When we adopt federal fuel standards, states are preempted from
adopting similar state-level controls. Section 211(c)(4)(A) of the CAAA
prohibits states from prescribing or attempting to enforce controls or
prohibitions respecting any fuel characteristic or component if EPA has
prescribed a control or prohibition applicable to such fuel
characteristic or component under section 211(c)(1). This preemption
applies to all states except California, as explained in section
[[Page 26094]]
211(c)(4)(B). For these states other than California, the Act provides
two mechanisms for avoiding preemption. First, section 211(c)(4)(A)(ii)
creates an exception to preemption for state prohibitions or controls
that are identical to the prohibition or control adopted by EPA.
Second, states may seek EPA approval of SIP revisions containing fuel
control measures, as described in section 211(c)(4)(C). EPA may approve
such SIP revisions, and thereby ``waive'' preemption, only if it finds
the state control or prohibition ``is necessary to achieve the national
primary or secondary ambient air quality standard which the plan
implements.''
We are proposing to adopt the sulfur standards pursuant to our
authority under section 211(c)(1). Thus, we believe final promulgation
of the sulfur standards would result in the clear preemption of future
state actions to adopt fuel sulfur controls.88 States would
therefore need to obtain a waiver from us under the provisions
described in section 211(c)(4)(C) for all state fuel sulfur control
measures adopted following promulgation, unless the state standard were
identical to our final sulfur standard. We welcome your comments on our
interpretation of the source and effect of federal preemption.
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\88\ Even in the absence of final promulgation of federal sulfur
standards, existing federal fuel controls for RFG and conventional
gasoline have raised issues of preemption of state fuel sulfur
measures. In any case, it is clear that state sulfur standards would
be preempted as of the date of promulgation of the proposed federal
sulfur standard.
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Section 211(c)(4)(A) preempts state fuel controls if EPA has
``prescribed'' federal controls. We read this language to preempt non-
identical state standards on the effective date of the standards, as
opposed to the date the standards become enforceable. Thus, if the
proposed standards are finalized according to our expected schedule,
this rulemaking would preempt state actions upon promulgation at the
end of 1999, even though the standards would not require sulfur
reductions until 2004. This interpretation is consistent with EPA
actions applying other federal fuel measures. See 54 FR 19173 (May 4,
1989) (noting preemption of Massachusetts state RVP measure before
start of first control period for federal RVP). We also believe this
interpretation is consistent with the intent behind section
211(c)(4)(A). Though the standards are not immediately enforceable,
they will have an immediate impact on refiners' investment decisions.
We believe, by adopting 211(c)(4)(A), Congress intended to provide
security for these investment decisions by preventing unnecessary
conflict between state and federal fuel controls.
2. Potential Changes in Gasoline Distillation Properties
During the last several years, representatives of the automotive
industry have presented information to us suggesting that control of
certain gasoline distillation properties can provide reductions in both
exhaust hydrocarbon emissions as well as the frequency of performance
problems such as hesitation, cold startability, and impeded
acceleration. Automotive industry representatives contend that the
source of most performance problems--slower atomization and
vaporization due to fuels with higher boiling points--also leads to
less efficient combustion, and thus higher levels of hydrocarbons in
the exhaust.
With regard to Tier 2 vehicles, some automakers have claimed that
in-use fuels with high boiling points would impact their ability to
control the mixture of air and fuel entering the engine, and thus could
result in in-use emissions that are higher than expected based on
certification levels. Thus, automakers argue, controls on the
distillation properties of gasoline would not only produce emission
benefits for the in-use fleet, but would also ensure the viability and
benefits of Tier 2 vehicles.
On January 27, 1999, we received a petition 89 from a
group of automakers in which they provided a more detailed analysis of
the costs and benefits of controlling gasoline distillation properties.
In this petition, they specifically requested that the Distillation
Index (DI) be capped at 1200 for all summer-grade gasolines nationwide.
They have defined the distillation index by the equation 1.5xT10 +
3xT50 + T90 +20xOxy, where T10 represents the temperature at which 10%
of the fuel has evaporated in a standard distillation test, and
likewise for T50 and T90, and Oxy is the oxygen content contributed by
ethanol. This petition includes a study conducted by MathPro
Inc.90 to estimate the feasibility and cost to the refining
industry of capping all summer grade gasoline at a DI level of 1200.
MathPro concluded that the cost of such control would be approximately
0.4 cents/gal on average for all summer grade gasoline.
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\89\ ``Petition to regulate gasoline distillation properties''.
Submitted by DaimlerChrysler Corporation, Ford Motor Company,
General Motors Corporation, and the Association of International
Automobile Manufacturers. Submitted to EPA Administrator Carol
Browner on January 27, 1999. EPA Air Docket A-97-10, Document No.
II-G-286.
\90\ ``Technical and economic implications of controlling the
distillation index of gasoline.'' MathPro Inc., October 21, 1998.
EPA docket A-97-10, document II-G-268.
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We believe that the analyses presented by this petition have merit.
However, we do not believe that they are sufficient to justify capping
DI at 1200 at this time, since there are a number of issues that it
does not address. Before we could formally propose a DI cap, we would
need to have a justification for the cap based on air quality need,
peer-reviewed estimates of the cost to the refining industry and to
consumers, and comparisons of the cost effectiveness of this strategy
to that for other potential hydrocarbon control strategies. Therefore,
we are not today proposing controls on gasoline distillation
properties. However, we request comment on the automakers' DI petition
and the included MathPro report in terms of their sufficiency in
demonstrating that a DI cap of 1200 is appropriate.
B. Gasoline Sulfur Program Compliance and Enforcement Provisions
1. Overview
We are proposing enforcement mechanisms that track those of the
reformulated gasoline/conventional gasoline (RFG/CG) rule, because of
significant similarities between the two programs, including refinery
average standards, refinery level and downstream level caps, and the
generation and use of credits. These features raise similar compliance
issues for both programs. Because of the importance of assuring that
all gasoline meets the sulfur standards, measures are needed to assure
the accuracy of refiner and importer testing, and to assure that the
quality of gasoline is not adversely affected downstream of the
refinery. Downstream enforcement would be based primarily on EPA
sampling and testing, and examination of product transfer documents
(PTDs) and other evidence.
More specifically, we are proposing:
That refiners and importers test each batch of RFG and CG
produced or imported for sulfur content and maintain testing records
and retain test samples.
That refiners and importers of gasoline submit reports
regarding compliance with averaging and credits provisions.
That the current attest procedures of the RFG/CG rule
91 be applied to sulfur rule compliance.
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\91\ 40 CFR part 80 subpart F.
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[[Page 26095]]
Enforcement provisions regarding the credit program, to
prevent the use, sale or purchase of invalid credits, and to require
adjustments to compliance calculations based on use of invalid credits.
Requirements to ensure compliance by small foreign
refiners subject to individual refinery sulfur standards and to ensure
the separation of such foreign gasoline from all other gasoline to the
U.S. port of entry.
Downstream maximum sulfur caps, which would apply to all
persons in the chain of distribution of gasoline, including
distributors, resellers, carriers, retailers and wholesale purchaser-
consumers of gasoline.
Voluntary downstream quality assurance testing by
distributors and refiners to help assure compliance.
The sulfur standards proposed today would apply, as in other fuels
programs, to all motor vehicle fuel that meets the definition of
gasoline. See 40 CFR 80.2. This definition typically includes all the
gasoline that is produced and distributed through the gasoline
distribution system, including gasoline, such as marina gas, that is
ultimately used in nonroad equipment. Such fuel meets the definition of
gasoline and is subject to the standards proposed today. For example,
where gasoline makes up only a small portion of what a refinery
produces, and is perhaps a byproduct of other processing, the refiner
could not avoid the sulfur standard by designating the product as
marina gasoline or nonroad gasoline. EPA would apply the sulfur
standard to the same broad group of products that meets the definition
of gasoline for its other gasoline fuel programs.
We are aware that there are certain fuels, such as aviation fuel
and racing fuel, that are generally segregated from gasoline throughout
the distribution system. Where such fuels are segregated from motor
vehicle gasoline and not made available for use in motor vehicles, the
fuel would not be subject to sulfur rule standards.92 We
propose that such fuel become subject to the sulfur standards and other
regulatory requirements and prohibitions if its segregation from
gasoline at any point in the distribution system is compromised.
Offering such fuel for motor vehicle use or dispensing such fuel for
motor vehicle use would be prohibited. We are also proposing specific
PTD requirements and labeling requirements to prevent introduction of
high sulfur fuels into motor vehicles. EPA invites comment on whether
such fuel should also be subject to refinery level sulfur standards, or
whether it should be subject to the standards from the point at which
it is made available for use in motor vehicles.
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\92\ If a fuel is not segregated throughout the gasoline
distribution system, but is fungibly mixed with gasoline, then it
becomes a gasoline that is subject to the standard.
---------------------------------------------------------------------------
The proposal would clarify the definition of refinery at 40 CFR
80.2(h). Specifically, we are proposing to clarify that ``refinery''
means any facility, including a plant, tanker truck or vessel where
gasoline or diesel fuel is produced, including any facility at which
blendstocks are combined to produce gasoline or diesel fuel, or at
which blendstock is added to gasoline or diesel fuel.93
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\93\ This is consistent with all current EPA fuels rules,
interpretations, policies and question and answer documents, and is
only a clarification.
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We propose that any oxygenate blender that only adds oxygenate to
gasoline or to ``reformulated blendstocks for oxygenate blending''
(RBOB), be exempt from sulfur standards and would not be required to
conduct any new testing, or perform any new recordkeeping or reporting,
because we believe the sulfur level of EPA-allowed oxygenates added
downstream from the refinery is very low. We believe it is an
appropriate assumption, barring special circumstances, that the sulfur
content of the gasoline will be diluted in proportion to the addition
of the oxygenate.
In the remainder of this section we address enforcement issues
regarding today's proposed rule that are not discussed in section
IV.C.3., above.
2. What Requirements is EPA Proposing for Foreign Refiners and
Importers?
As discussed in section IV.C, under today's proposal, standards for
gasoline produced by foreign refineries that are not subject to small
refiner individual refinery standards would be met by the importer.
Standards for gasoline produced by a foreign refinery subject to an
individual sulfur rule standard would be met by the foreign refinery,
with certain limited exceptions. The provisions would be very similar
to the foreign refinery provisions of the RFG/CG rule, under 40 CFR
80.94.
a. What Are the Proposed Requirements for Small Foreign Refiners with
Individual Refinery Sulfur Standards?
Under the RFG/CG rule, EPA has promulgated regulations
94 addressing establishment and implementation of individual
baselines for CG produced by certain foreign refiners. The purpose of
these regulations is to assure the compliance of gasoline supplied from
foreign refineries with individual compliance baselines. It includes
comprehensive controls, requirements and enforcement mechanisms to
monitor the movement of gasoline from the foreign refinery to the U.S.,
to monitor gasoline quality and to provide for compliance and
enforcement as necessary.
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\94\ 40 CFR 80.94.
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Today we are proposing similar requirements that would apply to any
foreign refiner that can demonstrate that it meets the small refiner
criteria. Foreign refinery baselines would be based on average sulfur
levels and the volume of gasoline imported to the U.S. in 1997-98. Any
foreign refiners that obtain a foreign refinery sulfur rule baseline
would be subject to the same requirements as domestic small refiners
with individual refinery sulfur rule standards. Additionally,
provisions similar to the provisions at 40 CFR 89.94 would apply, that
include:
1. Segregating gasoline produced at the small refinery until it
reaches the U.S.;
2. Refinery registration;
3. Controls on product designation;
4. Load port and port of entry testing;
5. Attest requirements; and
6. Requirements regarding bonds and sovereign immunity.
The rationale for these enforcement provisions is discussed more
fully in the Agency's August 28, 1997 preamble to the final RFG/CG
foreign refineries rule. (See 62 FR 45533 (Aug. 28, 1997)).
By no later than January 1, 2010, 95 all gasoline would
be subject to a single national averaged standard and one national
refinery level cap. Thus, EPA is proposing that, beginning on that
date, the use of foreign small refinery baselines would sunset and
standards for all imported gasoline would be met by U.S. importers.
With a single national standard and cap, gasoline sulfur content could
most readily be monitored at the U.S. importer level, since there would
no longer be a special class of gasoline with different standards that
would need to be monitored.
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\95\ As stated in section IV.C. of the preamble, small refiner
individual refinery standards would sunset January 1, 2008, except
for any small refineries that receive a hardship extension not to
exceed two years.
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b. What Are the Proposed Requirements for Truck Importers? The
proposed sampling and testing requirements for importers require
sampling and testing of each batch of gasoline. For parties that import
gasoline into the U.S. by truck, the every-batch testing requirement
would include testing the gasoline in each
[[Page 26096]]
truck compartment, or if the gasoline is homogeneous, testing the
gasoline in the truck. However, EPA is concerned that this testing
requirement may not be feasible for truckers hauling many small loads
of gasoline. Since some northern U.S. communities rely, in large part,
on gasoline transported into the U.S. by truck from Canadian terminals,
these communities could suffer gasoline shortages if this requirement
proves too burdensome for truck importers. We therefore propose to
allow alternative requirements for truck-imported gasoline only.
i. Truck Transports of Gasoline (Excluding Gasoline Subject to
Small Foreign Refiner Individual Refinery Standards).
EPA is proposing a limited alternative approach for truck importers
in lieu of every-batch testing. This proposal would be based on the
importer meeting the 30 ppm sulfur average standard on a per-gallon
basis. Under this proposal, the importer would be allowed to rely on
the sulfur results of sampling and testing conducted by the operator of
the truck loading terminal in Canada. The environmental consequences of
this proposal would be neutral, because by meeting the 30 ppm sulfur
standard on an every-gallon basis the standard also is being met on
average.
The importer would be required to demonstrate the gasoline meets
the 30 ppm sulfur standards on an every-gallon basis. The gasoline in
the storage tank from which the importer's trucks are loaded would have
to be sampled and tested subsequent to each receipt of gasoline into
the terminal tank, and these tests would have to show the gasoline
meets the 30 ppm sulfur standard. For each truck load of gasoline, the
importer would have to obtain documents that accurately state the
sulfur content of the gasoline. The importer then would treat each
truck load of imported gasoline as a separate batch for purposes of the
recordkeeping and reporting requirements.
The terminal operator in most cases would not be subject to United
States laws, so the proposal contains safeguards that are intended to
ensure the gasoline in fact meets the applicable standard. First, the
importer would be required to conduct an independent program of quality
assurance sampling and testing of the gasoline dispensed to the
importer. This sampling and testing would have to be at a rate
specified in the proposed regulations, and the sampling would have to
be unannounced to the terminal operator. In addition, EPA inspectors
would have to be given access to conduct inspections at the truck
loading terminal and at any laboratory where samples collected pursuant
to this proposed approach are analyzed. These inspections could be
unannounced, and would include gasoline sampling and testing, and
record reviews.
EPA requests comment on this proposal for parties that import
gasoline by truck. Specifically, EPA requests comment on the provisions
that apply to persons located outside the United States, and the need
for EPA inspectors to conduct inspections at terminals located outside
the United States. In addition, EPA recognizes that the proposed per-
gallon standard of 30 ppm is more restrictive than an annual average
standard with per-gallon caps, although it provides assurance that
gasoline imported by truck will meet the requirements of the sulfur
control program. However, establishing an averaged standard with per-
gallon caps for truck-imported gasoline would require more substantial
recordkeeping, reporting and auditing by the importers and more
compliance monitoring by the EPA. EPA requests comments on the
alternative of allowing an annual average standard with per-gallon caps
for truck importers and the appropriate sulfur standards that should
apply under such an approach.
ii. Truck-Imported Gasoline Subject to Small Foreign Refiner Individual
Refinery Standards
There are additional compliance concerns related to the gasoline
produced by small foreign refiners whose gasoline is imported into the
U.S. by truck. The proposed requirements for gasoline produced at a
small foreign refinery with an individual baseline, and certified as
subject to the individual standard (S-FRGAS), include the necessity of
segregating the gasoline from all other gasoline, from the refinery
gate to the U.S., so that compliance with standards can be tracked.
Under our proposed certified S-FRGAS provisions applicable to other
importers, each batch of gasoline must be tested at the load port and
port of entry. However, in the case of gasoline imported by truck, each
truckload of such gasoline would constitute a batch. Given the small
batch volumes for truck imports, the testing and other procedures
proposed for certified S-FRGAS may not be feasible. The issue is
further complicated because the load port, in effect, stretches from
the refinery, through a pipeline and to a terminal in Canada.
Therefore, EPA is proposing an alternative to the requirement for
testing every truckload of imported certified S-FRGAS.
EPA is proposing that small foreign refiners whose gasoline is
exported to the U.S. by truck would, as part of their petition for an
individual baseline, submit a plan designed to ensure that certified S-
FRGAS remains segregated from all other gasoline from the refinery to
the U.S. The proposed plan would be reviewed for approval in
conjunction with the baseline petition.
Rather than specifying the precise requirements of such a plan in
the regulations, EPA would allow the refiner to develop its own
procedures for ensuring that S-FRGAS remains segregated until it
reaches the U.S. However, EPA believes that any plan would have to
include certain elements. For example, PTDs would have to accompany
each transfer of certified S-FRGAS through the distribution system,
clearly identifying the origin of the gasoline and prohibiting its
commingling with any product other than certified S-FRGAS from that
refinery. The refiner may need to enter into contracts with pipelines
and terminals, if the gasoline is shipped in this manner, that ensure
segregation and prohibit commingling. This certified product could then
only be loaded into trucks if they were importing the gasoline into the
U.S.
The refiner of such gasoline would have to receive and maintain all
such product shipment documents, including U.S. import documents, for
five years and review these on an ongoing basis to ensure segregation
is maintained until reaching the U.S. To further ensure that this
review occurs, EPA is proposing that the refiner's plan would include
attest audit procedures to be conducted annually by an independent
third party that would review the refiner's procedures and records to
ensure that the certified S-FRGAS is segregated at all times. For
example, these procedures would likely include volume reconciliation to
confirm that product is transferred without commingling. However,
additional procedures may be needed to accomplish the goal of ensuring
that certified-S-FRGAS remains segregated from all other gasoline.
3. What Standards Would Apply Downstream?
EPA is proposing downstream per-gallon cap standards that would
apply to all parties in the distribution system downstream of the
refinery-level, including pipelines, terminals, distributors, carriers,
retailers and wholesale purchaser-consumers. Downstream standards would
help ensure the sulfur level of gasoline remains below the cap level
when dispensed for use in motor vehicles, thereby avoiding the adverse
emissions
[[Page 26097]]
consequences of using gasoline with a sulfur content above the cap
level.
EPA is proposing that downstream standards would be more lenient
than the refinery-level cap standards so that refiners and importers
can produce gasoline that equals the refinery-level cap standard. It
has been EPA's experience that if a refiner produces gasoline that
equals, or almost equals a standard, that gasoline may be shown to
violate the standard when subsequently tested at a location downstream
of the refinery due to testing variability. As a result, parties
downstream of the refinery (primarily pipelines) set commercial
specifications for the quality of the gasoline they will accept that
are more stringent than the standard that applies to the downstream
party. This, in effect, forces refiners to produce gasoline that is
``cleaner'' than the refinery-level standard.
In other fuels programs (for example, the benzene per-gallon
standard for RFG) EPA has resolved this concern by announcing
enforcement tolerances for fuels standards that apply downstream of the
refinery-level, thereby reducing the need for pipelines to set
specifications more stringent than the refinery level standards. EPA
believes the approach proposed for the gasoline sulfur cap standards--
more lenient downstream standards--would have the same effect as
announced enforcement tolerances.
EPA is proposing that the values of the downstream cap standards
would reflect the testing variability that could reasonably be expected
when different laboratories test gasoline for sulfur content, that is,
lab-to-lab variability, or reproducibility. For gasoline subject to the
80 ppm refinery-level sulfur cap the proposed downstream standard would
be 95 ppm. This difference reflects the lab-to-lab variability
established by the American Society for Testing and Materials
(ASTM).96 For gasoline subject to refinery-level sulfur caps
higher than 80 ppm, which would be the case for gasoline produced
before 2006 and by certain small refiners, the proposed downstream cap
would be similarly established by using the most recent available ASTM
reproducibility data.
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\96\ ASTM standard method D-2622-98, entitled ``Standard Test
Method for Sulfur in Petroleum Products by Wavelength Dispersive X-
ray Fluorescence Spectrometry.'' The California Air Resources Board
found nearly identical reproducibility under ASTM D-2622-94,
according to a round robin study conducted by ARB and received by
EPA Feb. 11, 1999.
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As described in section IV.C.3, EPA is proposing that the cap
standards that apply to some small refiners would be higher than the
cap standards that apply to refiners generally. The downstream
standards that apply to this small refiner gasoline would be
correspondingly higher, based on ASTM reproducibility for each
refinery's assigned cap. If gasoline produced by a small refiner with a
higher cap standard is mixed in the distribution system with other
gasoline with a lower cap standard, the entire mixture then would be
subject to the higher cap standard. For this reason, EPA is concerned
that the small volume of small refinery gasoline could drive up the
downstream standard for all gasoline, most of which would have been
subject to the much lower national cap standard.
Therefore, EPA is proposing that during the period small refinery
individual standards are in effect, PTDs must identify whether gasoline
is comprised, in whole or in part, of gasoline produced at a small
refinery with a higher sulfur cap standard than the national cap
standard, and the level of the downstream cap applicable to the
gasoline. A downstream party could rely on the information contained in
the PTDs for gasoline received by that party as the basis for whether
gasoline contains any small refinery gasoline.
However, as gasoline is mixed, and re-mixed, in downstream
pipelines and tanks, the percentage of a particular gasoline that is
small refinery gasoline normally will progressively diminish. For this
reason EPA also is proposing that a downstream party must classify
gasoline as containing no small refinery gasoline if a test result for
the gasoline shows a sulfur content below the applicable national
downstream cap.
Under these proposed requirements, downstream parties and EPA would
know the downstream standard that applies to any particular gasoline.
If the gasoline contains no small refiner gasoline, the downstream
standard would be based on the national cap. If the gasoline is
comprised in whole or in part of small refiner gasoline subject to a
higher cap standard, the downstream standard would be based on this
higher cap standard. This approach would require regulated parties and
EPA to review and rely on the information contained in PTDs.
Following are two examples of how gasoline from small refineries
with individual standards (S-RGAS) would be identified downstream of
the refinery and how the downstream cap would apply:
(1) In 2005 the national refinery cap standard is 180 ppm. If a
small refinery with an individual sulfur cap standard produces a batch
of gasoline that contains 175 ppm sulfur, the transfer document that
accompanies that batch of gasoline into a pipeline may not indicate the
batch contains S-RGAS.
(2) In 2006, when the national downstream cap is 95 ppm, a terminal
receives three shipments of gasoline that are identified in the PTD's
as S-RGAS subject to downstream per-gallon cap standards of 205, 325
and 410 ppm. The terminal operator combines these shipments in a
storage tank. That gasoline mixture is subject to a downstream cap
standard of 410 ppm and any PTD subsequently provided to transferees
must identify the gasoline as containing S-RGAS and state the gasoline
is subject to a downstream cap standard of 410 ppm.
After several additional receipts of gasoline into the storage
tank, the terminal operator obtains a test result indicating the sulfur
level of the mixture is 90 ppm. Based on this test result, the gasoline
mixture becomes subject to the national cap standard of 95 ppm and any
PTD subsequently provided to transferees may not state the gasoline
contains S-RGAS.
EPA requests comment on these proposed downstream standards.
Specifically, we request comment on an alternative whereby gasoline
would be presumed to be subject to the national cap downstream
standard, unless the responsible regulated party were able to
demonstrate through PTDs the presence of small refinery gasoline. EPA
also requests comment on any alternatives that would allow enforcement
of the national downstream cap standards during the period small
refiner individual refinery standards were in effect.
4. What Are the Proposed Testing and Sampling Methods and Requirements?
a. What Is the Primary Test Method for Gasoline? We propose that
the ASTM standard method D 2622-98 be the primary test method for
testing for sulfur in gasoline by refiners and importers. This is the
regulatory method under the RFG/CG rule.97 However, we are
requesting comment on whether ASTM method D 5453-93, entitled
``Standard Test Method for Determination of Total Sulfur in Light
Hydrocarbons, Motor Fuels and Oils by Ultraviolet Fluorescence,''
should be the primary method. We are specifically concerned about the
suitability of these test methods for sulfur levels between 0-10 ppm,
and invite comment on other appropriate test methods, including ASTM D
4045, which is used under the California fuels program for sulfur
levels below 10 ppm. We are also requesting
[[Page 26098]]
comment on relative costs of the methods. We believe that ASTM D 5453
would significantly reduce capital costs for test equipment and that
operational costs would be similar to ASTM D 2622. A description of
these ASTM test methods, as well as other methods discussed later in
this section, can be found in Table VI-1, below.
---------------------------------------------------------------------------
\97\ See 40 CFR 80.46(a). The proposed rule would update the
current method, ASTM D 2622-94.
Table VI.-1.--ASTM Standard Test Methods and Practices Described in This
Section
------------------------------------------------------------------------
ASTM No. Title
------------------------------------------------------------------------
D 2622................................. Standard Test Method for Sulfur
in Petroleum Products by
Wavelength Dispersive X-ray
Fluorescence Spectrometry.
D 4045................................. Standard Test Method for Sulfur
in Petroleum Products by
Hydrogenolysis and Rateometric
Colorimetry.
D 4057................................. Standard Practice for Manual
Sampling of Petroleum and
Petroleum Products.
D 4177................................. Standard Practice for Automatic
Sampling of Petroleum and
Petroleum Products.
D 5453................................. Standard Test Method for
Determination of Total Sulfur
in Light Hydrocarbons, Motor
Fuels and Oils by Ultraviolet
Fluorescence.
D 5842................................. Standard Practice for Sampling
and Handling of Fuels for
Volatility Measurement.
------------------------------------------------------------------------
b. What Is the Proposed Test Method for Sulfur in Butane? We are
proposing that ASTM D 5623 would be the regulatory method for testing
the sulfur content of butane. This is the sulfur test method for butane
that the Agency proposed under the RFG/CG rule (proposal published at
62 FR 37338 (July 11, 1997)). However, we received several negative
comments regarding this test method in response to our proposal. We are
requesting comments on other methods and correlation of those methods
to ASTM D 5623. We are also requesting comment on appropriate
correlation procedures and other issues such as bias, accuracy, and
precision.
c. Is EPA Proposing a Requirement To Test Every Batch of Gasoline
Produced or Imported? Under today's proposal, all refiners and
importers 98 would be required to sample and test the sulfur
content of each batch of gasoline produced or imported. Test results
would be used to calculate a refiner's or importer's annual average
sulfur level. Any batch of gasoline that exceeded the applicable sulfur
cap could not be distributed or sold in the U.S., unless it was
exempted from this rule, as described later in this section. This
``every-batch'' testing requirement is not a new requirement for RFG
refiners and importers. However, it would be a new requirement for
refiners and importers of CG.
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\98\ Except for certain truck importers, as noted above.
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In the past, CG refiners and importers have been allowed to prepare
composite samples of gasoline from multiple gasoline batches and test
the composite sample. However, we believe that every-batch sulfur
testing by refiners and importers is necessary to ensure compliance
with upstream and downstream sulfur caps contained in the proposed
rule. We have proposed the use of alternative test methods to reduce
the cost of testing. We are requesting comment on this proposed
requirement.
i. Butane Blenders' Every-Batch Testing Requirement
Under the RFG rule, refiners that blend butane to previously
certified gasoline (PCG) must determine the volume and parameter values
of the butane, including sulfur content, by testing the gasoline,
before and after blending, and calculating the properties of the butane
by subtracting the volume and parameter values of the PCG. For CG only,
under certain conditions, we have allowed butane blenders to use the
parameter specifications of butane as tested by the butane producer.
This includes an assumed sulfur content of 140 ppm. We have allowed
this alternative to every-batch testing because of the costs of testing
each load of butane.99
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\99\ In addition, commercial grade butane easily meets
conventional gasoline standards, but that is not the case with
regard to the proposed gasoline sulfur standards.
---------------------------------------------------------------------------
We are proposing a similar alternative to every-batch testing for
butane blenders under today's sulfur program. We propose that butane
blenders could use the actual sulfur test result of their suppliers, if
the butane contained less than 30 ppm sulfur and if the butane blender
undertook a quality assurance program to ensure that the supplier's
sampling and testing was accurate. If the butane were tested and found
to violate the 30 ppm cap, the butane blender would be in violation for
the volume of product that exceeded the 30 ppm cap that was added to
gasoline and for any violations of the national downstream cap
resulting from the butane sulfur content. We believe this is a fair
alternative to every batch testing and the only alternative that gives
EPA reasonable ability to monitor compliance. We request comment on
this proposal.
ii. Refiners Blending Other Blendstocks into Previously Certified
Gasoline
Refiners that blend blendstock into PCG would be required to sample
and test each batch of gasoline produced. This would normally include
sampling and testing the PCG to determine its sulfur content and
volume; then sampling and testing the combined product subsequent to
blending; and calculating the sulfur content and volume of the
blendstock (which is the blender's batch for annual average compliance
and reporting purposes), by subtracting the volume and sulfur content
of the PCG from the volume and sulfur content of the combined product.
We are proposing to allow such refiners to meet an alternative testing
requirement in lieu of testing every batch of gasoline. Provided that
the refiner's test result for the sulfur content of each of the
blendstocks is less than the national refinery level per-gallon cap
standard, a refiner could sample and test each blendstock when received
at the refinery, and treat each blendstock receipt as a separate batch
for purposes of compliance calculations for the annual average sulfur
standard.
d. What Sampling Methods Are Proposed? Sampling methods apply to
all parties that conduct sampling and testing under the rule. We are
proposing requiring the use of sampling methods that were proposed in
the July 11, 1997 Federal Register notice (62 FR 37338, at 37341-37342,
37375-37376), which proposes modifications to the RFG/CG rule. These
sampling methods include ASTM D 4057-95 (manual sampling), D 4177-95
(automatic sampling from pipelines/in-line blending), and ASTM D 5842
(this sampling method is primarily concerned with sampling where
gasoline volatility is going to be tested, but it would also be an
appropriate sampling method to use when testing for sulfur). We are
proposing requiring use of these ASTM methods instead of the methods
provided in 40 CFR part 80, Appendix D. That is because the proposed
methods have been updated by ASTM, the updates have provided
clarification and they have eliminated certain requirements, such as
storage tank tap extensions, that are not necessary for sampling light
petroleum products such as gasoline.
e. What Are the Proposed Gasoline Sample Retention Requirements?
We are proposing a refiner and importer sampling and testing
program to establish the sulfur compliance of each batch of gasoline
produced or
[[Page 26099]]
imported. However, we are aware of the inherent drawbacks to a self-
testing scheme. There is the possibility that a party might sample or
test gasoline in a manner not consistent with the required procedures,
or that employees might inaccurately record the test results, by
mistake or otherwise. Under such a scheme, parties might also attempt
to conceal a discovered violation or to save money by not correcting a
violation.
In an attempt to address these concerns about self-testing, we
considered the option of requiring independent sampling and testing for
all gasoline, including conventional gasoline. Under current
regulations, only refiners or importers of reformulated gasoline are
obligated to do this. However, because of the costs of independent
sampling and testing 100 EPA is instead proposing an
alternative strategy to help ensure refinery and importer sulfur
compliance. Refiners and importers would be required to retain for
thirty days a representative sample from each batch of gasoline
produced, and to provide such samples to the Agency upon request. By
means of this option, EPA could verify the refiner test results.
---------------------------------------------------------------------------
\100\ See the discussion on this subject in the preamble to the
reformulated gasoline program's final rule, 59 FR 7765 (Feb. 16,
1994).
---------------------------------------------------------------------------
This limited duration sample retention would be useful to address
many of the potential problems concerning a refiner self-testing
program. Through this requirement, parties would be faced with the
knowledge that EPA could easily and randomly confirm the accuracy of
the refiner's test results and could discover unrecorded violations. We
believe that this would create an incentive for refiners to sample,
test, and record their sulfur results in an accurate and truthful
manner.
The Agency also is proposing that refiners be required to certify
annually that the samples have been collected in the manner required
under the sulfur rule. This requirement is intended to assure that
refinery officials insist on accurate and honest sampling and retention
of samples at their refineries. We are also proposing that specific
procedures be followed by refiners to properly collect retain, and ship
the samples in a manner consistent with requirements already imposed or
proposed under the RFG program. Under today's proposal, a minimum
representative sample of 330 ml of each gasoline batch would need to be
retained.101
---------------------------------------------------------------------------
\101\ See 40 CFR 80.65(f)(3)(F)(ii), and the Proposed Rule for
Modifications to Standards and Requirements for Reformulated and
Conventional Gasoline, 62 FR 37337 et seq, proposed 40 CFR
80.101(i)(l)(i)(C)(iii).
---------------------------------------------------------------------------
The Agency does not believe that the proposed sulfur rule sample
retention requirements would impose an undue financial burden on
regulated parties. Many refineries already engage in some sample
retention for their own purposes, and the retention procedures proposed
in today's proposal would merely require that typical industry
retention standards be applied. Shipping samples to us would entail
some expense, but this shipping would only occur periodically, and
would certainly cost less than hiring an independent laboratory to
regularly sample and test gasoline.
The Agency requests comments on the costs and effectiveness of the
proposed sample retention requirements, and invites comments on any
alternative plan to promote accuracy of refiner self-testing of
gasoline for sulfur compliance. In particular, we are interested in
information on the cost and effectiveness of a nationwide, independent
sampling and testing program
5. What Federal Enforcement Provisions Would Exist for California
Gasoline and When Could California Test Methods Be Used to Determine
Compliance?
a. Requirement to Segregate Gasoline and To Use Product Transfer
Document Requirements. Today's proposal would generally exempt
California gasoline from regulation under the sulfur rule for the
reasons previously described in this preamble. However, today's NPRM
does propose two requirements that would apply to some California
gasoline. The first would require that gasoline produced outside of
California, that is intended for California use, be segregated from all
other gasoline at all points in the distribution system. Second, the
Agency is proposing that out-of-state producers of gasoline intended
for sale in California be required to create PTDs identifying the
product as California gasoline, and that such PTDs be provided to all
transferees of this gasoline in the distribution system. Such
documentation is intended to facilitate our enforcement of the proposed
sulfur control program through identifying the gasoline not covered by
the federal regulation, even though it is produced in areas otherwise
subject to this proposed regulation. This documentation would also
assist regulated parties in identifying the gasoline as non-federally
regulated to facilitate segregation of California gasoline from federal
gasoline.
