[Federal Register Volume 78, Number 98 (Tuesday, May 21, 2013)]
[Proposed Rules]
[Pages 29815-30191]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-08500]



[[Page 29815]]

Vol. 78

Tuesday,

No. 98

May 21, 2013

Part II





Environmental Protection Agency





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40 CFR Parts 79, 80, 85 et al.





 Control of Air Pollution From Motor Vehicles: Tier 3 Motor Vehicle 
Emission and Fuel Standards; Proposed Rule

Federal Register / Vol. 78 , No. 98 / Tuesday, May 21, 2013 / 
Proposed Rules

[[Page 29816]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 79, 80, 85, 86, 600, 1036, 1037, 1065, and 1066

[EPA-HQ-OAR-2011-0135; FRL-9785-8]
RIN 2060-AQ86


Control of Air Pollution From Motor Vehicles: Tier 3 Motor 
Vehicle Emission and Fuel Standards

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed Rule.

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SUMMARY: This action would establish more stringent vehicle emissions 
standards and reduce the sulfur content of gasoline beginning in 2017, 
as part of a systems approach to addressing the impacts of motor 
vehicles and fuels on air quality and public health. The proposed 
gasoline sulfur standard would make emission control systems more 
effective for both existing and new vehicles, and would enable more 
stringent vehicle emissions standards. The proposed vehicle standards 
would reduce both tailpipe and evaporative emissions from passenger 
cars, light-duty trucks, medium-duty passenger vehicles, and some 
heavy-duty vehicles. This would result in significant reductions in 
pollutants such as ozone, particulate matter, and air toxics across the 
country and help state and local agencies in their efforts to attain 
and maintain health-based National Ambient Air Quality Standards. Motor 
vehicles are an important source of exposure to air pollution both 
regionally and near roads. These proposed vehicle standards are 
intended to harmonize with California's Low Emission Vehicle program, 
thus creating a federal vehicle emissions program that would allow 
automakers to sell the same vehicles in all 50 states. The proposed 
vehicle standards would be implemented over the same timeframe as the 
greenhouse gas/fuel efficiency standards for light-duty vehicles, as 
part of a comprehensive approach toward regulating emissions from motor 
vehicles.

DATES: Comments. Comments must be received on or before June 13, 2013.
    Public Hearing: The public hearings were held on April 24, 2013 in 
Philadelphia, PA and April 29, 2013 in Chicago, IL.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2011-0135, by one of the following methods:
     www.regulations.gov: Follow the on-line instructions for 
submitting comments.
     Email: A-and-R-Docket@epamail.epa.gov.
     Mail: Air and Radiation Docket and Information Center, 
Environmental Protection Agency, Mailcode: 2822T, 1200 Pennsylvania 
Ave. NW., Washington, DC 20460. In addition, please mail a copy of your 
comments on the information collection provisions to the Office of 
Information and Regulatory Affairs, Office of Management and Budget 
(OMB), Attn: Desk Officer for EPA, 725 17th St. NW., Washington, DC 
20503.
     Hand Delivery: EPA Docket Center, EPA West Building, Room 
3334, 1301 Constitution Ave. NW., Washington, DC 20460. Such deliveries 
are only accepted during the Docket's normal hours of operation, and 
special arrangements should be made for deliveries of boxed 
information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2011-0135. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
www.regulations.gov, including any personal information provided, 
unless the comment includes information claimed to be Confidential 
Business Information (CBI) or other information whose disclosure is 
restricted by statute. Do not submit information that you consider to 
be CBI or otherwise protected through www.regulations.gov or email. The 
www.regulations.gov Web site is an ``anonymous access'' system, which 
means EPA will not know your identity or contact information unless you 
provide it in the body of your comment. If you send an email comment 
directly to EPA without going through www.regulations.gov your email 
address will be automatically captured and included as part of the 
comment that is placed in the public docket and made available on the 
Internet. If you submit an electronic comment, EPA recommends that you 
include your name and other contact information in the body of your 
comment and with any disk or CD-ROM you submit. If EPA cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, EPA may not be able to consider your comment. Electronic 
files should avoid the use of special characters, any form of 
encryption, and be free of any defects or viruses. For additional 
information about EPA's public docket visit the EPA Docket Center 
homepage at http://www.epa.gov/epahome/dockets.htm. For additional 
instructions on submitting comments, go to Section I.B of the 
SUPPLEMENTARY INFORMATION section of this document.
    Docket: All documents in the docket are listed in the 
www.regulations.gov index. Although listed in the index, some 
information is not publicly available, e.g., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, will be publicly available only in hard copy. 
Publicly available docket materials are available either electronically 
in www.regulations.gov or in hard copy at the Air and Radiation Docket 
and Information Center, EPA/DC, EPA West, Room 3334, 1301 Constitution 
Ave. NW., Washington, DC. The Public Reading Room is open from 8:30 
a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The 
telephone number for the Public Reading Room is (202) 566-1744, and the 
telephone number for the Air Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: JoNell Iffland, Office of 
Transportation and Air Quality, Assessment and Standards Division 
(ASD), Environmental Protection Agency, 2000 Traverwood Drive, Ann 
Arbor, MI 48105; Telephone number: (734) 214-4454; Fax number: (734) 
214-4816; Email address: iffland.jonell@epa.gov.

SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

    Entities potentially affected by this proposed rule include 
gasoline refiners and importers, ethanol producers, gasoline additive 
manufacturers, transmix processors, terminals and fuel distributors, 
light-duty vehicle manufacturers, independent commercial importers, 
alternative fuel converters, and manufacturers and converters of 
vehicles between 8,500 and 14,000 lbs gross vehicle weight rating 
(GVWR).
    Potentially regulated categories include:

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                                                                                Examples of potentially affected
                 Category                   NAICS \a\ Code     SIC \b\ Code                 entities
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Industry.................................            324110              2911  Petroleum refineries (including
                                                                                importers).
Industry.................................            325110              2869  Butane manufacturers.

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Industry.................................            325193              2869  Ethyl alcohol manufacturing.
Industry.................................            211112              1321  Natural gas liquids extraction
                                                                                and fractionation.
Industry.................................            325199              2869  Other basic organic chemical
                                                                                manufacturing.
Industry.................................            486910              4613  Natural gas liquids pipelines,
                                                                                refined petroleum products
                                                                                pipelines.
Industry.................................            424690              5169  Chemical and allied products
                                                                                merchant wholesalers.
Industry.................................            325199              2869  Manufacturers of gasoline
                                                                                additives.
Industry.................................            424710              5171  Petroleum bulk stations and
                                                                                terminals. E51-83 manufacturers.
Industry.................................            493190              4226  Other warehousing and storage-
                                                                                bulk petroleum storage.
Industry.................................           336111,              3711  Light-duty vehicle and light-duty
                                                     336112                     truck manufacturers.
Industry.................................           811111,             7538,  Independent commercial importers.
                                                    811112,             7533,
                                                     811198              7534
Industry.................................           335312,             3621,  Alternative fuel converters.
                                                    336312,             3714,
                                                    336322,             3519,
                                                    336399,             3599,
                                                     811198              7534
Industry.................................           333618,             3699,  On-highway heavy-duty engine &
                                                    336120,             3711,   vehicle (>8,500 lbs GVWR)
                                                    336211,             3713,   manufacturers.
                                                     336312              3714
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\a\ North American Industry Classification System (NAICS).
\b\ Standard Industrial Classification (SIC).

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be regulated by this 
proposed action. This table lists the types of entities that EPA is now 
aware could potentially be regulated by this proposed action. Other 
types of entities not listed in the table could also be regulated. To 
determine whether your activities would be regulated by this proposed 
action, you should carefully examine the applicability criteria in 40 
CFR parts 79, 80, 85, 86, 1065, and 1066 and the referenced 
regulations. If you have any questions regarding the applicability of 
this proposed action to a particular entity, consult the person listed 
in the preceding FOR FURTHER INFORMATION CONTACT section.

B. What should I consider as I prepare my comments for EPA?

1. Submitting CBI
    Do not submit this information to EPA through www.regulations.gov 
or email. Clearly mark the part or all of the information that you 
claim to be CBI. For CBI information in a disk or CD ROM that you mail 
to EPA, mark the outside of the disk or CD ROM as CBI and then identify 
electronically within the disk or CD ROM the specific information that 
is claimed as CBI. In addition to one complete version of the comment 
that includes information claimed as CBI, a copy of the comment that 
does not contain the information claimed as CBI must be submitted for 
inclusion in the public docket. Information so marked will not be 
disclosed except in accordance with procedures set forth in 40 CFR part 
2.
2. Tips for Preparing Your Comments
    When submitting comments, remember to:
     Identify the rulemaking by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).
     Follow directions--The agency may ask you to respond to 
specific questions or organize comments by referencing a Code of 
Federal Regulations (CFR) part or section number.
     Explain why you agree or disagree, suggest alternatives, 
and substitute language for your requested changes.
     Describe any assumptions and provide any technical 
information and/or data that you used.
     If you estimate potential costs or burdens, explain how 
you arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
     Provide specific examples to illustrate your concerns, and 
suggest alternatives.
     Explain your views as clearly as possible, avoiding the 
use of profanity or personal threats.
     Make sure to submit your comments by the comment period 
deadline identified.

C. Did EPA conduct a peer review before issuing this notice?

    This regulatory action was supported by influential scientific 
information. Therefore, EPA conducted peer reviews in accordance with 
OMB's Final Information Quality Bulletin for Peer Review. Specifically, 
EPA conducted six peer reviews in connection with data supporting the 
proposed Tier 3 program, including new research on the effects of fuel 
properties changes (including sulfur effects) on exhaust and 
evaporative emissions of Tier 2 vehicles. The refinery-by-refinery cost 
model was also peer reviewed. The peer review reports are located in 
the docket for today's action, as well as the agency's response to the 
peer review comments.