The sulfur program PTD requirements for California gasoline
produced out-of-state should not create any new burdens on regulated
parties, since the same requirements currently apply under the RFG
program.102 Today's proposal would incorporate and restate
the RFG rule's PTD requirements for this California gasoline. The
Agency does not believe that it is necessary to impose additional PTD
requirements under the sulfur program, since the California gasoline
identification requirements under the RFG rule would also satisfy the
identification needs of this rule. Having the same requirements in both
rules means that regulated parties that fail to produce and transfer
the necessary PTD identification would be in violation of both
programs.
---------------------------------------------------------------------------
\102\ See CFR 80.81(g).
---------------------------------------------------------------------------
b. Use of California Test Methods for 49 State Gasoline. As stated
previously, we are proposing to exclude gasoline produced in California
for California use from federal sulfur standards. However, refineries
or importers located in California would have to meet the standards and
other requirements with regard to ``federal'' gasoline used outside of
California. Nevertheless, EPA is proposing that gasoline produced in
California for sale outside of California could be tested for
compliance under the federal sulfur rule using the methodologies
approved by the ARB, provided that the producer complies with the
procedures for such testing as already required under 40 CFR 80.81(h),
which permits California test methods not identical to federal test
methods to be used for conventional gasoline only.
6. What Are the Proposed Recordkeeping and Reporting Requirements?
a. What Are the Proposed Product Transfer Document Requirements? We
are proposing that the PTDs that accompany each transfer of custody or
title of gasoline that includes gasoline produced by any small refiner
subject to sulfur rule individual refinery standards be required to
identify the gasoline as such, including the applicable downstream cap,
as an aid to enforcing the national downstream cap. Other PTD
information is currently required under the RFG/conventional gasoline
regulations. We believe that the additional PTD information regarding
sulfur compliance required under today's proposal would impose little
additional burden on industry. We request comment on this proposed
requirement.
[[Page 26100]]
b. What Are the Proposed Recordkeeping Requirements? We are
proposing to require that refiners and importers keep and make
available to EPA certain records that demonstrate compliance with the
sulfur program standards and requirements. The RFG/CG regulations
currently require refiners and importers to retain records that include
much of the information proposed to be required under today's rule. As
a result, we believe that the proposed reporting requirements would
impose very little additional burden on these regulated parties.
We are proposing to require all parties in the gasoline
distribution system, including refiners, importers, retailers, and all
types of distributors to retain PTDs and records of quality assurance
programs that parties conduct to establish a defense to downstream
violations. All parties in the gasoline distribution system currently
are required to keep PTDs for RFG. However, since there are no
downstream CG standards, only refiners and importers are required to
retain PTDs for conventional gasoline. Because today's proposed sulfur
rule, like the RFG rule, includes downstream standards, we believe that
a requirement to retain PTDs for all parties in the gasoline
distribution system would be appropriate under the sulfur rule. The PTD
information would help us identify the source of any gasoline found to
be in violation of the sulfur standards. The PTDs would also provide
downstream parties with information regarding the applicable downstream
standard.
Today's proposal would require parties to keep records for a period
of five years, with additional requirements for records pertaining to
credits. Records pertaining to credits that were banked and never
transferred to another party would need to be retained for five years
after the credits are used for compliance purposes. Records pertaining
to credits that were transferred would need to be retained by both
parties (transferee and transferor) for ten years after the date the
credits were generated (which would ensure the records are retained at
least years after they are used, since use would have to occur within
five years of generation even if the credits were transferred).
Most of the records that would be required to be kept for five
years already are subject to that requirement by the RFG/CG rule. Five
years is the applicable statute of limitations for the RFG and other
fuels programs. See 28 U.S.C. 2462. We request comment on these
proposed recordkeeping requirements for refiners, importers and
downstream regulated parties. In particular, we request comment on the
record retention provisions specific to credits that were transferred.
While we recognize that retaining records for ten years could be
problematic for both parties, we believe that both parties would need
to retain records so that we could be reasonably sure that credits used
for compliance were appropriate. An alternative, raised earlier in this
proposal, would be to give a more finite life to credits or to require,
beginning in 2006, credits to be used in the same year they were
generated or transferred. We welcome comments on this solution or any
other way in which we can be assured that adequate records would be
available should a credit transaction come into question at some date
longer than five years after the transaction.
c. What Are the Proposed Reporting Requirements? Today's proposed
rule would require refiners and importers to submit to us, on an annual
basis, a report that demonstrated compliance with the applicable sulfur
standards and data on individual batches of gasoline, including batch
volume and sulfur content. The RFG/CG programs contain similar
reporting requirements. Based on our experience with these programs, we
believe that requiring an annual sulfur report and batch information
would provide an appropriate and effective means of monitoring
compliance with the average standards under the sulfur program. The
batch data also would serve to verify that each batch of gasoline met
the applicable sulfur cap standard when it left the refinery. In
addition, the annual report would provide a vehicle for accounting for
any sulfur credits created, sold or used to achieve compliance during
the averaging period.
d. What Are the Proposed Attest Requirements? We are also proposing
to require refiners and importers to arrange for a certified public
accountant or certified internal auditor to conduct an annual review of
the company's records that form the basis of the annual sulfur
compliance report (called an ``attest engagement''). The purpose of the
attest engagement is to determine whether representations by the
company are supported by the company's internal records. Attest
engagements are required under the RFG/CG regulations. We believe that
an attestation for sulfur could be included in a refiner's current
attest engagement with little additional burden.
We believe that the proposed reporting requirements under today's
rule would impose minimal additional reporting burdens on industry
while providing us with information necessary to monitor compliance
with the sulfur standards. We request comment on these proposed
reporting requirements.
7. What Are the Proposed Exemptions for Research, Development, and
Testing?
We are proposing to exempt from the sulfur requirements gasoline
used for research, development and testing purposes. We recognize that
there may be legitimate research programs that require the use of
gasoline with higher sulfur levels than those allowed under today's
proposed rule. As a result, today's rule contains proposed provisions
for obtaining an exemption from the prohibitions for persons
distributing, transporting, storing, selling or dispensing gasoline
that exceeded the standards, where such gasoline is necessary to
conduct a research, development or testing program.
Under the proposal, parties would be required to submit to EPA an
application for exemption that would describe the purpose and scope of
the program and the reasons why use of the higher sulfur gasoline is
necessary. In approving any application, EPA would impose reasonable
conditions such as recordkeeping, reporting and volume limitations. We
believe that the proposal includes the least onerous requirements for
industry that also would ensure that higher sulfur gasoline is used
only for legitimate research purposes. We request comment on these
proposed provisions. We also request comment on whether in lieu of an
approval process, parties should be required to submit the required
information to EPA at the start of the program, and annually
thereafter, with the condition that EPA could provide a party with
written notification in the event the Agency determines the exemption
is not justified. We also request comment on whether the regulations
should impose a volume limit on the amount of gasoline that could be
used in a research program, as a way of minimizing any adverse
environmental effects that could result from allowing such an exemption
from the sulfur requirements.
8. What Are the Proposed Liability and Penalty Provisions for
Noncompliance?
Today's proposed rule contains provisions for liability and
penalties that are similar to the liability and penalty provisions of
the RFG and other fuels regulations.103 Under the proposed
[[Page 26101]]
rule, regulated parties would be liable for committing certain
prohibited acts, such as selling or distributing gasoline that does not
meet the sulfur standards, or causing others to commit prohibited acts.
In addition, parties would be liable for a failure to meet certain
affirmative requirements, or causing others to fail to meet affirmative
requirements. For example, persons who produce or import gasoline would
be liable for a failure to fulfill any of the requirements for refiners
and importers, including the sampling and testing requirements, the
reporting and attest audit requirements, the averaging requirements,
the small refinery requirements, and the credit creation and trading
requirements. In such cases the regulated party would also be liable
for any violation of the sulfur standard based on corrected
information. All parties in the gasoline distribution system, including
refiners, importers, distributors, carriers, retailers, and wholesale
purchaser-consumers, would be liable for a failure to fulfill the
recordkeeping requirements and the PTD requirements.
---------------------------------------------------------------------------
\103\ See section 80.5 (penalties for fuels violations); section
80.23 (liability for lead violations); section 80.28 (liability for
volatility violations); section 80.30 (liability for diesel
violations); section 80.79 (liability for violation of RFG
prohibited acts); section 80.80 (penalties for RFG/conventional
gasoline violations).
---------------------------------------------------------------------------
a. Presumptive Liability Scheme of Current EPA Fuels Programs.
Current EPA fuels programs include a presumptive liability scheme for
violations of prohibited acts. Under this approach, presumptive
liability is imposed on two types of parties: (1) That party in the
gasoline distribution system that controls the facility where the
violation was found or had occurred; and (2) those parties, typically
upstream in the gasoline distribution system from the initially listed
party, (such as the refiner, reseller, and any distributor of the
gasoline), whose prohibited activities could have caused the program
non-conformity to exist.104 This presumptive liability
scheme has worked well in enabling us to enforce our fuels programs,
since it creates comprehensive liability for substantially all the
potentially responsible parties. The presumptions of liability may be
rebutted by establishing an affirmative defense.
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\104\ Additional type of liability, vicarious liability, is also
imposed on branded refiners under these fuels programs.
---------------------------------------------------------------------------
To clarify the inclusive nature of these presumptive liability
schemes, today's proposed rule would explicitly include causing another
person to commit a prohibited act and causing the presence of non-
conforming gasoline to be in the distribution system as prohibitions.
This is consistent with the provisions and implementation of other
fuels programs.
Today's proposed rule, therefore, provides that most parties
involved in the chain of distribution would be subject to a presumption
of liability for actions prohibited, including causing non-conforming
gasoline to be in the distribution system and causing violations by
other parties. Like the other fuels regulations, a refiner also would
be subject to a presumption of vicarious liability for violations by
any downstream facility that displays the refiner's brand name, based
on the refiner's ability to exercise control at these facilities.
Carriers, however, would be presumed liable only for violations arising
from product under their control or custody, and not for causing non-
conforming gasoline to be in the distribution system, except where we
have specific evidence of causation.
b. Affirmative Defenses for Each Presumptively Liable Party. The
proposal includes affirmative defenses for each party that is deemed
presumptively liable for a violation, and all presumptions of liability
are refutable. The proposed defenses are similar to the defenses
available to parties for violations of the RFG regulations. We believe
that these defense elements set forth reasonably attainable criteria to
rebut a presumption of liability. The defenses include a demonstration
that: (1) the party did not cause the violation; and (2) except for
retailers and wholesale purchaser-consumers, the party conducted a
quality assurance program. For parties other than tank truck carriers,
the quality assurance program would be required to include periodic
sampling and testing of the gasoline. For tank truck carriers, the
quality assurance program would not need to include periodic sampling
and testing, but in lieu of sampling and testing, the carrier would be
required to demonstrate evidence of an oversight program for monitoring
compliance, such as appropriate guidance to drivers on compliance with
applicable requirements and the periodic review of records concerning
gasoline quality and delivery.
As in the other fuels regulations, branded refiners would be
subject to more stringent standards for establishing a defense because
of the control such refiners have over branded downstream parties.
Under today's rule, in addition to the other defense elements, branded
refiners would be required to show that the violation was caused by an
action by another person in violation of law, an action by another
person in violation of a contractual agreement with the refiner, or the
action of a distributor not subject to a contract with the refiner but
engaged by the refiner for the transportation of the gasoline.
Based on experience with other fuels programs, we believe that a
presumptive liability approach would increase the likelihood of
identifying persons who cause violations of the sulfur standards. We
normally do not have the information necessary to establish the cause
of a violation found at a facility downstream of the refiner or
importer. We believe that those persons who actually handle the
gasoline are in the best position to identify the cause of the
violation, and that a refutable presumption of liability would provide
an incentive for parties to be forthcoming with information regarding
the cause of the violation. In addition to identifying the party that
caused the violation, providing evidence to rebut a presumption of
liability would serve to establish a defense for the parties who are
not responsible. Presumptive liability is familiar to both industry and
to us, and we believe that this approach would make the most efficient
use of EPA's enforcement resources. For these reasons, we are proposing
a liability scheme for the sulfur program based on a presumption of
liability. We request comment on the proposed liability provisions.
c. Penalties for Violations. Section 211(d)(1) of the CAA provides
for penalties for violations of the fuels regulations.105
Today's rule proposes penalty provisions that would apply this CAA
penalty provision to the sulfur rule. The proposed provisions would
subject any person who violates any requirement or prohibition of the
sulfur rule to a civil penalty of up to $27,500 for every day of each
such violation and the amount of economic benefit or savings resulting
from the violation. A violation of the applicable average sulfur
standard would constitute a separate day of violation for each day in
the averaging period. A violation of a sulfur cap standard would
constitute a
[[Page 26102]]
separate day of violation for each day the gasoline giving rise to the
violation remained in the gasoline distribution system. The length of
time the gasoline in question remained in the distribution system would
be deemed to be twenty-five days unless there is evidence that the
gasoline remained in the gasoline distribution system for fewer than or
more than twenty-five days. The penalty provisions proposed in today's
rule are similar to the penalty provisions for violations of the RFG
regulations. EPA requests comment on these provisions.
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\105\ Section 211(d)(1) reads, in pertinent part:
(d)(1) Civil Penalties.--Any person who violates * * * the
regulations prescribed under subsection (c) * * * of this section *
* * shall be liable to the United States for a civil penalty of not
more than the sum of $25,000 for every day of such violation and the
amount of economic benefit or saving resulting from the violation. *
* * Any violation with respect to a regulation prescribed under
subsection (c) * * * of this section which establishes a regulatory
standard based upon a multi-day averaging period shall constitute a
separate day of violation for each and every day in the averaging
period. * * *
Pursuant to the Debt Collection Improvement Act of 1996 (31
U.S.C. 3701 note), the maximum penalty amount prescribed in section
211(d)(1) of the CAA was increased to $27,500. (See 40 CFR part 19.)
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9. How Would Compliance With the Sulfur Standards Be Determined?
We have often used a variety of evidence to establish non-
compliance with requirements imposed under our current fuels
regulations. Test results of the content of gasoline have been used to
establish violations, both in situations where the sample has been
taken from the facility at which the violation is found, and where the
sample has been obtained from other parties' facilities when such test
results have had probative value of the gasoline's characteristics at
points upstream or downstream. The Agency has also commonly used
documentary evidence to establish non-compliance or a party's liability
for non-compliance. Typical documentary evidence has included transfer
documents identifying the gasoline as inappropriate for the facility it
is being delivered to, or identifying parties having connection with
the non-complying gasoline.
a. What Evidence Could Be Used to Establish Sulfur Rule Violations
and Liability for these Violations? A recent EPA Environmental Appeals
Board decision, (In re: Commercial Cartage Company, Docket No. CAA-93-
H-002, CAA Appeal No. 97-9) (the ``Cartage'' decision), interpreted the
regulatory language of one of EPA's fuels programs as restricting the
evidence that the Agency may use in establishing a violation of a
standard under that program. Under the Cartage decision, in order to
establish the existence of a violation of the gasoline volatility
standards 106 at a particular carrier or retail outlet
facility, we would have to produce non-compliant test results obtained
only by using the regulatory method and only from a sample taken from
the facility itself. Other potentially persuasive evidence establishing
volatility standard violations would not be permitted under the Cartage
decision's interpretation of the volatility rule.107
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\106\ EPA's gasoline volatility regulations are found at 40 CFR
80.27 and 80.28.
\107\ See 40 CFR 80.27(b) and 80.28(b) and (e).
---------------------------------------------------------------------------
We believe that it would best serve the purposes of the proposed
sulfur rule to not limit the evidence that may be used to show whether
a violation occurred or liability for that violation. Our enforcement
experience in other programs has shown that the Cartage-permitted
evidence (test results from samples taken only from a particular
facility, and using only the regulatory test methods) often does not
exist, while other persuasive evidence of the existence of the
violations does exist. If we are not able to use other forms of
persuasive evidence to establish violations or other necessary facts
short of test results such as those permitted by the volatility
regulations under the Cartage interpretation, violators will continue
to avoid liability for their actions.
To ensure that evidence with probative value could be used under
the sulfur rule, the Agency is making explicit in today's proposal that
any probative evidence could be used to establish compliance or non-
compliance with the sulfur standards and requirements and liability for
non-compliance. This would not remove or change the obligation on
refiners and importers to perform testing on each batch of gasoline
using the procedures authorized under these regulations. Compliance or
non-compliance with sulfur standards would continue to be based on
regulatory test methods. However, other probative evidence could be
used to determine compliance with sulfur standards if the evidence is
relevant to whether the sulfur content would have been in compliance if
the appropriate sampling and testing methodologies had been performed.
Under today's proposal, the permitted probative evidence
specifically includes information obtained from any source or any
location, since Agency enforcement experience has proven the value of
such widely-obtained material. Respondents in EPA enforcement actions
would have the same right to present other evidence of compliance with
the sulfur rule as the Agency would have to establish non-compliance.
VII. Public Participation
We received many comments from a range of interested parties on our
Tier 2 Report to Congress. We have also received comments as part of
the our outreach to small entities (see section V.B.). These comments
have been very valuable in developing this proposal, and we look
forward to additional comment during the rulemaking process. You can
find comments on the issuance of Tier 2 standards and gasoline sulfur
control we received prior to this proposed action in the rulemaking
docket, and many of them are discussed in the context of various issues
in this preamble. We have considered comments received during the
development of the proposal and have addressed a number of them in
today's document.
A. Comments and the Public Docket
Publication of this document opens a formal comment period on this
proposal. You may submit comments during the period indicated under
DATES above. The Agency encourages all parties that have an interest in
the program described in this document to offer comment on all aspects
of the action. Throughout this proposal you will find requests for
specific comment on various topics.
The most useful comments are those supported by appropriate and
detailed rationales, data, and analyses. We also encourage commenters
who disagree with the proposed program to suggest and analyze alternate
approaches to meeting the air quality goals of this proposed program.
You should send all comments, except those containing proprietary
information, to the EPA's Air Docket (see ADDRESSES) before the date
specified above for the end of the comment period.
Commenters who wish to submit proprietary information for
consideration should clearly separate such information from other
comments. Such submissions should be labeled as ``Confidential Business
Information'' and be sent directly to the contact person listed (see
FOR FURTHER INFORMATION CONTACT), not to the public docket. This will
help ensure that proprietary information is not placed in the public
docket. If a commenter wants EPA to use a submission of confidential
information as part of the basis for the final rule, then a
nonconfidential version of the document that summarizes the key data or
information must be sent to the docket.
We will disclose information covered by a claim of confidentiality
only to the extent allowed by the procedures set forth in 40 CFR Part
2. If no claim of confidentiality accompanies a submission when we
receive it, we will make it available to the public without further
notice to the commenter.
B. Public Hearings
We will hold four public hearings as noted under ``DATES'' above.
If you would like to present testimony at the
[[Page 26103]]
public hearings, we ask that you notify the contact person listed above
two weeks before the date of the hearing at which you plan to testify.
You should include in this notification the date of the hearing at
which the testimony will be presented, an estimate of the time required
for the presentation, and any need for audio/visual equipment. We also
suggest that sufficient copies of the statement or material to be
presented be made available to the audience. In addition, it is helpful
if the contact person receives a copy of the testimony or material
before the hearing.
The hearings will be conducted informally, and technical rules of
evidence will not apply. A sign-up sheet will be available at the
hearings for scheduling the order of testimony. At the scheduled two
day hearing, we suggest that testimony that primarily pertains to the
proposed fuel requirements be presented on the first day of the
hearings and that testimony that primarily pertains to the proposed
vehicle standards (and/or other aspects of this proposal) be presented
on the second day of the hearings. Written transcripts of the hearings
will be prepared. The official record of the hearings will be kept open
for 30 days after the hearing dates to allow submittal of supplementary
information.
VIII. Administrative Requirements
A. Administrative Designation and Regulatory Analysis
Under Executive Order 12866 (58 FR 51735, Oct. 4, 1993), the Agency
is required to determine whether this regulatory action would be
``significant'' and therefore subject to review by the Office of
Management and Budget (OMB) and the requirements of the Executive
Order. The order defines a ``significant regulatory action'' as any
regulatory action that is likely to result in a rule that may:
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;
Create a serious inconsistency or otherwise interfere with
an action taken or planned by another agency;
Materially alter the budgetary impact of entitlements,
grants, user fees, or loan programs or the rights and obligations of
recipients thereof; or,
Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
Pursuant to the terms of Executive Order 12866, EPA has determined
that this proposal is a ``significant regulatory action'' because the
proposed vehicle standards, gasoline sulfur standards, and other
proposed regulatory provisions, if implemented, would have an annual
effect on the economy in excess of $100 million. Accordingly, a Draft
Regulatory Impact Analysis (RIA) has been prepared and is available in
the docket for this rulemaking. This action was submitted to the Office
of Management and Budget (OMB) for review as required by Executive
Order 12866. Written comments from OMB on today's action and responses
from EPA to OMB comments are in the public docket for this rulemaking.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act, 5 U.S.C. 601-612, was amended by
the Small Business Regulatory Enforcement Fairness Act of 1996
(SBREFA), Public Law 104-121, to ensure that concerns regarding small
entities are adequately considered during the development of new
regulations that affect them. In response to the provisions of this
statute, EPA has identified industries subject to this proposed rule
and has provided information to, and received comment from, small
entities and representatives of small entities in these industries. An
Initial Regulatory Flexibility Analysis (RFA) has been prepared by the
Agency to evaluate the economic impacts of today's proposal on small
entities.108 The key elements of the Initial RFA include:
---------------------------------------------------------------------------
\108\ The Initial RFA is contained in Chapter 8 of the
Regulatory Impact Analysis.
---------------------------------------------------------------------------
The number of affected small entities;
The projected reporting, record keeping, and other
compliance requirements of the proposed rule, including the classes of
small entities that would be affected and the type of professional
skills necessary for preparation of the report or record;
Other federal rules that may duplicate, overlap, or
conflict with the proposed rule; and,
Any significant alternatives to the proposed rule that
accomplish the stated objectives of applicable statutes and that
minimize significant economic impacts of the proposed rule on small
entities.
The Agency convened a Small Business Advocacy Review Panel (the
Panel) under section 609(b) of the Regulatory Flexibility Act as added
by SBREFA. The purpose of the Panel was to collect the advice and
recommendations of representatives of small entities that could be
affected by today's proposed rule and to report on those comments and
the Panel's findings as to issues related to the key elements of the
Initial Regulatory Flexibility Analysis under section 603 of the
Regulatory Flexibility Act. The report of the Panel has been placed in
the rulemaking record.109
---------------------------------------------------------------------------
\109\ Report of the Small Business Advocacy Panel on Tier 2
Light-Duty Vehicle and Light-Duty Truck Emission Standards, Heavy-
Duty Gasoline Engine Standards, and Gasoline Sulfur Standards,
October 1998.
---------------------------------------------------------------------------
The contents of today's proposal and the Initial Regulatory
Flexibility Analysis reflect the recommendations in the Panel's report.
We summarize our outreach to small entities and our responses to the
recommendations of the Panel below. The Agency continues to be
interested in the potential impacts of the proposed rule on small
entities and welcomes additional comments during the rulemaking process
on issues related to such impacts.
1. Potentially Affected Small Businesses
The Initial Regulatory Flexibility Analysis identified small
businesses from the industries in the following table as subject to the
provisions of today's proposed rule:
Table VIII.1.--Industries Containing Small Businesses Potentially Affected by Today's Proposed Rule
----------------------------------------------------------------------------------------------------------------
Industry NAICS a codes SIC b codes Defined by SBA as a small business if: c
----------------------------------------------------------------------------------------------------------------
Motor Vehicle Manufacturers........ 336111 3711 <1000 employees.
336112
336120
Alternative Fuel Vehicle Converters 336311 3592 <500 employees.
541690 8931
336312 3714 <750 employees.
[[Page 26104]]
422720 5172 <100 employees.
454312 5984 <$5 million annual sales.
811198 7549
541514 8742
Independent Commercial Importers of 811112 7533 <$5 million annual sales.
Vehicles and Vehicle Components. 811198 7549
541514 8742
Petroleum Refiners................. 324110 2911 <1500 employees.
Petroleum Marketers and 422710 5171 <100 employees.
Distributors. 422720 5172
----------------------------------------------------------------------------------------------------------------
a North American Industry Classification System.
b Standard Industrial Classification system.
c According to SBA's regulations (13 CFR 121), businesses with no more than the listed number of employees or
dollars in annual receipts are considered ``small entities'' for purposes of a regulatory flexibility
analysis.
The Initial RFA identified about 15 small petroleum refiners,
several hundred small petroleum marketers, and about 15 small
certifiers of covered vehicles (belonging to the other categories in
the above table) that would be subject to the proposed rule.
2. Small Business Advocacy Review Panel and the Evaluation of
Regulatory Alternatives
The Small Business Advocacy Review Panel was convened by EPA on
August 27, 1998. The Panel consisted of representatives of the Small
Business Administration (SBA), the Office of Management and Budget
(OMB), and EPA. During the development of today's proposal, EPA and the
Panel were in contact with representatives from the small businesses
that would be subject to the provisions in today's proposal. In
addition to verbal comments from industry noted by the Panel at
meetings and teleconferences, written comments were received from each
of the affected industry segments or their representatives. These
comments, alternatives suggested by the Panel to mitigate adverse
impacts on small businesses, and issues the Panel requested EPA take
additional comment on are contained in the report of the Panel and are
summarized below. Today's proposal incorporates or requests comment on
the alternatives and issues suggested by the Panel.
Fuel-Related Small Business Issues
Most of the small refiners stated that if they were required to
achieve 30 ppm sulfur levels on average with an 80 ppm per-gallon cap
without some regulatory relief, they would be forced out of business.
Thus, the Panel devoted much attention to regulatory alternatives to
address this concern. Most small refiners strongly supported delaying
mandatory compliance for their facilities. On the other hand, most
small refiners stated that a phase-in of gasoline sulfur standards
would not be helpful because it would be more cost-effective for them
to install the maximum technology required for the most stringent
sulfur levels that would ultimately be imposed.
The Society of Independent Gasoline Marketers of America (SIGMA)
commented that EPA should consider giving relief not only to refiners
that meet the SBA definition of small refiner but also to refineries
with relatively small production capacity that are owned by large
refining companies. This was because a refinery with a small production
capacity would operate essentially as an SBA-defined small refiner
would. SIGMA also noted that small gasoline marketers would be affected
by the closure of any refinery with small production capacity, whether
it was owned by a large company or an SBA-defined small refining
company.
The Panel recommended that small refiners be given a four to six
year period of relief during which less stringent gasoline sulfur
requirements would apply. The Panel also advised that EPA specifically
request comment on an alternative duration of ten years for the relief
period. Small refiners would be assigned interim sulfur standards
during this relief period based on their current individual refinery
sulfur levels. Following this relief period, small refiners would be
required to meet the industry-wide standard, although temporary
hardship relief would be available on a case-by-case basis. The
additional time provided to small refiners before compliance with the
industry-wide standard was required would allow (1) new sulfur-
reduction technologies to be proven-out by larger refiners, (2) the
costs of advanced technology units to drop as the volume of their sales
increases, (3) industry engineering and construction resources to be
freed-up, and (4) the acquisition of the necessary capital by small
refiners. The provisions that EPA is proposing for small refiners and
our requests for specific comments are found in Section IV.C.3.b.above.
The Panel concluded that adding gasoline sulfur to the fuel parameters
already being sampled and tested by gasoline marketers would likely
result in little, if any, additional burden. Therefore, the Panel did
not recommend any special provision for gasoline marketers.
Vehicle-Related Small Business Issues
Independent commercial importers of vehicles (ICIs) suggested that
the new emissions standards be phased-in with the phase-in schedule
based on the small vehicle manufacturer's annual production volume.
Secondly, the ICIs requested that small testing laboratories be
permitted to use older technology dynamometers than proposed for use by
the Agency. Finally, the ICIs commented that the certification process
should be waived for certain foreign vehicles. Small-volume vehicle
manufacturers (SVMs) stated that a phase-in of Tier-2 emissions
standards is essential. They further stated that SVMs should not be
required to comply until the end of the phase-in period, which should
not be before model year 2007. The SVMs also stated that a case-by-case
hardship relief provision should be provided for their members. SVMs
requested that a credit program be established with incentives for
larger manufacturers to make credits available to SVMs in meeting their
compliance goals.
Based on the above comments, the Panel advised that EPA consider
several
[[Page 26105]]
alternatives, individually or in combination, for the potential relief
that they might provide to small certifiers of vehicles. Our requests
for comments on these alternatives are found in Section V.A.8 above.
The Initial Regulatory Flexibility Analysis evaluates the financial
impacts of the proposed vehicle standards and fuel controls on small
entities. EPA believes that the regulatory alternatives considered in
today's document will provide substantial relief to small business from
the potential adverse economic impacts of complying with today's
proposed rule.
C. Paperwork Reduction Act
The information collection requirements (ICR) in this proposed rule
have been submitted for approval to the Office of Management and Budget
(OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The
Agency may not conduct or sponsor an information collection, and a
person is not required to respond to a request for information unless
the information collection request displays a currently valid OMB
control number. The OMB control numbers for EPA's regulations are
listed in 40 CFR part 9 and 48 CFR chapter 15.
The information collection requirements associated with today's
proposed rule belong to two distinct categories: (1) Those that pertain
to the proposed amendments to the vehicle certification requirements,
and (2) those that pertain to the proposed requirements for the control
of gasoline sulfur content. The information collection requirements are
contained in two separate ICR documents according to the category to
which they belong.110
---------------------------------------------------------------------------
\110\ The information collection requirements associated with
the proposed amendments to the requirements for vehicle
certification are contained in the Information Collection Request
entitled ``Amendments to the Reporting and Recordkeeping
Requirements for Motor Vehicle Certification Under the Proposed Tier
2 Rule''. The information collection requirements associated with
the proposed gasoline sulfur control program are contained in the
Information Collection Request entitled ``Recordkeeping and
Reporting Requirements Regarding the Sulfur Content of Motor Vehicle
Gasoline Under the Tier 2 Rule''.
---------------------------------------------------------------------------
The Paperwork Reduction Act stipulates that ICR documents estimate
the burden of activities that would be required of regulated parties
within a three year time period. Consequently, the ICR documents that
accompany today's proposed rule provide burden estimates for the
activities that would be required under the first three years of the
proposed program.
ICRs Pertaining to the Proposed Amendments to Vehicle Certification
Requirements
The information collection burden to vehicle certifiers associated
with the proposed amendments to the vehicle certification requirements
in today's document pertain to the proposed fleet-average
NOX standard and emission credits provisions. These proposed
requirements are very similar to those under the voluntary National Low
Emission Vehicle (NLEV) program, which includes a fleet-average
standard for nonmethane hydrocarbon organic gases (NMOG) and associated
emission credits provisions. The hours spent annually by a given
vehicle certifier on the information collection activities associated
with the proposed recordkeeping and reporting requirements depends upon
certifier-specific variables, including: the scope/variety of their
product line as reflected in the number of test groups and strategy
used to comply with the proposed fleet-average NOX standard,
the extent they utilize the proposed emissions credits provisions, and
whether they opted into the NLEV program. Vehicle certifiers that use
the proposed provisions for early banking of emission credits would be
subject to the associated information collection requirements as early
as September 1, 2000.111 All vehicle certifiers would be
required to comply with the information collection requirements
associated with the amendments to the vehicle certification program
beginning September 1, 2003.112 The ICR document for the
proposed amendments to the vehicle certification program provides
burden estimates for all of the associated information collection
requirements. The total information collection burden associated with
the proposed amendments to the vehicle certification requirements is
estimated at 8,361 hours and $564,172 annually for the certifiers of
light-duty vehicles and light-duty trucks.
---------------------------------------------------------------------------
\111\ These ICRs would become effective on the date that model
year 2001 vehicles are introduced into commerce. EPA assumes that
September 1, 2000 is the earliest date that model year 2001 vehicles
will be marketed.
\112\ Assuming model year 2004 vehicles are introduced into
commerce on this date.
---------------------------------------------------------------------------
ICRs Pertaining to the Proposed Requirements for Gasoline Sulfur
Control
The information collection burden to gasoline refiners, importers,
marketers, distributors, retailers and wholesale purchaser-consumers
(WPCs), and users of research and development (R&D) gasoline pertain to
the proposed gasoline sulfur control requirements. The scope of the
recordkeeping and reporting requirements for each regulated party, and
therefore the cost to that party, reflects the party's opportunity to
create, control, or alter the sulfur content of gasoline. As a result,
refiners and importers would have significant requirements, which are
necessary both for their own tracking, and that of downstream parties,
and for EPA enforcement. Parties downstream from the gasoline
production or import point, such as retailers, would have minimal
burdens that are primarily associated with the transfer and retention
of product transfer documents. Many of the reporting and recordkeeping
requirements for refiners and importers regarding the sulfur content of
gasoline on which the proposed rule would rely currently exist under
EPA's Reformulated Gasoline (RFG) and Anti-Dumping programs. The ICR
for the RFG program covered start up costs associated with reporting
gasoline sulfur content under the RFG program. Consequently, much of
the cost of the information collection requirements under the proposed
gasoline sulfur control program has already been accounted for under
the RFG program ICR.
The information collection requirements under the proposed sulfur
control program would evolve over time as the program is phased-in.
Beginning July 1, 2000, certain requirements would apply to parties
that voluntarily opt to generate credits for early sulfur reduction
under the proposed average banking and trading (ABT) provisions. Many
of the requirements would not become applicable until the beginning of
the sulfur control program on October 1, 2003, when all refiners would
be required to meet the proposed standards. The information collection
requirements under the proposed program would become stable after
January 1, 2008, when the optional small refiner provisions would
expire.113
---------------------------------------------------------------------------
\113\ A refiner could petition EPA for an extension of the small
refiner provisions beyond January 1, 2008, based on hardship.
---------------------------------------------------------------------------
The ICR document for the proposed gasoline sulfur control program
provides burden estimates for the activities that would be required
under the first three years of the sulfur control program, from July 1,
2000 through June 30, 2003. The burden associated with activities that
would be required after June 30, 2003 will be estimated in later ICRs.
The initial ICR for the gasoline sulfur control program, however, does
[[Page 26106]]
provide a qualitative characterization of all of the required
activities and associated burdens for the various regulated parties as
they develop, and until they become stable after January 1, 2008.