Table of Contents

I. Executive Summary and Overview of Proposed Program
    A. Introduction
    B. What are the basic components of the proposed program?
    1. Proposed Standards for Light-Duty Vehicle, Light-Duty Truck, 
and Medium-Duty Passenger Vehicle Tailpipe Emissions
    2. Proposed Heavy-Duty Vehicle Tailpipe Emissions Standards
    3. Proposed Evaporative Emission Standards
    4. Onboard Diagnostic Systems (OBD)
    5. Emissions Test Fuel
    6. Fuel Standards
    7. Regulatory Streamlining and Technical Amendments
    C. What would the impacts of the proposed standards be?
II. Why is EPA making this proposal?
    A. Basis for Action Under the Clean Air Act
    1. Clean Air Act Section 202
    2. Clean Air Act Section 211
    B. Overview of Public Health Impacts of Motor Vehicles and Fuels
    1. Ozone
    2. Particulate Matter
    3. Nitrogen Oxides and Sulfur Oxides
    4. Carbon Monoxide

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    5. Mobile Source Air Toxics
    6. Near-Roadway Pollution
    7. Environmental Impacts of Motor Vehicles and Fuels
III. How would this proposal reduce emissions and air pollution?
    A. Effects of the Proposed Vehicle and Fuel Changes on Mobile 
Source Emissions
    1. How do vehicles produce the emissions addressed in this 
proposal?
    2. How would the proposed changes to gasoline sulfur content 
affect vehicle emissions?
    B. How would emissions be reduced?
    1. NOX
    2. VOC
    3. CO
    4. Direct PM2.5
    5. Air Toxics
    6. SO2
    7. Greenhouse Gases
    C. How would air pollution be reduced?
    1. Ozone
    2. Particulate Matter
    3. Nitrogen Dioxide
    4. Air Toxics
    5. Visibility
    6. Nitrogen and Sulfur Deposition
    7. Environmental Justice
IV. Proposed Vehicle Emissions Program
    A. Tailpipe Emission Standards for Light-Duty Vehicles, Light-
Duty Trucks, and Medium-Duty Passenger Vehicles
    1. Overview
    2. Summary of Proposed FTP and SFTP Tailpipe Standards
    3. Proposed FTP Standards
    4. Proposed SFTP Standards
    5. Feasibility of the Proposed NMOG+NOX and PM 
Standards
    6. Impact of Gasoline Sulfur Control on the Feasibility of the 
Proposed Vehicle Emission Standards
    7. Other Provisions
    B. Tailpipe Emissions Standards for Heavy-Duty Vehicles
    1. Overview
    2. HDV Exhaust Emissions Standards
    3. Supplemental FTP Standards for HDVs
    4. HDV Emissions Averaging, Banking, and Trading
    5. Feasibility of HDV Standards
    6. Other HDV Provisions
    C. Evaporative Emissions Standards and Onboard Diagnostic System 
Requirements
    1. Tier 3 Evaporative Emission Standards
    2. Evaporative Emissions Program Structure and Implementation 
Flexibilities
    3. Heavy-Duty Gasoline Vehicle (HDGV) Requirements
    4. Test Procedures and Certification Test Fuel
    5. Improvements to In-Use Performance of Fuel Vapor Control 
Systems
    6. Other Initiatives
    D. Emissions Test Fuel
    1. Proposed Changes to Gasoline Emissions Test Fuel
    2. Proposed Flexible Fuel Vehicle Test Fuel
    3. Proposed Implementation Schedule
    4. Potential Implications on CAFE Standards, GHG Standards, and 
Fuel Economy Labels
    5. Consideration of Nonroad, Motorcycle, and Heavy-Duty Engine 
Emissions Test Fuel
    6. Consideration of CNG and LPG Emissions Test Fuel
    E. Small-Business Provisions
    1. Lead Time for Exhaust and Evaporative Emission Standards
    2. Assigned Deterioration Factors
    3. Reduced Testing Burden
    4. Hardship
    5. Applicability of Flexibilities
    F. Compliance Provisions
    1. Exhaust Emission Test Procedures
    2. Reduced Test Burden
    3. Miscellaneous Provisions
    4. Manufacturer In-Use Verification Testing (IUVP) Requirements
V. Proposed Fuel Program
    A. Proposed Tier 3 Gasoline Sulfur Standards
    1. Overview
    2. Proposed Annual Average Sulfur Standard
    3. Per-Gallon Sulfur Caps
    B. Refinery Air Permitting Interactions
    1. Background on New Source Review Programs
    2. Background on NSR Experience Under the Tier 2 Fuel Program
    3. Changes in the NSR Permitting Program since Tier 2 Final Rule
    4. Assessment of Tier 3 Refinery Changes and Permitting 
Implications
    5. New Source Performance Standards and National Emission 
Standards for Hazardous Air Pollutants for Refineries
    6. Steps for Streamlining the Permitting Process
    C. Standards for Denatured Fuel Ethanol and Other Oxygenates
    D. Standards for Fuel Used in Flexible Fueled Vehicles
    1. Standards for E51-83
    2. Standards for Mid-Level Ethanol Blends (E16-50)
    E. Proposed Program Flexibilities
    1. Averaging, Banking, and Trading Program
    2. Regulatory Flexibility Provisions
    3. Provisions for Refiners Facing Hardship Situations
    F. Compliance Provisions
    1. Registration, Reporting, and Recordkeeping Requirements
    2. Sampling and Testing Requirements
    3. Small Refiner Compliance
    4. Small Volume Refinery Compliance
    5. Attest Engagements, Violations, and Penalties
    6. Special Fuel Provisions and Exemptions
    G. Statutory Authority for Proposed Tier 3 Fuel Controls
    1. Section 211(c)(1)(A)
    2. Section 211(c)(1)(B)
VI. Technical Amendments and Regulatory Streamlining
    A. Amendments to 40 CFR Parts 79 and 80
    1. Regulatory Streamlining
    2. Subpart I Technical Amendments
    3. Performance-Based Measurement Systems (PBMS)
    4. Downstream Pentane Blending
    B. Engine, Vehicle and Equipment Programs
    1. Fuel Economy Labeling
    2. Removing Obsolete Regulatory Text
    3. Motorcycle Driving Schedules
    4. Updating Reference Procedures
VII. What are the cost impacts of the proposed rule?
    A. Estimated Costs of the Vehicle Standards
    B. Estimated Costs of the Fuel Program
    1. Overview
    2. Methodology
    3. Summary of Costs Without ABT Program
    4. Summary of Costs With ABT Program
    5. Other Cost Estimates
    C. Summary of Proposed Program Costs
    D. Cost per Ton of Emissions Reduced
VIII. What are the estimated benefits of the proposed rule?
    A. Overview
    B. Quantified Human Health Impacts
    C. Monetized Benefits
    D. What are the limitations of the benefits analysis?
    E. Illustrative Analysis of Monetized Impacts Associated With 
the Proposal in 2017
IX. Alternatives Analysis
    A. Vehicle Emission Standards
    1. Shorter NMOG+NOX Standard Phase-in
    2. Longer NMOG+NOX Standards Phase-in Due to Early 
Credits
    3. Shorter PM Standards Phase-in
    4. NMOG+NOX Standards
    5. PM Standards
    B. Fuel Sulfur Standards
X. Economic Impact Analysis
    A. Introduction
    B. Vehicle Sales Impacts
    C. Impacts on Petroleum Refinery Sector Production
    D. Employment Impacts
    1. Employment Impacts in the Auto Sector
    2. Refinery Employment Impacts
XI. Public Participation
    A. How do I submit comments?
    B. How should I submit CBI to the Agency?
    C. What should I consider as I prepare my comments for EPA?
    D. Will there be a public hearing?
XII. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and 
Executive Order 13563: Improving Regulation and Regulatory Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    1. Overview
    2. Background
    3. Reason for Today's Proposed Rule
    4. Legal Basis for Agency Action
    5. Summary of Potentially Affected Small Entities
    6. Potential Reporting, Recordkeeping, and Compliance
    7. Related Federal Rules
    8. Summary of SBREFA Panel Process and Panel Outreach
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From 
Environmental Health Risks and Safety Risks
    H. Executive Order 13211: Actions Concerning Regulations That

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Significantly Affect Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
XIII. Statutory Provisions And Legal Authority

I. Executive Summary and Overview of Proposed Program

A. Introduction

    In this action, EPA is proposing a major program designed to reduce 
air pollution from passenger cars and trucks. This program includes new 
standards for both vehicle emissions and the sulfur content of 
gasoline, considering the vehicle and its fuel as an integrated system. 
We refer to this proposed program as the ``Tier 3'' vehicle and fuel 
standards.
    This proposed rule is part of a comprehensive approach to address 
the impacts of motor vehicles on air quality and public health. Over 
158 million Americans are currently experiencing unhealthy levels of 
air pollution, which are linked with respiratory and cardiovascular 
problems and other adverse health impacts that lead to increased 
medication use, hospital admissions, emergency department visits, and 
premature mortality.\1\ Motor vehicles are a particularly important 
source of exposure to air pollution, especially in urban areas. By 2014 
we project that in many nonattainment areas, cars and light trucks will 
contribute 30-45 percent of total nitrogen oxides (NOX) 
emissions, 20-25 percent of total volatile organic compound (VOC) 
emissions, and 5-10 percent of total direct particulate matter 
(PM2.5) emissions.\2\ These compounds form ozone, PM, and 
other air pollutants, whose health and environmental effects are 
described in more detail in Section II. Cars and light trucks also 
continue to be a significant contributor to air pollution directly near 
roads, with gasoline vehicles accounting for more than 50 percent of 
near-road concentrations of some criteria and toxic pollutants.\3\ More 
than 50 million people live, work, or go to school in close proximity 
to high-traffic roadways, and the average American spends more than one 
hour traveling along roads each day.4 5 Almost 90 percent of 
daily trips use personal vehicles.\6\
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    \1\ Data come from Summary Nonattainment Area Population 
Exposure Report, current as of December 14, 2012 at: http://www.epa.gov/oar/oaqps/greenbk/popexp.html and contained in Docket 
EPA-HQ-OAR-2011-0135.
    \2\ Mobile source contributions derived from inventories 
developed for the Final Cross-State Air Pollution Rule (76 FR 48208, 
August 8, 2011). For more information on these inventories see the 
``Technical Support Document (TSD) for the final Transport Rule, 
Docket ID No. EPA-HQ-OAR-2009-0491, Emissions Inventory Final Rule 
TSD,'' available on the web at ftp://ftp.epa.gov/EmisInventory/2005v4_2/transportrulefinal_eitsd_28jun2011.pdf.
    \3\ For example, see Fujita, E.M; Campbell, D.E.; Zielinska, B.; 
Arnott, W.P.; Chow, J.C. (2011) Concentrations of Air Toxics in 
Motor Vehicle-Dominated Environments. Health Effects Institute 
Research Report 156. Available at http://www.healtheffects.org
    \4\ U.S. Census Bureau (2011). Current Housing Reports, Series 
H150/09, American Housing Survey for the United States: 2009. U.S. 
Government Printing Office, Washington, DC. Available at http://www.census.gov/hhes/www/housing/ahs/ahs09/ahs09.html. (Note that 
this survey includes estimates of homes within 300 feet of highways 
with four or more lanes, railroads, and airports.)
    \5\ Drago, R. (2011). Secondary activities in the 2006 American 
Time Use Survey. U.S. Bureau of Labor Statistics Working Paper 446. 
Available at http://www.bls.gov.
    \6\ U.S. Department of Transportation, Bureau of Transportation 
Statistics (2003). National Household Travel Survey 2001 Highlights 
Report. Government Printing Office, Washington, DC. Available at 
http://www.bts.gov/publications/highlights_of_the_2001_national_household_travel_survey/.
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    The standards set forth in this proposed rule would significantly 
reduce levels of multiple air pollutants (such as ambient levels of 
ozone, PM, nitrogen dioxide (NO2), and mobile source air 
toxics (MSATs)) across the country, with immediate impacts expected due 
to the proposed sulfur control standards starting in 2017. These 
reductions would help state and local agencies in their effort to 
attain and maintain health-based National Ambient Air Quality Standards 
(NAAQS). Few other national strategies exist that would deliver the 
same magnitude of multi-pollutant reductions projected to result from 
the proposed Tier 3 standards. In the absence of additional controls, 
many areas will continue to have ambient ozone concentrations exceeding 
the NAAQS in the future. See Section III.C for more details.
    The Clean Air Act authorizes EPA to establish emissions standards 
for motor vehicles to address air pollution that may reasonably be 
anticipated to endanger public health or welfare (section 202). EPA 
also has authority to establish fuel controls to address such air 
pollution (section 211). These statutory authorities are described in 
Section II.A.
    The vehicle and gasoline sulfur standards we are proposing 
represent a ``systems approach'' to reducing vehicle-related exhaust 
and evaporative emissions by addressing the vehicle and fuel as a 
system. The systems approach enables emission reductions that are both 
technologically feasible and cost-effective beyond what would be 
possible looking at vehicle and fuel standards in isolation. We first 
applied such an approach with our Tier 2 vehicle/gasoline sulfur 
standards (finalized in 2000).\7\ We believe that a similar approach 
for the proposed Tier 3 standards would be a cost-effective way to 
achieve substantial additional emissions reductions.
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    \7\ 65 FR 6698 (February 10, 2000).
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    The proposed Tier 3 standards include new light- and heavy-duty 
vehicle emission standards for exhaust emissions of VOC (specifically, 
non-methane organic gases, or NMOG), NOX, and PM, as well as 
evaporative emissions standards. The proposed standards for light-duty 
vehicle, light-duty truck, and medium-duty passenger vehicle tailpipe 
emissions are an 80 percent reduction in fleet average 
NMOG+NOX compared to current standards, and a 70 percent 
reduction in per-vehicle PM standards. The proposed Tier 3 heavy-duty 
vehicle tailpipe emissions standards provide reductions in both 
NMOG+NOX and PM that are on the order of 60 percent, 
compared to current standards. The proposed evaporative emissions 
standards represent a 50 percent reduction from current standards.
    The vehicle emission standards, combined with the proposed 
reduction of gasoline sulfur content from the current 30 parts per 
million (ppm) average down to a 10-ppm average, would result in 
dramatic emissions reductions for NOX, VOC, direct 
PM2.5, carbon monoxide (CO) and air toxics. For example, in 
2030, when Tier 3 vehicles would make up the majority of the fleet as 
well as vehicle miles travelled, NOX and VOC emissions from 
on-highway vehicles would be reduced by about one quarter, and CO 
emissions would be reduced by about 30 percent. Emissions of many air 
toxics would also be reduced by 10 to nearly 40 percent of national 
emissions from on-highway vehicles. Reductions would continue beyond 
2030 as more of the fleet is composed of Tier 3 vehicles. For example, 
the Tier 3 program would reduce on-highway emissions of NOX 
and VOC nearly 40 percent by 2050, when Tier 3 vehicles would comprise 
almost the entire fleet.
    Gasoline vehicles depend to a great degree on catalytic converters 
to reduce levels of pollutants in their exhaust, including NMOG and 
NOX, as well as PM (specifically, the volatile hydrocarbon 
fraction), CO, and most air toxics. The catalytic converters become 
significantly less efficient when sulfur