We estimate that the total burden of the information collection
requirements that would be applicable during the first three years of
the proposed gasoline sulfur control program would be 42,479 hours and
$2,149,865 annually. The estimated annual burden for the various
regulated entities under the initial three year period of the proposed
gasoline sulfur control program are as follows:
--Refiners: 31,231 hours, $1,879,822
--Importers: 40 hours, $2,067
--Pipelines: 85 hours, $2,785
--Terminals: 1,700 hours, $55,700
--Truckers: 3,333 hours, $118,000
--Retailers/WPCs: 6,087 hours, $ 91,298
--R&D Gasoline Users: 3 hours, $193
Total Burden of the Proposed ICRs
We estimate that the total burden of the recordkeeping and
reporting requirements associated with the proposed vehicle
certification and gasoline sulfur control requirements would be at
50,840 hours and $2,714,037 annually over the first three years that
these requirements would be in effect.
Comments on EPA's Burden Estimates
We request comments on the Agency's need for the information
proposed to be collected, the accuracy of our estimates of the
associated burdens, and any suggested methods for minimizing the
burden, including the use of automated techniques for the collection of
information. Comments on the ICR should be sent to: the Office of
Policy, Regulatory Information Division, U.S. Environmental Protection
Agency (Mail Code 2136), 401 M Street, SW., Washington, DC 20460,
marked ``Attention: Director of OP;'' and to the Office of Information
and Regulatory Affairs, Office of Management and Budget, 725 17th
Street, NW., Washington, DC 20503, marked ``Attention: Desk Officer for
EPA.'' Include the ICR number in any such correspondence. OMB is
required to make a decision concerning the ICR between 30 and 60 days
after publication of a proposed rule. Therefore, comments to OMB on the
ICR are most useful if received within 30 days of the publication date
of today's document. Any comments from OMB and from the public on the
information collection requirements in today's proposal will be placed
in the docket and addressed by EPA in the final rule.
Copies of the ICR documents can be obtained from Sandy Farmer,
Office of Policy, Regulatory Information Division, U.S. Environmental
Protection Agency (Mail Code 2137), 401 M Street, SW., Washington, DC
20460, or by calling (202) 260-2740. Insert the ICR title and/or OMB
control number in any correspondence. Copies may also be downloaded
from the internet at http://www.epa.gov.icr.
D. Intergovernmental Relations
1. Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for federal agencies to assess the
effects of their regulatory actions on state, local, and tribal
governments, and the private sector. Under section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``federal mandates'' that
may result in expenditures to state, local, and tribal governments, in
the aggregate, or to the private sector, of $100 million or more for
any single year. Before promulgating a rule, for which a written
statement is needed, section 205 of the UMRA generally requires EPA to
identify and consider a reasonable number of regulatory alternatives
and adopt the least costly, most cost-effective, or least burdensome
alternative that achieves the objectives of the rule. The provisions of
section 205 do not apply when they are inconsistent with applicable
law. Moreover, section 205 allows EPA to adopt an alternative that is
not the least costly, most cost-effective, or least burdensome
alternative if EPA provides an explanation in the final rule of why
such an alternative was adopted.
Before we establish any regulatory requirement that may
significantly or uniquely affect small governments, including tribal
governments, we must develop a small government plan pursuant to
section 203 of the UMRA. Such a plan must provide for notifying
potentially affected small governments, and enabling officials of
affected small governments to have meaningful and timely input in the
development of our regulatory proposals with significant federal
intergovernmental mandates. The plan must also provide for informing,
educating, and advising small governments on compliance with the
regulatory requirements.
This proposed rule contains no federal mandates for state, local,
or tribal governments as defined by the provisions of Title II of the
UMRA. The rule imposes no enforceable duties on any of these
governmental entities. Nothing in the proposed rule would significantly
or uniquely affect small governments.
EPA has determined that this rule contains federal mandates that
may result in expenditures of more than $100 million to the private
sector in any single year. EPA believes that the proposed program
represents the least costly, most cost-effective approach to achieve
the air quality goals of the proposed rule. The cost-benefit analysis
required by the UMRA is discussed in Section IV.D. above and in the
Draft RIA. See the ``Administrative Designation and Regulatory
Analysis'' section in today's preamble (VIII.A.) for further
information regarding these analyses.
2. Executive Order 12875: Enhancing Intergovernmental Partnerships
Under Executive Order 12875, EPA may not issue a regulation that is
not required by statute and that creates a mandate upon a state, local
or Tribal government, unless the federal government provides the funds
necessary to pay the direct compliance costs incurred by those
governments, or EPA consults with those governments. If EPA complies by
consulting, Executive Order 12875 requires EPA to provide to the Office
of Management and Budget a description of the extent of EPA's prior
consultation with representatives of affected state, local and tribal
governments, the nature of their concerns, copies of any written
communications from the governments, and a statement supporting the
need to issue the regulation. In addition, Executive Order 12875
requires EPA to develop an effective process permitting elected
officials and other representatives of state, local and Tribal
governments ``to provide meaningful and timely input in the development
of regulatory proposals containing significant unfunded mandates.''
Today's proposed rule would not create a mandate on state, local or
Tribal governments. The proposed rule would not impose any enforceable
duties on these entities. Accordingly, the requirements of section 1(a)
of Executive Order 12875 do not apply to this rule.
3. Executive Order 13084: Consultation and Coordination With Indian
Tribal Governments
Under Executive Order 13084, 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
[[Page 26107]]
costs on those communities, unless the federal government provides the
funds necessary to pay the direct compliance costs incurred by the
tribal governments, or EPA consults with those governments. If EPA
complies by consulting, Executive Order 13084 requires EPA to provide
to the Office of Management and Budget, in a separately identified
section of the preamble to the rule, a description of the extent of
EPA's prior consultation with representatives of affected tribal
governments, a summary of the nature of their concerns, and a statement
supporting the need to issue the regulation. In addition, Executive
Order 13084 requires EPA to develop an effective process permitting
elected officials 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.''
Today's rule does not significantly or uniquely affect the
communities of Indian Tribal governments. The proposed motor vehicle
emissions, motor vehicle fuel, and other related requirements for
private businesses in today's document would have national
applicability, and thus would not uniquely affect the communities of
Indian Tribal Governments. Further, no circumstances specific to such
communities exist that would cause an impact on these communities
beyond those discussed in the other sections of today's document. Thus,
EPA's conclusions regarding the impacts from the implementation of
today's proposed rule discussed in the other sections of today's
document are equally applicable to the communities of Indian Tribal
governments. Accordingly, the requirements of section 3(b) of Executive
Order 13084 do not apply to this rule.
E. National Technology Transfer and Advancement Act
Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (NTTAA), Section 12(d) of Public Law 104-113, directs EPA
to use voluntary consensus standards in its regulatory activities
unless it would be inconsistent with applicable law or otherwise
impractical. Voluntary consensus standards are technical standards
(e.g., materials specifications, test methods, sampling procedures, and
business practices) developed or adopted by voluntary consensus
standards bodies. The NTTAA directs EPA to provide Congress, through
OMB, explanations when the Agency decides not to use available and
applicable voluntary consensus standards.
This proposed rule references technical standards adopted by the
Agency through previous rulemakings. No new technical standards are
proposed in today's document. The standards referenced in today's
proposed rule involve the measurement of gasoline fuel parameters and
motor vehicle emissions. The measurement standards for gasoline fuel
parameters referenced in today's proposal are all voluntary consensus
standards. The motor vehicle emissions measurement standards referenced
in today's proposed rule are government-unique standards that were
developed by the Agency through previous rulemakings. These standards
have served the Agency's emissions control goals well since their
implementation and have been well accepted by industry. EPA is not
aware of any voluntary consensus standards for the measurement of motor
vehicle emissions. Therefore, the Agency proposes to use the existing
EPA-developed standards found in 40 CFR part 86 for the measurement of
motor vehicle emissions.
EPA welcomes comments on this aspect of the proposed rulemaking
and, specifically, invites the public to identify potentially-
applicable voluntary consensus standards and to explain why such
standards should be used in this regulation.
F. Executive Order 13045: Children's Health Protection
Executive Order (E.O.) 13045, ``Protection of Children from
Environmental Health Risks and Safety Risks'' (62 FR 19885, April 23,
1997) applies to any rule that (1) is determined to be ``economically
significant'' as defined under E.O. 12866, and (2) concerns an
environmental health or safety risk that EPA has reason to believe may
have a disproportionate effect on children. If the regulatory action
meets both criteria, section 5-501 of the Order directs the Agency to
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 Agency.
This proposed rule is subject to the Executive Order because it is
an economically significant regulatory action as defined by E.O. 12866
and it concerns in part an environmental health or safety risk that EPA
has reason to believe may have a disproportionate effect on children.
This rulemaking will achieve significant reductions of various
emissions from passenger cars and light trucks, primarily
NOX, but also NMOG and PM. These pollutants raise concerns
regarding environmental health or safety risks that EPA has reason to
believe may have a disproportionate effect on children, such as impacts
from ozone, PM and certain toxic air pollutants. See Section III of
this proposal and the RIA for a further discussion of these issues.
The effects of ozone and PM on children's health were addressed in
detail in EPA's rulemaking to establish the NAAQS for these pollutants,
and EPA is not revisiting those issues here. EPA believes, however,
that the emission reductions from the strategies proposed in this
rulemaking will further reduce air toxics and the related adverse
impacts on children's health. EPA will be addressing the issues raised
by air toxics from motor vehicles and their fuels in a separate
rulemaking that EPA will initiate in the near future under section
202(l) of the Act. That rulemaking will address the emissions of
hazardous air pollutants from vehicles and fuels, and the appropriate
level of control of HAPs from these sources.
In this proposal, EPA has evaluated several regulatory strategies
for reductions in emissions from passenger cars and light trucks. (See
sections IV, V, and VI of this proposal as well as the RIA.) For the
reasons described there, EPA believes that the strategies proposed are
preferable under the Clean Air Act to other potentially effective and
reasonably feasible alternatives considered by the Agency, for purposes
of reducing emissions from these sources as a way of helping areas
achieve and maintain the NAAQS for ozone and PM. Moreover, EPA believes
that it has selected for proposal the most stringent and effective
control reasonably feasible at this time, in light of the technology
and cost requirements of the Act.
IX. Statutory Provisions and Legal Authority
Statutory authority for the vehicle controls proposed in today's
document can be found in sections 202, 206, 207, 208, and 301 of the
Clean Air Act (CAA), as amended, 42 U.S.C. sections 7521, 7525, 7541,
and 7601.
Statutory authority for the fuel controls proposed in today's
document comes from section 211(c) of the CAA, which allows EPA to
regulate fuels that either contribute to air pollution which endangers
public health or welfare or which impair emission control equipment.
Both criteria are satisfied for
[[Page 26108]]
the proposed gasoline sulfur controls. Additional support for the
procedural and enforcement-related aspects of the fuel's controls in
today's proposal, including the proposed record keeping requirements,
comes from sections 114(a) and 301(a) of the CAA.
List of Subjects
40 CFR Part 80
Environmental protection, Administrative practice and procedure,
Fuel Additives, Gasoline, Imports, Labeling, Motor vehicle pollution,
Penalties, Reporting and recordkeeping requirements.
40 CFR Part 85
Environmental protection, Confidential business information,
Imports, Labeling, Motor vehicle pollution, Penalties, Reporting and
recordkeeping requirements, Research, Warranties.
40 CFR Part 86
Environmental protection, Administrative practice and procedure,
Confidential business information, Labeling, Motor vehicle pollution,
Penalties, Reporting and recordkeeping requirements.
Dated: May 1, 1999.
Carol M. Browner,
Administrator.
For the reasons set forth in the preamble, we propose to amend
parts 80, 85 and 86 of title 40, of the Code of Federal Regulations as
follows:
PART 80--REGULATION OF FUELS AND FUEL ADDITIVES
1. The authority citation for part 80 continues to read as follows:
Authority: Secs. 114, 211, and 301(a) of the Clean Air Act, as
amended (42 U.S.C. 7414, 7545 and 7601(a)).
2. Section 80.2 is amended by removing and reserving paragraph (aa)
and revising paragraphs (h), (s), (w) and (gg) to read as follows:
Sec. 80.2 Definitions.
* * * * *
(h) Refinery means any facility, including but not limited to, a
plant, tanker truck, or vessel where gasoline or diesel fuel is
produced, including any facility at which blendstocks are combined to
produce gasoline or diesel fuel, or at which blendstock is added to
gasoline or diesel fuel.
* * * * *
(s) Gasoline blending stock, blendstock, or component means any
liquid compound which is blended with other liquid compounds to produce
gasoline.
* * * * *
(w) Previously certified gasoline means gasoline or RBOB that
previously has been included in a batch for purposes of complying with
the standards for reformulated gasoline, conventional gasoline or
gasoline sulfur, as appropriate.
* * * * *
(aa) [Reserved]
* * * * *
(gg) Batch of gasoline means a quantity of gasoline that is
homogeneous with regard to those properties that are specified for
conventional or reformulated gasoline.
* * * * *
3. Section 80.46 is amended by revising paragraphs (a) and (h) to
read as follows:
Sec. 80.46 Measurement of reformulated gasoline fuel parameters.
(a) Sulfur. Sulfur content must be determined by using one of the
following methods:
(1) Primary method. American Society for Testing and Materials
(ASTM) standard method D-2622-98, entitled ``Standard Test Method for
Sulfur in Petroleum Products by Wavelength Dispersive X-ray
Fluorescence Spectrometry.''
(2) Alternative method. ASTM D-5453-93, entitled ``Standard Test
Method for Determination of Total Sulfur in Light Hydrocarbons, Motor
fuels and Oils by Ultraviolet Fluorescence.''
* * * * *
(h) Incorporations by reference. ASTM standard methods D-2622-98,
D-5453-93, D-3606-92, D-1319-93, D-4815-93, and D-86-90 with the
exception of the degrees Fahrenheit figures in Table 9 of D-86-90, are
incorporated by reference. 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. Copies may be obtained from the
American Society for Testing and Materials, 100 Barr Harbor Dr., West
Conshohocken, PA 19428. Copies may be inspected at the Air Docket
Section (LE-131), room M-1500, U.S. Environmental Protection Agency,
Docket No. A-97-03, 401 M Street, SW., Washington, DC 20460, or at the
Office of the Federal Register, 800 North Capitol Street, NW., Suite
700, Washington, DC.
4. Subpart H is added to read as follows:
Subpart H--Gasoline Sulfur
General Information
Sec.
80.180 What are the implementation dates for the gasoline sulfur
program?
80.185 [Reserved]
80.190 Am I required to register with EPA under the sulfur program?
Gasoline Sulfur Standards
80.195 What are the gasoline sulfur standards for refiners and
importers?
80.200 What gasoline is subject to the sulfur standards?
80.205 How is compliance with the annual average sulfur level
determined?
80.210 What sulfur standards apply to gasoline downstream from
refineries and importers?
80.215 What requirements apply to oxygenate blenders?
80.220 [Reserved]
Small Refiner Provisions
80.225 What is the definition of a small refiner?
80.230 Who is not eligible for the small refiner provisions?
80.235 How does a refiner obtain approval as a small refiner?
80.240 What are the small refiner gasoline sulfur standards?
80.245 How does small refiner apply for a sulfur baseline?
80.250 How is the small refiner sulfur baseline determined?
80.255 [Reserved]
80.260 What are the procedures and requirements for obtaining a
hardship extension?
80.265 How will the EPA approve or disapprove of my hardship
extension application?
80.270-80.275 [Reserved]
Sulfur Averaging, Banking, Trading--General Information
80.280 What is the sulfur Averaging, Banking and Trading (ABT)
program?
80.285 Who may participate in the sulfur ABT program?
Sulfur ABT Program--Baseline
80.290 How do I apply for a sulfur baseline?
80.295 How is a refinery or importer sulfur baseline determined?
80.300 What if I did not produce or import gasoline during 1997 or
1998?
Sulfur ABT Program--Credit Generation
80.305 How are credits generated during the time period 2001
through 2003?
80.310 How are credits generated beginning in 2004?
Sulfur ABT Program--Credit Use
80.315 How are credits used?
80.320 What are the reporting requirements for the sulfur ABT
program?
80.325 [Reserved]
Sampling, Testing and Retention Requirements for Refiners and Importers
80.330 What are the sampling and testing requirements for refiners
and importers?
[[Page 26109]]
80.335 What gasoline sample retention requirements apply to
refiners and importers?
80.340 What alternative standards, sampling and testing
requirements apply to refiners producing gasoline by blending
blendstocks into previously certified gasoline (PCG)?
80.345 [Reserved]
80.350 What alternative sulfur standards, sampling and testing
requirements apply to importers who transport gasoline by truck?
80.355 [Reserved]
Recordkeeping and Reporting Requirements
80.360 What are the product transfer document requirements?
80.365 What records must be kept?
80.370 What are the annual reporting requirements?
Exemptions
80.375 What requirements apply to California gasoline?
80.380 What are the requirements for obtaining an exemption for
gasoline used for research, development or testing purposes?
Violation Provisions
80.385 What acts are prohibited under the gasoline sulfur program?
80.390 What evidence may be used to determine compliance with the
prohibitions and requirements of this subpart and liability for
violations of this subpart?
80.395 Who is liable for violations under the gasoline sulfur
program?
80.400 What defenses apply to persons deemed liable for a violation
of a prohibited act?
80.405 What penalties am I subject to?
Provisions for Foreign Refiners With Individual Sulfur Baselines
80.410 What are the additional requirements for gasoline produced
at foreign refineries having individual small refiner sulfur
baselines?
Attest Engagements
80.415 What are the attest engagement requirements for gasoline
sulfur compliance?
Subpart H--Gasoline Sulfur
General Information
Sec. 80.180 What are the implementation dates for the gasoline sulfur
program?
(a) July 1, 2000. Deadline for submittal of sulfur baseline
determinations for averaging, banking and trading program per
Sec. 80.290.
(b) June 1, 2002. Deadline for small refiner applications per
Sec. 80.235.
(c) October 1, 2003. Per-gallon caps apply, per Sec. 80.195 or
Sec. 80.240, as applicable.
(d) January 1, 2004. Refinery and importer average standards apply
and corporate pool average gasoline standards apply, per Sec. 80.195.
Small refinery average standards apply per Sec. 80.240.
(e) February 1, 2004. Downstream caps apply, per Sec. 80.210.
(f) January 1, 2005. Corporate pool average standards and per-
gallon caps are made more stringent per Sec. 80.195.
(g) January 1, 2006. Corporate pool average gasoline standards no
longer apply. Per-gallon caps are made more stringent per Sec. 80.195.
(h) June 30, 2007. Deadline for small refiner hardship extension
applications per Sec. 80.260.
(i) January 1, 2008. With the exception of gasoline produced by
small refiners with approved hardship extensions, every batch of
gasoline is subject to the 80 ppm cap. With the exception of small
refiners with approved hardship extensions, refinery and importer
average gasoline sulfur standards apply, per Sec. 80.195.
(j) January 1, 2010. Every batch of gasoline is subject to the 80
ppm cap. Refinery and importer average gasoline sulfur standards apply,
per Sec. 80.195.
Sec. 80.185 [Reserved]
Sec. 80.190 Am I required to register with EPA under the sulfur
program?
(a) Each refiner and importer must register with EPA according to
the procedures specified in this section.
(b) Refiners and importers subject to the standards in Sec. 80.195
who are registered by EPA under Sec. 80.76(a) are deemed to be
registered for purposes of this subpart. Refiners and importers subject
to the standards in Sec. 80.195 who are not registered by EPA under
Sec. 80.76(a) must provide to EPA the information required by
Sec. 80.76 by November 1, 2003 or not later than three months in
advance of the first date that such person produces or imports
gasoline, whichever is later.
(c) Refiners and individual refineries that are registered by EPA
under Sec. 80.76(a) and have established small refiner individual
refinery standards status under Sec. 80.235(f) are deemed to be
registered for purposes of this subpart. Refiners having any refinery
subject to the standards in Sec. 80.240 who are not registered by EPA
under Sec. 80.76(a) must provide to EPA the information required by
Sec. 80.76 by June 1, 2002.
(d) Any refiner or importer who plans to generate credits in any
year prior to 2004 must register with us no later than November 1 of
the year prior to the first year of credit generation.
Gasoline Sulfur Standards
Sec. 80.195 What are the gasoline sulfur standards for refiners and
importers?
(a)(1) The gasoline sulfur standards for refiners and importers,
excluding small refiners subject to the standards at Sec. 80.240, are
shown in Table 1 of this section.
(2) The averaging period is January 1 through December 31 of each
year. For each averaging period, a refiner's or importer's average
sulfur level must be no greater than the levels specified in Table 1 of
this section, as follows:
Table 1.--Gasoline Sulfur Standards
----------------------------------------------------------------------------------------------------------------
For the averaging period beginning
--------------------------------------------------------------
January 1, 2004 January 1, 2005 January 1, 2006+
----------------------------------------------------------------------------------------------------------------
Refinery or Importer Average, ppm................ 30 30 30
Corporate Pool Average, ppm...................... 120 90 (b)
Per-Gallon Cap, ppm.............................. a300 180 80
----------------------------------------------------------------------------------------------------------------
a This per-gallon cap standard must be met beginning October 1, 2003.
b Not applicable.
(b) The refinery or importer average gasoline sulfur standard.
(1) The refinery or importer average gasoline sulfur standard is
the maximum average sulfur level, measured in parts per million (ppm),
allowed for the combined reformulated and conventional gasoline
produced at a refinery or imported by an importer
[[Page 26110]]
during each calendar year starting January 1, 2004.
(2) The annual average sulfur level is calculated as specified in
section Sec. 80.205.
(3) The refinery or importer average gasoline sulfur standard may
be met using credits according to Sec. 80.315, or any other potential
sources of credits or allowances, if applicable.
(c) The corporate pool average gasoline sulfur standard applicable
in 2004 and 2005 is the maximum average sulfur level, in ppm, allowed
for a refiner's or importer's combined reformulated and conventional
gasoline production from all of a refiner's refineries and all gasoline
imported by an importer in a calendar year. The corporate pool average
is determined by volume-weighting each refinery's and importer's actual
annual average sulfur levels by their respective production or import
volumes, as specified in Sec. 80.205.
(d) The per-gallon cap standard specified in Table 1 of this
section for the averaging period beginning January 1, 2004, must be met
beginning October 1, 2003.
Sec. 80.200 What gasoline is subject to the sulfur standards?
All gasoline is subject to the standards in this subpart, with the
following exceptions:
(a) Gasoline that is used to fuel aircraft, racing vehicles or
racing boats that are used only in sanctioned racing events, provided
that:
(1) Product transfer documents associated with such gasoline, and
any pump stand from which such gasoline is dispensed, identify the
gasoline either as gasoline that is restricted for use in aircraft, or
as gasoline that is restricted for use in racing motor vehicles or
racing boats that are used only in sanctioned racing events;
(2) The gasoline is completely segregated from all other gasoline
throughout production, distribution and sale to the ultimate consumer;
and
(3) The gasoline is not made available for use as motor vehicle
gasoline, or dispensed for use in motor vehicles.
(b) California gasoline as defined in Sec. 80.81(a)(2).
(c) Gasoline that is exported for sale outside the U.S.
Sec. 80.205 How is compliance with the annual average sulfur level
determined?
(a) The refinery or importer average gasoline sulfur level is
calculated as follows:
[GRAPHIC] [TIFF OMITTED] TP13MY99.005
Where:
Sa = The refinery or importer annual average sulfur value.
Vi = The volume of gasoline produced or imported in batch i.
Si = The sulfur content of batch i as determined in
accordance with the requirements of Sec. 80.330.
n = The number of batches of gasoline produced or imported during the
averaging period.
i = Individual batch of gasoline produced or imported during the
averaging period.
(b) A refiner or importer may include oxygenate added downstream
from the refinery or import facility when calculating the sulfur
content, provided the following requirements are met:
(1) For oxygenate added to conventional gasoline, the refiner or
importer must comply with the requirements of Sec. 80.101(d)(4)(ii).
(2) For oxygenate added to RBOB, the refiner or importer must
comply with the requirements of Sec. 80.69(a).
(c) Refiners and importers must exclude from compliance
calculations all of the following:
(1) Gasoline that was not produced at the refinery or was not
imported by the importer (or that was imported as Certified Sulfur-
FRGAS).
(2) Blending stocks or gasoline that have been included in another
refiner's compliance calculations.
(3) Gasoline exempted from standards under Sec. 80.200.
(d) Compliance deficit. A refinery or importer may exceed the
refinery or importer annual average sulfur standard specified in
Sec. 80.195 under the following conditions:
(1) In the calendar year following the year the standard is not
met, the refinery or importer achieves compliance with the refinery or
importer annual average sulfur standard specified in Sec. 80.195; and
(2) In the calendar year following the year the standard is not
met, and after achieving compliance with the refinery or importer
annual average sulfur standard specified in Sec. 80.195, the refinery
or importer must have sufficient additional credits and/or actual
reduction in sulfur levels to equal the compliance deficit of the
previous year.
Sec. 80.210 What sulfur standards apply to gasoline downstream from
refineries and importers?
(a) Definition. S-RGAS means gasoline produced by a domestic
refinery that is subject to the standards in Sec. 80.240, and to
Certified Sulfur-FRGAS, as defined in Sec. 80.410, except that no batch
of gasoline may be classified as S-RGAS if the actual sulfur content is
less than the national refinery cap standard specified in Sec. 80.195.
(b) The sulfur cap standard for gasoline at any point in the
gasoline distribution system downstream from refineries and import
facilities, including gasoline at facilities of distributors, carriers,
retailers and wholesale purchaser-consumers, is as follows:
(1) The following standards apply to gasoline except where product
transfer documents indicate the presence of any S-RGAS:
------------------------------------------------------------------------
National
Downstream
During the Period Sulfur Cap
Standard
(ppm)
------------------------------------------------------------------------
February 1, 2004, through January 31, 2005................ 3
26
February 1, 2005, through January 31, 2006................ 2
01
February 1, 2006, and thereafter.......................... 9
5
------------------------------------------------------------------------
(2) For gasoline, including a mixture of gasoline batches from
different refineries, where product transfer documents indicate the
presence of any S-RGAS, the downstream cap standard for the gasoline is
the highest downstream cap standard applicable to any gasoline in the
mixture, except that if a test result indicates the sulfur content of
the mixture is less than or equal to the applicable national downstream
cap standard, the gasoline is subject to the national downstream cap
standard.
Sec. 80.215 What requirements apply to oxygenate blenders?
Oxygenate blenders, as defined by Sec. 80.2(mm), are subject to the
requirements of this subpart except for the reporting requirements of
Sec. 80.370 and the requirements under Sec. 80.330 to sample and test
each batch of gasoline produced.
Sec. 80.220 [Reserved]
Small Refiner Provisions
Sec. 80.225 What is the definition of a small refiner?
(a) A small refiner is defined as any person, as defined by 42
U.S.C. 7602(e), which, as of January 1, 1999:
[[Page 26111]]
(1) Produced gasoline at a refinery by processing crude oil through
refinery processing units; and
(2)(i) Employed no more than 1500 people, including subsidiaries,
and in the case of a refiner who operates a refinery as a joint venture
with other refiners, including the total number of employees of all
corporate entities in the venture; or
(ii) Is a subsidiary, in which case the employees of the parent
company and any wholly-owned subsidiaries of the parent company must be
included in determining if the 1,500 employee limit is exceeded.
(b) This definition applies to domestic and foreign refiners.
(c) If, without merger with or acquisition of another business
unit, a company with approved small refiner status exceeds 1500
employees after January 1, 1999, it will be considered a small refiner
for the duration of the small refiner program.
(d) A refiner that was not in operation as of January 1, 1999, that
begins operation before January 1, 2001, and meets all other criteria
of this subpart, may apply for small refiner status according to
Sec. 80.235.
Sec. 80.230 Who is not eligible for the small refiner provisions?
(a) The following are not eligible for the small refiner
provisions:
(1) Refineries built or started up after January 1, 1999, unless
the criteria of Sec. 80.225(d) are met; or
(2) Persons that employ more than 1500 people on January 1, 1999,
but employ fewer than 1500 people after that date; or
(3) Importers; or
(4) Refiners employing 1500 or fewer people which were part of a
larger corporation as of January 1, 1999 but subsequently were sold to
form a new company.
(b) Disqualification as a small refiner. (1) Refiners who qualify
as small under Sec. 80.225, and subsequently employ more than 1500
people as a result of merger with or acquisition of another entity, are
disqualified as small refiners and must meet the standards in
Sec. 80.195 beginning on January 1 of the first calendar year following
such merger or acquisition.
(2) If a small refiner is no longer eligible for small refiner
status or elects to change the status of any refinery operating under a
small refiner individual refinery standard to subject the refinery to
the standards in Sec. 80.195, the refiner must notify EPA in writing
within 20 days of the disqualifying event or, in the case of a
voluntary election, no later than November 15 prior to the year that
the change will occur. Each refinery of the small refiner no longer
eligible for small refiner status must meet the standards inSec. 80.195
for the next averaging period.
Sec. 80.235 How does a refiner obtain approval as a small refiner?
(a) A refiner must apply to EPA for small refiner status by June 1,
2002.
(b) Applications for small refiner status must be sent to: U.S.
EPA--FED, Gasoline Sulfur Small Refiner Status, 2000 Traverwood, Ann
Arbor, MI 48105.
(c) The small refiner status application must contain the following
information:
(1) A listing of the name and address of each location where any
employee of the refiner worked on January 1, 1999, the total number of
employees at each location, and the type of business activities carried
out at each location.
(2) A letter signed by the president, chief operating or chief
executive officer of the company, or his/her designee, stating that the
information contained in the application is true to the best of his/her
knowledge.
(3) Name, address, phone number, facsimile number and E-mail
address of a corporate contact person.
(d) For joint ventures, the total employee count includes the
combined employee count of all corporate entities in the venture.
(e) For government-owned refiners, the total employee count
includes all government employees.
(f) Refiners who apply for small refiner status based on the number
of employees after January 1, 1999 but before January 1, 2001, as
permitted under Sec. 80.225(d), must comply with paragraphs (a) through
(c) of this section.
(g) EPA will notify a refiner of approval or disapproval of small
refiner status by letter.
(1) If approved, EPA will notify the refiner of each refinery's
approved baseline, refinery per-gallon cap, and downstream per-gallon
cap standard under Sec. 80.210.
(2) If disapproved, the refiner must comply with the standards in
Sec. 80.195.
Sec. 80.240 What are the small refiner gasoline sulfur standards?
(a) The gasoline sulfur standards for an approved small refiner
depend on the refinery baseline sulfur level, and are shown in Table 1
of this section, as follows:
Table 1.--Gasoline Sulfur Standards for Approved Small Refiners
------------------------------------------------------------------------
Refinery annual average and per-
gallon (``cap'') sulfur
Refinery baseline sulfur level (ppm) standards (ppm) that apply
during 2004-2007
------------------------------------------------------------------------
0 to 30............................... Refinery average: 30.
Cap: 80.
31 to 80.............................. Refinery average: no
requirement.
Cap: 80.
81 to 200............................. Refinery average: baseline
level.
Cap: Factor of 2 above the
baseline.
201 and above......................... Refinery average: 200 ppm or 50%
of baseline, whichever is
higher, but in no event greater
than 300 ppm.
Cap: Factor of 1.5 above
baseline level.
------------------------------------------------------------------------
(b) The average standards specified in Table 1 of this section
apply to the combined reformulated and conventional gasoline produced
at a refinery.
(c) The refinery average sulfur standards specified in Table 1 of
this section must be met on an annual calendar year basis for each
refinery owned by a small refiner.
(d) The per-gallon cap standards specified in Table 1 of this
section for the averaging period beginning January 1, 2004 must be met
beginning October 1, 2003.
(e) Volume limitation. (1) The refinery average standards specified
in Table 1 of this section apply to the volume of gasoline produced by
a small refiner's refinery up to the lesser of:
(i) 105% of the baseline gasoline volume; or
(ii) The volume of gasoline produced at that refinery during the
average period by processing crude oil.
(2) If a refiner exceeds the volume limitation in paragraph (e)(1)
of this section during the calendar year, the annual average sulfur
standard is calculated as follows:
[GRAPHIC] [TIFF OMITTED] TP13MY99.007
Where:
Ssr = Small refiner annual average sulfur standard.
Vb = Applicable volume under paragraph (e)(1) of this
section.
Va = Averaging period gasoline volume.
Sb = Small refiner sulfur baseline.
(3) The applicable volume from paragraph (e)(1) of this section
excludes volumes of gasoline blending stocks used in the small
refinery's gasoline
[[Page 26112]]
production that were received from external sources, unless such
blending stocks are substantially transformed through the refinery's
processing operations and have not been included in any other refiner's
or importer's compliance determination.
(4) The applicable per-gallon cap standards in Table 1 of this
section apply to all gasoline produced by small refiners.
(f) Withdrawal of small refiner status. Refiners that receive
notification from EPA under Sec. 80.235(f) of their qualification as
small refiners will have that status withdrawn if EPA finds that the
refiner provided false or inaccurate information on its application for
small refiner status. Such refiners will be subject to the standards in
Sec. 80.195 beginning on January 1, 2004.
Sec. 80.245 How does a small refiner apply for a sulfur baseline?
(a) A refiner seeking small refiner status must establish an
individual sulfur baseline for every refinery covered by the small
refiner status application by June 1, 2002
(1) If a sulfur baseline was submitted for the refinery under
Sec. 80.290, the refiner does not need to resubmit that information.
(2) If no sulfur baseline was previously submitted, the refiner
must submit a sulfur baseline for every refinery according to
Sec. 80.250.
(b) The sulfur baselines must be submitted to the address specified
in Sec. 80.235(b).
Sec. 80.250 How is the small refiner sulfur baseline determined?
(a) The small refiner sulfur baseline is determined as follows:
[GRAPHIC] [TIFF OMITTED] TP13MY99.008
Where:
Sb = Sulfur baseline value.
Vi = Volume of gasoline batch i.
Si = Sulfur content of batch i.
n = Total number of batches of conventional gasoline produced from
January 1, 1997 through December 31, 1998.
i = Individual batch of conventional gasoline produced from January 1,
1997 through December 31, 1998.
(b) Foreign small refiners must also comply with the baseline
establishment requirements in Sec. 80.410(b).
(c) An approved small refiner may not aggregate the gasoline
volumes and sulfur levels of its refineries for compliance with the
applicable standards specified in Sec. 80.240.
(d) If at any time a small refinery baseline is determined to be
incorrect, the corrected baseline applies ab initio and the annual
average standards and cap standards are deemed to be those applicable
under the corrected information.
(e) If a small refiner does not have the data specified in
paragraph (a) of this section to generate a sulfur baseline, or if any
refineries owned by that refiner were not operating in 1997-1998, EPA
will assign each refinery a baseline average sulfur level of 150 ppm
sulfur and a baseline CG volume equivalent to the annual gasoline
volume capability of the refinery at the time it applies for small
refiner status.