[[Page 29820]]

from the gasoline is deposited (adsorbed) onto the precious metals that 
catalyze the reactions to reduce the emissions. The Tier 2 rulemaking 
required refiners to take steps to reduce sulfur levels in gasoline by 
approximately 90 percent, to an average of 30 ppm. As discussed in 
Section IV.A.6, subsequent research provides a compelling case that 
even this level of sulfur not only degrades the emission performance of 
vehicles on the road today, but also inhibits necessary further 
reductions in vehicle emissions performance to reach the proposed Tier 
3 standards. Thus, the proposed Tier 3 10-ppm average sulfur standard 
is significant in two ways: it enables vehicles designed to the 
proposed Tier 3 tailpipe exhaust standards to meet these standards in-
use for the duration of their useful life, and it facilitates immediate 
emission reductions from all the vehicles on the road at the time the 
sulfur controls are implemented. Lower sulfur gasoline also facilitates 
the development of lower-cost technologies to improve fuel economy. 
Sulfur in the fuel quickly causes the fuel economy benefits of lean-
burn technologies to disappear due to its effect on NOx adsorber 
operation requiring more fuel to be burned. We are not the first 
regulatory agency to recognize the need for lower-sulfur gasoline. 
Agencies in Europe and Japan have already imposed gasoline sulfur caps 
of 10 ppm, and the State of California is already averaging 10 ppm 
sulfur with a per gallon cap of 20 ppm. Other states are preempted by 
the Clean Air Act from adopting new fuel programs to meet air quality 
objectives. Consequently, they could not receive the air quality 
benefits of lower sulfur gasoline without federal action.
    This proposal is one aspect of a comprehensive national program 
regulating emissions from motor vehicles. EPA's recent final rule for 
reducing greenhouse gas (GHG) emissions from light-duty (LD) vehicles 
starting with model year (MY) 2017 (referred to here as the ``2017 LD 
GHG'' standards) is another aspect of this comprehensive program.\8\ 
The Tier 3 proposal addresses interactions with the 2017 LD GHG rule in 
a manner that aligns implementation of the two actions, to achieve 
significant criteria pollutant and GHG emissions reductions while 
providing regulatory certainty and compliance efficiency. As vehicle 
manufacturers introduce new vehicle platforms for compliance with the 
GHG standards, they will be able to design them for compliance with the 
Tier 3 standards at the same time. The proposed Tier 3 standards are 
also closely coordinated with California's Low Emission Vehicle (LEV 
III) program to create a vehicle emissions program that would allow 
automakers to sell the same vehicles in all 50 states. (In December 
2012 EPA approved a waiver of Clean Air Act preemption for the 
California Air Resources Board's (CARB's) LEV III program with 
compliance beginning in 2015. Ten states have adopted the LEV III 
program under Section 177 of the Clean Air Act.\9\) We have worked 
closely with individual vehicle manufacturers and their trade 
associations, who have emphasized the importance of a harmonized 
national program. Together, the Tier 3, 2017 LD GHG, and LEV III 
standards would maximize reductions in GHGs, criteria pollutants and 
air toxics from motor vehicles while streamlining programs and enabling 
manufacturers to design a single vehicle for nationwide sales, thus 
reducing their costs of compliance. In this way, the Tier 3 proposal 
responds to the May 21, 2010 Presidential Memorandum that requested 
that EPA develop a comprehensive approach toward regulating motor 
vehicles, including consideration of non-GHG emissions standards.\10\
---------------------------------------------------------------------------

    \8\ 77 FR 62623 (October 15, 2012).
    \9\ These states include Connecticut, Maryland, Maine, 
Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island, 
Washington, and Vermont.
    \10\ The Presidential Memorandum is found at: http://www.whitehouse.gov/the-press-office/presidential-memorandum-regarding-fuel-efficiency-standards.
---------------------------------------------------------------------------

    As part of the systems approach to this program, we are considering 
the future fuels on which vehicles will be operating. In particular, 
the renewable fuels mandate that was revised by the Energy Independence 
and Security Act (EISA) and is being implemented through the Renewable 
Fuel Standards program (RFS2)\11\ will result in significant amounts of 
ethanol-blended gasoline in the implementation timeframe of the 
proposed Tier 3 program. We are proposing to update the specifications 
of the certification test fuel with which vehicles demonstrate 
compliance with emissions standards, in order to better reflect the 
ethanol content and other properties of gasoline that will be in use.
---------------------------------------------------------------------------

    \11\ 75 FR 14670 (March 26, 2010).
---------------------------------------------------------------------------

    This section provides an overview of the vehicle- and fuel-related 
standards we are proposing as well as the impacts of the proposed 
standards. The public health issues and statutory requirements that 
have prompted this proposal are described in Section II, and our 
discussion of how the proposal would reduce emissions and air pollution 
is presented in Section III. Details of proposed standards and how they 
would be implemented can be found in Sections IV through VI. Sections 
VII through X contain our discussion of the proposed standards' 
technological feasibility and cost, benefits, alternatives and economic 
impacts.

B. What are the basic components of the proposed program?

    In the more than 10 years since EPA finalized the Tier 2 Vehicle 
Program, manufacturers of light-duty vehicles have continued to develop 
a wide range of improved technologies capable of reducing key exhaust 
emissions, especially VOC, NOX, and PM. The California LEV 
II program has been instrumental in the continuous technology 
improvements by requiring year after year reductions in the fleet 
average hydrocarbon levels, in addition to requiring the introduction 
of advanced exhaust and evaporative emission controls in partial zero 
emission vehicles (PZEVs). This progress in vehicle technology has made 
it possible for manufacturers to achieve emission reductions well 
beyond the requirements of the Tier 2 program if gasoline sulfur levels 
are lowered further.
    As a result, we are proposing new standards for exhaust emissions 
of NMOG, NOX, and PM, as well as evaporative emissions 
standards. These standards would phase in beginning with MY 2017. The 
proposed Tier 3 standards are very similar in structure to those in the 
existing Tier 2 program. As with the Tier 2 program, the proposed 
standards would apply to all light-duty vehicles (LDVs, or passenger 
cars), light-duty trucks (LDT1s, LDT2s, LDT3s, and LDT4s) and Medium-
Duty Passenger Vehicles (or MDPVs). We are also proposing separate but 
closely related standards for heavy-duty vehicles up to 14,000 lbs 
Gross Vehicle Weight Rating (GVWR). These vehicles were not included in 
Tier 2 but were made subject to new standards in a final rule that 
covered the broad heavy-duty sector (66 FR 5002, January 18, 2001). We 
have concluded that the proposed vehicle emissions standards, in 
conjunction with the reductions in fuel sulfur also proposed in this 
action, are feasible across the fleet in the proposed time frame.
    In the discussions of the various elements of our proposed program 
for light- and heavy-duty vehicles throughout this preamble, we 
describe how the provisions would be consistent with the California Air 
Resources Board (CARB) LEV III program. Auto