Sec. 80.255 [Reserved].
Sec. 80.260 What are the procedures and requirements for obtaining a
hardship extension?
(a) An approved small refiner may apply to EPA for a hardship
extension of the small refiner standards for calendar years 2008 and
2009. The application must be submitted no later than June 30, 2007 to
U.S. EPA-FED, Small Refiner Hardship Extension, 2000 Traverwood, Ann
Arbor, MI 48105.
(b) The application must provide a detailed discussion regarding
the inability of the refinery to produce gasoline meeting the
requirements of Sec. 80.195. Such an application must include, at a
minimum, the following information:
(1) A detailed analysis of the reasons the refinery is unable to
produce gasoline meeting the requirements of Sec. 80.195 in 2008,
including costs, specification of equipment still needed, potential
equipment suppliers, and efforts already completed to obtain the
necessary equipment;
(2) If unavailability of equipment is part of the reason for the
inability to comply, a discussion of other options considered, and the
reasons these other options are not feasible;
(3) If relevant, a demonstration that a needed or lower cost
technology is immediately unavailable, but will be available in the
near future, and full information regarding when and from what sources
it will be available;
(4) Schematic drawings of the refinery configuration as of January
1, 1997 and as of the date of the hardship extension application, and
any planned future additions or changes;
(5) If relevant, a demonstration that a temporary unavailability
exists of engineering or construction resources necessary for design or
installation of the needed equipment;
(6) If sources of crude oil lower in sulfur than what the refiner
is currently using are available, full information regarding the
availability of these different crude sources, the sulfur content of
those crude sources, the cost of the different crude sources over the
past five years, and an estimate of gasoline sulfur levels achievable
by your refinery if the lower sulfur crude sources were used;
(7) A discussion of any sulfur reductions that can be achieved from
current levels;
(8) The date the refiner anticipates compliance with the standards
in Sec. 80.195 can be achieved at its refinery;
(9) An analysis of the economic impact of compliance on the
refiner's business (including financial statements from the last 5
years, or for any time period up to 10 years, at EPA's request); and
(10) Any other information regarding other strategies considered,
including strategies, or components of strategies, that do not involve
installation of equipment, and why meeting the standards in Sec. 80.195
beginning in 2008 is infeasible.
(c) The hardship extension application must contain a letter signed
by the president, chief operating or chief executive officer, of the
company, or his/her designee, stating that the information contained in
the application is true to the best of his/her knowledge.
Sec. 80.265 How will the EPA approve or disapprove of my hardship
extension application?
(a) EPA will evaluate each application for hardship extension on a
case-by-case basis. An extension will be granted for a refinery if the
small refiner who owns the refinery adequately demonstrates that severe
economic hardship would result if compliance with the standards in
Sec. 80.195 is required in 2008 and/or 2009.
(b) EPA may request more information, if necessary, for evaluation
of the application. If requested information is not submitted within
the time specified in EPA's request, or any extensions granted, the
application may be denied.
(c) EPA will notify the refiner of approval or disapproval of
hardship extension by letter.
(1) If approved, EPA will also notify the refiner of the date that
full compliance with the standards specified at Sec. 80.195 must be
achieved or what interim sulfur levels or schedules apply, if any.
[[Page 26113]]
(2) If disapproved, beginning January 1, 2008, the refinery is
subject to the requirements in Sec. 80.195.
Sec. 80.270-80.275 [Reserved]
Sulfur Averaging, Banking, Trading-General Information
Sec. 80.280 What is the sulfur Averaging, Banking and Trading (ABT)
program?
(a) The sulfur averaging, banking and trading program is a
voluntary program which allows eligible, participating refiners and
importers to generate, bank, trade and use credits.
(b) Beginning in 2000, refiners and importers may generate credits
by producing or importing gasoline with sulfur levels below the
applicable baseline as calculated under Sec. 80.295.
(c) Beginning in 2004, sulfur credits may be:
(1) Used by the refiner or importer who generated the credits;
(2) Banked for later use or transfer; or
(3) Traded or sold to another refiner or importer.
(d) This subpart contains specific requirements for the following:
(1) Using, generating, selling and trading credits; and
(2) The duration of the ABT program.
(e) The gasoline sulfur ABT program is summarized in Table 1 of
this section as follows:
BILLING CODE 6560-50-P
[GRAPHIC] [TIFF OMITTED] TP13MY99.009
BILLING CODE 6560-50-C
Sec. 80.285 Who may participate in the sulfur ABT program?
(a) Any refiner or importer of gasoline, may participate in the
program, except that participation by small refiners is limited under
paragraph (d) of this section.
(b) Refiners and importers who choose to generate credits in the
ABT program must establish a sulfur baseline under Sec. 80.290.
(c) Oxygenate blenders may not participate in the program.
(d) Small refiners with any refinery subject to the standards
specified in Sec. 80.240:
(1) May not use sulfur credits to meet the average standard
applicable to the refinery.
(2) May generate early credits under Sec. 80.305 and bank and trade
such sulfur credits throughout the duration of the sulfur ABT program.
Sulfur ABT Program--Baseline
Sec. 80.290 How do I apply for a sulfur baseline?
(a) Each refiner or importer who wishes to generate ABT program
credits during 2000-2003 must submit a sulfur baseline notification to
EPA by July 1, 2000.
(b) The sulfur baseline notification must be sent to: U.S. EPA-FED,
ABT Sulfur Baseline, 2000 Traverwood, Ann Arbor, MI 48105.
(c) The sulfur baseline notification must include the following
information:
(1) A listing of the names and addresses of all refineries and/or
import facilities owned by the corporation;
(2) The conventional gasoline sulfur baseline value, calculated as
specified in Sec. 80.295(a), for each refinery and import facility of
the corporation.
(3) The conventional gasoline baseline volume, calculated as
specified in Sec. 80.295(c), for each refinery and import facility of
the corporation.
(4) A letter signed by the president, chief operating or chief
executive officer, of the company, or his/her delegate, stating that
the information contained in the sulfur baseline determination is true
to the best of his/her knowledge.
(5) Name, address, phone number, facsimile number and E-mail
address of a corporate contact person.
(d)(1) A refiner or importer may generate credits as specified in
Sec. 80.305, beginning in calendar year 2000, based on the sulfur
baseline submitted to EPA according to paragraph (c) of this section.
(2) If at any time the baseline submitted in accordance with the
requirements of this section is determined to be incorrect, the
corrected baseline applies. Credits
[[Page 26114]]
generated, banked, used or traded will be adjusted to reflect the
correction.
Sec. 80.295 How is a refinery or importer sulfur baseline determined?
(a) A refinery's or importer's conventional gasoline sulfur
baseline is calculated using the following equation:
[GRAPHIC] [TIFF OMITTED] TP13MY99.010
Where:
SBCG = Conventional gasoline sulfur baseline value.
Vi = Volume of conventional gasoline batch i.
Si = Sulfur content of conventional gasoline batch i.
n = Total number of batches of conventional gasoline produced or
imported during January 1, 1997 through December 31, 1998.
i = Individual batch of conventional gasoline produced or imported
during January 1, 1997 through December 31, 1998.
(b) The individual sulfur baseline for summer reformulated gasoline
is 150 ppm.
(c) The individual sulfur baseline for winter reformulated gasoline
is equivalent to the conventional gasoline sulfur baseline calculated
under paragraph (a) of this section.
(d) The baseline volumes are as follows:
(1) The conventional gasoline baseline volume is one half of the
total 1997 and 1998 volume of conventional gasoline produced or
imported.
(2) There is no baseline volume for either summer or winter RFG
produced or imported.
(e) Any refiner or importer who, under Sec. 80.65 or
Sec. 80.101(d)(4), included oxygenate blended downstream in
conventional gasoline compliance calculations for 1997-1998 must
include this oxygenate in the baseline calculations for sulfur content
and volume under paragraphs (a) and (d) of this section.
(f) The baseline calculations for sulfur content and volume under
paragraphs (a) and (d) of this section for non-oxygenated blendstock,
such as natural gasoline or butane, that is blended into gasoline must
be calculated using the sulfur content and volume of the blendstock
only.
Sec. 80.300 What if I did not produce or import gasoline during 1997
or 1998?
A refiner or importer who did not produce or import gasoline during
1997 or 1998 is assigned a baseline sulfur level of 150 ppm for
conventional gasoline and RFG (winter and summer).
Sulfur ABT Program--Credit Generation
Sec. 80.305 How are credits generated during the time period 2000
through 2003?
(a) General. (1) Sulfur credits may be generated annually during
calendar years 2000-2003.
(2) Credits must be calculated separately for Conventional gasoline
and RFG. Credits must be calculated by multiplying the volume of
gasoline for which credits are generated under paragraphs (b) and (c)
of this section by the amount of sulfur reduction in ppm below the
refiner's or importer's applicable sulfur baseline. The refiner or
importer may include any oxygenates included in its RFG or Conventional
gasoline volume under Secs. 80.65 and 80.101(d)(4), respectively, for
the purpose of generating credits.
(3) A refiner's or importer's total credit generation is the sum of
the separate credit calculations for Conventional gasoline and RFG.
(4) Credits under this program are in units of ``ppm-gallons''.
(5) Credits must be identified by the year of creation, the year of
transfer (if any), and the year of use (as specified in Sec. 80.315).
Records relating to credit generation, use, and transfer, including the
applicable years, must be maintained pursuant to Sec. 80.365.
(b) Calculation of credits for conventional gasoline. (1) Refiners
and importers may generate credits for conventional gasoline produced
or imported during an averaging period only if the annual average
sulfur level for the conventional gasoline produced during the
averaging period is less than 150 ppm.
(2) Refiners and importers whose conventional gasoline volume for
the averaging period is less than or equal to 105% of its baseline
volume for conventional gasoline, must calculate credits as follows:
CRCG = (VCG) x
SBCG-SACG)
Where:
CRCG = Credits generated for conventional gasoline.
VCG = Volume of conventional gasoline produced or imported
during the averaging period.
SBCG = Sulfur baseline value for conventional gasoline or
150, whichever is greater .
SACG = Annual average sulfur level for conventional gasoline
produced or imported during the averaging period.
(3) Refiners and importers whose conventional gasoline volume for
the averaging period is greater than 105% of the baseline volume for
conventional gasoline, must calculate credits as follows:
CRCG = (VBCG x 1.05) x
(SBCG-SACG) + (VCG-(1.05 x
VBCG)) x (150-SACG)
Where:
CRCG = Credits generated for conventional gasoline.
VBCG = Baseline volume of conventional gasoline.
SBCG = Sulfur baseline value for conventional gasoline or
150, whichever is greater.
SACG = Annual average sulfur level for conventional gasoline
produced or imported during the averaging period.
VCG = Volume of conventional gasoline produced or imported
during the averaging period.
(c) Calculation of credits for RFG. (1) Refiners and importers may
generate credits for summer RFG produced or imported during an
averaging period only if the average sulfur level for the summer RFG
produced or imported during the averaging period is less than 150 ppm.
Summer RFG credits are calculated as follows:
CRSRFG = (VSRFG) x (150-SSRFG)
Where:
CRSRFG = Credits generated for summer reformulated gasoline.
VSRFG = Volume of summer RFG produced or imported during the
averaging period.
SSRFG = Average sulfur level for summer RFG produced or
imported during the averaging period.
(2) Refiners and importers may generate credits for winter RFG
produced or imported during an averaging period only if the average
sulfur level for the winter RFG produced or imported during the
averaging period is less than 150 ppm. Winter RFG credits calculated as
follows:
CRWRFG = (VWRFG) x
(SBCG-SWRFG)
Where:
CRWRFG = Credits generated for winter reformulated gasoline.
VWRFG = Volume of winter RFG produced or imported during the
averaging period.
SBCG = Sulfur baseline value for conventional gasoline or
150, whichever is greater.
SWRFG = Average sulfur level for winter RFG produced or
imported during the averaging period.
[[Page 26115]]
Sec. 80.310 How are credits generated beginning in 2004?
(a) A refiner, for any refinery owned by it, or an importer may
generate credits for annual average sulfur reductions if the annual
average sulfur level for the combined RFG and conventional gasoline
produced by any refinery owned by the refiner or imported by the
importer for the averaging period is less than 30 ppm.
(b) Credits calculated as follows:
CRA = (VA) x (30-SA)
Where:
CRA = Credits generated for the averaging period.
VA = Total annual combined volume of RFG and conventional
gasoline produced in a refinery or imported during the averaging
period.
SA = Annual average sulfur level of RFG and conventional
gasoline produced in a refinery or imported during the averaging
period.
(c) Credits must be identified by the year of creation, the year of
transfer (if any), and the year of use (as specified in Sec. 80.315).
Records relating to credit generation, use, and transfer, including the
applicable years, must be maintained pursuant to Sec. 80.365.
Sulfur ABT Program-Credit Use
Sec. 80.315 How are credits used?
(a) Credits may be used, beginning with the 2004 averaging period,
to meet the applicable annual average sulfur standard of 30 ppm,
provided that:
(1) Sulfur credits used were generated pursuant to the requirements
of this subpart; and
(2) The requirements of paragraphs (b) and (e) of this section are
met.
(b) Credits may not be used to meet the applicable corporate pool
average under Sec. 80.195.
(c) Credit transfers. (1) Credits obtained from other persons may
be used to meet the annual averaged 30 ppm standard specified in
Sec. 80.195 if all the following conditions are met:
(i) The credits are generated and reported according to the
requirements of this subpart.
(ii) The credits are used in compliance with the limitations
regarding the appropriate periods for credit use in this subpart.
(iii) Any credit transfer takes place no later than the last day of
February following the calendar year averaging period when the credits
are used.
(iv) Only the refiner or importer who generates the credits
transfers them, and only a refiner or importer who uses the credits to
achieve its compliance with the averaged standards obtains them from
the transferor refiner or importer.
(v) The credit transferor must apply any credits necessary to meet
the transferor's applicable average standard, including credits
generated during 2000, 2001, 2002 and 2003, before transferring credits
to any other refiner or importer. No credits may be transferred that
would result in the transferor having a negative credit balance.
(vi) The transferor must supply to the transferee records
indicating the year(s) the credits were generated.
(2) In the case of credits that have been calculated or created
improperly, or are otherwise determined to be invalid in violation of
the requirements of this subpart, the following provisions apply:
(i) Invalid credits cannot be used to achieve compliance with the
transferee's averaging standard, regardless of the transferee's good
faith belief that the credits were valid.
(ii) The refiner or importer who used the credits, and any
transferor of the credits, must adjust its sulfur calculations to
reflect the proper credits.
(iii) Any properly created credits existing in the transferor's
credit balance after correcting the credit balance, and after the
transferor applies credits as needed to meet the average standard at
the end of the compliance year, must first be applied to correct the
invalid transfers before the transferor trades or banks the credits.
(d) Limitations on credit use. (1) Credits generated prior to 2004
must be used or transferred no later than 2007.
(2) Credits generated in 2004 or later must be used or transferred
within five years of generation.
(3) Credits transferred must be used by the transferee within five
years of transfer, or no more than ten years of the year of generation,
whichever is less.
(4) A refiner possessing credits must use all credits prior to
falling into compliance deficit, as defined under Sec. 80.205(d) (2).
(e) If the recordkeeping requirements of Sec. 80.365(d) are not
met, credits used under this subpart are invalid.
Sec. 80.320 What are the reporting requirements for the sulfur ABT
program?
(a) A refiner or importer who generates, uses, or transfers credits
under the sulfur ABT program must file an annual report with EPA which
must be submitted with the refiner's or importer's annual compliance
report under Sec. 80.370.
(b) The report must include the following information:
(1) For credits generated in 2000, 2001, 2002 and 2003, the
applicable Conventional gasoline sulfur content baseline, in ppm, and
Conventional gasoline baseline;
(2) The actual annual average sulfur content, in ppm, before the
application of credits, separately for Conventional gasoline and
separately, the average sulfur content, in ppm, for winter RFG and for
summer RFG;
(3) For refiners, the annual volume of conventional gasoline
produced, and for importers, the annual volume of Non-Certified S-FRGAS
imported, in gallons;
(4) The number of credits used in ppm-gallons, in the averaging
period;
(5) The number of credits banked, credits transferred and credits
acquired, in ppm-gallons;
(6) The identity of the refiners and importers involved in these
transactions, including their registration numbers, under Sec. 80.190,
and the number of credits in ppm-gallons in each transaction; and
(7) The number of credits, if any, for which the refiner is
deficient, as defined under Sec. 80.205 (d), and the use of credits in
the following year to cure the deficiency under Sec. 80.205(d)(2).
Sec. 80.325 [Reserved].
Sampling, Testing and Retention Requirements for Refiners and
Importers
Sec. 80.330 What are the sampling and testing requirements for
refiners and importers?
(a) Sample and test each batch of gasoline. (1) Refiners and
importers of gasoline must collect a representative sample from each
batch of gasoline produced or imported and test each sample to
determine its sulfur content for compliance with requirements under
this subpart prior to the gasoline leaving the refinery or import
facility, using the sampling and testing methods provided in this
section.
(2) The requirements of this section apply beginning October 1,
2003, or January 1 of the first year of credit generation for refiners
and importers generating early credits under Sec. 80.305.
(b) Sampling methods. Refiners and importers must sample each batch
of gasoline by using one of the following methods:
(1) Manual sampling of tanks and pipelines must be performed
according to the applicable procedures specified in one of the two
following methods:
(i) American Society for Testing and Materials (ASTM) method D
4057-95, entitled ``Standard Practice for Manual Sampling of Petroleum
and Petroleum Products.''
(ii) Samples collected under the applicable procedures in ASTM D
5842-95, entitled ``Standard Practice for Sampling and Handling of
Fuels for Volatility Measurement,'' may be used
[[Page 26116]]
for measuring sulfur content if you assure that there is no
contamination present that could affect the sulfur test result.
(2) Automatic sampling of petroleum products in pipelines must be
performed according to the applicable procedures specified in ASTM
method D 4177-95, entitled ``Standard Practice for Automatic Sampling
of Petroleum and Petroleum Products.''
(c) Test method for measuring the sulfur content of gasoline.
Refiners and importers must use the method provided in Sec. 80.46(a) to
measure the sulfur content of gasoline they produce or import.
(d) Test method for sulfur in Butane. The sulfur content of butane
must be determined by ASTM D-5623-94, entitled ``Standard Test Method
for Sulfur Compounds in Light Petroleum Liquids by Gas Chromatography
and Sulfur Selective Detection.''
(e) Incorporations by reference. ASTM standard practices D 4057-95,
D 4177-95 and D 5842-95, and ASTM standard method D 5623-94 are
incorporated by reference. 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. Copies may be obtained from the
American Society for Testing and Materials, 100 Barr Harbor Dr., West
Conshohocken, PA 19428. Copies may be inspected at the Air Docket
Section (LE-131), room M-1500, U.S. Environmental Protection Agency,
Docket No. A-97-03, 401 M Street, SW., Washington, DC 20460, or at the
Office of the Federal Register, 800 North Capitol Street, NW., suite
700, Washington, DC.
Sec. 80.335 What gasoline sample retention requirements apply to
refiners and importers?
(a) For each batch of gasoline produced or imported, refiners and
importers must:
(1) Retain a representative sample of at least 330 ml, collected
from the batch and keep the sample for a period not less than 30 days
from the date the batch was collected.
(2) Comply with the gasoline sample handling and storage procedures
found in the sampling procedures specified in Sec. 80.330 for each
sample retained.
(3) Provide the sample retained under paragraph (a) of this section
to the Administrator's authorized representative upon request by EPA,
and if requested by EPA, ship the sample to EPA within two working days
by an overnight shipping service or comparable means, following the
procedures specified by EPA when the request is made.
(4) Include with each annual report filed under Sec. 80.370, the
following statement, signed and dated by the same person who signs the
annual report:
I certify that I have made inquiries that are sufficient to give
me knowledge of the procedures to collect and store gasoline
samples, and I further certify that the procedures meet the
requirements of the ASTM procedures required under Sec. 80.330.
(b) The requirements of this section apply beginning October 1,
2003, or January 1 of the first year of credit generation for refiners
and importers generating early credits under Sec. 80.305.
Sec. 80.340 What alternative standards, sampling and testing
requirements apply to refiners producing gasoline by blending
blendstocks into previously certified gasoline (PCG)?
(a) Any refiner who produces gasoline by blending blendstock into
PCG must meet the requirement of Sec. 80.330 to sample and test every
batch of gasoline as follows:
(1)(i) Sample and test to determine the volume and sulfur content
of the PCG prior to blendstock blending;
(ii) Sample and test to determine the volume and sulfur content of
the gasoline subsequent to blendstock blending;
(iii) Calculate the volume and sulfur content of the blendstock,
which is a batch for purposes of compliance calculations and reporting,
by subtracting the volume and sulfur content of the PCG from the volume
and sulfur content of the gasoline subsequent to blendstock blending.
(2) In the alternative, and provided every batch of blendstock used
at a refinery during an averaging period has a sulfur content that is
equal to or less than the applicable per-gallon cap standard under
Sec. 80.195, a refiner may sample and test each batch of blendstock
when received at the refinery to determine the volume and sulfur
content, and treat each blendstock receipt as a separate batch for
purposes of compliance calculations for the annual average sulfur
standard and for reporting.
(b) Refiners that blend only butane into PCG may meet the sampling
and testing requirements by using sulfur test results of the butane
supplier, provided that the following requirements are also met:
(1) The sulfur content of the butane received from the butane
supplier must not exceed 30 ppm on a per-gallon basis.
(2) The butane supplier must demonstrate that the sulfur content of
each load of butane supplied does not exceed the per-gallon sulfur
standard of 30 ppm through test results of samples of the butane
contained in the storage tank from which the butane blender is
supplied.
(i) Testing for the sulfur content of the butane by the supplier
must be subsequent to each time butane is supplied to the supplier's
storage tank, or the testing must be immediately before transfer of
butane to the butane blender.
(ii) The testing must be performed by the method specified in
Sec. 80.330(d).
(iii) The butane blender must obtain a copy of the butane
supplier's test results, at the time of each transfer of butane to the
butane blender, that reflect the sulfur content of each load of butane
supplied to the butane blender.
(3) The sulfur content and volume of each batch of gasoline
produced must be that of the butane the refiner blends into gasoline
for purposes of calculating compliance with the standards in
Sec. 80.195.
(4) The refiner must conduct a quality assurance program of
sampling and testing for each butane supplier that demonstrates the
butane sulfur content does not exceed 30 ppm. The frequency of butane
sampling and testing, for each butane supplier, must be one sample for
every 500,000 gallons of butane received, or one sample every 3 months,
whichever results in more frequent sampling.
(5) If any of the requirements of this section are not met, in
whole or in part, for any butane blended into gasoline, that butane is
deemed in violation of the gasoline sulfur standards in Sec. 80.195.
Sec. 80.345 [Reserved]
Sec. 80.350 What alternative sulfur standards, sampling and testing
requirements apply to importers who transport gasoline by truck?
Importers who import gasoline into the United States by truck, as
an alternative to the requirements to sample and test every batch of
gasoline under Sec. 80.330(a), and the annual sulfur average and per-
gallon cap standards otherwise applicable to importers under
Sec. 80.195, may instead comply with the following requirements:
(a) Per-gallon standard. The imported gasoline must meet a sulfur
standard of 30 ppm on a per-gallon basis.
(b) Terminal testing. The terminal operator must demonstrate the
gasoline does not exceed 30 ppm sulfur on a per-gallon basis, through
testing of the gasoline contained in the storage tank from which the
trucks used to transport gasoline into the United States are loaded.
[[Page 26117]]
(1) This sampling and testing must be performed after each receipt
of gasoline into the storage tank, or immediately before each transfer
of gasoline to the importer's truck.
(2) The sampling and testing must be performed using the methods
specified in Sec. 80.330.
(3) At the time of each transfer of gasoline to the importer's
truck, the importer must obtain a copy of the terminal test result that
indicates the sulfur content of each truck load of gasoline that is
imported into the United States.
(c) Quality assurance program. The importer must conduct a quality
assurance program, as specified in this paragraph, for each truck
loading terminal.
(1) Quality assurance samples must be obtained from the truck-
loading terminal and tested by the importer, or by an independent
laboratory, and the terminal operator must not know in advance when
samples are to be collected.
(2) The sampling and testing must be performed using the methods
specified in Sec. 80.330.
(3) The quality assurance test results for sulfur must be within 12
ppm of the terminal's test results.
(4) The frequency of the quality assurance sampling and testing
must be at least one sample for each fifty of an importer's trucks that
are loaded at a terminal, or one sample per month, whichever is more
frequent.
(d) Instead of conducting the quality assurance program specified
in paragraph (c) of this section an importer may meet the quality
assurance program requirement if the sampling and testing requirements
of paragraph (b) of this section are conducted by an independent
laboratory that meets the requirements in Sec. 80.65(f)(2)(iii).
(e) The importer must treat each truck load of imported gasoline as
a separate batch for purposes of assigning batch numbers and
maintaining records under Sec. 80.365, and reporting under Sec. 80.370.
(f) EPA inspectors or auditors, and auditors conducting attest
engagements under Sec. 80.415, must be given full and immediate access
to the truck-loading terminal and any laboratory at which samples of
gasoline collected at the terminal are analyzed, and must be allowed to
conduct inspections, review records, collect gasoline samples, and
perform audits. These inspections or audits may be either announced or
unannounced.
(g) This section does not apply to Certified Sulfur-FRGAS.
(h) If any of the requirements of this section are not met, all
gasoline imported by the truck importer during the time any
requirements are not met is deemed in violation of the gasoline sulfur
average and per-gallon cap standards in Sec. 80.195. In addition, the
truck importer may not in the future use the sampling and testing
provisions in this section in lieu of the provisions in Sec. 80.330.
Sec. 80.355 [Reserved]
Recordkeeping and Reporting Requirements
Sec. 80.360 What are the product transfer document requirements?
(a) On each occasion that any person transfers custody of or title
to S-RGAS, as defined in Sec. 80.210, other than when S-RGAS is sold or
dispensed for use in motor vehicles at a retail outlet or wholesale
purchaser-consumer facility, the product transfer documents must
include a statement identifying the gasoline as S-RGAS and the
applicable downstream cap under Sec. 80.210(b).
(b) Except for transfers to truck carriers, retailers and wholesale
purchaser-consumers, product codes may be used to convey the
information required by this section if such codes are clearly
understood by each transferee.
Sec. 80.365 What records must be kept?
(a) Records that must be kept. Beginning January 1, 2004, any
person who sells, offers for sale, dispenses, distributes, supplies,
offers for supply, stores, or transports gasoline, must keep the
following records:
(1) The product transfer documents required under Secs. 80.106,
80.77 and 80.360;
(2) For any sampling and testing for sulfur content conducted:
(i) The location, date, time and storage tank or truck
identification for each sample collected;
(ii) The name and title of the person who collected the sample and
the person who performed the testing;
(iii) The results of the tests for sulfur content and the test
volume; and
(3) Reasonable business records documenting the actions you took to
stop the sale or distribution of any gasoline found not to be in
compliance with the sulfur standards specified in this subpart, and the
actions you took to identify the cause of any noncompliance and prevent
future instances of noncompliance.
(b) Additional records that refiners and importers must keep.
Beginning October 1, 2003, or January 1 of the first year of early
credit generation for refiners and importers generating credits under
Sec. 80.305, refiners and importers must keep records that include the
following information:
(1) The volume of each batch of gasoline produced or imported;
(2) For credit generation, the information required by paragraph
(a)(2) of this section as well as the information required under
Sec. 80.305(a)(5) and Sec. 80.310(c);
(3) The batch number assigned to each batch of gasoline under
Sec. 80.65(d)(3); however, if composite samples that represent multiple
batches of conventional gasoline for anti-dumping purposes are used, a
separate batch number must be assigned to each batch for purposes of
this subpart;
(4) The date of production or importation of each batch of gasoline
produced or imported;
(5) The calculations and records used in making the calculations to
determine compliance with the applicable sulfur standard on average,
including compliance with the debit provision of this subpart and
records regarding the generation, use, transfer, and banking of credits
under Secs. 80.195, 80.305, 80.310 and 80.315; and
(6) A copy of all reports and other documents submitted to the EPA
pursuant to the requirements of this subpart.
(c) Additional records importers must keep. Importers must maintain
documentation which verifies the source of each batch of certified
Sulfur-FRGAS and non-certified Sulfur-FRGAS imported.
(d) Length of time records must be kept. The records required in
paragraphs (a), (b) and (c) of this section must be maintained for five
years from the date they were created, except for the following:
(1) For any person who generates credits, and/or uses the credits
so generated, the records required by paragraphs (a), (b) and (c) of
this section must be retained for five years from the date the credits
were used, and in no case must the records be retained for more than
ten years from the year they were generated.
(2) In the case of credits that were transferred between two
parties, both parties must retain records of those credits for ten
years from the date the credits were generated.
(e) Make records available to EPA. The records required in
paragraphs (a), (b) and (c) of this section must be made available to
the Administrator or the Administrator's authorized representative upon
request.
Sec. 80.370 What are the annual reporting requirements?
Beginning with the 2004 averaging period, or the first year of
credit
[[Page 26118]]
generation for refiners and importers generating early credits under
Sec. 80.305, and continuing for each averaging period thereafter,
refiners and importers must submit to the Administrator a report that
contains the information required in this section and such other
information as EPA may require. A refiner's annual reports for 2004 and
2005 must include the refiner's RFG and conventional gasoline
production for all refineries during the averaging period. Beginning in
2006 and thereafter, a refiner must submit a separate annual report for
each refinery that produced gasoline during the averaging period. An
importer must submit a report for all of the gasoline imported during
the averaging period no later than the last day of February following
the previous year's averaging period.
(a) Information required in a refiner's report. For refiners, the
annual sulfur averaging report must include the following information:
(1) The EPA refiner and refinery facility registration numbers;
(2) The total gallons of gasoline (winter reformulated, summer
reformulated, and conventional) produced at the refinery or aggregation
of refineries;
(3) The annual average sulfur content of the gasoline (winter
reformulated, summer reformulated, and conventional) produced at the
refinery, or aggregation of refineries, in parts per million;
(4) For each batch of gasoline produced during the averaging
period:
(i) The batch number assigned under Sec. 80.65(d)(3); however, if
composite samples that represent multiple batches of conventional
gasoline are tested for conventional gasoline, a separate batch number
must be assigned to each batch, using the batch numbering procedures
specified in Sec. 80.65(d)(3);
(ii) The date the batch was produced;
(iii) The volume of the batch;
(iv) The sulfur content of the batch as determined under
Sec. 80.330;
(v) The information on individual batches submitted to EPA under
Sec. 80.75(a)(2) and 80.105(a)(5) satisfies the requirements of this
paragraph (a)(4) unless compositing of samples is used for anti-dumping
rule batch reporting under Sec. 80.105(a)(5);
(5) A refiner's annual report for 2004 and 2005 must include the
refiner's winter reformulated RFG, summer RFG, and conventional
gasoline for all refineries during the averaging period;
(6) Beginning in 2006 and thereafter, a refiner must submit a
separate annual report for each of its refineries that produced
gasoline during the averaging period.
(b) Information required in an importer's report. An importer must
submit a report for all the gasoline it imported during the averaging
period. The report must include the following information:
(1) The EPA importer registration number;
(2) The total gallons of gasoline (reformulated and conventional)
imported during the averaging period, excluding certified Sulfur-FRGAS;
(3) The annual average sulfur content of the gasoline (reformulated
and conventional) imported during the averaging period, excluding
certified Sulfur-FRGAS, in parts per million;
(4) For gasoline imported during the averaging period from any
small foreign refiner who has an EPA approved individual baseline under
the small refiner provisions at Sec. 80.410, include the following
information:
(i) The EPA refiner and refinery registration numbers of each such
small foreign refiner and refinery facility; and
(ii) The total gallons of certified Sulfur-FRGAS and non-certified
Sulfur-FRGAS imported from each such small foreign refiner;
(5) The batch information required in paragraph (a)(4) of this
section.
(c) Sulfur credit program activity. Refiners and importers who
generate, bank, transfer, or use sulfur credits must submit to EPA an
annual report in accordance with the provisions of Sec. 80.320.
(d) The report must state the debit for the current year, as
applicable, and credits applied to the previous compliance year's
debit, as applicable.
(e) Report submission. Each annual report required under this
section must be:
(1) Signed and certified as meeting all of the applicable
requirements of this subpart H by the owner or a responsible corporate
officer of the refiner or importer; and
(2) Submitted to EPA no later than the last day of February for the
prior calendar year averaging period.
(f) Attest reports. Attest reports for refiner and importer attest
engagements must be submitted to the Administrator by May 30 of each
year under Sec. 80.415.
Exemptions
Sec. 80.375 What requirements apply to California gasoline?
(a) Definition. For purposes of this subpart, California gasoline
is defined under Sec. 80.81(a)(2).
(b) California gasoline exemptions. California gasoline is exempt
from all requirements of this subpart with the exception of the
segregation requirement described in paragraph (c) of this section and
the product transfer document requirements described in paragraph (d)
of this section.
(c) Segregation requirement. California gasoline produced at a
refinery located outside of the state of California must be kept
segregated from all gasoline that is not California gasoline at all
points in the distribution system.
(d) Product transfer documents. For California gasoline produced at
a refinery located outside the state of California, the transferors and
transferees must comply with the product transfer document requirements
in Sec. 80.81(g).
(e) Use of California test methods and off site sampling
procedures. Any refiner of gasoline produced in California or importer
of gasoline imported into California whose gasoline is used outside of
California may:
(1) Use the sampling and testing methods approved in Title 13 of
the California Code of Regulations, as permitted under Sec. 80.81(h)(1)
as an alternative to the sampling and testing methods required by
Sec. 80.330; and
(2) Determine the sulfur content of gasoline at off site tankage as
permitted in Sec. 80.81(h)(2).
Sec. 80.380 What are the requirements for obtaining an exemption for
gasoline used for research, development or testing purposes?
(a) R&D application. Any person may request an exemption from the
provisions of this subpart for gasoline used for research, development
or testing (``R&D'') purposes by submitting an application that
includes all the information listed in paragraph (c) of this section
to:
Director (6406J), Fuels and Energy Division, U.S. Environmental
Protection Agency, 401 M Street SW, Washington, DC 20460; and
Director (2242A), Air Enforcement Division, U.S. Environmental
Protection Agency, 401 M Street, SW, Washington, DC 20460.
(b) Criteria for an R&D exemption. For an R&D exemption to be
granted, the proposed test program must:
(1) Have a purpose that constitutes an appropriate basis for
exemption;
(2) Necessitate the granting of an exemption;
(3) Be reasonable in scope; and
(4) Have a degree of control consistent with the purpose of the
program and EPA's monitoring requirements.