[[Page 29821]]

manufacturers have stressed to us the importance of their being able to 
design and produce a single fleet of vehicles in all 50 states that 
would comply with requirements under the Tier 3 program and the LEV III 
program, as well as greenhouse gas/Corporate Average Fuel Economy 
(CAFE) requirements in the same timeframe. Consistency among the 
federal and California programs means that special versions of vehicles 
with different emission control hardware and calibrations would not be 
necessary for different geographic areas. This would allow 
manufacturers to avoid the additional costs of parallel design, 
development, calibration, and manufacturing. Consistency among programs 
would also eliminate the need to supply aftermarket parts for repair of 
multiple versions of a vehicle. To that end, we worked closely with 
CARB and with the vehicle manufacturers, both with individual companies 
and with their trade associations, to align the two programs in most 
respects.
    We have also designed the proposed Tier 3 program to be implemented 
in the same timeframe as the federal and California GHG emissions and 
fuel economy standards for model years 2017-2025. We expect that in 
response to these programs, manufacturers will be developing entirely 
new powertrains for most of their vehicles. Because the Tier 3 
standards would phase in over the same timeframe, manufacturers would 
be in a position to simultaneously respond to all of these 
requirements.
1. Proposed Standards for Light-Duty Vehicle, Light-Duty Truck, and 
Medium-Duty Passenger Vehicle Tailpipe Emissions
    We are proposing a comprehensive program that would include new 
fleet-average standards for the sum of NMOG and NOX tailpipe 
emissions (presented as NMOG+NOX) and for PM.\12\ These 
proposed standards, when applied in conjunction with reduced gasoline 
sulfur content, would result in very significant improvements in 
vehicle emissions from the levels of the Tier 2 program. For these 
pollutants, we are proposing standards as measured on test procedures 
that represent a range of vehicle operation, including the Federal Test 
Procedure (or FTP, simulating typical driving) and the Supplemental 
Federal Test Procedure (or SFTP, a composite test simulating higher 
temperatures, higher speeds, and quicker accelerations). In addition to 
the standards, we are also proposing to extend the regulatory useful 
life period during which the standards apply and to make test fuel more 
representative of expected real-world fuel (see Section I.B.5 below).
---------------------------------------------------------------------------

    \12\ A discussion of the reasons for combining the two 
pollutants for this purpose is in Section IV.A.3.a below.
---------------------------------------------------------------------------

    As discussed in Section IV.A.6., the impact of gasoline sulfur 
poisoning on exhaust catalyst performance provides a compelling 
argument, particularly for larger vehicles and trucks, that these 
vehicle standards would be achievable only with a reduction of gasoline 
sulfur content from the current 30-ppm average down to a 10-ppm 
average. Sulfur is a well-known catalyst poison. The nature of sulfur's 
interactions with active catalytic materials is complex and varies with 
catalyst composition, exhaust gas composition and exhaust temperature. 
Thus, even if a manufacturer were able to certify a new vehicle to the 
proposed new stringent standards, the manufacturer's ability to 
maintain the emission performance of that vehicle in-use is greatly 
jeopardized if the vehicle is being operated on gasoline sulfur levels 
greater than 10 ppm. Vehicle manufacturers, both individually and 
through their trade associations, have emphasized that reduced gasoline 
sulfur would be required to meet the proposed 
standards.13 14 Due to the variation in actual vehicle 
operation, any amount of gasoline sulfur will deteriorate catalyst 
efficiency. However, we believe that a 10-ppm average sulfur level is 
sufficiently low to enable compliance with these proposed Tier 3 
vehicle standards, and as described below and in Section V, reducing 
sulfur levels further would cause sulfur control costs to quickly 
escalate.
---------------------------------------------------------------------------

    \13\ Letter to EPA Administrator Jackson, with white paper, from 
Alliance of Automobile Manufacturers, October 6, 2011.
    \14\ Global Automakers letter to EPA Administrator Jackson, 
October 21, 2011.
---------------------------------------------------------------------------

    The proposed FTP and SFTP NMOG+NOX standards would be 
fleet-average standards, meaning that a manufacturer would calculate 
the average emissions of the vehicles it sells in each model year and 
compare that average to the applicable standard for that model year. 
The manufacturer would certify each of its vehicles to a per-vehicle 
``bin'' standard (see Section IV.A.2) and sales-weight these values to 
calculate its fleet-average NMOG+NOX emissions for each 
model year. The proposed fleet average standards for 
NMOG+NOX evaluated over the FTP are summarized in Table I-1. 
The standards for light-duty vehicles would begin in MY 2017 at a level 
representing a 46 percent reduction from the current Tier 2 
requirements. (For vehicles over 6000 lbs GVWR, the standards would 
apply beginning in MY 2018). As shown, these proposed fleet-average 
standards would decline during the first several years of the program, 
becoming increasingly stringent until ultimately reaching an 81 percent 
reduction when the transition is complete. The proposed FTP 
NMOG+NOX program includes two separate sets of declining 
fleet-average standards, with LDVs and small light trucks (LDT1s) in 
one grouping and heavier light trucks (LDT2s, LDT3s, LDT4s) and MDPVs 
in a second grouping, that would converge at 30 milligram per mile (mg/
mi) in MY 2025 and later.\15\
---------------------------------------------------------------------------

    \15\ Alternatively, a manufacturer could choose to certify its 
entire fleet of passenger cars and light trucks to the 30 mg/mi 
level beginning in MY 2017 and continuing for all subsequent model 
years. A percent phase-in would apply. This would not be a fleet-
average standard.
---------------------------------------------------------------------------

    Manufacturers could also earn credits for fleet average 
NMOG+NOX levels below the applicable standard in any model 
year. Credits that were previously banked or obtained from other 
manufacturers could be used, or credits could be transferred to other 
manufacturers (see Section IV.A.7.a). Unused credits would expire after 
5 model years. Manufacturers would also be allowed to carry deficits in 
their credit balance for up to 3 model years.

[[Page 29822]]



                                       Table I-1--Proposed LDV, LDT, and MDPV Fleet Average NMOG+NOX FTP Standards
                                                                         [mg/mi]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                   Model year
                                                      --------------------------------------------------------------------------------------------------
                                                                                                                                                2025 and
                                                        2017 \a\     2018       2019       2020       2021       2022       2023       2024      later
--------------------------------------------------------------------------------------------------------------------------------------------------------
LDV/LDT1 \b\.........................................         86         79         72         65         58         51         44         37         30
LDT2,3,4 and MDPV....................................        101         92         83         74         65         56         47         38         30
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ For vehicles above 6000 lbs GVWR, the fleet average standards would apply beginning in MY 2018.
\b\ These proposed standards would apply for a 150,000 mile useful life. Manufacturers could choose to certify all of their LDVs and LDT1s to a useful
  life of 120,000 miles. If any of these families are certified to the shorter useful life, a proportionally lower numerical fleet-average standard
  would apply, calculated by multiplying the respective 150,000 mile standard by 0.85 and rounding to the nearest mg. See Section IV.A.7.b.

    Similarly, the proposed NMOG+NOX standards measured over 
the SFTP would be fleet-average standards, declining from MY 2017 until 
MY 2025, as shown in Table I-2. In this case, the same standards would 
apply to both lighter and heavier vehicles. In MY 2025, the SFTP 
NMOG+NOX standard would reach its final fleet average level 
of 50 mg/mi.

                                      Table I-2--Proposed LDV, LDT, and MDPV Fleet Average NMOG+NOX SFTP Standards
                                                                         [mg/mi]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                   Model year
                                                      --------------------------------------------------------------------------------------------------
                                                                                                                                                2025 and
                                                        2017 \a\     2018       2019       2020       2021       2022       2023       2024      later
--------------------------------------------------------------------------------------------------------------------------------------------------------
NMOG + NOX...........................................        103         97         90         83         77         70         63         57         50
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ For vehicles above 6000 lbs GVWR, the fleet average standards would apply beginning in MY 2018.

    We are also proposing PM standards as part of this Tier 3 program, 
both on the FTP and US06 cycles (US06 is a component of the SFTP test). 
Research has demonstrated that the level of PM from gasoline light-duty 
vehicles is more significant than previously thought.\16\ Although many 
vehicles today are performing at or near the levels of the proposed 
standards, the data indicate that improvements, especially in high-load 
fuel control and in the durability of engine components, are possible.
---------------------------------------------------------------------------

    \16\ Nam, E.; Fulper, C.; Warila, J.; Somers, J.; Michaels, H.; 
Baldauf, R.; Rykowski, R.; and Scarbro, C. (2008). Analysis of 
Particulate Matter Emissions from Light-Duty Gasoline Vehicles in 
Kansas City, EPA420-R-08-010. Assessment and Standards Division 
Office of Transportation and Air Quality U.S. Environmental 
Protection Agency Ann Arbor, MI, April 2008.
---------------------------------------------------------------------------

    Under typical driving, as simulated by the FTP, the PM emissions of 
most current-technology gasoline vehicles are fairly low at 
certification and in use, well below the Tier 2 p.m. standards. At the 
same time we see considerable variation in PM emissions among vehicles 
of various makes, models, and designs. As a result, we are proposing a 
new FTP PM standard that is set to ensure that all new vehicles perform 
at the level already being achieved by well-designed Tier 2 emission 
control technologies. The proposed PM standards would apply to each 
vehicle separately (i.e., not as a fleet average). Also, in contrast to 
the declining NMOG+NOX standards, the proposed PM standard 
on the FTP for certification testing is 3 mg/mi for all vehicles and 
for all model years. As for the NMOG+NOX standards, for 
vehicles over 6000 lbs GVWR, the FTP PM standard would apply beginning 
in MY 2018. Manufacturers could phase in their vehicle models as a 
percent of U.S. sales through MY 2022. Most vehicles are already 
performing at this stringent PM level, and the primary intent of the 
proposed standard is to bring all light-duty vehicles to the typical 
level of PM performance being demonstrated by the current light-duty 
fleet.
    The proposed program also includes a separate in-use FTP PM 
standard of 6 mg/mi for the testing of in-use vehicles that would apply 
during the percent phase-in period only. This in-use standard would 
address the uncertainties that accompany the introduction of new 
technologies, and then expire. Table I-3 presents the FTP certification 
and in-use PM standards and the phase-in percentages. The proposed 
standards represent a significant numerical reduction from the Tier 2 
p.m. emission standards of 10 mg/mi for light-duty vehicles.

                                Table I-3--Phase-In for Proposed FTP PM Standards
----------------------------------------------------------------------------------------------------------------
                                                                                                        2022 and
                                                 2017 \a\     2018       2019       2020       2021      later
----------------------------------------------------------------------------------------------------------------
Phase-In (percent of U.S. sales)..............         20         20         40         70        100        100
Certification Standard (mg/mi)................          3          3          3          3          3          3

[[Page 29823]]

 
In-Use Standard (mg/mi).......................          6          6          6          6          6          3
----------------------------------------------------------------------------------------------------------------
\a\ For vehicles above 6000 lbs GVWR, the proposed FTP PM standards would apply beginning in MY 2018.