(c) Information required to be submitted. To demonstrate each of
the four elements in paragraphs (b)(1) through (4) of this section, the
[[Page 26119]]
application required under paragraph (a) of this section must include
the following information:
(1) A concise statement of the purpose of the program demonstrating
that the program has an appropriate R&D purpose.
(2) An explanation of why the stated purpose of the program cannot
be achieved in a practicable manner without performing one or more of
the prohibited acts under Sec. 80.385.
(3) To demonstrate the reasonableness of the scope of the program:
(i) An estimate of the program's duration;
(ii) An estimate of the maximum number of vehicles or engines
involved in the program;
(iii) The time or mileage duration of the program;
(iv) The range of sulfur content of the gasoline expected to be
used in the program, in ppm; and
(v) The quantity of gasoline which exceeds the applicable sulfur
standard that is expected to be used in the program.
(4) With regard to control, a demonstration that the program
affords EPA a monitoring capability, including at a minimum:
(i) The technical nature of the program;
(ii) The site(s) of the program (including street address, city,
county, State, and zip code);
(iii) The manner in which information on vehicles and engines used
in the program will be recorded and made available to the
Administrator;
(iv) The manner in which results of the program will be recorded
and made available to the Administrator;
(v) The manner in which information on the gasoline used in the
program (including quantity, sulfur content, name, address, telephone
number and contact person of the supplier, and the date received from
the supplier), will be recorded and made available to the
Administrator;
(vi) The manner in which distribution pumps will be labeled to
insure proper use of the gasoline;
(vii) The name, address, telephone number and title of the
person(s) in the organization requesting an exemption from whom further
information on the application may be obtained; and
(viii) The name, address, telephone number and title of the
person(s) in the organization requesting an exemption who is
responsible for recording and making available the information
specified in paragraphs (b)(4)(iii), (iv) and (v) of this section, and
the location in which such information will be maintained.
(d) Additional requirements. (1) The product transfer documents
associated with R&D gasoline must identify the gasoline as such, and
must state that the gasoline is to be used only for research,
development, or testing purposes.
(2) The R&D gasoline must be kept segregated from non-exempt
gasoline at all points in distribution of the gasoline.
(3) The R&D gasoline must not be sold, distributed, offered for
sale or distribution, dispensed, supplied, offered for supply,
transported to or from, or stored by a gasoline retail outlet, or by a
wholesale purchaser-consumer facility, unless the wholesale purchaser-
consumer facility is associated with the R&D program that uses the
gasoline.
(e) Memorandum of exemption. The Administrator will grant an R&D
exemption upon a demonstration that the requirements of this section
have been met. The R&D exemption will be granted in the form of a
memorandum of exemption signed by the applicant and the Administrator
(or delegate), which will include such terms and conditions as the
Administrator determines necessary to monitor the exemption and to
carry out the purposes of this section. Any violation of such a term or
condition of the exemption or any requirement under this section will
cause the exemption to be void ab initio.
Violation Provisions
Sec. 80.385 What acts are prohibited under the gasoline sulfur
program?
No person may:
(a) Produce or import gasoline that does not comply with the
applicable sulfur average standards at Sec. 80.195 or Sec. 80.240.
(b) Produce, import, sell, offer for sale, dispense, supply, offer
for supply, store or transport gasoline that does not comply with the
applicable sulfur cap standards at Sec. 80.195, Sec. 80.210 or
Sec. 80.240.
(c) Cause another person to commit an act in violation of paragraph
(b) of this section.
(d) Cause gasoline that does not comply with an applicable refiner/
importer or downstream cap standard under Sec. 80.195, Sec. 80.210 or
Sec. 80.240 to be in the gasoline distribution system.
Sec. 80.390 What evidence may be used to determine compliance with the
prohibitions and requirements of this subpart and liability for
violations of this subpart?
(a) Compliance with the sulfur standards of this subpart must be
determined based on the sulfur level of the gasoline, measured using
the methodologies specified in Sec. 80.330. Any evidence or
information, including the exclusive use of such evidence or
information, may be used to establish the sulfur level of gasoline if
the evidence or information is relevant to whether the sulfur level of
gasoline would have been in compliance with the standards if the
appropriate sampling and testing methodology had been correctly
performed. Such evidence may be obtained from any source or location
and may include, but is not limited to, test results using methods
other than those specified in Sec. 80.330, business records, and
commercial documents.
(b) Determination of compliance with the requirements of this
subpart other than the sulfur standards, and determination of liability
for any violation of this subpart, are based on probative evidence or
information obtained from any source or location. Such evidence may
include, but is not limited to, business records and commercial
documents.
Sec. 80.395 Who is liable for violations under the gasoline sulfur
program?
(a) Persons liable for violations of prohibited acts. (1) Any
refiner or importer who violates Sec. 80.385(a) is liable for the
violation.
(2) Any refiner, importer, distributor, reseller, carrier, retailer
or wholesale purchaser-consumer who owned, leased, operated, controlled
or supervised a facility where a violation of Sec. 80.385(b) occurred,
is deemed in violation of Sec. 80.385(b).
(3) Any refiner, importer, distributor, reseller, retailer, or
wholesale purchaser-consumer who produced, imported, sold, offered for
sale, dispensed, supplied, offered for supply, stored, transported, or
caused the transportation or storage of gasoline that is the subject of
a violation of Sec. 80.385(b), is deemed in violation of
Sec. 80.385(c).
(4) Any refiner or importer whose corporate, trade, or brand name,
or whose marketing subsidiary's corporate, trade, or brand name
appeared at a facility where a violation of Sec. 80.385(b) occurred, is
deemed in violation of Sec. 80.385(b).
(5) Any carrier who dispensed, supplied, stored, or transported
gasoline which is the subject of a violation of Sec. 80.385(b), is
deemed in violation of Sec. 80.385(c) provided that EPA demonstrates,
by reasonably specific showing by direct or circumstantial evidence,
that any such carrier caused the violation.
(6) Any refiner, importer, distributor, reseller, or carrier who
owned, leased, operated, controlled or supervised a facility from which
gasoline that does
[[Page 26120]]
not comply with an applicable refiner/importer or downstream sulfur cap
standard at Sec. 80.195, Sec. 80.210 or Sec. 80.240 was released into
the distribution system, is deemed in violation of Sec. 80.385(d).
(7) Any person who caused another party to violate Sec. 80.385(a),
is liable for causing a violation of Sec. 80.385(a).
(b) Persons liable for failure to meet other requirements of this
subpart. (1) Any person who failed to meet a requirement of this
subpart not addressed in paragraph (a) of this section is liable for a
violation of that requirement.
(2) Any person who caused another person to fail to meet a
requirement of this subpart not addressed in paragraph (a) of this
section is liable for causing a violation of that requirement.
Sec. 80.400 What defenses apply to persons deemed liable for a
violation of a prohibited act?
(a) Any person deemed liable for a violation of a prohibition under
Sec. 80.395(a), will not be deemed in violation if the person
demonstrates:
(1) That the violation was not caused by the person or the person's
employee or agent; and
(2) That the person conducted a quality assurance sampling and
testing program, as described in paragraph (d) of this section. A
carrier may rely on the quality assurance program carried out by
another party, including the party who owns the gasoline in question,
provided that the quality assurance program is carried out properly.
Retailers and wholesale purchaser-consumers are not required to conduct
quality assurance programs.
(b) In the case of a violation found at a facility operating under
the corporate, trade or brand name of a refiner or importer, or a
refiner's or importer's marketing subsidiary, the refiner or importer
must show, in addition to the defense elements required by paragraph
(a) of this section, that the violation was caused by:
(1) An act in violation of law (other than the Clean Air Act or
this Part 80), or an act of sabotage or vandalism;
(2) The action of any refiner, importer, retailer, distributor,
reseller, carrier, retailer or wholesale purchaser-consumer in
violation of a contractual agreement between the branded refiner or
importer and the person designed to prevent such action, and despite
periodic sampling and testing by the branded refiner or importer to
ensure compliance with such contractual obligation; or
(3) The action of any carrier or other distributor not subject to a
contract with the refiner or importer, but engaged for transportation
of gasoline, despite specifications or inspections of procedures and
equipment which are reasonably calculated to prevent such action.
(c) Under paragraph (a) of this section, for any person to show
that the violation was not caused by it, or under paragraph (b) of this
section, to show that the violation was caused by any of the specified
actions, the person must demonstrate by reasonably specific showing, by
direct or circumstantial evidence, that the violation was caused or
must have been caused by another person and that the person asserting
the defense did not contribute to that other person's causation.
(d) Quality assurance program. To demonstrate an acceptable quality
assurance program under paragraph (a)(2) of this section, a person must
present evidence of the following:
(1) A periodic sampling and testing program to ensure the gasoline
the person sold, dispensed, supplied, stored, or transported, meets the
applicable sulfur standard;
(2) On each occasion when gasoline is found not in compliance with
the applicable sulfur standard:
(i) The person immediately ceases selling, offering for sale,
dispensing, supplying, offering for supply, storing or transporting the
non-complying product; and
(ii) The person promptly remedies the violation and the factors
that caused the violation (for example, by removing the non-complying
product from the distribution system until the applicable standard is
achieved and taking steps to prevent future violations of a similar
nature from occurring); and
(3) Any carrier who transports gasoline in a tank truck, the
quality assurance program required under this paragraph (d) of this
section is not required to include periodic sampling and testing of
gasoline in the tank truck, but instead of such sampling and testing,
the carrier must present evidence of an oversight program relating to
the transport or storage of gasoline by tank truck, such as appropriate
guidance to drivers regarding compliance with the applicable sulfur
standard and product transfer document requirements, and the periodic
review of records received in the ordinary course of business
concerning gasoline quality and delivery.
Sec. 80.405 What Penalties Am I Subject To?
(a) Any person liable for a violation under Sec. 80.395, is subject
to a civil penalty of not more than $27,500 for every day of each such
violation and the amount of economic benefit or savings resulting from
each violation.
(b) Any person liable under Sec. 80.395(a) for a violation of the
applicable sulfur average standard or causing another party to violate
that standard during any averaging period, is subject to a separate day
of violation for each and every day in the averaging period. Any person
liable under Sec. 80.395(b) for a failure to fulfill any credit
creation or transfer requirement, is subject to a separate day of
violation for each and every day in the averaging period.
(c)(1) Any person liable under Sec. 80.395(a) for causing gasoline
that does not comply with an applicable refiner/importer or downstream
sulfur cap standard to be in the gasoline distribution system in
violation of Sec. 80.385(d), is subject to a separate day of violation
for each and every day that the non-complying gasoline remains any
place in the gasoline distribution system.
(2) For purposes of paragraph (c) of this section, the length of
time the gasoline in question remained in the gasoline distribution
system is deemed to be twenty-five days, unless a person subject to
liability or EPA demonstrates by reasonably specific showings, by
direct or circumstantial evidence, that the non-complying gasoline
remained in the gasoline distribution system for fewer than or more
than twenty-five days.
(d) Any person liable under Sec. 80.395(b) for failure to meet, or
causing a failure to meet, a requirement of this subpart is liable for
a separate day of violation for each and every day such requirement
remains unfulfilled.
Provisions for Foreign Refiners With Individual Sulfur Baselines
Sec. 80.410 What are the additional requirements for gasoline produced
at foreign refineries having individual small refiner sulfur baselines?
(a) Definitions. (1) A foreign refinery is a refinery that is
located outside the United States, the Commonwealth of Puerto Rico, the
Virgin Islands, Guam, American Samoa, and the Commonwealth of the
Northern Mariana Islands (collectively referred to in this section as
``the United States'').
(2) A foreign refiner is a person who meets the definition of
refiner under Sec. 80.2(i) for foreign refinery.
(3) A small foreign refiner is a refiner that meets the definition
of a small refiner under Sec. 80.225.
(4) ``Sulfur-FRGAS'' means gasoline produced at a foreign refinery
that has been assigned an individual refinery
[[Page 26121]]
sulfur baseline and that is imported into the United States.
(5) ``Non-Sulfur-FRGAS'' means gasoline that is produced at a
foreign refinery that has not been assigned an individual refinery
sulfur baseline, gasoline produced at a foreign refinery with an
individual refinery sulfur baseline that is not imported into the
United States, and gasoline produced at a foreign refinery with an
individual sulfur baseline during a year when the foreign refiner has
opted to not participate in the Sulfur-FRGAS program under paragraph
(c)(3) of this section.
(6) ``Certified Sulfur-FRGAS'' means Sulfur-FRGAS the foreign
refiner intends to include in the foreign refinery's sulfur compliance
calculations under Sec. 80.205, and does include in these compliance
calculations when reported to EPA.
(7) ``Non-Certified Sulfur-FRGAS'' means Sulfur-FRGAS that is not
Certified Sulfur-FRGAS.
(b) Baseline establishment. Any foreign refiner that meets the
definition of small under Sec. 80.225, may submit to a petition to the
Administrator for an individual refinery sulfur baseline, under
Sec. 80.235 by June 1, 2002.
(1) The baseline for a foreign refinery must reflect only the
volume and properties of gasoline produced in 1997 and 1998 that was
imported into the United States.
(2) In making determinations for foreign refinery baselines EPA
will consider all information supplied by a foreign refiner, and in
addition may rely on any and all appropriate assumptions necessary to
make such a determination.
(3) Where a foreign refiner submits a petition that is incomplete
or inadequate to establish an accurate baseline, and the refiner fails
to cure this defect after a request for more information, then EPA will
not assign an individual refinery sulfur baseline.
(c) General requirements for foreign refiners with individual
refinery sulfur baselines. A foreign refiner of a refinery that has
been assigned an individual sulfur baseline under paragraph (b) of this
section must designate all gasoline produced at the foreign refinery
that is exported to the United States as either Certified Sulfur-FRGAS
or as Non-Certified Sulfur-FRGAS, except as provided in paragraph
(c)(3) of this section.
(1) In the case of Certified Sulfur-FRGAS, the foreign refiner must
meet all requirements that apply to refiners under this subpart.
(2) In the case of Non-Certified Sulfur-FRGAS, the foreign refiner
must meet all the following requirements:
(i) The designation requirements in this section.
(ii) The recordkeeping requirements in Secs. 80.360 and 80.365.
(iii) The reporting requirements in Sec. 80.370 and this section.
(iv) The product transfer document requirements in this section.
(v) The prohibitions in this section and Sec. 80.385.
(vi) The independent audit requirements in Sec. 80.415 and
paragraph (h) of this section.
(3)(i) Any foreign refiner that has been assigned an individual
sulfur baseline for a foreign refinery under paragraph (b) of this
section may elect to classify no gasoline imported into the United
States as Sulfur-FRGAS, provided the foreign refiner notifies EPA of
the election no later than November 1 of the prior calendar year.
(ii) An election under paragraph (c)(3)(i) of this section must:
(A) Be for an entire calendar year averaging period and apply to
all gasoline produced during the calendar year at the foreign refinery
that is used in the United States; and
(B) Remain in effect for each succeeding calendar year averaging
period, unless and until the foreign refiner notifies EPA of a
termination of the election. The change in election takes effect at the
beginning of the next calendar year.
(d) Designation, product transfer documents, and foreign refiner
certification. (1) Any foreign refiner of a foreign refinery that has
been assigned an individual sulfur baseline must designate each batch
of Sulfur-FRGAS as such at the time the gasoline is produced, unless
the refiner has elected to classify no gasoline exported to the United
States as Sulfur-FRGAS under paragraph (c)(3)(i) of this section.
(2) On each occasion when any person transfers custody or title to
any Sulfur-FRGAS prior to its being imported into the United States,
they must include the following information as part of the product
transfer document information in this section:
(i) Identification of the gasoline as Certified Sulfur-FRGAS or as
Non-Certified Sulfur-FRGAS; and
(ii) The name and EPA refinery registration number of the refinery
where the Sulfur-FRGAS was produced.
(3) On each occasion when Sulfur-FRGAS is loaded onto a vessel or
other transportation mode for transport to the United States, the
foreign refiner must prepare a certification for each batch of the
Sulfur-FRGAS that meets the following requirements:
(i) The certification must include the report of the independent
third party under paragraph (f) of this section, and the following
additional information:
(A) The name and EPA registration number of the refinery that
produced the Sulfur-FRGAS;
(B) The identification of the gasoline as Certified Sulfur-FRGAS or
Non-Certified Sulfur-FRGAS, and for Certified Sulfur-FRGAS the
information required by Sec. 80.360;
(C) The volume of Sulfur-FRGAS being transported, in gallons;
(D) A declaration that the Sulfur-FRGAS is being included in the
compliance baseline calculations under Sec. 80.250 for the refinery
that produced the Sulfur-FRGAS; and
(E) In the case of Certified Sulfur-FRGAS:
(1) The sulfur content as determined under paragraph (f) of this
section; and
(2) A declaration that the Sulfur-FRGAS is being included in the
compliance calculations under Sec. 80.205 for the refinery that
produced the Sulfur-FRGAS.
(ii) The certification must be made part of the product transfer
documents for the Sulfur-FRGAS.
(e) Transfers of Sulfur-FRGAS to non-United States markets. The
foreign refiner is responsible to ensure that all gasoline classified
as Sulfur-FRGAS is imported into the United States. A foreign refiner
may remove the Sulfur-FRGAS classification, and the gasoline need not
be imported into the United States, but only if:
(1)(i) The foreign refiner excludes:
(A) The volume of gasoline from the refinery's compliance baseline
calculations under Sec. 80.250; and
(B) In the case of Certified Sulfur-FRGAS, the volume and sulfur
content of the gasoline from the compliance calculations under
Sec. 80.205;
(ii) The exclusions under paragraph (e)(1)(i) of this section must
be on the basis of the parameter and volumes determined under paragraph
(f) of this section; and
(2) The foreign refiner obtains sufficient evidence in the form of
documentation that the gasoline was not imported into the United
States.
(f) Load port independent sampling, testing and refinery
identification. (1) On each occasion Sulfur-FRGAS is loaded onto a
vessel for transport to the United States a foreign refiner must have
an independent third party:
(i) Inspect the vessel prior to loading and determine the volume of
any tank bottoms;
(ii) Determine the volume of Sulfur-FRGAS loaded onto the vessel
(exclusive of any tank bottoms present before vessel loading);
[[Page 26122]]
(iii) Obtain the EPA-assigned registration number of the foreign
refinery;
(iv) Determine the name and country of registration of the vessel
used to transport the Sulfur-FRGAS to the United States; and
(v) Determine the date and time the vessel departs the port serving
the foreign refinery.
(2) On each occasion Certified Sulfur-FRGAS is loaded onto a vessel
for transport to the United States a foreign refiner must have an
independent third party:
(i) Collect a representative sample of the Certified Sulfur-FRGAS
from each vessel compartment subsequent to loading on the vessel and
prior to departure of the vessel from the port serving the foreign
refinery;
(ii) Prepare a volume-weighted vessel composite sample from the
compartment samples, and determine the value for sulfur using the
methodology specified in Sec. 80.330 by:
(A) The third party analyzing the sample; or
(B) The third party observing the foreign refiner analyze the
sample;
(iii) Review original documents that reflect movement and storage
of the certified Sulfur-FRGAS from the refinery to the load port, and
from this review determine:
(A) The refinery at which the Sulfur-FRGAS was produced; and
(B) That the Sulfur-FRGAS remained segregated from:
(1) Non-Sulfur-FRGAS and Non-Certified Sulfur-FRGAS; and
(2) Other Certified Sulfur-FRGAS produced at a different refinery.
(3) The independent third party must submit a report:
(i) To the foreign refiner containing the information required
under paragraphs (f)(1) and (2) of this section, to accompany the
product transfer documents for the vessel; and
(ii) To the Administrator containing the information required under
paragraphs (f)(1) and (2) of this section, within thirty days following
the date of the independent third party's inspection. This report must
include a description of the method used to determine the identity of
the refinery at which the gasoline was produced, assurance that the
gasoline remained segregated as specified in paragraph (n)(1) of this
section, and a description of the gasoline's movement and storage
between production at the source refinery and vessel loading.
(4) The independent third party must:
(i) Be approved in advance by EPA, based on a demonstration of
ability to perform the procedures required in this paragraph (f);
(ii) Be independent under the criteria specified in
Sec. 80.65(f)(2)(iii); and
(iii) Sign a commitment that contains the provisions specified in
paragraph (i) of this section with regard to activities, facilities and
documents relevant to compliance with the requirements of this
paragraph (f).
(g) Comparison of load port and port of entry testing. (1)(i) Any
foreign refiner and any United States importer of Certified Sulfur-
FRGAS must compare the results from the load port testing under
paragraph (f) of this section, with the port of entry testing as
reported under paragraph (o) of this section, for the volume of
gasoline and the sulfur value; except that
(ii) Where a vessel transporting Certified Sulfur-FRGAS off loads
this gasoline at more than one United States port of entry, and the
conditions of paragraph (g)(2)(i) of this section are met at the first
United States port of entry, the requirements of paragraph (g)(2) of
this section do not apply at subsequent ports of entry if the United
States importer obtains a certification from the vessel owner, that
meets the requirements of paragraph(s) of this section, that the vessel
has not loaded any gasoline or blendstock between the first United
States port of entry and the subsequent port of entry.
(2)(i) The requirements of this paragraph (g)(2) apply if:
(A) The temperature-corrected volumes determined at the port of
entry and at the load port differ by more than one percent; or
(B) The sulfur value determined at the port of entry is higher than
the sulfur value determined at the load port, and the amount of this
difference is greater than the reproducibility amount specified for the
port of entry test result by the American Society of Testing and
Materials (ASTM).
(ii) The United States importer and the foreign refiner must treat
the gasoline as Non-Certified Sulfur-FRGAS, and the foreign refiner
must:
(A) Exclude the gasoline volume and properties from its gasoline
sulfur compliance calculations under Sec. 80.205; and
(B) Include the gasoline volume in its compliance baseline
calculation under Sec. 80.250.
(h) Attest requirements. The following additional procedures must
be carried out by any foreign refiner of Sulfur-FRGAS as part of the
attest engagement for each foreign refinery under Sec. 80.415:
(1) The inventory reconciliation analysis under Sec. 80.128(b) and
the tender analysis under Sec. 80.128(c) must include Non-Sulfur-FRGAS
in addition to the gasoline types listed in Sec. 80.128(b) and (c).
(2) Obtain separate listings of all tenders of Certified Sulfur-
FRGAS, and of Non-Certified Sulfur-FRGAS. Agree the total volume of
tenders from the listings to the gasoline inventory reconciliation
analysis in Sec. 80.128(b), and to the volumes determined by the third
party under paragraph (f)(1) of this section.
(3) For each tender under paragraph (h)(2) of this section where
the gasoline is loaded onto a marine vessel, report as a finding the
name and country of registration of each vessel, and the volumes of
Sulfur-FRGAS loaded onto each vessel.
(4) Select a sample from the list of vessels identified in
paragraph (h)(3) of this section used to transport Certified Sulfur-
FRGAS, in accordance with the guidelines in Sec. 80.127, and for each
vessel selected perform the following:
(i) Obtain the report of the independent third party, under
paragraph (f) of this section, and of the United States importer under
paragraph (o) of this section.
(A) Agree the information in these reports with regard to vessel
identification, gasoline volumes and test results.
(B) Identify, and report as a finding, each occasion the load port
and port of entry parameter and volume results differ by more than the
amounts allowed in paragraph (g) of this section, and determine whether
the foreign refiner adjusted its refinery calculations as required in
paragraph (g) of this section.
(ii) Obtain the documents used by the independent third party to
determine transportation and storage of the Certified Sulfur-FRGAS from
the refinery to the load port, under paragraph (f) of this section.
Obtain tank activity records for any storage tank where the Certified
Sulfur-FRGAS is stored, and pipeline activity records for any pipeline
used to transport the Certified Sulfur-FRGAS, prior to being loaded
onto the vessel. Use these records to determine whether the Certified
Sulfur-FRGAS was produced at the refinery that is the subject of the
attest engagement, and whether the Certified Sulfur-FRGAS was mixed
with any Non-Certified Sulfur-FRGAS, Non-Sulfur-FRGAS, or any Certified
Sulfur-FRGAS produced at a different refinery.
(5) Select a sample from the list of vessels identified in
paragraph (h)(3) of this section used to transport certified and Non-
Certified Sulfur-FRGAS, in accordance with the guidelines in
Sec. 80.127, and for each vessel selected perform the following:
[[Page 26123]]
(i) Obtain a commercial document of general circulation that lists
vessel arrivals and departures, and that includes the port and date of
departure of the vessel, and the port of entry and date of arrival of
the vessel.
(ii) Agree the vessel's departure and arrival locations and dates
from the independent third party and United States importer reports to
the information contained in the commercial document.
(6) Obtain separate listings of all tenders of Non-Sulfur-FRGAS,
and perform the following:
(i) Agree the total volume of tenders from the listings to the
gasoline inventory reconciliation analysis in Sec. 80.128(b).
(ii) Obtain a separate listing of the tenders under this paragraph
(h)(6) where the gasoline is loaded onto a marine vessel. Select a
sample from this listing in accordance with the guidelines in
Sec. 80.127, and obtain a commercial document of general circulation
that lists vessel arrivals and departures, and that includes the port
and date of departure and the ports and dates where the gasoline was
off loaded for the selected vessels. Determine and report as a finding
the country where the gasoline was off loaded for each vessel selected.
(7) In order to complete the requirements of this paragraph (h) an
auditor must:
(i) Be independent of the foreign refiner;
(ii) Be licensed as a Certified Public Accountant in the United
States and a citizen of the United States, or be approved in advance by
EPA based on a demonstration of ability to perform the procedures
required in Sec. 80.125 through 130 and this paragraph (h); and
(iii) Sign a commitment that contains the provisions specified in
paragraph (i) of this section with regard to activities and documents
relevant to compliance with the requirements of Sec. 80.125 through
80.130 and this paragraph (h).
(i) Foreign refiner commitments. Any foreign refiner must commit to
and comply with the provisions contained in this paragraph (i) as a
condition to being assigned an individual refinery sulfur baseline.
(1) Any United States Environmental Protection Agency inspector or
auditor must be given full, complete and immediate access to conduct
inspections and audits of the foreign refinery.
(i) Inspections and audits may be either announced in advance by
EPA, or unannounced.
(ii) Access must be provided to any location where:
(A) Gasoline is produced;
(B) Documents related to refinery operations are kept;
(C) Gasoline or blendstock samples are tested or stored; and
(D) Sulfur-FRGAS is stored or transported between the foreign
refinery and the United States, including storage tanks, vessels and
pipelines.
(iii) Inspections and audits may be by EPA employees or contractors
to EPA.
(iv) Any documents requested that are related to matters covered by
inspections and audits must be provided to an EPA inspector or auditor
on request.
(v) Inspections and audits by EPA may include review and copying of
any documents related to:
(A) Refinery baseline establishment, including the volume and
sulfur content, and transfers of title or custody, of any gasoline or
blendstocks, whether Sulfur-FRGAS or Non-Sulfur-FRGAS, produced at the
foreign refinery during the period January 1, 1997 through the date of
the refinery baseline petition or through the date of the inspection or
audit if a baseline petition has not been approved, and any work papers
related to refinery baseline establishment;
(B) The volume and sulfur content of Sulfur-FRGAS;
(C) The proper classification of gasoline as being Sulfur-FRGAS or
as not being Sulfur-FRGAS, or as Certified Sulfur-FRGAS or as Non-
Certified Sulfur-FRGAS;
(D) Transfers of title or custody to Sulfur-FRGAS;
(E) Sampling and testing of Sulfur-FRGAS;
(F) Worked performed and reports prepared by independent third
parties and by independent auditors under the requirements of this
section and Sec. 80.415, including work papers; and
(G) Reports prepared for submission to EPA, and any work papers
related to such reports.
(vi) Inspections and audits by EPA may include taking samples of
gasoline or blendstock, and interviewing employees.
(vii) Any employee of the foreign refiner must be made available
for interview by the EPA inspector or auditor, on request, within a
reasonable time period.
(viii) English language translations of any documents must be
provided to an EPA inspector or auditor, on request, within 10 working
days.
(ix) English language interpreters must be provided to accompany
EPA inspectors and auditors, on request.
(2) An agent for service of process located in the District of
Columbia must be named, and service on this agent constitutes service
on the foreign refiner or any employee of the foreign refiner for any
action by EPA or otherwise by the United States related to the
requirements of this subpart.
(3) The forum for any civil or criminal enforcement action related
to the provisions of this section for violations of the Clean Air Act
or regulations promulgated thereunder are governed by the Clean Air
Act, including the EPA administrative forum where allowed under the
Clean Air Act.
(4) United States substantive and procedural laws apply to any
civil or criminal enforcement action against the foreign refiner or any
employee of the foreign refiner related to the provisions of this
section.
(5) Submitting a petition for an individual refinery sulfur
baseline, producing and exporting gasoline under an individual refinery
sulfur baseline, and all other actions to comply with the requirements
of this subpart relating to the establishment and use of an individual
refinery sulfur baseline constitute actions or activities that satisfy
the provisions of 28 U.S.C. 1605(a)(2), but solely with respect to
actions instituted against the foreign refiner, its agents and
employees in any court or other tribunal in the United States for
conduct that violates the requirements applicable to the foreign
refiner under this subpart, including conduct that violates 18 U.S.C.
1001 and Clean Air Act section 113(c)(2).
(6) The foreign refiner, or its agents or employees, must not
detain or impose civil or criminal remedies against EPA inspectors or
auditors, whether EPA employees or EPA contractors, for actions
performed within the scope of EPA employment related to the provisions
of this section.
(7) The commitment required by this paragraph (i) must be signed by
the owner or president of the foreign refiner business.
(8) In any case where Sulfur-FRGAS produced at a foreign refinery
is stored or transported by another company between the refinery and
the vessel that transports the Sulfur-FRGAS to the United States, the
foreign refiner must obtain from each such other company a commitment
that meets the requirements specified in paragraphs (i)(1) through (7)
of this section, and these commitments must be included in the foreign
refiner's baseline petition.
(j) Sovereign immunity. By submitting a petition for an individual
foreign refinery baseline under this section, or by producing and
exporting gasoline to the United States under an individual refinery
sulfur baseline under this section, the foreign refiner, its agents
[[Page 26124]]
and employees, without exception, become subject to the full operation
of the administrative and judicial enforcement powers and provisions of
the United States without limitation based on sovereign immunity, with
respect to actions instituted against the foreign refiner, its agents
and employees in any court or other tribunal in the United States for
conduct that violates the requirements applicable to the foreign
refiner under this subpart, including conduct that violates 18 U.S.C.
1001 and Clean Air Act section 113(c)(2).
(k) Bond posting. Any foreign refiner must meet the requirements of
this paragraph (k) as a condition to being assigned an individual
refinery sulfur baseline.
(1) The foreign refiner must post a bond of the amount calculated
using the following equation:
Bond = G x $0.01
Where:
Bond = Amount of the bond in U. S. dollars.
G = The largest volume of gasoline produced at the foreign refinery and
exported to the United States, in gallons, during a single calendar
year among the most recent of the following calendar years, up to a
maximum of five calendar years: the calendar year immediately preceding
the date the baseline petition is submitted, the calendar year the
baseline petition is submitted, and each succeeding calendar year.
(2) Bonds must be posted by:
(i) Paying the amount of the bond to the Treasurer of the United
States;
(ii) Obtaining a bond in the proper amount from a third party
surety agent that is payable to satisfy United States administrative or
judicial judgments against the foreign refiner, provided EPA agrees in
advance as to the third party and the nature of the surety agreement;
or
(iii) An alternative commitment that results in assets of an
appropriate liquidity and value being readily available to the United
States, provided EPA agrees in advance as to the alternative
commitment.
(3) If the bond amount for a foreign refinery increases the foreign
refiner must increase the bond to cover the shortfall within 90 days of
the date the bond amount changes. If the bond amount decreases, the
foreign refiner may reduce the amount of the bond beginning 90 days
after the date the bond amount changes.
(4) Bonds posted under this paragraph (k) must be used to satisfy
any judicial judgment that results from an administrative or judicial
enforcement action for conduct in violation of this subpart, including
where such conduct violates 18 U.S.C. 1001 and Clean Air Act section
113(c)(2).
(5) On any occasion a foreign refiner bond is used to satisfy any
judgment, the foreign refiner must increase the bond to cover the
amount used within 90 days of the date the bond is used.
(l) [Reserved]
(m) English language reports. Any report or other document
submitted to EPA by an foreign refiner must be in English language, or
must include an English language translation.
(n) Prohibitions. (1) No person may combine Certified Sulfur-FRGAS
with any Non-Certified Sulfur-FRGAS or Non-Sulfur-FRGAS, and no person
may combine Certified Sulfur-FRGAS with any Certified Sulfur-FRGAS
produced at a different refinery, except as provided in paragraph (e)
of this section.
(2) No foreign refiner or other person may cause another person to
commit an action prohibited in paragraph (n)(1) of this section, or
that otherwise violates the requirements of this section.
(o) United States importer requirements. Any United States importer
must meet the following requirements:
(1) Each batch of imported gasoline must be classified by the
importer as being Sulfur-FRGAS or as Non-Sulfur-FRGAS, and each batch
classified as Sulfur-FRGAS must be further classified as Certified
Sulfur-FRGAS or as Non-certified Sulfur-FRGAS.
(2) Gasoline must be classified as Certified Sulfur-FRGAS or as
Non-Certified Sulfur-FRGAS according to the designation by the foreign
refiner if this designation is supported by product transfer documents
prepared by the foreign refiner as required in paragraph (d) of this
section, unless the gasoline is classified as Non-Certified Sulfur-
FRGAS under paragraph (g) of this section.
(3) For each gasoline batch classified as Sulfur-FRGAS, any United
States importer must perform the following procedures:
(i) In the case of both Certified and Non-Certified Sulfur-FRGAS,
have an independent third party:
(A) Determine the volume of gasoline in the vessel;
(B) Use the foreign refiner's Sulfur-FRGAS certification to
determine the name and EPA-assigned registration number of the foreign
refinery that produced the Sulfur-FRGAS;
(C) Determine the name and country of registration of the vessel
used to transport the Sulfur-FRGAS to the United States; and
(D) Determine the date and time the vessel arrives at the United
States port of entry.
(ii) In the case of Certified Sulfur-FRGAS, have an independent
third party:
(A) Collect a representative sample from each vessel compartment
subsequent to the vessel's arrival at the United States port of entry
and prior to off loading any gasoline from the vessel;
(B) Prepare a volume-weighted vessel composite sample from the
compartment samples; and
(C) Determine the sulfur value using the methodologies specified in
Sec. 80.330, by:
(1) The third party analyzing the sample; or
(2) The third party observing the importer analyze the sample.
(4) Any importer must submit reports within thirty days following
the date any vessel transporting Sulfur-FRGAS arrives at the United
States port of entry:
(i) To the Administrator containing the information determined
under paragraph (o)(3) of this section; and
(ii) To the foreign refiner containing the information determined
under paragraph (o)(3)(ii) of this section.
(5) Any United States importer must meet the requirements specified
in Sec. 80.195 for any imported gasoline that is not classified as
Certified Sulfur-FRGAS under paragraph (o)(2) of this section.
(p) [Reserved]
(q) Withdrawal or suspension of a foreign refinery's baseline EPA
may withdraw or suspend a baseline that has been assigned to a foreign
refinery where:
(1) A foreign refiner fails to meet any requirement of this
section;
(2) A foreign government fails to allow EPA inspections as provided
in paragraph (i)(1) of this section;
(3) A foreign refiner asserts a claim of, or a right to claim,
sovereign immunity in an action to enforce the requirements in this
subpart; or
(4) A foreign refiner fails to pay a civil or criminal penalty that
is not satisfied using the foreign refiner bond specified in paragraph
(k) of this section.
(r) Any refiner whose Sulfur-FRGAS is transported into the United
States by truck may petition EPA to use alternative procedures to meet
the requirements for certification under paragraph (d)(5) of this
section, load port and port of entry sampling and testing under
paragraphs (f) and (g) of this section, attest under paragraph (h) of
this section and importer testing under paragraph (o)(3) of this
section.
[[Page 26125]]
These alternative procedures must ensure Certified Sulfur-FRGAS remains
segregated from Non-Certified Sulfur-FRGAS and from Non-Sulfur-FRGAS
until it is imported into the United States. The petition will be
evaluated based on whether it adequately addresses the following:
(1) Provisions for monitoring pipeline shipments, if applicable,
from the refinery, that ensure segregation of Certified Sulfur-FRGAS
from that refinery from all other gasoline.
(2) Contracts with any terminals and/or pipelines that receive and/
or transport Certified Sulfur-FRGAS, that prohibit the commingling of
Certified Sulfur-FRGAS with any of the following:
(i) Other Certified Sulfur-FRGAS from other refineries.
(ii) All Non-Certified Sulfur-FRGAS.
(iii) All Non-Sulfur-FRGAS.
(3) Procedures for obtaining and reviewing truck loading records
and United States import documents for Certified Sulfur-FRGAS to ensure
that such gasoline is only loaded into trucks making deliveries to the
United States.
(4) Attest procedures to be conducted annually by an independent
third party that review loading records and import documents based on
volume reconciliation, or other criteria, to confirm that all Certified
Sulfur-FRGAS remains segregated throughout the distribution system and
is only loaded into trucks for import into the United States.
(5) The petition required by this section must be submitted to EPA
along with the application for small refiner status and individual
refinery sulfur baseline and standards under Sec. 80.235 and this
section.
(s) Additional requirements for petitions, reports and
certificates. Any petition for a refinery baseline under paragraph (b)
of this section, any alternative procedures under paragraph (r) of this
section, any report or other submission required by paragraphs (c),
(f)(2), or (i) of this section, and any certification under paragraph
(d)(3) of this section must be:
(1) Submitted in accordance with procedures specified by the
Administrator, including use of any forms that may specified by the
Administrator.
(2) Be signed by the president or owner of the foreign refiner
company, or by that person's immediate designee, and must contain the
following declaration:
I hereby certify: (1) that I have actual authority to sign on
behalf of and to bind [insert name of foreign refiner] with regard
to all statements contained herein; (2) that I am aware that the
information contained herein is being certified, or submitted to the
United States Environmental Protection Agency, under the
requirements of 40 CFR Part 80, subpart H and that the information
is material for determining compliance under these regulations; and
(3) that I have read and understand the information being certified
or submitted, and this information is true, complete and correct to
the best of my knowledge and belief after I have taken reasonable
and appropriate steps to verify the accuracy thereof.
I affirm that I have read and understand the provisions of 40
CFR Part 80, subpart H, including 40 CFR Sec. 80.410 [insert name of
foreign refiner]. Pursuant to Clean Air Act section 113(c) and Title
18, United States Code, section 1001, the penalty for furnishing
false, incomplete or misleading information in this certification or
submission is a fine of up to $10,000, and/or imprisonment for up to
five years.
Attest Engagements
Sec. 80.415 What are the attest engagement requirements for gasoline
sulfur compliance?
Refiners and importers, for each annual averaging period, must
arrange to have an attest engagement performed of the underlying
documentation that forms the basis of any report required under this
section. The attest engagement must comply with the procedures and
requirements that apply to refiners and importers under Secs. 80.125
through 80.130, and must be submitted to the Administrator of EPA by
May 30 of each year.
PART 85--CONTROL OF AIR POLLUTION FROM MOBILE SOURCES
5. The authority citation for part 85 continues to read as follows:
Authority: 42 U.S.C. 7521, 7522, 7524, 7525, 7541, 7542,
7601(a).
6. Section 85.1515 is amended by redesignating the existing
paragraph (c) as paragraph (c)(1) and adding new paragraphs (c)(2),
(c)(3), (c)(4) and (c)(5) to read as follows:
Sec. 85.1515 Emission standards and test procedures applicable to
imported nonconforming motor vehicles and motor vehicle engines.
* * * * *
(c)(1) * * *
(2) The provisions of paragraph (c)(1) of this section
notwithstanding, nonconforming light duty vehicles or light light-duty
trucks (LDV/LLDTs) modified in model years 2004, 2005 or 2006 must meet
the interim FTP exhaust and evaporative emission standards for light
duty vehicles and light light-duty trucks specified in 40 CFR 86.1811-
04(l) and 86.1811-04(e)(5). Nonconforming LDT3s and LDT4s (HLDTs)
modified in model years 2004 through 2008 must meet the interim non-
Tier 2 FTP exhaust and evaporative standards for HLDTs specified in 40
CFR 86.1811-04(l) and 86.1811-04(e)(5). Optionally, independent
commercial importers may elect to meet the Tier 2 FTP exhaust and
evaporative emission standards set forth in 40 CFR 86.1811-04(c) and
(e) during those years. ICIs are exempt from the Tier 2 and the interim
non-Tier 2 phase-in percentage requirements described in 40 CFR
86.1811-04.
(3) Nonconforming light duty vehicles and light light-duty trucks
(LDV/LLDTs) modified in model years 2007 or later must meet the exhaust
and evaporative emission requirements set forth for all 2007 and later
model year LDV/LLDTs in 40 CFR 86.1811-04.
(4) Nonconforming heavy light-duty trucks (HLDTs) modified in model
years 2009 or later must meet the exhaust and evaporative emission
requirements set forth for all 2009 and later model year HLDTs in 40
CFR 86.1811-04.
(5) The requirements of 40 CFR 86.1811-04 related to fleet average
NOX standards and requirements to comply with such standards
do not apply to vehicles modified under this subpart.
* * * * *
PART 86--CONTROL OF EMISSIONS FROM NEW AND IN-USE HIGHWAY VEHICLES
AND ENGINES
7. The authority citation for part 86 continues to read as follows:
Authority: 42 U.S.C. 7401-7671q.
8. Section 86.1 is amended by revising the entry for ``California
Regulatory Requirements Applicable to the National Low Emission Vehicle
Program, October, 1996'', and by adding an entry in alphabetical order
in the table in paragraph (b)(4) to read as follows:
Sec. 86.1 Reference materials.
* * * * *
(b) * * *
(4) * * *
[[Page 26126]]
----------------------------------------------------------------------------------------------------------------
Document No. and name 40 CFR part 86 reference
----------------------------------------------------------------------------------------------------------------
* * * * * *
*
California Regulatory Requirements Applicable to the 86.1830-01; 86.1806-01; 86.1810-01; 86.1811-04; 86.1844-
``LEV II'' Program, including 01.
1. Amendments to California Exhaust and Evaporative
Emission Standards and Test Procedures for
Passenger Cars, Light-duty Trucks and Medium-duty
Vehicles and Amendments to California Motor
Vehicle Certification, Assembly-line and In-use
Test Requirements ``CAP 2000''.
2. California Zero-Emission and Hybrid Electric
Vehicle Exhaust Emission Standards and Test
Procedures for 2003 and Subsequent Model Passenger
Cars, Light-duty Trucks and Medium-duty Vehicles.
3. California Exhaust Emission Standards and Test
Procedures for 2001 and Subsequent Model Passenger
Cars, Light-duty Trucks and Medium-duty Vehicles.
4. California Non-Methane Organic Gas Test
Procedures.
5. California Evaporative Emission Standards and
Test Procedures for 2001 and Subsequent Model
Motor Vehicles.
6. California Refueling Emission Standards and Test
Procedures for 2001 and Subsequent Model Motor
Vehicles.
California Regulatory Requirements Applicable to the 86.113-004; 86.612-97; 86.1012-97; 86.1702-99; 86.1708-
National Low Emission Vehicle Program, October 1996. 99; 86.1709-99; 86.1717-99; 86.1735-99; 86.1771-99;
86.1775-99; 86.1776-99; 86.1777-99; Appendix XVI;
Appendix XVII.
----------------------------------------------------------------------------------------------------------------
* * * * *
Subpart B--Emission Regulations for 1997 and Later Model Year New
Light-duty Vehicles and New Light-duty Trucks; Test Procedures
9. Section 86.113-04 is added to read as follows:
Sec. 86.113-04 Fuel Specifications.
This section includes text that specifies requirements that differ
from Sec. 86.113-94. Where a paragraph in Sec. 86.113-94 is identical
and applicable to this section, this will be indicated by specifying
the corresponding paragraph and the statement ``[Reserved]. For
guidance see Sec. 86.113-94.''
(a) Gasoline fuel. (1) Gasoline having the following specifications
will be used by the Administrator in exhaust and evaporative emission
testing of petroleum-fueled Otto-cycle vehicles. Gasoline having the
following specification or substantially equivalent specifications
Approved by the Administrator, must be used by the manufacturer in
exhaust and evaporative testing except that octane specifications do
not apply:
----------------------------------------------------------------------------------------------------------------
Item ASTM test method No. Value
----------------------------------------------------------------------------------------------------------------
Octane, Research, Min................... D2699 93.
Sensitivity, Min........................ ........................ .7.5
Lead (organic), maximum: g/U.S. gal. (g/ D3237 0.050 (0.013).
liter).
Distillation Range...................... D86 ............................................
IBP \1\: deg. F (deg. C)............ ........................ 75-95 (23.9-35).
10 pct. point: deg.F (deg.C)........ ........................ 120-135 (48.9-57.2).
50 pct. point: deg.F. (deg.C)....... ........................ 200-230 (93.3-110).
90 pct. point: deg.F (deg.C)........ ........................ 300-325 (148.9-162.8).
EP, max: deg.F (deg.C)D86........... ........................ 415 (212.8).
Sulfur, weight pct...................... D1266 0.003-0.008.
Phosphorous, max. g/U.S. gal (g/liter).. D3231 0.005 (0.0013).
RVP 2 3................................. D3231 8.7-9.2 (60.0-63.4).
Hydrocarbon composition................. D1319 ............................................
Olefins, max. pct................... ........................ 10.
Aromatics, max, pct................. ........................ 35.
Saturates........................... ........................ Remainder.
----------------------------------------------------------------------------------------------------------------
\1\ For testing at altitudes above 1,219 m (4000 feet), the specified range is 75-105 deg. F (23.9-40.6 deg. C).
\2\ For testing which is unrelated to evaporative emission control, the specified range is 8.0-9.2 psi (55.2-
63.4 kPa).
\3\ For testing at altitudes above 1,219 m (4000 feet), the specified range is 7.6-8.0 psi (52-55 kPa).
(2) For light-duty vehicles and light-duty trucks certified for 50
state sale, ``California Phase 2'' gasoline having the specifications
listed in the table in this section may be used in exhaust emission
testing as an option to the specifications in paragraph (a)(1) of this
section. If a manufacturer elects to utilize this option, exhaust
emission testing must be conducted by the manufacturer with gasoline
having the specifications listed in the table in this paragraph (a)(2)
and the Administrator must also conduct exhaust emission testing with
gasoline having the specifications listed in the table in this
paragraph (a)(2), except that the Administrator may use or require the
use of test fuel meeting the specifications in paragraph (a)(1) of this
section for selective enforcement auditing and in-use testing. All fuel
property test methods for this fuel are contained in Chapter 4 of the
California
[[Page 26127]]
Regulatory Requirements Applicable to the National Low Emission Vehicle
Program (October, 1996). These requirements are incorporated by
reference (see Sec. 86.1). The table follows:
------------------------------------------------------------------------
Fuel property Limit
------------------------------------------------------------------------
Octane, (R+M)/2 (min).................. 91.
Sensitivity (min)...................... 7.5.
Lead, g/gal (max) (No lead added)...... 0-0.01.
Distillation Range, deg.F
10 pct. point,......................... 130-150.
50 pct. point,......................... 200-210.
90 pct. point,......................... 290-300.
EP, maximum............................ 390.
Residue, vol% (max).................... 2.0.
Sulfur, ppm by wt...................... 30-40.
Phosphorous, g/gal (max)............... 0.005.
RVP, psi............................... 6.7-7.0.
Olefins, vol %......................... 4.0-6.0.
Total Aromatic Hydrocarbons (vol%)..... 22-25.
Benzene, vol %......................... 0.8-1.0.
Multi-Substituted Alkyl Aromatic 12-14.
Hydrocarbons, vol%.
MTBE, vol%............................. 10.8-11.2.
Additives.............................. See Chapter 4 of the California
Regulatory Requirements
Applicable to the National Low
Emission Vehicle Program
(October, 1996). These
procedures are incorporated by
reference (see Sec. 86.1).
Copper Corrosion....................... No. 1.
Gum, Washed, mg/100 ml (max)........... 3.0.
Oxidation Stability, minutes (min).... 1000.
Specific Gravity....................... No limit; report to purchaser
required.
Heat of Combustion..................... No limit; report to purchaser
required.
Carbon, wt%............................ No limit; report to purchaser
required.
Hydrogen, wt%.......................... No limit; report to purchaser
required.
------------------------------------------------------------------------
(3)(i) Unless otherwise approved by the Administrator, unleaded
gasoline representative of commercial gasoline that will be generally
available through retail outlets must be used in service accumulation.
Unless otherwise approved by the Administrator, where the vehicle is to
be used for evaporative emission durability demonstration, such fuel
must contain ethanol as required by Sec. 86.1824-01(a)(2)(iii). Leaded
gasoline must not be used in service accumulation.
(ii) The octane rating of the gasoline used must be no higher than
1.0 Research octane number above the minimum recommended by the
manufacturer and have a minimum sensitivity of 7.5 octane numbers,
where sensitivity is defined as the Research octane number minus the
Motor octane number.
(iii) The Reid Vapor Pressure of the gasoline used must be
characteristic of the motor fuel used during the season in which the
service accumulation takes place.
(4) The specification range of the gasoline to be used under
paragraph (a) of this section must be reported in accordance with
Secs. 86.094-21(b)(3) and 86.1844-01.
(b) through (g) ``[Reserved]. For guidance see Sec. 86.113-94.''
6. Section 86.129-00 is amended by adding a new paragraph
(f)(1)(ii)(C) to read as follows:
Sec. 86.129-00 Road load power, test weight, and inertia weight class
determination.
* * * * *
(f) * * *
(1) * * *
(ii) * * *
(C) Regardless of other requirements in this section relating to
the testing of heavy light duty trucks, for Tier 2 heavy light duty
trucks, the test weight basis for FTP and SFTP testing (both US06 and
SC03) is the vehicle curb weight plus 300 pounds.
* * * * *
Subpart C--Emission Regulations for 1994 and Later Model Year
Gasoline-Fueled New Light-duty Vehicles and New Light-duty Trucks;
Cold Temperature Test Procedures
10. Section 86.213-04 is added to read as follows:
Sec. 86.213-04 Fuel specifications.
Gasoline having the following specifications will be used by the
Administrator. Gasoline having the specifications set forth in the
table in this section may be used by the manufacturer except that the
octane specification does not apply. In lieu of using gasoline having
these specifications, the manufacturer may, for certification testing,
use gasoline having the specifications specified in Sec. 86.113-04
provided the cold CO emissions are not decreased. Documentation showing
that cold CO emissions are not decreased must be maintained by the
manufacturer and must be made available to the Administrator upon
request. The table listing the cold CO fuel specifications described in
the text in this section follows:
[[Page 26128]]
Table--Cold CO Fuel Specifications
----------------------------------------------------------------------------------------------------------------
Cold CO low octane value or
Item ------------------------------------------- Cold CO high octane \1\ value or
ASTM test Range range
----------------------------------------------------------------------------------------------------------------
(RON+MON)/2, min............... D2699 87.8.3..... 92.30.5.
Sensitivity, min............... D2699 7.5.................... 7.5.
Distillation range:
IBP, deg.F................. D86 76-96.................. 76-96.
10% point, deg.F........... D86 98-118................. 105-125.
50% point, deg.F........... D86 179-214................ 195-225.
90% point, deg.F........... D86 316-346................ 316-346.
EP, max, deg.F............. D86 413.................... 413.
Sulfur, wt. %.................. D3120 0.003-0.008............ 0.003-0.008.
Phosphorous, g/U.S gal, max.... D3231 0.005.................. 0.005.
Lead, g/gal, max............... ................ 0.01................... 0.01.
RVP, psi....................... D4953 11.5.3..... 11.5.3.
Hydrocarbon composition........ D1319
Olefins, vol. pct.......... ................ 12.55.0.... 10.05.0.
Aromatics, vol. pct........ ................ 26.44.0.... 32.04.0.
Saturates.................. ................ Remainder.............. Remainder.
----------------------------------------------------------------------------------------------------------------
\1\ Gasoline having these specifications may be used for vehicles which are designed for the use of high-octane
premium fuel.
Subpart R--General Provisions for the Voluntary National Low
Emission Vehicle Program for Light-duty Vehicles and Light-duty
Trucks
11. Section 86.1701-99 is amended by adding paragraph (f) to read
as follows:
Sec. 86.1701-99 General applicability.
* * * * *
(f) The provisions of this subpart are not applicable to 2004 or
later model year vehicles, except where specific references to
provisions of this subpart are made in conjunction with provisions
applicable to such vehicles.
Subpart S--General Compliance Provisions for Control of Air
Pollution From New and In-use Light-duty Vehicles and Light-duty
Trucks
12. Section 86.1801-01 is amended by revising the first sentence of
paragraph (a) and the first sentence of paragraph (e) and adding
paragraphs (f) and (g) to read as follows:
Sec. 86.1801-01 Applicability.
(a) Except as otherwise indicated, the provisions of this subpart
apply to new 2001 and later model year Otto-cycle and diesel cycle
light duty vehicles and light duty trucks, including alternative
fueled, hybrid electric, and zero emission vehicles.* * *
* * * * *
(e) National Low Emission Vehicle Program for light-duty vehicles
and light light-duty trucks. A manufacturer may elect to certify 2001-
2003 model year light duty vehicles and light light-duty trucks (LDV/
LLDTs) to the provisions of the National Low Emission Vehicle Program
contained in Subpart R of this part. * * *
(f) ``Early'' Tier 2 LDV/Ts. Any LDV/LLDT which is certified to
Tier 2 FTP exhaust standards prior to the 2004 model year, or any HLDT
which is certified to the Tier 2 FTP exhaust standards prior to the
2008 model year, to utilize alternate phase-in schedules and/or for
purposes of generating and banking NOX credits, must comply
with all the exhaust emission requirements applicable to Tier 2 LDV/Ts
under this subpart.
(g) Interim non-Tier 2 LDV/Ts. Model year 2004-2008 LDV/Ts, that do
not comply with the Tier 2 FTP exhaust emission requirements (interim
non-Tier 2 LDV/Ts) as permitted under the phase-in requirements of
Sec. 86.1811-04(k) must comply with all interim non-Tier 2 exhaust
emission requirements contained in this subpart, including FTP exhaust
emission requirements for all interim non-Tier 2 LDV/Ts found at
Sec. 86.1811-04(l). Separate emission requirements are provided for
interim non-Tier 2 LDV/LLDTs and interim non-Tier 2 HLDTs.
13. Section 86.1803-01 is amended by adding the following
definitions in alphabetical order to read as follows:
Sec. 86.1803-01 Definitions.
* * * * *
Bin or emission bin means a set of emission standards applicable to
exhaust pollutants measured on the Federal Test Procedure (FTP). A bin
is equivalent to a horizontal row of FTP standards in the various
charts shown in this subpart. Manufacturers are generally free to
choose the bin of standards that will apply to a certain test group of
vehicles, provided that on a sales weighted average of those bins, all
of their vehicles meet a specified fleet average standard for a
particular pollutant.
* * * * *
CalLEV II or California LEV II refers to California's second phase
of its low emission vehicle (LEV) program. This program was adopted at
the hearing of the California Air Resources Board held on November 5,
1998.
* * * * *
Fleet average NOX standard means, for light-duty
vehicles and light-duty trucks, a NOX standard imposed over
an individual manufacturer's total U.S. sales (or a fraction of total
U.S. sales during phase-in years), as ``U.S. sales'' is defined in this
subpart, of light duty vehicles and trucks of a given model year.
Manufacturers determine their compliance with such a standard by
averaging, on a sales weighted basis, the individual NOX
standards they choose for the fleet of light duty vehicles and trucks
they sell of that model year.
* * * * *
Interim non-Tier 2 vehicle or interim non-Tier 2 LDV/T or interim
vehicle means any 2004 or later model year light duty vehicle or light
duty truck not certified to Tier 2 FTP exhaust emission standards
during the Tier 2 phase-in period.
* * * * *
LDV/T means light duty vehicles and light duty trucks collectively,
without regard to category.
* * * * *
Non-methane organic gases (NMOG) means the sum of oxygenated and
non-oxygenated hydrocarbons contained in a gas sample as measured in
accordance with the California Non-Methane Organic Gas Test Procedures.
These
[[Page 26129]]
requirements are incorporated by reference (see Sec. 86.1).
* * * * *
Periodically regenerating trap oxidizer system means a trap
oxidizer that utilizes, during normal driving conditions, an automated
regeneration mode for cleaning the trap, the operation of which can be
easily detected.
* * * * *
Point of first sale means the location where the completed light
duty vehicle or light duty truck is first purchased. This term is
synonymous with final product purchase location. The point of first
sale may be a retail customer, dealer, distributor, fleet operator,
broker, secondary manufacturer, or any other entity which purchases a
vehicle from a manufacturer. In cases where the end user purchases the
completed vehicle directly from the manufacturer, the end user is the
point of first sale.
* * * * *
Round, rounded or rounding means, unless otherwise specified, that
numbers will be rounded according to ASTM-E29-93a, which is
incorporated by reference in this part pursuant to Sec. 86.1.
* * * * *
Tier 2 standards means those FTP exhaust emission standards
applicable to new light-duty vehicles and light light duty trucks and
that begin a phase-in in the 2004 model year, and those exhaust
emission standards applicable to heavy light duty trucks that begin a
phase-in in the 2008 model year. These standards are found in
Sec. 86.1811-04.
Tier 2 vehicle or Tier 2 LDV/T means any light duty vehicle or
light duty truck, including HEVs and ZEVs, of the 2004 or later model
year certified to comply with the Tier 2 FTP exhaust standards
contained in Sec. 86.1811-04. The term Tier 2 vehicle also includes any
light duty vehicle or truck, of any model year, which is certified to
Tier 2 FTP exhaust standards for purposes of generating or banking
early NOX credits for averaging under Tier 2 requirements as
allowed in this subpart.
* * * * *
U.S. sales means, unless otherwise specified, sales in any state of
the United States except for California or a state that has adopted
California motor vehicle standards for that model year pursuant to
section 177 of the Clean Air Act. This definition applies only to those
regulatory requirements addressing Tier 2 and interim non-Tier 2 LDV/
Ts.
* * * * *
14. Section 86.1804-01 is amended by adding the following acronyms
and abbreviations, in alphabetical order, to read as follows:
Sec. 86.1804-01 Acronyms and abbreviations.
* * * * *
HCHO--Formaldehyde.
* * * * *
HEV--Hybrid electric vehicle.
* * * * *
HLDT--Heavy light duty truck. Includes only those trucks over
6000 pounds GVWR (LDT3s and LDT4s).
* * * * *
LDV/LLDT--Light duty vehicles and light light-duty trucks.
Includes only those trucks rated at 6000 pounds GVWR or less (LDT1s
and LDT2s).
LDV/T--Light duty vehicles and light duty trucks. This term is
used collectively to include, or to show that a provision applies
to, all light duty vehicles and all categories of light duty trucks,
i.e.
LDT1, LDT2, LDT3 and LDT4.
LEV--Low Emission Vehicle.
* * * * *
NLEV--Refers to the National Low Emission Vehicle Program.
Regulations governing this program are found at subpart R of this
part.
* * * * *
NMOG--Non-methane organic gases.
* * * * *
RAF--Reactivity adjustment factor.
* * * * *
SULEV--Super Ultra Low Emission Vehicle.
* * * * *
TLEV--Transitional Low Emission Vehicle.
* * * * *
ULEV--Ultra Low Emission Vehicle.
* * * * *
ZEV--Zero Emission Vehicle.
* * * * *
15. Section 86.1805-04 is added to read as follows:
Sec. 86.1805-04 Useful life.
(a) Except as required under paragraph (b) of this section or
permitted under paragraphs (d) and (e) of this section, the full useful
life for all LDVs, LDT1s and LDT2s is a period of use of 10 years or
120,000 miles, whichever occurs first. For all HLDTs, full useful life
is a period of 11 years or 120,000 miles, whichever occurs first. This
full useful life applies to exhaust, evaporative and refueling emission
requirements except for standards which are specified to only be
applicable at the time of certification.
(b) Manufacturers may elect to optionally certify a test group to
the Tier 2 exhaust emission standards for 150,000 miles to gain
additional NOX credits, as permitted in Sec. 86.1860-04(g).
In such cases, useful life is a period of use of 15 years or 150,000
miles, whichever occurs first, for all exhaust, evaporative and
refueling emission requirements except for cold CO standards and
standards which are applicable only at the time of certification.
(c) Where intermediate useful life exhaust emission standards are
applicable, such standards are applicable for five years or 50,000
miles, whichever occurs first.
(d)(1) Manufacturers may petition the Administrator to provide
alternative useful life periods for idle CO requirements for light duty
trucks when they believe that the useful life period described in this
section is significantly unrepresentative for one or more test groups
(either too long or too short). This petition must include the full
rationale behind the request, together with any supporting data and
other evidence. Based on this or other information, the Administrator
may assign an alternative useful life period. Any petition should be
submitted in a timely manner to allow adequate time for a thorough
evaluation.
(2) Where cold CO standards are applicable, the useful life
requirement for compliance with the cold CO standard only, is 5 years
or 50,000 miles whichever occurs first.
(e) Where LDVs, LDT1s and LDT2s of the 2003 or earlier model years
are certified to Tier 2 exhaust emission standards for purposes of
generating early NOX credits, manufacturers may certify
those vehicles to full useful lives of 100,000 miles in lieu of the
otherwise required 120,000 mile full useful lives, as provided under
Sec. 86.1861-04(c)(4).
16. Section 86.1806-01 is amended by adding paragraph (b)(8) to
read as follows:
Sec. 86.1806-01 On-board diagnostics.
* * * * *
(b)* * *
(8) For Tier 2 and interim non-Tier 2 hybrid electric vehicles
(HEVs) only. Unless added to HEVs in compliance with other requirements
of this section, or unless otherwise approved by the Administrator:
(i) The manufacturer must equip each HEV with a maintenance
indicator consisting of a light that must activate automatically by
illuminating the first time the minimum performance level is observed
for each battery system component. Possible battery system components
requiring monitoring are: battery water level, temperature control,
pressure control, and other parameters critical for determining battery
condition.
(ii) The manufacturer must equip ``off-vehicle charge capable
HEVs'' with a useful life indicator for the battery
[[Page 26130]]
system consisting of a light that must illuminate the first time the
battery system is unable to achieve an all-electric operating range
(starting from a full state-of-charge) which is at least 75 percent of
the range determined for the vehicle in the Urban Driving Schedule
portion of the All-Electric Range Test (see the California Zero-
Emission and Hybrid Electric Vehicle Exhaust Emission Standards and
Test Procedures for 2003 and Subsequent Model Year Passenger Cars,
Light-Duty Trucks and Medium Duty Vehicles. These requirements are
incorporated by reference (see Sec. 86.1)
(iii) The manufacturer must equip each HEV with a separate odometer
or other device subject to the approval of the Administrator that can
accurately measure the mileage accumulation on the engines used in
these vehicles.
* * * * *
17. Section 86.1807-01 is amended by revising paragraph (a)(3)(vi)
to read as follows:
Sec. 86.1807-01 Vehicle labeling.
(a) * * *
(3) * * *
(vi) The exhaust emission standards to which the test group is
certified, and for test groups having different in-use standards, the
corresponding exhaust emission standards that the test group must meet
in use. In lieu of this requirement, manufacturers may use the
standardized test group name designated by EPA;
* * * * *
18. Section 86.1809-01 is amended by adding paragraph (e) to read
as follows:
Sec. 86.1809-01 Prohibition of defeat devices.
* * * * *
(e) For each test group of Tier 2 and interim non-Tier 2 LDV/Ts,
the manufacturer must submit, with the Part II certification
application, an engineering evaluation demonstrating to the
satisfaction of the Administrator that a discontinuity in emissions of
non-methane organic gases, carbon monoxide, oxides of nitrogen and
formaldehyde measured on the Federal Test Procedure (subpart B of this
part) does not occur in the temperature range of 20 to 86 degrees F.
For diesel vehicles, the engineering evaluation must also include
particulate emissions.
19. Section 86.1810-01 is amended by adding two new sentences to
the end of the introductory text; by adding a new sentence to the end
of paragraph (i)(6); and by adding new paragraphs (i)(13), (i)(14), (o)
and (p) to read as follows:
Sec. 86.1810-01 General standards; increase in emissions; unsafe
conditions; waivers.
* * * For Tier 2 and interim non-Tier 2 LDV/Ts, this section also
applies to hybrid electric vehicles and zero emission vehicles. Unless
otherwise specified, requirements and provisions of this subpart
applicable to methanol fueled vehicles are also applicable to Tier 2
and interim non-Tier 2 ethanol fueled LDV/Ts.
* * * * *
(i) * * *
(6) * * * For Tier 2 and interim non-Tier 2 LDV/Ts, this provision
does not apply to enrichment that occurs upon cold start, warm-up
conditions and rapid-throttle motion conditions (``tip-in'' or ``tip-
out'' conditions).
* * * * *
(13) A/C-on specific calibrations. (i) For Tier 2 and interim non-
Tier 2 LDV/Ts, A/C-on specific calibrations (e.g. air to fuel ratio,
spark timing, and exhaust gas recirculation), may be used which differ
from A/C-off calibrations for given engine operating conditions (e.g.,
engine speed, manifold pressure, coolant temperature, air charge
temperature, and any other parameters).
(ii) Such calibrations must not unnecessarily reduce the
NMHC+NOX emission control effectiveness during A/C-on
operation when the vehicle is operated under conditions which may
reasonably be expected to be encountered during normal operation and
use.
(iii) If reductions in control system NMHC+NOX
effectiveness do occur as a result of such calibrations, the
manufacturer must, in the Application for Certification, specify the
circumstances under which such reductions do occur, and the reason for
the use of such calibrations resulting in such reductions in control
system effectiveness.
(iv) A/C-on specific ``open-loop'' or ``commanded enrichment'' air-
fuel enrichment strategies (as defined below), which differ from A/C-
off ``open-loop'' or ``commanded enrichment'' air-fuel enrichment
strategies, may not be used, with the following exceptions: Cold-start
and warm-up conditions, or, subject to Administrator approval,
conditions requiring the protection of the vehicle, occupants, engine,
or emission control hardware. Other than these exceptions, such
strategies which are invoked based on manifold pressure, engine speed,
throttle position, or other engine parameters must use the same engine
parameter criteria for the invoking of this air-fuel enrichment
strategy and the same degree of enrichment regardless of whether the A/
C is on or off. ``Open-loop'' or ``commanded'' air-fuel enrichment
strategy is defined as enrichment of the air to fuel ratio beyond
stoichiometry for the purposes of increasing engine power output and
the protection of engine or emissions control hardware. However,
``closed-loop biasing,'' defined as small changes in the air-fuel ratio
for the purposes of optimizing vehicle emissions or driveability, must
not be considered an ``open-loop'' or ``commanded'' air-fuel enrichment
strategy. In addition, ``transient'' air-fuel enrichment strategy (or
``tip-in'' and ``tip-out'' enrichment), defined as the temporary use of
an air-fuel ratio rich of stoichiometry at the beginning or duration of
rapid throttle motion, must not be considered an ``open-loop'' or
``commanded'' air-fuel enrichment strategy.
(14) ``Lean-on-cruise'' calibration strategies. (i) For Tier 2 and
interim non-Tier 2 LDV/Ts, the manufacturer must state in the
Application for Certification whether any ``lean-on-cruise'' strategies
are incorporated into the vehicle design. A ``lean-on-cruise'' air-fuel
calibration strategy is defined as the use of an air-fuel ratio
significantly greater than stoichiometry, during non-deceleration
conditions at speeds above 40 mph. ``Lean-on-cruise'' air-fuel
calibration strategies must not be employed during vehicle operation in
normal driving conditions, including A/C usage, unless at least one of
the following conditions is met:
(A) Such strategies are substantially employed during the FTP or
SFTP;
(B) Such strategies are demonstrated not to significantly reduce
vehicle NMHC+NOX emission control effectiveness over the
operating conditions in which they are employed; or
(C) Such strategies are demonstrated to be necessary to protect the
vehicle occupants, engine, or emission control hardware.
(ii) If the manufacturer proposes to use a ``lean-on-cruise''
calibration strategy, the manufacturer must specify the circumstances
under which such a calibration would be used, and the reason or reasons
for the proposed use of such a calibration.
* * * * *
(o) Unless otherwise approved by the Administrator, manufacturers
must measure NMOG emissions in accordance with the California Non-
Methane Organic Gas Test Procedures. These procedures are incorporated
by reference (see Sec. 86.1).
(p) For diesel vehicles, manufacturers may measure non-methane
hydrocarbons in lieu of NMOG.