    Finally, the proposed Tier 3 program includes certification PM 
standards evaluated over the SFTP (specifically the US06 component of 
the SFTP procedure) at a level of 10 mg/mi for lighter vehicles and 20 
mg/mi for heavier vehicles. PM levels over the SFTP are typically 
higher than the PM emitted over the FTP due to the increased load on 
the vehicle. Test data show that most current light-duty vehicles are 
already performing in the range of the proposed standard. As in the 
case of the FTP PM standards, the intent of the proposed standard is to 
bring the emission performance of all vehicles to that already being 
demonstrated by many vehicles in the current light-duty fleet.
    As with the FTP PM standard, we propose separate in-use US06 p.m. 
standards during the percent phase-in only, of 15 and 25 mg/mi for 
vehicles up to and above 6,000 lbs (lbs) GVWR, respectively. The US06 
p.m. standards would also phase in on the same schedule as the FTP PM 
standards, reaching 100 percent of each company's U.S. sales by MY 
2022.
2. Proposed Heavy-Duty Vehicle Tailpipe Emissions Standards
    As discussed in detail in Section IV.B, we are proposing Tier 3 
exhaust emissions standards for complete heavy-duty vehicles (HDVs) 
between 8,501 and 14,000 lb GVWR. Vehicles in this GVWR range are often 
referred to as Class 2b (8,501-10,000 lb) and Class 3 (10,001-14,000 
lb) vehicles, and are typically full-size pickup trucks and work vans. 
Most are built by companies with even larger light-duty truck markets, 
and as such they frequently share major design characteristics and 
potential emissions control technologies with their LDT counterparts. 
However, in contrast to the largely gasoline-fueled LDT fleet, roughly 
half of the HD pickup and van fleet in the U.S. is diesel-fueled, which 
is a consideration in setting emissions standards, as diesel engine 
emissions and control strategies differ from those of gasoline engines.
    The key elements of the proposed Tier 3 program for HDVs would 
parallel those proposed for passenger cars and LDTs, with adjustments 
in standards levels, emissions test requirements, and implementation 
schedules, appropriate to this sector. These key elements include a 
combined NMOG+NOX declining fleet average standard, new 
stringent PM standards phasing in on a separate schedule, adoption of a 
15 percent ethanol by volume (E15) certification test fuel for 
gasoline-fueled vehicles, extension of the regulatory useful life to 
150,000 miles or 15 years (whichever occurs first), and a new 
requirement to meet standards over an SFTP that would address real-
world driving modes not well-represented by the FTP cycle alone.
    We are proposing the separate Class 2b and Class 3 fleet average 
NMOG+NOX standards shown in Table I-4. The proposed 
standards would become more stringent in successive model years from 
2018 to 2022, with voluntary standards made available in 2016 and 2017, 
all of which would be set at levels that match those of California's 
LEV III program for these classes of vehicles. Each covered HDV sold by 
a manufacturer in each model year would contribute to this fleet 
average based on the mg/mi NMOG+NOX level of the emission 
level (``bin'') declared for it by the manufacturer. Manufacturers 
could also earn credits for fleet average NMOG+NOX levels 
below the standard in any model year. Tier 3 credits that were 
previously banked, obtained from other manufacturers, or transferred 
across the Class 2b/Class 3 categories could be used to help 
demonstrate compliance. Unused credits would expire after 5 model 
years. Manufacturers would also be allowed to carry deficits in their 
credit balance for up to 3 model years.

                                                Table I-4--Proposed HDV Fleet Average NMOG+NOX Standards
                                                                         [mg/mi]
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Voluntary
                                                                 Required program.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Model Year...................................       2016       2017       2018       2019       2020       2021  2022 and later.
Class 2b.....................................        333        310        278        253        228        203  178.
Class 3......................................        548        508        451        400        349        298  247.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We are proposing PM standards of 8 mg/mi and 10 mg/mi for Class 2b 
and Class 3 HDVs, respectively, phasing in as an increasing percentage 
of a manufacturer's sales per year. We are proposing the same phase-in 
schedule as proposed for the light-duty sector during model years 2018-
2019-2020-2021: 20-40-70-100 percent, respectively, and a more flexible 
but equivalent alternative PM phase-in is also being proposed. Tier 3 
HDVs would also be subject to more stringent CO and formaldehyde 
exhaust emissions standards.
    Finally, we are proposing first-ever SFTP standards for HDVs to 
ensure a robust overall control program that precludes high off-FTP 
cycle emissions by having vehicle designers consider them in their 
choice of compliance strategies. As for light-duty vehicles, we are 
proposing that SFTP compliance be based on a weighted composite of 
measured emissions from testing over the FTP cycle, the SC03 cycle, and 
an aggressive driving cycle, with the latter tailored to various HDV 
sub-categories: the US06 cycle for most HDVs, the highway portion of 
the US06 cycle for low power-to-weight Class 2b HDVs, and the LA-92 (or 
``Unified'') cycle for Class 3 HDVs. The proposed SFTP standards are 
the same as those adopted for California LEV III vehicles, and would 
apply to NMOG+NOX, PM, and CO emissions.
    Overall, we expect the Tier 3 program we are proposing for HDVs to 
result in

[[Page 29824]]

substantial reductions in harmful emissions from this large fleet of 
work trucks and vans. The final Tier 3 standards levels for 
NMOG+NOX and PM are on the order of 60 percent lower than 
the current stringent standards that took full effect in the 2009 model 
year.
3. Proposed Evaporative Emission Standards
    Gasoline vapor emissions from vehicle fuel systems occur when a 
vehicle is in operation, when it is parked, and when it is being 
refueled. These evaporative emissions, which occur on a daily basis 
from gasoline-powered vehicles, are primarily functions of temperature, 
fuel vapor pressure, and activity. EPA first instituted evaporative 
emission standards in the early 1970s to address emissions when 
vehicles are parked after being driven. These are commonly referred to 
as hot soak plus diurnal emissions. Over the subsequent years the test 
procedures have been modified and improved and the standards have 
become more numerically stringent. We have addressed emissions which 
arose from new fuel system designs by putting in place new requirements 
such as running loss emission standards and test procedure provisions 
to address permeation emissions. Subsequently standards were put in 
place to control refueling emissions from all classes of gasoline-
powered motor vehicles up to 10,000 lbs GVWR. Even though evaporative 
and refueling emission control systems have been in place for most of 
these vehicles for many years, they still contribute about 30-40 
percent of the summer on-highway mobile source hydrocarbon inventory. 
These fuel vapor emissions are ozone and PM precursors, and also 
contain air toxics such as benzene.
    To control evaporative emissions, EPA is proposing more stringent 
standards that would require covered vehicles to have essentially zero 
fuel vapor emissions in use. These include more stringent evaporative 
emissions standards, new test procedures, and a new fuel/evaporative 
system leak emission standard. The program also includes refueling 
emission standards for a portion of heavy-duty gasoline vehicles 
(HDGVs) over 10,000 lbs GVWR. EPA is proposing phase-in flexibilities 
as well as credit and allowance programs. The proposed standards, 
harmonized with California's ``zero evap'' standards, are designed to 
essentially allow for a use of common technology in vehicle models sold 
throughout the U.S. The level of the standard remains above zero to 
account for nonfuel background emissions from the vehicle hardware 
itself.
    Requirements to meet the Tier 3 evaporative emission regulations 
would phase-in over a six model year period. We are proposing two 
options for the 2017 model year, but after that the sales percentage 
requirements are 60 percent for MYs 2018 and 2019, 80 percent for model 
years 2020 and 2021, and 100 percent for model years 2022 and later. In 
Table I-5 we present the proposed evaporative diurnal plus hot soak 
emission standards by vehicle class. The standards are approximately a 
50 percent reduction from the existing standards. To enhance 
flexibility and reduce costs, EPA is proposing a program that would 
allow manufacturers to generate allowances through early certifications 
(basically before the 2017 model year) and to demonstrate compliance 
using averaging concepts. Manufacturers may comply on average within 
each of the four vehicle categories, but not across these categories. 
EPA is not proposing any changes to the existing light-duty running 
loss or refueling emission standards, with the exception of the 
certification test fuel requirement discussed in Section I.B.5 below.

           Table I-5--Proposed Evaporative Emission Standards
                                [g/test]
------------------------------------------------------------------------
                                                  Highest diurnal + hot
                                                  soak level  (over both
                 Vehicle class                   2-day and 3-day diurnal
                                                          tests)
------------------------------------------------------------------------
LDV, LDT1......................................                    0.300
LDT2...........................................                    0.400
LDT3, LDT4, MDPV...............................                    0.500
HDGVs..........................................                    0.600
------------------------------------------------------------------------

    EPA is proposing a new testing requirement referred to as the bleed 
emission test procedure to help ensure fuel vapor emissions are 
eliminated. Under this proposal, manufacturers would be required to 
measure diurnal emissions over the 2-day diurnal test procedure from 
just the fuel tank and the evaporative emission canister and comply 
with a 0.020 gram per test (g/test) standard for all LDVs, LDTs, and 
MDPVs, without averaging. The corresponding canister bleed test 
standard for HDGVs would be 0.030 g/test. The proposed Tier 3 
evaporative emission standards would be phased in over a period of six 
model years between MY 2017 and MY 2022, with the leak test phasing in 
beginning in 2018.
    Data from in-use evaporative emissions testing indicates that vapor 
leaks from vehicle fuel/evaporative systems are found in the fleet and 
that even very small leaks have the potential to make relatively 
significant contributions to the mobile source VOC inventory. To help 
address this issue, we are also proposing to add a new emission 
standard and test procedure to control vapor leaks from vehicle fuel 
and vapor control systems. The standard would prohibit leaks with a 
cumulative equivalent diameter of 0.02 inches or greater. We are 
proposing to add this simple and inexpensive test and emission standard 
to help ensure vehicles maintain zero fuel vapor emissions over their 
full useful life. New LDV, LDT, MDPV, and HDGV equal to or less than 
14.000 lbs GVWR meeting the proposed Tier 3 evaporative emission 
regulations would also be required to meet the leak emission standard 
beginning in the 2018 model year. The requirement to meet the leak 
emission standard would phase-in on the same percentage of sales 
schedule as the proposed Tier 3 evaporative emission standard. 
Manufacturers would comply with the leak emission standard during 
certification and in use. EPA is not proposing that the leak emission 
standard apply to HDGVs above 14,000 lbs GVWR.
    EPA is also proposing new refueling emission control requirements 
for all HDGVs equal to or less than 14,000 lbs GVWR (i.e., Class 2b/3 
HDGVs), starting in the 2018 model year. EPA is proposing to include 
these vehicles as part of the same basic implementation scheme used for 
LDVs and LDTs. The current refueling emission control requirements 
apply to complete Class 2b HDGVs, and EPA is proposing to extend those 
requirements to Class 3 HDGVs as well, since the fuel and evaporative 
control systems on these vehicles are very similar to those on their 
slightly lighter-weight Class 2b counterparts.
4. Onboard Diagnostic Systems (OBD)
    EPA and CARB both have OBD regulations applicable to the vehicle 
classes covered by the proposed Tier 3 emission standards. In the past 
the requirements have been very similar, so most manufacturers have met 
CARB OBD requirements and, as permitted in our regulations, EPA has 
generally accepted compliance with CARB's OBD requirements as 
satisfying EPA's OBD requirements. Over the past several years CARB has 
upgraded its requirements to help improve the effectiveness of OBD in 
ensuring good in-use exhaust and evaporative system emissions 
performance. We have reviewed these provisions and agree with CARB that 
these revisions will