[[Page 26131]]
20. Section 86.1811-01 is amended by adding a sentence to the end
of the introductory text to read as follows:
Sec. 86.1811-01 Emission standards for light-duty vehicles.
* * * This section does not apply to 2004 and later model year
vehicles, except as specifically referenced by Sec. 86.1811-04.
* * * * *
21. Section 86.1811-04 is added to read as follows:
Sec. 86.1811-04 Emission standards for light duty vehicles and light
duty trucks.
(a) Applicability. (1) This section contains regulations
implementing emission standards for all light duty vehicles and light
duty trucks (LDV/Ts). This section applies to 2004 and later model year
LDV/Ts fueled by gasoline, diesel, methanol, ethanol, natural gas and
liquefied petroleum gas fuels, except as noted. Additionally, this
section contains provisions applicable to hybrid electric vehicles
(HEVs) and zero emission vehicles (ZEVs). Multi-fueled vehicles must
comply with all requirements established for each consumed fuel.
(2)(i) This section also applies to LDV/LLDTs of model years prior
to 2004, when manufacturers certify such vehicles to Tier 2 exhaust
emission requirements to utilize alternate phase-in schedules, as
allowed under paragraph (k)(6) of this section, and/or to earn
NOX credits for use in complying with the Tier 2 fleet
average NOX standard which takes effect in the 2004 model
year for LDV/LLDTs.
(ii) This section also applies to HLDTs of model years prior to
2004, when manufacturers certify such vehicles to Tier 2 exhaust
emission requirements to utilize alternate phase-in schedules as
allowed under paragraph (k)(6) of this section.
(3) Except where otherwise specified, this section applies instead
of Secs. 86.1811-01, 86.1812-01, 86.1813-01, 86.1814-01, 86.1814-02,
86.1815-01, and 86.1815-02.
(4) Except where otherwise specified, the provisions of this
section apply equally to LDVs and all categories of LDTs, as reflected
by the use of the term LDV/T.
(5) The exhaust emission standards and evaporative emission
standards of this section apply equally to certification and in-use
LDV/Ts unless otherwise specified.
(b) Test weight. (1) Except as required in paragraph (b)(2) of this
section, emission testing of all LDV/Ts to determine compliance with
any exhaust or evaporative emission standard set forth in this part
must be on a loaded vehicle weight (LVW) basis, as that term is defined
in this subpart.
(2) Interim non-Tier 2 HLDTs tested to Tier 1 SFTP standards, must
be tested on an adjusted loaded vehicle weight (ALVW) basis, as that
term is defined in this subpart, during the SC03 element of the SFTP.
(c) Tier 2 FTP exhaust emission standards. Exhaust emissions from
Tier 2 LDV/Ts must not exceed the standards in Table S04-1 of this
section at full useful life when tested over the Federal Test Procedure
(FTP) described in subpart B of this part. Exhaust emissions from Tier
2 LDV/Ts must not exceed the standards in Table S04-2 of this section
at intermediate useful life, if applicable, when tested over the FTP.
Manufacturers of LDV/Ts must meet these standards according to the
phase-in schedules shown in Tables S04-6 and S04-7 of this section.
(1) For a given test group a manufacturer desires to certify to
operate only on one fuel, the manufacturer must select a set of
standards from the same bin (line or row) in Table S04-1 of this
section for non-methane organic gases (NMOG), carbon monoxide (CO),
oxides of nitrogen (NOX), formaldehyde (HCHO) and
particulate matter (PM). The manufacturer must certify the test group
to meet those standards, subject to all the applicable provisions of
this subpart. The manufacturer must also certify the test group to meet
the intermediate useful life standards (if any) in Table S04-2 of this
section having the same EPA bin reference number as the chosen full
useful life standards.
(2) For a given test group of flexible-fueled, bi-fuel or dual fuel
vehicles when operated on the alcohol or gaseous fuel they are designed
to use, manufacturers must select a bin of standards from Table S04-1
of this section and the corresponding bin in Table S04-2, if any. When
these flexible-fueled, bi-fuel or dual fuel vehicles are certified to
operate on gasoline or diesel fuel, the manufacturer may choose to
comply with the next numerically higher NMOG standard above the bin
which contains the standards selected for certification on the gaseous
or alcohol fuel.
(3) The bin 7 NMOG value may be used by alternative fueled vehicles
when operated on gasoline or diesel fuel when such vehicles are
certified to bin 6 standards on the gaseous or alcohol fuel on which
they are designed to operate.
(4) In addition to the bins shown in Tables S04-1 and 2 of this
section, manufacturers may also use the applicable interim non-Tier 2
bins for Tier 2 vehicles. These bins are shown in Tables S04-8 and 9 of
this section for LDV/LLDTs and Tables S04-10 and 11 of this section for
HLDTs. These bins may only be used through the last model year of the
duration of the applicable interim program, i.e. 2006 for LDV/LLDTs and
2008 for HLDTs. In a given model year, an individual vehicle may not be
included in both the Tier 2 program and an interim program.
(5) Tables S04-1 and S04-2 follow:
Table S04-1.--Tier 2 Light Duty Full Useful Life Exhaust Mass Emission Standards
[Grams per mile]
----------------------------------------------------------------------------------------------------------------
EPA bin No. NMOG CO HCHO NOX PM
----------------------------------------------------------------------------------------------------------------
7............................... a 0.156 .............. .............. .............. ..............
7............................... 0.125 4.2 .018 0.20 0.02
6............................... 0.090 4.2 0.018 0.15 0.02
5............................... 0.090 4.2 0.018 0.07 0.01
4............................... 0.055 2.1 0.011 0.07 0.01
3............................... 0.070 2.1 0.011 0.04 0.01
2............................... 0.010 2.1 0.004 0.02 0.01
1............................... 0.000 0.0 0.000 0.00 0.0
----------------------------------------------------------------------------------------------------------------
a Applicable only to flexible-fueled and dual-fuel bin 7 vehicles when certifying for operation on gasoline.
[[Page 26132]]
Table S04-2.--Tier 2 Light Duty Intermediate Useful Life Exhaust Mass Emission Standards
[Grams per mile]
----------------------------------------------------------------------------------------------------------------
EPA bin No. NMOG CO HCHO NOX PM b
----------------------------------------------------------------------------------------------------------------
7............................... a 0.125 .............. .............. .............. ..............
7............................... 0.100 3.4 0.015 0.14 ..............
6............................... 0.075 3.4 0.015 0.11 ..............
5............................... 0.075 3.4 0.015 0.05 ..............
4............................... 0.040 1.7 0.008 0.05 ..............
----------------------------------------------------------------------------------------------------------------
a Applicable only to flexible-fueled and dual-fuel bin 7 vehicles when certifying for operation on gasoline.
b The full useful life PM standards from Table S04-1 also apply at intermediate useful life.
(d) Fleet average NOX Standards. (1) For a given
individual model year's sales of Tier 2 LDV/Ts, including model years
during the phase-in years of the Tier 2 standards, manufacturers must
comply with a fleet average oxides of nitrogen (NOX)
standard of 0.07 grams per mile. The manufacturer must calculate its
fleet average NOX emission level(s) as described in
Sec. 86.1860-04. Up through and including model year 2008,
manufacturers must calculate separate fleet average NOX
emission levels for LDV/LLDTs and HLDTs as described in Sec. 86.1860-
04.
(2) For Early Tier 2 LDV/LLDTs. For model years prior to 2004,
where the manufacturer desires to bank early Tier 2 NOX
credits as permitted under Sec. 86.1861(c), the manufacturer must
comply with a fleet average standard of 0.07 grams per mile for its
Tier 2 LDV/LLDTs. Manufacturers must determine compliance with the
NOX fleet average standard according to regulations in
Sec. 86.1860-04.
(3) For Early Tier 2 HLDTs. For model years prior to 2008, where
the manufacturer desires to bank early Tier 2 NOX credits as
permitted under Sec. 86.1861(c), the manufacturer must comply with a
fleet average standard of 0.07 grams per mile for its Tier 2 HLDTs.
Manufacturers must determine compliance with the NOX fleet
average standard according to regulations in Sec. 86.1860-04.
(e) Evaporative emission standards. Consistent with the phase-in
requirements in paragraph (k) of this section, evaporative emissions
from gasoline-fueled, natural gas-fueled, liquefied petroleum gas-
fueled, ethanol-fueled and methanol-fueled LDV/Ts must not exceed the
standards in this paragraph. The standards apply equally to
certification and in-use LDV/Ts, except that the spitback standard
applies only to newly assembled LDV/Ts.
(1) Diurnal-plus-hot soak evaporative hydrocarbon standards.
Hydrocarbons for LDV/Ts must not exceed the diurnal plus hot soak
standards shown in Table S04-3 for the full three diurnal test sequence
and for the supplemental two diurnal test sequence. Table S04-3
follows:
Table S04-3.--Light-Duty Diurnal Plus Hot Soak Evaporative Emission
Standards
[Grams per test]
------------------------------------------------------------------------
Supplemental
3 day 2 day
Vehicle category diurnal + diurnal +
hot Soak hot soak
------------------------------------------------------------------------
LDVs, LDT1s and LDT2s......................... 0.95 1.2
LDT3s and LDT4s............................... 1.2 1.5
------------------------------------------------------------------------
(2) Running loss standard. Hydrocarbons for LDV/Ts measured on the
running loss test must not exceed 0.05 grams per mile.
(3) Refueling emission standards. Refueling emissions must not
exceed the following standards:
(i) For gasoline-fueled, diesel-fueled and methanol-fueled LDV/Ts:
0.20 grams hydrocarbon per gallon (0.053 grams per liter) of fuel
dispensed.
(ii) For liquefied petroleum gas-fueled LDV/Ts: 0.15 grams
hydrocarbon per gallon (0.04 grams per liter) of fuel dispensed.
(iii) Refueling standards for LDT3s and LDT4s are subject to the
phase-in requirements found in Sec. 86.1810-01(k).
(4) Spitback standards. For gasoline and methanol fueled LDV/Ts,
hydrocarbons measured on the fuel dispensing spitback test must not
exceed 1.0 grams hydrocarbon (carbon if methanol-fueled) per test.
(5) Vehicles not certified to meet the evaporative emission
standards in this paragraph (e) as permitted under the phase-in
schedule of paragraph (k) of this section, must meet applicable
evaporative emission standards in Secs. 86.1811-01, 86.1812-01,
86.1813-01, 86.1814-02 or 86.1815-02 except that all LDV/Ts must meet
the refueling emission standards in paragraph (e)(3) of this section.
(f) Supplemental exhaust emission standards for LDV/Ts. (1)
Supplemental exhaust emissions from gasoline-fueled and diesel fueled
LDV/Ts must not exceed the standards in Table S04-4 at full useful
life. Supplemental exhaust emission standards are not applicable to
alternative fueled LDV/Ts, or flexible fueled LDV/Ts when operated on a
fuel other than gasoline or diesel. Table S04-4 follows:
Table S04-4.-- Full Useful Life Supplemental Emission Standards (SFTP Standards) for LDV/Ts
[Grams/mile]
----------------------------------------------------------------------------------------------------------------
Vehicle category USO6 NMHC+NOX USO6 CO SCO3 NMHC+NOX SCO3 CO
----------------------------------------------------------------------------------------------------------------
LDV/LDT1........................................ 0.20 11.1 0.26 4.2
LDT2............................................ 0.37 14.6 0.39 5.5
LDT3............................................ 0.53 16.9 0.44 6.4
LDT4............................................ 0.78 19.3 0.62 7.3
----------------------------------------------------------------------------------------------------------------
(2) Gasoline-fueled LDV/Ts, diesel-fueled LDV/Ts and flexible
fueled LDV/Ts when operated on gasoline or diesel fuel, and subject to
intermediate useful life FTP standards, must not exceed the
intermediate useful life supplemental emission standards in Table S04-
5, as follows:
[[Page 26133]]
Table S04-5.--Intermediate Useful Life Supplemental Emission Standards (SFTP Standards) for LDV/Ts
[Grams/mile]
----------------------------------------------------------------------------------------------------------------
Vehicle category USO6 NMHC+NOX USO6 CO SCO3 NMHC+NOX SCO3 CO
----------------------------------------------------------------------------------------------------------------
LDV/LDT1........................................ 0.16 9.0 0.22 3.0
LDT2............................................ 0.30 11.6 0.32 3.9
LDT3............................................ 0.45 11.6 0.36 3.9
LDT4............................................ 0.67 13.2 0.51 4.4
----------------------------------------------------------------------------------------------------------------
(3) For interim non-Tier 2 gasoline, diesel and flexible-fueled
LDT3s and LDT4s, manufacturers may, at their option, meet the gasoline
SFTP standards found in Secs. 86.1814-02 and 86.1815-02, respectively.
(4) Interim non-Tier 2 gasoline, diesel and flexible-fueled LDV/
LLDTs certified to bin 5 FTP exhaust emission standards from Table S04-
8 in this section may meet the gasoline Tier 1 SFTP requirements found
at Sec. 86.1811-01(b).
(g) Cold temperature exhaust emission standards for LDV/Ts. These
standards are applicable only to gasoline fueled LDV/Ts. For cold
temperature exhaust emission standards, a useful life of 50,000 miles
applies.
(1) For LDVs and LDT1s, the standard is 10.0 grams per mile CO.
(2) For LDT2s, LDT3s and LDT4s, the standard is 12.5 grams per mile
CO.
(h) Certification short test exhaust emission standards for LDV/Ts.
Certification short test emissions from all gasoline-fueled otto cycle
LDV/Ts must not exceed the following standards:
(1) Hydrocarbons: 100 ppm as hexane, for certification and SEA
testing; 220 ppm as hexane, for in-use testing.
(2) Carbon monoxide: 0.5% for certification and SEA testing; 1.2%
for in-use testing.
(i) Idle exhaust emission standards for light duty trucks. Exhaust
emissions of carbon monoxide from gasoline, methanol, natural gas, and
liquefied petroleum gas-fueled light duty trucks must not exceed 0.5%
of exhaust gas flow at curb idle for the useful life of the trucks as
defined in this part. This standard does not apply to light duty
vehicles.
(j) Highway NOX exhaust emission standard for LDV/Ts.
The maximum projected NOX emissions measured on the federal
Highway Fuel Economy Test in 40 CFR part 600, subpart B, must not be
greater than 1.33 times the applicable FTP NOX standard to
which the manufacturer certifies the test group. Both the projected
emissions and the product of the NOX standard and 1.33 must
be rounded to the nearest 0.01 g/mi before being compared.
(k) Phase-in of the Tier 2 FTP exhaust and evaporative
requirements; small volume manufacturer flexibilities. (1)
Manufacturers must comply with the phase-in requirements in Tables S04-
6 and S04-7 of this section for the Tier 2 FTP exhaust emission
requirements specified in paragraph (c) of this section. Separate
phase-in schedules are provided for LDV/LLDTs and HLDTs. These
requirements specify the minimum percentage of the manufacturer's LDV/
LLDT and HLDT U.S. sales, by model year, that must meet the Tier 2
requirements for their full useful lives. Tables S04-6 and S04-7
follow:
Table S04-6.--Phase-In Percentages for LDV/LLDT Tier 2 Requirements
------------------------------------------------------------------------
Percentage of
LDV/LLDTs that
Model year must meet tier
2 requirements
------------------------------------------------------------------------
2004.................................................... 25
2005.................................................... 50
2006.................................................... 75
2007 and subsequent..................................... 100
------------------------------------------------------------------------
Table S04-7.--Phase-In Percentages for HLDT Tier 2 Requirements
------------------------------------------------------------------------
Percentage
of HLDTs
Model year that must
meet tier 2
requirements
------------------------------------------------------------------------
2008...................................................... 50
2009 and subsequent....................................... 100
------------------------------------------------------------------------
(2) Manufacturers must also comply with the phase-in requirements
in Tables S04-6 and S04-7 of this section for the evaporative emission
requirements contained in paragraph (e) of this section.
(3) Manufacturers may opt to use different LDV/LLDTs and HLDTs to
meet the phase-in requirements for evaporative emissions and FTP
exhaust emissions, provided that the manufacturer meets the minimum
phase-in requirements in Table S04-6 and Table S04-7 of this section
for both FTP exhaust and evaporative emissions. A LDV or LDT counted
toward compliance with any phase-in requirement for FTP exhaust or
evaporative standards, must comply with all applicable Tier 2 exhaust
requirements or all evaporative requirements, as applicable, described
in this section.
(4) LDVs and LDTs not certified to meet the Tier 2 FTP exhaust
requirements during model years 2004-2008, as allowed under this
subpart, are subject to the provisions of paragraph (l) of this
section. LDVs and LDTs not certified to meet the evaporative
requirements in paragraph (e) of this section during model years 2004-
2008, as allowed under this subpart, must meet all evaporative
requirements found in Secs. 86.1811-01, 86.1812-01, 86.1813-01,
86.1814-02 and 86.1815-02 as applicable, and the refueling requirements
found in paragraph (e)(3) of this section.
(5)(i) Small volume manufacturers, as defined in this part, are
exempt from the LDV/LLDT phase-in requirements for model years 2004,
2005 and 2006 in Table S04-6, but must comply with the 100% requirement
for the 2007 and later model years.
(ii) Small volume manufacturers, as defined in this part, are
exempt from the HLDT phase-in requirement for model year 2008 in Table
S04-7 of this section and the interim fleet average NOX
standard and the phase-in of the HLDT interim non-Tier 2 FTP exhaust
standards for the 2004, 2005 and 2006 model years.
(iii) Small volume manufacturers must comply with the interim non-
Tier 2 FTP exhaust emission standards of bin 5 or lower from Tables
S04-10 and 11 of this section for HLDTs of model years 2004, 2005 and
2006; the interim non-Tier 2 FTP exhaust standards from Tables S04-10
and 11 and the 0.20 g/mi fleet average NOX standard for the
2007 and 2008 model year; and the Tier 2 FTP exhaust standards,
evaporative standards, and the 0.07 g/mi fleet average NOX
standard for the 2009 and later model years.
[[Page 26134]]
(6)(i) A manufacturer may elect an alternate phase-in schedule that
results in 100% phase-in for LDV/LLDTs by 2007 . Alternate phase-in
schedules must produce a sum of at least 250% when the percentages of
LDV/LLDTs certified to Tier 2 requirements for each model year from
2001 through 2007 are summed. As an example, a 10/25/50/65/100 percent
phase-in that began in 2003 would have a sum of 250 percent would be
acceptable. However, a 10/25/40/70/100 percent phase-in that began the
same year would have a sum of 245 percent and would not be acceptable.
(ii) A manufacturer electing this option for LDV/LLDTs may
calculate its compliance with the evaporative standards in paragraph
(e)(1) of this section separately from its compliance with Tier 2
exhaust standards, provided that the phase-in schedules for each
separately produce a sum of at least 250 percent when calculated as
described in paragraph (k)(6)(i) of this section. A vehicle counted
towards compliance with any phase-in requirement for the Tier 2 exhaust
standards or the evaporative standards in paragraph (e)(1) of this
section, must comply with all applicable Tier 2 exhaust standards or
all evaporative standards, as applicable, described in this section.
(iii) In addition to the requirements of paragraph (k)(6)(i) and
(ii) of this section, a manufacturer of LDV/LLDTs electing to use an
alternate phase-in schedule for compliance with the Tier 2 exhaust
standards or the evaporative standards in paragraph (e)(1) of this
section must ensure that the sum of the percentages of vehicles from
model years 2001 through 2004, meeting such exhaust or evaporative
standards, as applicable, is at least 25%.
(iv) A manufacturer may elect an alternate phase-in schedule that
results in 100% phase-in for HLDTs by 2009. The requirements of
paragraph (k)(6)(i) through (k)(6)(iii) of this section apply, except
that for HLDTs, the calculation described in paragraph (k)(6)(i) of
this section may cover model years 2001 through 2009 and must produce a
sum of at least 150%.
(7)(i) Sales percentages for the purpose of determining compliance
with the phase-in of the Tier 2 requirements and the phase-in of the
evaporative standards in paragraph (e)(1) of this section, must be
based upon projected U.S. sales of LDV/LLDTs and HLDTs of the
applicable model year by the manufacturer to the point of first sale.
Such sales percentages must be rounded to the nearest one tenth of a
percent, and must not include vehicles and trucks projected to be sold
to points of first sale in California or a state that has adopted
California requirements for that model year as permitted under section
177 of the Act.
(ii) Alternatively, the manufacturer may petition the Administrator
to allow actual volume produced for U.S. sales to be used in lieu of
projected U.S. sales for purposes of determining compliance with the
phase-in percentage requirements under this section. The manufacturer
must submit its petition within 30 days of the end of the model year to
the Vehicle Programs and Compliance Division. For EPA to approve the
use of actual volume produced for U.S. sales, the manufacturer must
establish to the satisfaction of the Administrator, that actual
production volume is functionally equivalent to actual sales volume of
LDV/LLDTs and HLDTs sold in states other than California and states
that have adopted California standards.
(iii) Manufacturers must submit information showing compliance with
all phase-in requirements of this section with its Part I application
as required by Sec. 86.1844(d)(13).
(l) FTP exhaust standards for interim non-Tier 2 LDV/LLDTs and
HLDTs. (1) FTP exhaust emission standards for interim non-Tier 2 LDV/
LLDTs. (i) LDV/LLDTs that are not certified to meet Tier 2 FTP exhaust
emission requirements during the Tier 2 phase-in period (model years
2004-2006) must comply with the full useful life FTP exhaust emission
standards listed in Table S04-8 of this section and, the corresponding
intermediate useful life standards, if any, in Table S04-9 of this
section. Manufacturers may choose the bin of full useful life standards
to which they certify a test group of vehicles, subject to the
requirements in paragraph (l)(3)(i) of this section. In addition to the
bins shown in Tables S04-8 and S04-9 of this section, manufacturers may
also use the Tier 2 bins shown in Tables S04-1 and S04-2 of this
section. Manufacturers may include LDV/LLDTs in the interim program
that are not used to meet the Tier 2 corporate average NOX
standard or the phase-in percentage requirements in the Tier 2 program
or to generate Tier 2 NOX credits. More simply, a
manufacturer may use the Tier 2 bins for interim non-Tier 2 vehicles;
but, in a given model year, an individual vehicle may not be included
in both the Tier 2 program and an interim program. Tables S04-8 and
S04-9 follow:
Table S04-8.--Full Useful Life Interim Exhaust Mass Emission Standards for LDV/LLDTs
[Grams per mile]
----------------------------------------------------------------------------------------------------------------
EPA Bin No. NMOG CO NOX HCHO PM
----------------------------------------------------------------------------------------------------------------
5............................... 0.156 4.2 0.60 0.018 0.06
4............................... 0.090 4.2 0.30 0.018 0.06
3............................... 0.055 2.1 0.30 0.011 0.04
2............................... 0.090 4.2 0.07 0.018 0.01
1............................... 0.000 0.0 0.00 0.000 0.0
----------------------------------------------------------------------------------------------------------------
Table S04-9.--Intermediate Useful Life Interim Exhaust Mass Emission Standards for LDV/LLDTs
[Grams per mile]
----------------------------------------------------------------------------------------------------------------
EPA Bin No. NMOG CO NOX HCHO PM
----------------------------------------------------------------------------------------------------------------
5............................... 0.125 3.4 0.40 0.015
4............................... 0.075 3.4 0.20 0.015
3............................... 0.040 1.7 0.20 0.008
2............................... 0.075 3.4 0.05 0.015
----------------------------------------------------------------------------------------------------------------
(ii) Manufacturers must select a set of standards from the same bin
in Table S04-8 of this section and the corresponding bin in Table S04-
9, if any, for a given test group of flexible-fueled, dual fuel or
multi-fuel LDV/LLDTs, when operated
[[Page 26135]]
on the alcohol or gaseous fuel they are designed to use. When these
flexible-fueled, dual fuel or multi fuel LDV/Ts are certified to
operate on gasoline, the manufacturer may choose to comply with the
next numerically higher NMOG standard (if there is one) above the bin
which contains the standards selected for certification on the gaseous
or alcohol fuel.
(2) FTP exhaust emission standards for interim non-Tier 2 HLDTs.
(i) HLDTs of model years 2004-2008 that are not certified to meet the
Tier 2 FTP exhaust standards in paragraph (c) of this section must
comply with the interim non-Tier 2 FTP exhaust emission standards in
Tables S04-10 and S04-11 of this section.
(ii) HLDTs of model years 2004-2008 that are not certified to meet
the Tier 2 FTP exhaust standards in paragraph (c) of this section must
also comply with the fleet average NOX standard described in
paragraph (l)(3)(ii) of this section subject to the phase-in schedule
in paragraph (l)(2)(iv) of this section, i.e. 25 percent of the HLDTs
must meet the fleet average standard of 0.20 g/mi in 2004, 50 percent
in 2005, and so on.
(iii) Manufacturers may choose the bin of full useful life
standards to which they certify a test group of HLDTs, subject to the
requirements in paragraph (l)(3)(ii) of this section. In addition to
the bins shown in Tables S04-10 and S04-11 of this section,
manufacturers may also use the Tier 2 bins shown in Tables S04-1 and
S04-2 of this section. Therefore, manufacturers may include HLDTs in
the interim program that are not used to meet the Tier 2 corporate
average NOX standard or the phase-in percentage requirements
in the Tier 2 program or to generate Tier 2 NOX credits.
More simply, a manufacturer may use the Tier 2 bins for interim non-
Tier 2 vehicles; but, in a given model year, an individual vehicle may
not be included in both the Tier 2 program and an interim program.
Tables S04-10 and S04-11 follow:
Table S04-10.--Full Useful Life Interim Exhaust Mass Emission Standards for HLDTs
[Grams/mile]
----------------------------------------------------------------------------------------------------------------
EPA Bin No. NMOG CO NOX HCHO PM
----------------------------------------------------------------------------------------------------------------
5............................... 0.230 4.2 0.60 0.018 0.06
4............................... 0.180 4.2 0.30 0.018 0.06
3............................... 0.156 4.2 0.20 0.018 0.02
2............................... 0.090 4.2 0.07 0.018 0.01
1............................... 0.000 0.0 0.00 0.000 0.0
----------------------------------------------------------------------------------------------------------------
Table S04-11.--Intermediate Useful Life Interim Exhaust Mass Emission Standards for HLDTs
[Grams per mile]
----------------------------------------------------------------------------------------------------------------
EPA Bin No. NMOG CO NOX HCHO PM
----------------------------------------------------------------------------------------------------------------
5......................................... 0.160 3.4 0.40 0.015 ....
4......................................... 0.140 3.4 0.20 0.015 ....
3......................................... 0.125 3.4 0.14 0.015 ....
2......................................... 0.075 3.4 0.05 0.015 ....
----------------------------------------------------------------------------------------------------------------
(iv) Phase-in schedule for interim non-Tier 2 HLDT standards. Table
S04-12 of this section specifies the minimum percentage of the
manufacturer's non-Tier 2 HLDT U.S. sales, by model year, that must
comply with the fleet average NOX standard described in
paragraph (l)(3(ii) of this section. Table S04-12 follows:
Table S04-12.--Phase-in Percentages for Interim Non-Tier 2 Fleet Average
NOX Standard for HLDTs
------------------------------------------------------------------------
Percentage of
non-tier 2
HLDTs that
must meet
Model year interim non-
tier 2 fleet
average NOX
standard
------------------------------------------------------------------------
2004.................................................... 25
2005.................................................... 50
2006.................................................... 75
2007 and 2008........................................... 100
------------------------------------------------------------------------
(v) A manufacturer may elect an alternate phase-in schedule,
beginning as early as the 2001 model year, that results in 100%
compliance by 2007 with the fleet average NOX standard for
HLDTs described in paragraph (1)(3)(ii) of this section. The
requirements of paragraph (k)(6)(i) of this section apply to the
selection of an alternate phase-in schedule.
(vi) Manufacturers must select a set of standards from the same bin
in Table S04-10 of this section and the corresponding bin in Table S04-
11, if any (or Tables S04-1 and S04-2 of this section), for a given
test group of flexible-fueled, dual fuel or multi-fuel HLDTs, when
operated on the alcohol or gaseous fuel they are designed to use. When
these flexible-fueled, dual fuel or multi fuel HLDTs are certified to
operate on gasoline, the manufacturer may choose to comply with the
next numerically higher NMOG standard (if there is one) above the bin
which contains the standards selected for certification on the gaseous
or alcohol fuel.
(3) Fleet average NOX standards for interim non-Tier 2
LDV/Ts. (i) Manufacturers must comply with a fleet average full useful
life NOX standard for their interim non-Tier 2 LDV/LLDTs, on
an annual basis, of 0.30 grams per mile.
(ii) Manufacturers must comply with a fleet average full useful
life NOX standard for their interim non-Tier 2 HLDTs,
excluding those HLDTs not yet covered by the phase-in requirement
described in paragraph (l)(2)(ii) of this section, on an annual basis,
of 0.20 grams per mile.
(iii) Manufacturers must determine their compliance with these
interim fleet average NOX standards for each model year by
separately computing the sales weighted average NOX level of
all interim non-Tier 2 LDV/LLDTs and all interim non-Tier 2 HLDTs
(excluding those not yet phased in as described in paragraph (l)(2)(ii)
of this section), using the methodology in Sec. 86.1860.
[[Page 26136]]
(iv) Manufacturers may generate, bank, average, trade and use
interim non-Tier 2 NOX credits based on their NOX
fleet average as determined under paragraph (l)(3)(iii) of this
section. Unless waived or modified by the Administrator, the provisions
of Sec. 86.1861 apply to the generation, banking, averaging, trading
and use of credits generated by interim non-Tier 2 LDV/Ts.
NOX credits generated by interim non-Tier 2 LDV/Ts are not
subject to any discount.
(m) NMOG standards for diesel, flexible fueled and dual-fueled LDV/
Ts. (1) For diesel fueled LDV/Ts, the term ``NMOG'' in both the Tier 2
and interim non-Tier 2 standards means non-methane hydrocarbons.
(2) Flexible-fueled and dual-fuel Tier 2 LDV/Ts and interim non-
Tier 2
LDV/Ts must be certified to NMOG exhaust emission standards both for
operation on gasoline and on any alternate fuel they are designed to
use.
(n) Hybrid electric vehicle (HEV) and Zero Emission Vehicle (ZEV)
requirements. For FTP and SFTP exhaust emissions, and unless otherwise
approved by the Administrator, manufacturers must measure emissions
from all HEVs and ZEVs according to the requirements and test
procedures found in the document entitled California Zero-Emission and
Hybrid Electric Vehicle Exhaust Emission Standards and Test Procedures
for 2003 and Subsequent Model Passenger Cars, Light-duty Trucks and
Medium-duty Vehicles. This document is incorporated by reference (see
Sec. 86.1) . Requirements and procedures in this document that are
relevant only to complying with the California ZEV mandate, computing
partial and full ZEV allowance credits, or generating and using ZEV
credits, are not relevant to the federal program and may be
disregarded. Discussion in that document relevant to fleet average NMOG
standards and NMOG credits may also be disregarded.
(o) NMOG measurement. (1) Manufacturers must measure NMOG emissions
in accordance with Part G of the California Non-Methane Organic Gas
Test Procedures. These requirements are incorporated by reference (see
Sec. 86.1).
(2) Manufacturers must not apply reactivity adjustment factors
(RAFs) to NMOG measurements. See Sec. 86.1841.
(p) In-use standards for Tier 2 LDV/Ts. (1) Table S04-13 of this
section contains in-use emission standards applicable only to Tier 2
LDV/Ts certified to the bins shown in the table. These standards apply
to in-use testing performed by the manufacturer pursuant to regulations
at Secs. 1845-01, 1845-04 and 1846-01 and to in-use testing performed
by EPA. These standards do not apply to certification or Selective
Enforcement Auditing.
(2) These standards apply only to Tier 2 LDV/LLDTs produced up
through the 2008 model year, and Tier 2 HLDTs produced up through the
2010 model year. These standards are subject to other limitations
described in paragraph (p)(3) of this section.
(3) For the first model year and also for the next model year after
that, in which a test group of Tier 2 vehicles is certified to a bin of
standards to which it has not previously been certified, the standards
in Table S04-13 of this section apply for purposes of in-use testing
only. The standards apply equally to Tier 2 LDV/Ts produced before,
during and after the applicable Tier 2 phase-in period, subject to the
model year limitation in paragraph (p)(2) of this section. Table S04-13
follows:
Table S04-13.--In-Use Compliance Standards for Tier 2 Vehicles (g/mi)
[Certification standards shown for reference purposes]
----------------------------------------------------------------------------------------------------------------
Durability NOX
Bin No. period (miles) NOX in-use certification NMOG in-use NMOG certification
----------------------------------------------------------------------------------------------------------------
5,4......................... 50,000 0.07 0.05 n/a 0.075, 0.04
5,4......................... 120,000 0.10 0.07 n/a 0.090, 0.055
3........................... 120,000 0.06 0.04 n/a 0.070
2........................... 120,000 0.03 0.02 0.02 0.010
----------------------------------------------------------------------------------------------------------------
22. Section 86.1812-01 is amended by adding the following sentence
to the end of the introductory text to read as follows:
Sec. 86.1812-01 Emission standards for light-duty trucks 1.
* * * This section does not apply to 2004 and later model year
vehicles, except as specifically referenced by Sec. 86.1811-04.
* * * * *
23. Section 86.1813-01 is amended by adding the following sentence
to the end of the introductory text to read as follows:
Sec. 86.1813-01 Emission standards for light-duty trucks 2.
* * * This section does not apply to 2004 and later model year
vehicles, except as specifically referenced by Sec. 86.1811-04.
* * * * *
24. Section 86.1814-02 is amended by adding the following sentence
to the end of the introductory text to read as follows:
Sec. 86.1814-02 Emission standards for light-duty trucks 3.
* * * This section does not apply to 2004 and later model year
vehicles, except as specifically referenced by Sec. 86.1811-04.
* * * * *
Sec. 86.1814-04 [Removed]
25. Section 86.1814-04 is removed.
26. Section 86.1815-02 is amended by adding the following sentence
to the end of the introductory text to read as follows:
Sec. 86.1815-02 Emission standards for light-duty trucks 4.
* * * This section does not apply to 2004 and later model year
vehicles, except as specifically referenced by Sec. 86.1811-04.
* * * * *
Sec. 86.1815-04 [Removed]
27. Section 86.1815-04 is removed.
28. Section 86.1824-01 is amended by adding paragraphs (a)(2)(iii)
and (a)(2)(iv) to read as follows:
Sec. 86.1824-01 Durability demonstration procedures for evaporative
emissions.