[[Page 29825]]

help to improve in-use emissions performance, while at the same time 
harmonizing with the CARB program. Toward that end, we are proposing to 
adopt and incorporate by reference the current CARB OBD regulations 
effective for the 2017 MY. We are also proposing two specific additions 
to enhance the implementation of the leak emission standard. EPA would 
retain the provision that certifying with CARB's program would permit 
manufacturers to seek a separate EPA certificate on that basis.
5. Emissions Test Fuel
    In-use gasoline has changed considerably since EPA's test fuel 
specifications were first set and last revised. Gasoline sulfur and 
benzene have been reduced and, perhaps most importantly, gasoline 
containing 10 percent ethanol by volume (E10) has replaced clear 
gasoline (E0) across the country. This has had second-order effects on 
other gasoline properties. In-use fuel is projected to continue to 
change with the implementation of the RFS2 program (e.g., the potential 
expansion of the number of retailers that offer gasoline containing 15 
percent ethanol by volume (E15)) as well as today's proposed Tier 3 
gasoline sulfur program.
    As a result, we are proposing to update our federal emissions test 
fuel to better match today's in-use gasoline and also to be forward-
looking with respect to future ethanol and sulfur content. The new test 
fuel specifications would apply to new vehicle certification, assembly 
line, and in-use testing. EPA is also proposing changes consistent with 
CARB's LEV III emissions test fuel specifications. Key changes include:
     Moving away from ``Indolene'' (E0) to an E15 test fuel;
     Lowering octane to match regular-grade gasoline (except 
for premium-required vehicles);
     Adjusting distillation temperatures, aromatics, and 
olefins to better match today's in-use fuel and to be consistent with 
anticipated E15 composition; and
     Lowering the existing sulfur specification and setting a 
benzene specification to be consistent with proposed Tier 3 gasoline 
sulfur requirements and recent MSAT2 gasoline benzene requirements.\17\
---------------------------------------------------------------------------

    \17\ 72 FR 8434 (February 26, 2007).
---------------------------------------------------------------------------

    The proposed E15 emissions test fuel specifications are detailed in 
Section IV.D.1 as well as Sec.  1065.710 of the proposed regulations. 
For more information on how we arrived at the proposed fuel parameters 
and ASTM test methods, refer to Chapter 3 of the draft Regulatory 
Impact Analysis (RIA).
    In addition to proposing a new E15 emissions test fuel, we are also 
proposing for the first time detailed specifications for the E85 
emissions test fuel used for flexible fuel vehicle (FFV) certification, 
as discussed in Section IV.D.2.\18\ This is intended to avoid 
uncertainty and confusion in the certification of FFVs designed to 
operate on ethanol levels up to 83 percent. Furthermore, we are 
proposing to allow vehicle manufacturers to request approval for an 
alternative certification fuel such as a high-octane 30 percent ethanol 
by volume (E30) blend for vehicles they might design or optimize for 
use on such a fuel. This could help manufacturers that wish to raise 
compression ratios to improve vehicle efficiency, as a step toward 
complying with the 2017 and later light-duty greenhouse gas and CAFE 
standards (2017 LD GHG). This in turn could help provide a market 
incentive to increase ethanol use beyond E10 by overcoming the 
disincentive of lower fuel economy associated with increasing ethanol 
concentrations in fuel, and enhance the environmental performance of 
ethanol as a transportation fuel by using it to enable more fuel 
efficient engines.
---------------------------------------------------------------------------

    \18\ Flexible fuel vehicles are currently required to meet 
emissions certification requirements using both E0 and E85 test 
fuels. However, there are currently no detailed regulatory 
specifications regarding the composition of E85 test fuels.
---------------------------------------------------------------------------

    In addition to seeking comment on all aspects of the proposed new 
emission test fuel requirements, we also seek comment on whether there 
are other aspects of today's proposed standards that, if modified, 
might provide an incentive for, or remove obstacles to, the development 
of highly efficient vehicles optimized for use on higher level ethanol 
blends.
6. Fuel Standards
    Under the Tier 3 fuel program, we are proposing that gasoline and 
any ethanol-gasoline blend contain no more than 10 ppm sulfur on an 
annual average basis by January 1, 2017. Similar to the Tier 2 gasoline 
program, the proposed Tier 3 program would apply to gasoline in the 
U.S. and the U.S. territories of Puerto Rico and the Virgin Islands, 
excluding California. The proposed program would result in gasoline 
that contains, on average, two-thirds less sulfur than it does today. 
In addition, following discussions with numerous refiners and other 
segments of the fuel market (e.g., pipelines, terminals, marketers, 
ethanol industry representatives, transmix processors, additive 
manufacturers), we are proposing a Tier 3 fuel program that contains 
considerable flexibility to ease both initial and long-term 
implementation of the program. We are proposing an averaging, banking, 
and trading (ABT) program that would allow refiners and importers to 
spread out their investments through an early credit program and rely 
on ongoing nationwide averaging to meet the 10-ppm sulfur standard. We 
are also proposing a three-year delay for small refiners and ``small 
volume refineries'' processing less than or equal to 75,000 barrels of 
crude oil per day. As a result of the early credit program, even 
considering the proposed ABT program and flexibilities offered to small 
refiners and small volume refineries, we anticipate considerable 
reductions in gasoline sulfur levels prior to 2017, with final refinery 
control to the 10-ppm average occurring by January 1, 2020. For more on 
the proposed gasoline sulfur program flexibilities, refer to Section 
V.D.
    Under today's Tier 3 gasoline sulfur program, we are proposing to 
either maintain the current 80-ppm refinery gate and 95-ppm downstream 
per-gallon caps or lower them to 50 and 65 ppm, respectively. We also 
evaluated and are seeking comment on the potential of lowering the per-
gallon caps to as low as 20 and 25 ppm. There are advantages and 
disadvantages with each of the various sulfur cap options (explained in 
more detail in Section V.A.3), but under all scenarios, the stringency 
of the 10-ppm annual average standard would result in reduced gasoline 
sulfur levels nationwide. A summary of the proposed Tier 3 sulfur 
standards is provided in Table I-6.

[[Page 29826]]



                                                  Table I-6--Proposed Tier 3 Gasoline Sulfur Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Cap Option 1                                                Cap Option 2
Proposed Tier 3 gasoline sulfur ------------------------------------------------------------------------------------------------------------------------
           standards                         Limit                        Effective                       Limit                       Effective
--------------------------------------------------------------------------------------------------------------------------------------------------------
Refinery annual average          10 ppm.......................  January 1, 2017 \a\.........  10 ppm......................  January 1, 2017.\a\
 standard.
Refinery gate per-gallon cap...  80 ppm.......................  Already.....................  50 ppm......................  January 1, 2020.
Downstream per-gallon cap......  95 ppm.......................  Already.....................  65 ppm......................  March 1, 2020.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Effective January 1, 2020 for eligible small refiners and small volume refineries.

    We are proposing that manufacturers of gasoline additives that are 
used downstream of the refinery at less than 1 volume percent must 
limit the sulfur contribution to the finished gasoline from the use of 
their additive to less than 3 ppm when the additive is used at the 
maximum recommended treatment rate.
    The proposed vehicle emissions standards are fuel neutral (i.e. 
they are applicable regardless of the type of fuel that the vehicle is 
designed to use). The sulfur content of highway diesel fuel is already 
required to meet a 15ppm sulfur cap. Thus, no further action is needed 
to enable diesel fuel vehicles to meet the proposed emissions 
standards. There currently are no sulfur standards for the fuel used in 
compressed natural gas (CNG) and liquid propane gas (LPG) vehicles. We 
request comment on whether it is necessary for EPA to establish sulfur 
standards for CNG and LPG, and whether a 15 ppm sulfur cap similar to 
that established for highway diesel fuel would be appropriate. Comment 
is also requested on whether and how to address the sulfur contribution 
from odorants and other additives used in CNG and LPG.
    As the number of flex-fuel vehicles (FFVs) in the in-use fleet 
increases, it is now becoming increasingly important that all fuels 
used in FFVs, not just gasoline, meet fuel quality standards. A lack of 
clarity regarding the standards that apply to fuels used in FFVs could 
act to impede the further expansion of ethanol blended fuels with 
concentrations greater than 15 volume percent, which is important to 
satisfying the requirements of the RFS2 program. For these reasons, we 
believe it is important that our gasoline quality standards for not 
only sulfur, but also benzene, RVP, detergency, and chemical 
composition (i.e., contains only carbon, hydrogen, oxygen, nitrogen, 
and sulfur) apply to any fuel used in an FFV. At the same time, it is 
not necessarily clear how we should implement such standards within the 
context of our existing regulations as these fuels tend to be produced 
downstream of the petroleum refinery. For this reason we are seeking 
comment on both the need to extend our gasoline standards to all 
gasoline-ethanol blends, as well as the appropriate regulatory 
mechanisms for doing so.
7. Regulatory Streamlining and Technical Amendments
    We are proposing and requesting comment in this action on a number 
of items to help streamline the in-use fuels regulations at 40 CFR part 
80. The majority of items involve clarifying vague or inconsistent 
language, removal or updating of outdated provisions, and decrease in 
frequency and/or volume of reporting burden where data are no longer 
needed or are redundant with other EPA fuels programs. In general, we 
believe that these changes would reduce burden on industry and allow us 
to achieve the standards and resulting environmental benefits as early 
as possible with no expected loss in environmental control. In some 
cases, these regulatory streamlining items are non-substantive 
amendments that correct minor errors or inconsistencies in the 
regulations.
    The regulatory streamlining items that we are proposing for the in-
use fuels regulations are changes that we believe are straightforward 
and should be made quickly. In addition, there are a number of items 
that we believe need further consideration and discussion on which we 
are seeking comment.
    The proposal also includes a variety of technical amendments to 
certification-related requirements for engine and vehicle emission 
standards. We are proposing to revise the fuel economy labeling 
requirements to correspond to the new Tier 3 standards. We are also 
proposing to remove obsolete regulatory text and make several minor 
corrections and clarifications.
    Please refer to Section VI for a complete discussion of technical 
amendments and regulatory streamlining provisions and issues.

C. What would the impacts of the proposed standards be?

    The proposed Tier 3 vehicle and fuel standards together would 
reduce dramatically emissions of NOX, VOC, PM2.5, 
and air toxics. The gasoline sulfur standards, which would take effect 
in 2017, would provide large immediate reductions in emissions from 
existing gasoline vehicles and engines. NOX emissions would 
be reduced by about 284,000 tons, or about 8 percent of emissions from 
on-highway vehicles, in 2017 alone. The emission reductions would 
increase over time as newer vehicles become a larger percentage of the 
fleet. In 2030, when 80 percent of the light-duty fleet (and 90 percent 
of the vehicle miles travelled) consists of Tier 3 vehicles, we expect 
the NOX and VOC emissions to be reduced by about 525,000 
tons and 226,000 tons, respectively, or one quarter of emissions from 
on-highway vehicles compared to their 2030 levels without the Tier 3 
program. Emissions of CO would decrease by almost 6 million tons, or 30 
percent of emissions from on-highway vehicles. Emissions of many air 
toxics would also be reduced, including benzene, 1,3-butadiene, 
acetaldehyde, formaldehyde, acrolein and ethanol, with reductions 
ranging from 10 to nearly 40 percent of national emissions from on-
highway vehicles. We expect these reductions to continue beyond 2030 as 
more of the fleet continues to turn over to Tier 3 vehicles; for 
example, by 2050, when nearly all of the fleet would have turned over 
to Tier 3 standards, we estimate the Tier 3 program would reduce on-
highway emissions of NOX and VOC nearly 40 percent from the 
level of emissions projected without Tier 3 controls.\19\
---------------------------------------------------------------------------

    \19\ To estimate the benefits of the proposed Tier 3 rule, we 
perfomed air quality modeling for the year 2030.
---------------------------------------------------------------------------

    These reductions in emissions of NOX, VOC, 
PM2.5 and air toxics from the proposed Tier 3 standards are 
projected to lead to significant decreases in ambient concentrations of 
ozone, PM2.5 and air toxics (including notable nationwide 
reductions in benzene concentrations) by 2030, and would immediately 
reduce ozone in 2017 when the proposed sulfur controls take effect. 
Additional information on the emission and air quality impacts of the 
proposed Tier 3 program is presented in Sections III.B and C.

[[Page 29827]]

    Exposure to ambient concentrations of ozone, PM2.5, and 
air toxics is linked to adverse human health impacts such as premature 
deaths as well as other important public health and environmental 
effects (see Section II.B). The proposed Tier 3 standards would reduce 
these adverse impacts and yield significant benefits, including those 
we can monetize and those we are unable to quantify. We estimate that 
by 2030, the annual emission reductions of the Tier 3 standards would 
annually prevent between 670 and 1,700 PM-related premature deaths, 
between 160 and 710 ozone-related premature deaths, 81,000 work days 
lost, and approximately 1.4 million minor restricted-activity days. The 
estimated annual monetized health benefits of the proposed Tier 3 
standards in 2030 (2010$) would be between $8.0 and $23 billion, 
assuming a 3-percent discount rate (or between $7.4 billion and $21 
billion assuming a 7-percent discount rate). \20\ The proposed fuel 
standards are projected to cost on average less than one cent per 
gallon of gasoline, and the proposed light-duty vehicle standards would 
have an average cost that increases in proportion to the increase in 
stringency from $50 per vehicle in 2017 to $134 per vehicle when the 
standards are fully phased in 2025. The annual cost of the overall 
program in 2030 would be approximately $3.4 billion.\21\ The 2030 
benefits are 2 to 7 times the costs of the program.
---------------------------------------------------------------------------

    \20\ These benefits estimates have been adjusted to remove 
benefits of the Tier 3 program in California. The Tier 3 proposal's 
analysis assumed emissions reductions and resulting benefits would 
occur nationwide. California was recently granted a Clean Air Act 
waiver of preemption for the LEV III vehicle program, and some other 
states have adopted it. The Tier 3 final rule analysis will account 
for those emission reductions that will occur even in the absence of 
Tier 3 vehicle standards, for all states that have adopted LEV III. 
See Section VIII of the preamble for more information on the 
benefits associated with the Tier 3 program.
    \21\ Costs include estimates for the proposed Tier 3 standards 
in all states except California.
---------------------------------------------------------------------------

    The benefits in Table I-7 include all of the human health impacts 
we are able to quantify and monetize at this time. However, the full 
complement of human health and welfare effects associated with PM, 
ozone and air toxics remain unquantified because of current limitations 
in methods and/or available data. As a result, the health benefits 
quantified in this section are likely underestimates of the total 
benefits attributable to the proposed standards. See Sections VII and 
VIII for detailed descriptions of the costs and benefits of this 
proposal.

   Table I-7--Summary of Annual Benefits and Costs Associated With the
                         Proposed Tier 3 Program
                          [Billions, 2010$] \a\
------------------------------------------------------------------------
                       Description                             2030
------------------------------------------------------------------------
Vehicle Program Costs...................................            $2.1
Fuels Program Costs.....................................             1.3
Total Estimated Costs \b\...............................             3.4
Total Estimated Health Benefits c d e f g...............  ..............
    3 percent discount rate.............................        $8.0-$23
    7 percent discount rate.............................          7.4-21
Annual Net Benefits (Total Benefits--Total Costs):......  ..............
    3 percent discount rate.............................          4.6-20
    7 percent discount rate.............................          4.0-18
------------------------------------------------------------------------
\a\ All estimates represent annual benefits and costs anticipated for
  the year 2030. Totals are rounded to two significant digits and may
  not sum due to rounding.
\b\ The calculation of annual costs does not require amortization of
  costs over time. Therefore, the estimates of annual cost do not
  include a discount rate or rate of return assumption (see Section VII
  of the preamble for more information on vehicle and fuel costs). The
  program costs include the costs associated with the Tier 3 vehicle and
  fuel standards in all states except California.
\c\ The benefits presented in this table have been adjusted to remove
  benefits of the Tier 3 program in California.
\d\ Total includes ozone and PM2.5 benefits. Range was developed by
  adding the estimate from the Bell et al., 2004 ozone premature
  mortality function to PM2.5-related premature mortality derived from
  the American Cancer Society cohort study (Pope et al., 2002) for the
  low estimate and ozone premature mortality derived from the Levy et
  al., 2005 study to PM2.5-related premature mortality derived from the
  Six-Cities (Laden et al., 2006) study for the high estimate.
\e\ Annual benefits analysis results reflect the use of a 3 percent and
  7 percent discount rate in the valuation of premature mortality and
  nonfatal myocardial infarctions, consistent with EPA and OMB
  guidelines for preparing economic analyses.
\f\ Valuation of premature mortality based on long-term PM exposure
  assumes discounting over the SAB recommended 20-year segmented lag
  structure described in the Regulatory Impact Analysis for the 2006 PM
  National Ambient Air Quality Standards (September, 2006).
\g\ Not all possible benefits are quantified and monetized in this
  analysis; the total monetized benefits presented here may therefore be
  underestimated. Potential benefit categories that have not been
  quantified and monetized, due to current limitations in methods and/or
  data availability, are listed in Table VIII-2. For example, we have
  not quantified a number of known or suspected health and welfare
  effects linked with reductions in ozone and PM (e.g., reductions in
  heart rate variability, reduced material damage to structures and
  cultural monuments, and reduced eutrophication in coastal areas). We
  are also unable to quantify health and welfare benefits associated
  with reductions in air toxics.

II. Why is EPA making this proposal?

    The Clean Air Act authorizes EPA to establish emissions standards 
for motor vehicles to address air pollution that may reasonably be 
anticipated to endanger public health or welfare. EPA also has 
authority to establish fuel controls to address such air pollution. 
These statutory requirements are described in Section II.A.
    Emissions from motor vehicles and their fuels contribute to ambient 
levels of ozone, PM, NO2, sulfur dioxide (SO2) 
and CO, which are all pollutants for which EPA has established health-
based NAAQS. These pollutants are linked with respiratory and/or 
cardiovascular problems and other adverse health impacts leading to 
increased medication use, hospital admissions, emergency department 
visits, and premature mortality. Over 158 million people currently live 
in areas designated nonattainment for one or more of the current 
NAAQS.\22\
---------------------------------------------------------------------------

    \22\ Data come from Summary Nonattainment Area Population 
Exposure Report, current as of December 14, 2012 at: http://www.epa.gov/oar/oaqps/greenbk/popexp.html and contained in Docket 
EPA-HQ-OAR-2011-0135.
---------------------------------------------------------------------------

    Motor vehicles also emit air toxics, and the majority of Americans 
continue to be exposed to ambient concentrations of air toxics at 
levels which have the potential to cause adverse health effects, 
including cancer, immune system damage, and neurological, reproductive, 
developmental, respiratory, and other

[[Page 29828]]

health problems.\23\ A more detailed discussion of the health and 
environmental effects of these pollutants is included in Section II.B.
---------------------------------------------------------------------------

    \23\ U.S. EPA. (2011) Summary of Results for the 2005 National-
Scale Assessment. www.epa.gov/ttn/atw/nata2005/05pdf/sum_results.pdf.
---------------------------------------------------------------------------

    Cars and light trucks also continue to be a significant contributor 
to air pollution directly near roads, with gasoline vehicles accounting 
for more than 50 percent of near-road concentrations of some criteria 
and toxic pollutants.\24\ More than 50 million people live, work, or go 
to school in close proximity to high-traffic roadways, and the average 
American spends more than one hour traveling each day, with nearly 90 
percent of daily trips occurring by personal 
vehicle.25 26 27 Exposure to traffic-related pollutants has 
been linked with adverse health impacts such as respiratory problems 
(particularly in asthmatic children) and cardiovascular problems.
---------------------------------------------------------------------------

    \24\ For example, see Fujita, E.M; Campbell, D.E.; Zielinska, 
B.; Arnott, W.P.; Chow, J.C. (2011) Concentrations of Air Toxics in 
Motor Vehicle-Dominated Environments. Health Effects Institute 
Research Report 156. Available at http://www.healtheffects.org.
    \25\ U.S. Census Bureau (2011). Current Housing Reports, Series 
H150/09, American Housing Survey for the United States: 2009. U.S. 
Government Printing Office, Washington, DC. Available at http://www.census.gov/hhes/www/housing/ahs/ahs09/ahs09.html.
    \26\ Drago, R.(2011). Secondary activities in the 2006 American 
Time Use Survey. U.S. Bureau of Labor Statistics Working Paper 446. 
Available at http://www.bls.gov.
    \27\ U.S. Department of Transportation, Bureau of Transportation 
Statistics. (2003) National Household Travel Survey 2001 Highlights 
Report. Government Printing Office, Washington, DC. Available at 
http://www.bts.gov/publications/highlights_of_the_2001_national_household_travel_survey/.
---------------------------------------------------------------------------