* * * * *
(a) * * *
(2) * * *
(iii) For gasoline fueled LDV/Ts certified to meet the evaporative
emission standards set forth in Sec. 86.1811-04(e)(1), any service
accumulation method for evaporative emissions must employ gasoline fuel
for the entire service accumulation period which contains ethanol in,
at least, the highest concentration permissible in gasoline under
federal law and that is
[[Page 26137]]
commercially available in any state in the United States. Unless
otherwise approved by the Administrator, the manufacturer must
determine the appropriate ethanol concentration by selecting the
highest legal concentration commercially available during the calendar
year before the one in which the manufacturer begins its service
accumulation. The manufacturer must also provide information acceptable
to the Administrator to indicate that the service accumulation method
is of sufficient design, duration and severity to stabilize the
permeability of all non-metallic fuel and evaporative system components
to the service accumulation fuel constituents.
(iv) For flexible-fueled, dual-fueled, multi-fueled, ethanol-fueled
and methanol-fueled LDV/Ts certified to meet the evaporative emission
standards set forth in Sec. 86.1811-04(e)(1), any service accumulation
method must employ fuel for the entire service accumulation period
which the vehicle is designed to use and which the Administrator
determines will have the greatest impact upon the permeability of
evaporative and fuel system components. The manufacturer must also
provide information acceptable to the Administrator to indicate that
the service accumulation method is of sufficient design, duration and
severity to stabilize the permeability of all non-metallic fuel and
evaporative system components to service accumulation fuel
constituents.
* * * * *
29. Section 86.1827-01 is amended by adding paragraph (e) to read
as follows:
Sec. 86.1827-01 Test group determination.
* * * * *
(e) Unless otherwise approved by the Administrator, a manufacturer
of hybrid electric vehicles must create separate test groups based on
both the type of battery technology employed by the HEV and upon
features most related to their exhaust emission characteristics.
30. Section 86.1829-01 is amended by adding paragraph (d) to read
as follows:
Sec. 86.1829-01 Durability and emission testing requirements; waivers.
* * * * *
(d)(1) Beginning in the 2004 model year, the exhaust emissions must
be measured from all exhaust emission data vehicles tested in
accordance with the federal Highway Fuel Economy Test (HWFET; 40 CFR
part 600, subpart B). The oxides of nitrogen emissions measured during
such tests must be multiplied by the oxides of nitrogen deterioration
factor computed in accordance with Sec. 86.1824-01 and subsequent model
year provisions, and then rounded and compared with the applicable
emission standard in Sec. 86.1811-04. All data obtained from the
testing required under this paragraph (d) must be reported in
accordance with the procedures for reporting other exhaust emission
data required under this subpart.
(2) In the event that one or more emission data vehicles fail the
applicable HWFET standard in Sec. 86.1811-04, the manufacturer may
submit to the Administrator engineering data or other evidence showing
that the system is capable of complying with the standard. If the
Administrator finds, on the basis of an engineering evaluation, that
the system can comply with the HWFET standard, he or she may accept the
information supplied by the manufacturer in lieu of the test data.
31. Section 86.1837-01 is amended by designating the existing text
as paragraph (a) and by adding paragraph (b) to read as follows:
Sec. 86.1837-01 Rounding of emission measurements.
* * * * *
(b) Fleet average NOX value calculations, where
applicable, must be rounded to one more decimal place than that of the
applicable fleet average standard before comparing with the applicable
fleet average NOX standard to determine credit generation or
credit needs.
32. Section 86.1838-01 is amended by revising paragraph (c)(2)(iii)
to read as follows:
Sec. 86.1838-01 Small volume manufacturer certification procedures.
* * * * *
(c) * * *
(2) * * *
(iii) The provisions of Sec. 86.1845-01(c)(2) and Sec. 86.1845-
04(c)(2) that require one vehicle of each test group during high
mileage in-use verification testing to have a minimum odometer mileage
of 75 percent of the full useful life mileage for Tier 1 and NLEV LDV/
Ts, or 90,000 (or 105,000) miles for Tier 2 and interim non-Tier 2 LDV/
Ts, do not apply.
* * * * *
33. Section 86.1840-01 is amended by adding paragraph (c) to read
as follows:
Sec. 86.1840-01 Special test procedures.
* * * * *
(c) Manufacturers of LDV/Ts equipped with periodically regenerating
trap oxidizer systems must propose a procedure for testing and
certifying such LDV/Ts including SFTP testing for the review and
approval of the Administrator. The manufacturer must submit its
proposal before it begins any service accumulation or emission testing.
The manufacturer must provide with its submittal, sufficient
documentation and data for the Administrator to fully evaluate the
operation of the trap oxidizer system and the proposed certification
and testing procedure.
34. Section 86.1841-01 is amended by revising paragraph (a)(1)(iii)
and adding paragraph (e) to read as follows:
Sec. 86.1841-01 Compliance with emission standards for the purpose of
certification.
(a) * * *
(1) * * *
(iii) For the SFTP composite standard of NMHC+NOX, the
measured results of NMHC and NOX must each be adjusted by
their corresponding deterioration factors before the composite
NMHC+NOX certification level is calculated. Where the
applicable FTP exhaust hydrocarbon emission standard is an NMOG
standard, the applicable NMOG deterioration factor must be used in
place of the NMHC deterioration factor, unless otherwise approved by
the Administrator.
* * * * *
(e) Unless otherwise approved by the Administrator, manufacturers
must not use Reactivity Adjustment Factors (RAFs) in their calculation
of the certification levels of any pollutant, regardless of the fuel
used in the test vehicle.
35. Section 86.1844-01 is amended by adding a new paragraph
(d)(15), a new paragraph (e)(6) and a new paragraph (i) to read as
follows:
Sec. 86.1844-01 Information requirements: Application for
certification and submittal of information upon request.
* * * * *
(d) * * *
(15) For HEVs, unless otherwise approved by the Administrator, the
information required by the ``California Zero-Emission and Hybrid
Electric Vehicle Standards and Test Procedures for 2003 and Subsequent
Model Year Passenger Cars, Light-Duty Trucks and Medium-duty Vehicles''
must be supplied. These procedures are incorporated by reference (see
Sec. 86.1).
(e) * * *
(6) The NMOG/NMHC and formaldehyde to NMHC ratios established
according to Sec. 86.1845-04.
* * * * *
(i) For exhaust emission testing for Tier 2 and interim non-Tier 2
LDV/Ts, if approved by the Administrator in advance, manufacturers may
submit exhaust emission test data generated
[[Page 26138]]
under California test procedures to comply with any certification and
in-use testing requirements under this subpart. The Administrator may
require supporting information to establish that differences between
California and Federal exhaust testing procedures and fuels will not
produce significant differences in emission results. The Administrator
may require that in-use testing be performed using Federal test fuels
as specified in Sec. 86.113-04(a)(1).
36. Section 86.1845-04 is amended by redesignating the text of
paragraph (a) after the paragraph heading as paragraph (a)(1), adding
paragraph (a)(2), revising paragraph (c)(2) and adding paragraph (f) to
read as follows:
Sec. 86.1845-04 Manufacturer in-use verification testing requirements.
(a) General requirements. (1) * * *
(2) Unless otherwise approved by the Administrator, no emission
measurements made under the requirements of this section may be
adjusted by Reactivity Adjustment Factors (RAFs).
* * * * *
(c) * * *
(2) Vehicle mileage:
(i) All test vehicles must have a minimum odometer mileage of
50,000 miles. At least one vehicle of each test group must have a
minimum odometer mileage of 75 percent of the full useful life mileage.
See Sec. 86.1838-01(c)(2) for small volume manufacturer mileage
requirements; or
(ii) For engine families certified for a useful life of 150,000
miles, at least one vehicle must have a minimum odometer mileage of
105,000 miles. See Sec. 86.1838-01(c)(2) for small volume manufacturer
mileage requirements.
* * * * *
(f)(1) As an alternative to measuring the NMOG content, the
Administrator may approve, upon submission of supporting data by a
manufacturer, the use of NMOG to NMHC ratios. To request the use of
NMOG to NMHC ratios, a manufacturer must establish during certification
testing the ratio of measured NMOG exhaust emissions to measured NMHC
exhaust emissions for each emission data vehicle for the applicable
test group. The results must be submitted to the Administrator in the
Part II application for certification. A manufacturer may conduct in-
use testing on the test group by measuring NMHC exhaust emissions
rather than NMOG exhaust emissions. After approval by the
Administrator, the measured NMHC exhaust emissions must be multiplied
by the NMOG to NMHC ratio submitted in the application for
certification for the test group to determine the equivalent NMOG
exhaust emission values for the test vehicle. The equivalent NMOG
exhaust emission value must be used in place of the measured NMOG
exhaust emission value in determining the exhaust NMOG results. The
equivalent NMOG exhaust emission values must be compared to the NMOG
exhaust emission standard from the emission bin to which the test group
was certified.
(2) For flexible-fueled LDV/Ts certified to NMOG standards, the
manufacturer may request from the Administrator the use of a methanol
(M85) or ethanol (E85) NMOG exhaust emission to gasoline NMHC exhaust
emission ratio which must be established during certification for each
emission data vehicle for the applicable test group. The results must
be submitted to the Administrator in the Part II application for
certification. After approval by the Administrator, the measured
gasoline NMHC exhaust emissions must be multiplied by the M85 or E85
NMOG to gasoline NMHC ratio submitted in the application for
certification for the test group to determine the equivalent NMOG
exhaust emission values for the test vehicle. The equivalent NMOG
exhaust emission value must be used in place of the measured NMOG
exhaust emission value in determining the exhaust NMOG results. The
equivalent NMOG exhaust emission values must be compared to the NMOG
exhaust emission standard from the vehicle emission standard bin to
which the test group was certified.
(3) As an alternative to measuring the HCHO content, the
Administrator may approve, upon submission of supporting data by a
manufacturer, the use of HCHO to NMHC ratios. To request the use of
HCHO to NMHC ratios, the manufacturer must establish during
certification testing the ratio of measured HCHO exhaust emissions to
measured NMHC exhaust emissions for each emission data vehicle for the
applicable test group. The results must be submitted to the
Administrator with the Part II application for certification. Following
approval of the application for certification, the manufacturer may
conduct in-use testing on the test group by measuring NMHC exhaust
emissions rather than HCHO exhaust emissions. The measured NMHC exhaust
emissions must be multiplied by the HCHO to NMHC ratio submitted in the
application for certification for the test group to determine the
equivalent HCHO exhaust emission values for the test vehicle. The
equivalent HCHO exhaust emission values must be compared to the HCHO
exhaust emission standard applicable to the test group.
37. Section 86.1846-01 is amended by redesignating paragraph (a) as
paragraph (a)(1) and adding paragraph (a)(2) to read as follows:
Sec. 86.1846-01 Manufacturer in-use confirmatory testing requirements.
(a)(1) * * *
(2) Except for vehicles certified under the NLEV provisions of
subpart R of this part or unless otherwise approved by the
Administrator, no emission measurements made under the requirements of
this section may be adjusted by Reactivity Adjustment Factors (RAFs).
* * * * *
38. Section 86.1848-01 is amended by adding paragraph (c)(7) to
read as follows:
Sec. 86.1848-01 Certification.
* * * * *
(c) * * *
(7) For Tier 2 LDV/Ts and interim non-Tier 2 LDV/Ts, all
certificates of conformity issued are conditional upon compliance with
all provisions of Secs. 86.1811-04, 86.1860-04, 86.1861-04 and 86.1862-
04 both during and after model year production.
(i) Failure to meet the fleet average NOX requirements
of 0.07g/mi, 0.30
g/mi or 0.20 g/mi, as applicable, will be considered to be a failure to
satisfy the terms and conditions upon which the certificate(s) was
(were) issued and the LDV/Ts sold in violation of the fleet average
NOX standard will not be covered by the certificate(s).
(ii) Failure to comply fully with the prohibition against selling
credits that it has not generated or that are not available, as
specified in Sec. 86.1861-04, will be considered to be a failure to
satisfy the terms and conditions upon which the certificate(s) was
(were) issued and the LDV/Ts sold in violation of this prohibition will
not be covered by the certificate(s).
(iii) Failure to comply fully with the phase-in requirements of
Sec. 86.1811-04, will be considered to be a failure to satisfy the
terms and conditions upon which the certificate(s) was (were) issued
and the LDV/Ts sold which do not comply with Tier 2 or interim non-Tier
2 requirements, up to the number needed to comply, will not be covered
by the certificate(s).
(iv) For paragraphs (c)(7) (i) through (iii) of this section:
(A) The manufacturer must bear the burden of establishing to the
satisfaction of the Administrator that the terms and conditions upon
which the certificate(s) was (were) issued were satisfied.
[[Page 26139]]
(B) For recall and warranty purposes, LDV/Ts not covered by a
certificate of conformity will continue to be held to the standards
stated or referenced in the certificate that otherwise would have
applied to the LDV/Ts
* * * * *
Secs. 86.1854 through 86.1859 [Reserved]
39. Sections 86.1854 through 86.1859 are added and reserved.
40. Section 86.1860-04 is added to read as follows:
Sec. 86.1860-04 How to comply with the Tier 2 and interim non-Tier 2
fleet average NOX standards.
(a) The fleet average standards referred to in this section are the
corporate fleet average standards for FTP exhaust NOX
emissions set forth in: Sec. 86.1811-04(d) for Tier 2 LDV/Ts (0.07 g/
mi); Sec. 86.1811-04(l)(3) for interim non-Tier 2 LDV/LLDTs (0.30 g/
mi); and, Sec. 86.1811-04(l)(3) for interim non-Tier 2 HLDTs (0.20 g/
mi). Unless otherwise indicated in this section, the provisions of this
section apply to all three corporate fleet average standards, except
that the interim non-Tier 2 fleet average NOX standards do
not apply to a manufacturer whose U.S. LDV/T sales are 100% Tier 2 LDV/
Ts.
(b) Each manufacturer must comply with the applicable fleet average
NOX standard, or standards, on a sales weighted average
basis, at the end of each model year, using the procedure described in
this section.
(c)(1)(i) Each manufacturer must separately compute the sales
weighted averages of the individual NOX emission standards
to which it certified all its Tier 2 LDV/Ts, interim non-Tier 2 LDV/
LLDTs, and interim non-Tier 2 HLDTs of a given model year as described
in Sec. 86.1804(l)(2). The averages must be rounded to the same number
of decimal places as those of the standard plus one additional decimal
place.
(ii) For model years up to and including 2008, manufacturers must
compute separate NOX fleet averages for Tier 2 LDV/LLDTs and
Tier 2 HLDTs.
(2)(i) For model years up to and including 2008, if a manufacturer
certifies its entire U.S. sales of Tier 2 or interim non-Tier 2 LDV/
LLDTs or interim non-Tier 2 HLDTs, to full useful life bins having
NOX standards at or below the applicable fleet average
NOX standard, that manufacturer may elect not to compute a
fleet average NOX level for that category of vehicles. A
manufacturer making such an election must not generate NOX
credits for that category of vehicles for that model year.
(ii) For model years after 2008, if a manufacturer certifies its
entire U.S. sales of Tier 2 vehicles to full useful life bins having
NOX standards at or below 0.07 gpm, that manufacturer may
elect not to compute a fleet average NOX level for its Tier
2 vehicles. A manufacturer making such an election must not generate
NOX credits for that model year.
(d) The sales weighted NOX fleet averages determined
pursuant to paragraph (c) of this section must be compared with the
applicable fleet average standard; 0.07 g/mi for NOX for
Tier 2 LDV/Ts, 0.30 g/mi for NOX for interim non-Tier 2 LDV/
LLDTs, and 0.20 g/mi for NOX for interim non-Tier 2 HLDTs.
Each manufacturer must comply on an annual basis with the fleet average
standards by:
(1) showing that its sales weighted average NOX
emissions of its LDV/LLDTs, HLDTs or LDV/Ts, as applicable, are at or
below the applicable fleet average standard; or
(2) if the sales weighted average is not at or below the applicable
fleet average standard, obtaining and applying sufficient Tier 2
NOX credits, interim non-Tier 2 LDV/LLDT NOX
credits or interim non-Tier 2 HLDT NOX credits as permitted
under Sec. 86.1861-04 of this part. Manufacturers may not use NMOG
credits generated under the NLEV program in subpart R of this part to
meet any Tier 2 or interim non-Tier 2 NOX fleet average
standard. Tier 2 NOX credits may not be used to meet any
fleet average interim non-Tier 2 NOX standard. Interim non-
Tier 2 NOX credits may not be used to meet the Tier 2
corporate average NOX standard. Interim non-Tier 2
NOX credits from HLDTs may not be used to meet the fleet
average NOX standard for interim non-Tier 2 LDV/LLDTs, and
interim non-Tier 2 credits from LDV/LLDTs may not be used to meet the
fleet average NOX standard for interim non-Tier 2 HLDTs.
(e) Manufacturers that can not meet the requirements of paragraph
(d) of this section, may carry forward a credit deficit for one model
year, but may not carry a deficit forward in two consecutive model
years, except that manufacturers may carry forward a credit deficit for
interim non-Tier 2 LDV/LLDTs or interim non-Tier 2 HLDTs for more than
one year but must cover the LDV/LLDT credit deficit with interim non-
Tier 2 LDV/LLDT NOX credits by the end of model year 2006,
and any interim non-Tier 2 HLDT deficit with interim non-Tier 2 HLDT
NOX credits by the end of model year 2008. No deficit from
interim non-Tier 2 LDV/LLDTs of any model year may be carried forward
into the 2007 model year. No deficit from interim non-Tier 2 HLDTs may
be carried forward into the 2009 model year.
(f) Computing fleet average NOX emissions. (1)
Manufacturers must separately compute these fleet NOX
averages using the equation contained in paragraph (f)(2) of this
section:
(i) Their Tier 2 LDV/LLDT and Tier 2 HLDT fleet average
NOX emissions for each model year through 2008;
(ii) Their Tier 2 LDV/T fleet average NOX emissions for
each model year after 2008;
(iii) Their interim non-Tier 2 LDV/LDT fleet average NOX
emissions for each model year through 2006; and
(iv) Their interim non-Tier 2 HLDT fleet average NOX
emissions for each model year through 2008.
(2) The equation for computing fleet average NOX
emissions is as follows:
[GRAPHIC] [TIFF OMITTED] TP13MY99.011
Where:
N = The number of LDV/Ts sold in the applicable category that were
certified for each corresponding NOX emission bin. N must be
based on LDV/Ts counted to the point of first sale.
Emission standard = The individual full useful life NOX
emission standard for each bin for which the manufacturer had sales.
(3) The results of the calculation in paragraph (f)(2) of this
section must be rounded to one more decimal place than the number of
decimal places of the fleet average NOX standard.
(4) When approved in advance by the Administrator, the numerator in
the equation in paragraph (f)(2) of this section may be adjusted
downward by the product of the number of HEVs from each NOX
emission bin times a HEV NOX contribution factor determined
through mathematical estimation of the reduction in NOX
emissions over the
[[Page 26140]]
test procedure used to certify the HEVs. The reduction in
NOX emissions must be determined using good engineering
judgement and reflect the relation in actual full useful life
NOX emissions to the full useful life NOX
standards for the certification bin applicable to the LDV/Ts. The
Administrator may require that calculation of the HEV NOX
contribution factor include vehicle parameters such as vehicle weight,
portion of time during the test procedure that the HEV operates with
zero exhaust emissions, zero emission range, NOX emissions
from fuel-fired heaters and NOX emissions from electricity
production and storage.
(g) Additional credits for LDV/Ts certified to 150,000 mile useful
lives. A manufacturer may certify any Tier 2 test group to an optional
useful life of 150,000 miles. For any test group certified to the
optional 150,000 mile useful life, the manufacturer, when calculating
its fleet average by the procedure in paragraph (f) of this section,
may substitute an adjusted NOX standard for the applicable
NOX standards from the full useful life certification bin.
The adjusted standard must be equal to the applicable full useful life
NOX standard multiplied by 0.85 and rounded to the same
number of decimal places as the applicable full useful life
NOX standard.
41. Section 86.1861-04 is added to read as follows:
Sec. 86.1861-04 How do the Tier 2 and interim non-Tier 2
NOX averaging, banking and trading programs work?
(a) General provisions for Tier 2 credits and debits. (1) A
manufacturer whose Tier 2 fleet average NOX emissions
exceeds the 0.07 g/mile standard must complete the calculation at
paragraph (b) of this section to determine the size of its
NOX credit deficit. A manufacturer whose Tier 2 fleet
average NOX emissions is less than or equal to the 0.07 g/
mile standard must complete the calculation in paragraph (b) of this
section if it desires to generate NOX credits. In either
case, the number of credits or debits determined in the calculation at
paragraph (b) of this section must be rounded to the nearest whole
number.
(2) Credits generated according to the calculation in paragraph
(b)(1) of this section may be banked for future use or traded to
another manufacturer.
(3) NOX credits are not subject to any discount or
expiration date.
(4) If a manufacturer calculates that it has negative credits
(debits or a credit deficit) for a given model year, it must obtain
sufficient credits from LDV/Ts produced by itself or another
manufacturer in a model year no later than the one following the model
year for which it calculated the credit deficit. (Example: if a
manufacturer calculates that it has a NOX credit deficit for
the 2008 model year, it must obtain sufficient NOX credits
to offset that deficit from its own production or that of other
manufacturers' 2009 or earlier model year LDV/Ts.)
(5) A manufacturer must not have a NOX credit deficit
for any two consecutive model years. (Example: A manufacturer that has
a NOX credit deficit at the end of the 2008 model year from
its 2008 production that it can not offset with NOX credits
from 2008 or earlier model year LDV/Ts as allowed under this subpart,
must not also have a NOX credit deficit at the end of the
2009 model year.)
(6) Manufacturers may not use NOX credits generated in
the Tier 2 program to comply with the NLEV requirements of subpart R of
this part. Manufacturers may not use NMOG credits generated by vehicles
certified to the NLEV requirements of subpart R of this part to comply
with any NOX requirements of this subpart. Manufacturers may
not use NOX credits generated by interim non-Tier 2 LDV/Ts
to comply with the corporate average NOX standard for Tier 2
LDV/Ts. Manufacturers may not use NOX credits generated by
Tier 2 LDV/Ts to comply with any corporate average NOX
standard for interim non-Tier 2 LDV/Ts. Manufacturers may not use
NOX credits generated by interim non-Tier 2 LDV/LLDTs to
comply with the corporate average NOX standard for interim
non-Tier 2 HLDTs. Manufacturers may not use NOX credits
generated by interim non-Tier 2 HLDTs to comply with the corporate
average NOX standard for interim non-Tier 2 LDV/LLDTs.
(7) Manufacturers may bank Tier 2 NOX credits for later
use to meet the Tier 2 corporate average NOX standard or
trade them to another manufacturer. Credits are earned on the last day
of the model year. Before trading or carrying over credits to the next
model year, a manufacturer must apply available credits to offset any
credit deficit, where the deadline to offset that credit deficit has
not yet passed.
(8) There are no property rights associated with NOX
credits generated under this subpart. Credits are a limited
authorization to emit the designated amount of emissions. Nothing in
this part or any other provision of law should be construed to limit
EPA's authority to terminate or limit this authorization through a
rulemaking.
(b) Calculating Tier 2 credits and debits. (1) Manufacturers that
achieve fleet average NOX values from the calculation in
Sec. 86.1860-04(f), lower than the applicable fleet average
NOX standard, may generate credits for a given model year,
in units of vehicle-g/mi NOX, determined in this equation:
[(Fleet Average NOX Standard)-(Manufacturer's Fleet Average
NOX Value)] x (Total number of Tier 2 LDV/Ts Sold,
Including ZEVs and HEVs)
Where: The number of Tier 2 LDV/Ts sold is based on the point of first
sale and does not include vehicles sold in California or a state that
adopts, and has in effect for that model year, California emission
requirements.
(2) Where the result of the calculation in paragraph (b)(1) of this
section is a negative number, the manufacturer must generate negative
NOX credits (debits).
(c) Early banking. (1)(i) Manufacturers may certify LDV/LLDTs to
the Tier 2 FTP exhaust standards in Sec. 86.1811-04 for model years
2001-2003 in order to bank credits for use in the 2004 and later model
years. Such vehicles must also meet SFTP exhaust emission standards
specified in Sec. 86.1811-04.
(ii) Manufacturers may certify HLDTs to the Tier 2 FTP exhaust
standards in Sec. 86.1811-04 for model years 2004-2007 in order to bank
credits for use in the 2008 and later model years. Such vehicles must
also meet SFTP exhaust emission standards specified in Sec. 86.1811-04.
(iii) This process is referred to as ``early banking'' and the
resultant credits are referred to as ``early credits''. In order to
bank early credits, a manufacturer must comply with all exhaust
emission standards and requirements applicable to Tier 2 LDV/LLDTs and/
or HLDTs, as applicable, except as allowed under paragraph (c)(4) of
this section.
(2) To generate early credits, a manufacturer must separately
compute the sales weighted NOX average of the LDV/LLDTs and
HLDTs it certifies to the Tier 2 exhaust requirements and separately
compute credits using the calculations in this section and in
Sec. 86.1860-04.
(3) Early HLDT credits may not be applied to LDV/LLDTs before the
2009 model year. Early LDV/LLDT credits may not be applied to HLDTs
before the 2009 model year.
(4) Manufacturers may generate early Tier 2 credits from LDVs,
LDT1s and LDT2s that are certified to a full useful life of 100,000
miles, provided that the credits are prorated by a multiplicative
factor of 0.833 (the quotient of 100,000/120,000). Where a manufacturer
has
[[Page 26141]]
both 100,000 and 120,000 mile full useful life vehicles for which it
desires to bank early credits, it must compute the credits from each
group of vehicles separately and then add them together.
(5) Manufacturers may bank early credits for later use to meet the
Tier 2 corporate average NOX standard or trade them to
another manufacturer subject to the restriction in paragraph (c)(3) of
this section.
(6) Early credits may not be used to comply with the corporate
average NOX standards for interim non-Tier 2 LDV/Ts.
(d) Reporting and recordkeeping for Tier 2 NOX credits
including early credits. Each manufacturer must comply with the
reporting and recordkeeping requirements of Sec. 86.1862-04.
(e) Fleet average NOX debits. (1) Manufacturers must
offset any debits for a given model year by the fleet average
NOX reporting deadline for the model year following the
model year in which the debits were generated. Manufacturers may offset
debits by generating credits or acquiring credits generated by another
manufacturer.
(2)(i) Failure to meet the requirements of paragraphs (a) through
(d) of this section within the required timeframe for offsetting debits
will be considered to be a failure to satisfy the conditions upon which
the certificate(s) was issued and the individual noncomplying LDV/Ts
not covered by the certificate must be determined according to this
section.
(ii) If debits are not offset within the specified time period, the
number of LDV/Ts not meeting the fleet average NOX standards
and not covered by the certificate must be calculated by dividing the
total amount of debits for the model year by the fleet average
NOX standard applicable for the model year in which the
debits were first incurred.
(iii) EPA will determine the LDV/Ts for which the condition on the
certificate was not satisfied by designating LDV/Ts in those engine
families with the highest certification NOX emission values
first and continuing until a number of LDV/Ts equal to the calculated
number of noncomplying LDV/Ts as determined above is reached. If this
calculation determines that only a portion of LDV/Ts in an engine
family contribute to the debit situation, then EPA will designate
actual LDV/Ts in that engine family as not covered by the certificate,
starting with the last vehicle produced and counting backwards.
(3) If a manufacturer ceases production of LDV/Ts or is purchased
by, merges with or otherwise combines with another manufacturer, the
manufacturer continues to be responsible for offsetting any debits
outstanding within the required time period. Any failure to offset the
debits will be considered to be a violation of paragraph (e)(1) of this
section and may subject the manufacturer to an enforcement action for
sale of LDV/Ts not covered by a certificate, pursuant to paragraph
(e)(2) of this section.
(4) For purposes of calculating the statute of limitations, a
violation of the requirements of paragraph (e)(1) of this section, a
failure to satisfy the conditions upon which a certificate(s) was
issued and hence a sale of LDV/Ts not covered by the certificate, all
occur upon the expiration of the deadline for offsetting debits
specified in paragraph (e)(1) of this section.
(f) NOX credit transfers. (1) EPA may reject
NOX credit transfers if the involved manufacturers fail to
submit the credit transfer notification in the annual report.
(2) A manufacturer may not sell credits that are not available for
sale pursuant to the provisions in paragraphs (a)(2) and (a)(7) of this
section.
(3) In the event of a negative credit balance resulting from a
transaction, both the buyer and seller are liable, except in cases
involving fraud. EPA may void ab initio the certificates of conformity
of all engine families participating in such a trade.
(4)(i) If a manufacturer transfers a credit that it has not
generated pursuant to paragraph (b) of this section or acquired from
another party, the manufacturer will be considered to have generated a
debit in the model year that the manufacturer transferred the credit.
The manufacturer must offset such debits by the deadline for the annual
report for that same model year.
(ii) Failure to offset the debits within the required time period
will be considered a failure to satisfy the conditions upon which the
certificate(s) was issued and will be addressed pursuant to paragraph
(e) of this section.
(g) Interim non-Tier 2 NOX credits and debits; Interim
non-Tier 2 averaging, banking and trading. Interim non-Tier 2
NOX credits must be generated, calculated, tracked,
averaged, banked, traded, accounted for and reported upon separately
from Tier 2 credits. The provisions of this section applicable to Tier
2 NOX credits and debits and Tier 2 averaging banking and
trading are applicable to interim non-Tier 2 LDV/Ts with the following
exceptions:
(1) Provisions for early banking under paragraph (c) of this
section do not apply.
(2) The fleet average NOX standard used for calculating
credits is 0.30 grams per mile for interim non-Tier 2 LDV/LLDTs and
0.20 g/mi for interim non-Tier 2 HLDTs. (The interim non-Tier 2
NOX standard of 0.30 (or 0.20)
g/mi replaces 0.07 in the text and calculation in this section.)
(3) Interim non-Tier 2 NOX credit deficits may be
carried forward for more than one year, except that all credit deficits
must be reduced to zero for interim non-Tier 2 LDV/LLDTs by the end of
the 2006 model year, and by the end of the 2008 model year for interim
non-Tier 2 HLDTs.
42. Section 86.1862-04 is added to read as follows:
Sec. 86.1862-04 Maintenance of records and submittal of information
relevant to compliance with fleet average NOX standards.
(a) Maintenance of records. (1) The manufacturer producing any
light-duty vehicles and/or light-duty trucks subject to the provisions
in this subpart must establish, maintain, and retain the following
information in adequately organized and indexed records for each model
year:
(i) Model year;
(ii) Applicable fleet average NOX standard: 0.07g/mi for
Tier 2 LDV/Ts; 0.30 g/mi for interim non-Tier 2
LDV/LLDTs; or 0.20 g/mi for interim non-Tier 2 HLDTs;
(iii) Fleet average NOX value achieved; and
(iv) All values used in calculating the fleet average
NOX value achieved.
(2) The manufacturer producing any LDV/Ts subject to the provisions
in this subpart must establish, maintain, and retain the following
information in adequately organized and indexed records for each LDV/T
subject to this subpart:
(i) Model year;
(ii) Applicable fleet average NOX standard;
(iii) EPA test group;
(iv) Assembly plant;
(v) Vehicle identification number;
(vi) NOX standard to which the
LDV/T is certified; and
(vii) Information on the point of first sale, including the
purchaser, city, and state.
(3) The manufacturer must retain all records required to be
maintained under this section for a period of eight years from the due
date for the annual report. Records may be retained as hard copy or
reduced to microfilm, ADP diskettes, and so forth, depending on the
manufacturer's record retention procedure; provided, that in every case
all information contained in the hard copy is retained.
(4) Nothing in this section limits the Administrator's discretion
to require the
[[Page 26142]]
manufacturer to retain additional records or submit information not
specifically required by this section.
(5) Pursuant to a request made by the Administrator, the
manufacturer must submit to the Administrator the information that the
manufacturer is required to retain.
(6) EPA may void ab initio a certificate of conformity for a LDV/T
certified to emission standards as set forth or otherwise referenced in
this subpart for which the manufacturer fails to retain the records
required in this section or to provide such information to the
Administrator upon request.
(b) Reporting. (1) Each covered manufacturer must submit an annual
report. Except as provided in paragraph (b)(2) of this section, the
annual report must contain, for each applicable fleet average
NOX standard, the fleet average NOX value
achieved, all values required to calculate the NOX value,
the number of credits generated or debits incurred, and all the values
required to calculate the credits or debits. The annual report must
contain the resulting balance of credits or debits.
(2) When a manufacturer calculates compliance with the fleet
average NOX standard using the provisions in Sec. 86.1860-
04(c)(2), then the annual report must state that the manufacturer has
elected to use such provision and must contain the fleet average
NOX standard as the fleet average NOX value for
that model year.
(3) For each applicable fleet average NOX standard, the
annual report must also include documentation on all credit
transactions the manufacturer has engaged in since those included in
the last report. Information for each transaction must include:
(i) Name of credit provider;
(ii) Name of credit recipient;
(iii) Date the transfer occurred;
(iv) Quantity of credits transferred; and
(v) Model year in which the credits were earned.
(4) Unless a manufacturer reports the data required by this section
in the annual production report required under Sec. 86.1844-01(e) and
subsequent model year provisions, a manufacturer must submit an annual
report for each model year after production ends for all affected
vehicles and trucks produced by the manufacturer subject to the
provisions of this subpart and no later than May 1 of the calendar year
following the given model year. Annual reports must be submitted to:
Director, Vehicle Programs and Compliance Division, U.S. Environmental
Protection Agency, 2000 Traverwood, Ann Arbor, Michigan 48105.
(5) Failure by a manufacturer to submit the annual report in the
specified time period for all vehicles and trucks subject to the
provisions in this section is a violation of section 203(a)(1) of the
Clean Air Act for each subject vehicle and truck produced by that
manufacturer.
(6) If EPA or the manufacturer determines that a reporting error
occurred on an annual report previously submitted to EPA, the
manufacturer's credit or debit calculations will be recalculated. EPA
may void erroneous credits, unless transferred, and must adjust
erroneous debits. In the case of transferred erroneous credits, EPA
must adjust the manufacturer's credit or debit balance to reflect the
sale of such credits and any resulting generation of debits.
(c) Notice of opportunity for hearing. Any voiding of the
certificate under paragraph (a)(6) of this section will be made only
after EPA has offered the manufacturer concerned an opportunity for a
hearing conducted in accordance with Sec. 86.614 for light-duty
vehicles or Sec. 86.1014 for light-duty trucks and, if a manufacturer
requests such a hearing, will be made only after an initial decision by
the Presiding Officer.
[FR Doc. 99-11384 Filed 5-6-99; 11:03 am]
BILLING CODE 6560-50-P