    In the absence of additional controls such as Tier 3 standards, 
many areas will continue to have ambient ozone and PM2.5 
concentrations exceeding the NAAQS in the future. States and local 
areas are required to adopt control measures to attain the NAAQS and, 
once attained, to demonstrate that control measures are in place 
sufficient to maintain the NAAQS for ten years (and eight years later, 
a similar demonstration is required for another ten-year period). The 
proposed Tier 3 standards would be a critical part of areas' strategies 
to attain and maintain the standards. Maintaining the standards has 
been challenging in the past, particularly for areas where high 
population growth rates lead to significant annual increases in vehicle 
trips and vehicle miles traveled. Our air quality modeling for this 
proposal, which is described in more detail in Section III.C, projects 
that in 2017 a significant number of counties outside CA will be within 
10 percent of the 2008 ozone NAAQS, in the absence of additional 
controls. These counties in particular would benefit from the proposed 
Tier 3 standards as they work to ensure long-term maintenance of the 
NAAQS.
    Section III provides more detail on how this proposal would reduce 
motor vehicle emissions and ambient levels of pollution. The proposed 
rule would meaningfully reduce ozone concentrations as early as 2017 
(the first year of the program), and even more significantly in 2030. 
The reductions are of significant enough magnitude to bring ozone 
levels in some counties from above the standard to below the standard, 
even without any additional controls. We also project that the Tier 3 
standards would reduce ambient PM2.5 concentrations.
    Without this proposal to reduce nationwide motor vehicle emissions, 
areas would have to adopt other measures to reduce emissions from other 
sources under their state or local authority. Few other measures exist 
for providing multi-pollutant reductions of the same magnitude and 
cost-effectiveness as those expected from the proposed Tier 3 
standards. Furthermore, states outside California do not have the 
authority to lower the sulfur in gasoline, which is needed to 
immediately reduce emissions from the existing fleet and also enable 
new vehicles to meet the proposed Tier 3 emissions standards throughout 
their useful life.
    The reductions in ambient ozone and PM2.5 that would 
result from the proposed Tier 3 standards would provide significant 
health benefits. By 2030, the standards would annually prevent between 
670 and 1,700 PM-related premature deaths, between 160 and 710 ozone-
related premature deaths, 81,000 work days lost, and approximately 1.4 
million minor restricted-activity days (see Section VIII for more 
details). This proposal would also reduce air toxics; for example, we 
project that in 2030, the proposal would decrease ambient benzene 
concentrations by 10-25 percent in some urban areas. Furthermore, the 
proposed Tier 3 standards would reduce traffic-associated pollution 
near major roads. EPA is proposing Tier 3 vehicle and fuel standards as 
part of a comprehensive nationwide program for regulating all types of 
air pollution from motor vehicles. EPA recently finalized standards to 
reduce GHG emissions from light-duty vehicles, starting with model year 
2017.\28\ The Tier 3 standards in this proposal, which address non-
GHGs, would be implemented on the same timeframe, thus allowing 
manufacturers to optimize their vehicle redesigns over both sets of 
standards. Furthermore, the Tier 3 vehicle and fuel standards are also 
closely aligned with California's LEV III program, in such a way that 
manufacturers could design a single vehicle for nationwide sales. This 
reduces the cost of compliance for auto manufacturers.
---------------------------------------------------------------------------

    \28\ 77 FR 62623 (October 15, 2012).
---------------------------------------------------------------------------

    This Tier 3 proposal responds to the President's request in his May 
2010 memorandum for EPA to review the adequacy of its existing non-GHG 
standards for new motor vehicles and fuels, and to promulgate new 
standards, if necessary, as part of a comprehensive approach to 
regulating motor vehicles.\29\ Based on our review, we have concluded 
that improved vehicle technology, combined with lower sulfur gasoline, 
make it feasible and cost-effective to reduce emissions well below the 
current Tier 2 levels. These emission reductions are necessary to 
reduce air pollution that is (and projected to continue to be) at 
levels that endanger public health and welfare.
---------------------------------------------------------------------------

    \29\ The Presidential Memorandum is found at: http://www.whitehouse.gov/the-press-office/presidential-memorandum-regarding-fuel-efficiency-standards.
---------------------------------------------------------------------------

A. Basis for Action Under the Clean Air Act

1. Clean Air Act Section 202
    We are proposing to set motor vehicle emission standards under the 
authority of section 202 of the Clean Air Act. Section 202(a) provides 
EPA with general authority to prescribe vehicle standards, subject to 
any specific limitations elsewhere in the Act. EPA is also setting 
standards for larger light-duty trucks and MDPVs under the general 
authority of section 202(a)(1) and under section 202(a)(3), which 
requires that standards applicable to emissions of hydrocarbons, 
NOX, CO and PM from heavy-duty vehicles \30\ 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. In addition, section 202(k) provides EPA with 
authority to issue and revise regulations applicable to evaporative 
emissions of hydrocarbons from all gasoline-fueled motor vehicles 
during: (1) Operation, and (2) over 2 or more days of nonuse;

[[Page 29829]]

under ozone-prone summertime conditions. Regulations under section 
202(k) shall take effect as expeditiously as possible and shall require 
the greatest degree of emission reduction achievable by means 
reasonably expected to be available for production during any model 
year to which the regulations apply, giving appropriate consideration 
to fuel volatility, and to cost, energy, and safety factors associated 
with the application of the appropriate technology. Further, section 
206 and in particular section 206(d) of the Clean Air Act authorizes 
EPA to establish methods and procedures for testing whether a motor 
vehicle or motor vehicle engine conforms with section 202 requirements.
---------------------------------------------------------------------------

    \30\ LDTs that have gross vehicle weight ratings above 6000 lbs 
are considered ``heavy-duty vehicles'' under the CAA. See section 
202(b)(3)(C). For regulatory purposes, we refer to those LDTs at or 
below 8500 lbs GVWR as ``heavy light-duty trucks'' made up of LDT3s 
and LDT4s.
---------------------------------------------------------------------------

2. Clean Air Act Section 211
    We are proposing to adopt gasoline sulfur controls pursuant to our 
authority under section 211(c)(1) of the CAA. This section allows EPA 
to establish 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 impair to a significant degree the performance of any 
emissions control device or system which is either in general use or 
which the Administrator finds has been developed to a point where in a 
reasonable time it will be in general use were the fuel control to be 
adopted. We are proposing gasoline sulfur controls based on both of 
these criteria. Under the first criterion, we believe that gasoline 
with current levels of sulfur contributes to ambient levels of air 
pollution that endanger public health and welfare, as described in 
Section II.B. Under the second criterion, we believe that gasoline 
sulfur impairs the emissions control systems of vehicles, as discussed 
in Section III.A.2.

B. Overview of Public Health Impacts of Motor Vehicles and Fuels

    Motor vehicles emit pollutants that contribute to ambient levels of 
ozone, PM, NO2, SO2, CO, and air toxics. Motor 
vehicles are significant contributors to emissions of VOC and 
NOX, which contribute to the formation of both ozone and 
PM2.5. Approximately 159 million people currently live in 
counties designated nonattainment for one or more of the NAAQS, and 
this figure does not include the people living in areas with a risk of 
exceeding the NAAQS in the future.\31\ The majority of Americans 
continue to be exposed to ambient concentrations of air toxics at 
levels which have the potential to cause adverse health effects.\32\ In 
addition, populations who live, work, or attend school near major roads 
experience elevated exposure concentrations to a wide range of air 
pollutants.\33\
---------------------------------------------------------------------------

    \31\ Data come from Summary Nonattainment Area Population 
Exposure Report, current as of July 20, 2012 at: http://www.epa.gov/oar/oaqps/greenbk/popexp.html and contained in Docket EPA-HQ-OAR-
2011-0135.
    \32\ U.S. EPA. (2011) Summary of Results for the 2005 National-
Scale Assessment. www.epa.gov/ttn/atw/nata2005/05pdf/sum_results.pdf.
    \33\ Health Effects Institute Panel on the Health Effects of 
Traffic-Related Air Pollution. (2010) Traffic-related air pollution: 
a critical review of the literature on emissions, exposure, and 
health effects. HEI Special Report 17. Available at http://www.healtheffects.org].
---------------------------------------------------------------------------

    EPA has already adopted many emission control programs that are 
expected to reduce ambient pollution levels. As a result of these 
programs, the number of areas that continue to violate the ozone and 
PM2.5 NAAQS or have high levels of air toxics is expected to 
continue to decrease. However, the baseline air quality modeling 
completed for this proposed rule predicts that without additional 
controls there will continue to be a need for reductions in ozone, 
PM2.5 and air toxics concentrations in the future. Section 
III.C of this preamble presents the air quality modeling results for 
this proposed rule.
1. Ozone
a. Background
    Ground-level ozone pollution is typically formed through reactions 
involving VOC and NOX in the lower atmosphere in the 
presence of sunlight. These pollutants, often referred to as ozone 
precursors, are emitted by many types of pollution sources, such as 
highway and nonroad motor vehicles and engines, power plants, chemical 
plants, refineries, makers of consumer and commercial products, 
industrial facilities, and smaller area sources.
    The science of ozone formation, transport, and accumulation is 
complex. Ground-level ozone is produced and destroyed in a cyclical set 
of chemical reactions, many of which are sensitive to temperature and 
sunlight. When ambient temperatures and sunlight levels remain high for 
several days and the air is relatively stagnant, ozone and its 
precursors can build up and result in more ozone than typically occurs 
on a single high-temperature day. Ozone and its precursors can be 
transported hundreds of miles downwind from precursor emissions, 
resulting in elevated ozone levels even in areas with low local VOC or 
NOX emissions.
b. Health Effects of Ozone
    The health and welfare effects of ozone are well documented and are 
assessed in EPA's 2006 Air Quality Criteria Document and 2007 Staff 
Paper.34 35 People who are more susceptible to effects 
associated with exposure to ozone can include children, the elderly, 
and individuals with respiratory disease such as asthma. Those with 
greater exposures to ozone, for instance due to time spent outdoors 
(e.g., children and outdoor workers), are of particular concern. Ozone 
can irritate the respiratory system, causing coughing, throat 
irritation, and breathing discomfort. Ozone can reduce lung function 
and cause pulmonary inflammation in healthy individuals. Ozone can also 
aggravate asthma, leading to more asthma attacks that require medical 
attention and/or the use of additional medication. Thus, ambient ozone 
may cause both healthy and asthmatic individuals to limit their outdoor 
activities. In addition, there is suggestive evidence of a contribution 
of ozone to cardiovascular-related morbidity and highly suggestive 
evidence that short-term ozone exposure directly or indirectly 
contributes to non-accidental and cardiopulmonary-related mortality, 
but additional research is needed to clarify the underlying mechanisms 
causing these effects. In a report on the estimation of ozone-related 
premature mortality published by the National Research Council (NRC), a 
panel of experts and reviewers concluded that short-term exposure to 
ambient ozone is likely to contribute to premature deaths and that 
ozone-related mortality should be included in estimates of the health 
benefits of reducing ozone exposure.\36\ Animal toxicological evidence 
indicates that with repeated exposure, ozone can inflame and damage the 
lining of the lungs, which may lead to permanent changes in lung tissue 
and irreversible reductions in lung function. The respiratory effects 
observed in controlled human exposure studies and animal studies are 
coherent with the evidence from epidemiologic studies supporting a 
causal relationship between acute ambient ozone exposures

[[Page 29830]]

and increased respiratory-related emergency room visits and 
hospitalizations in the warm season. In addition, there is suggestive 
evidence of a contribution of ozone to cardiovascular-related morbidity 
and non-accidental and cardiopulmonary mortality.
---------------------------------------------------------------------------

    \34\ U.S. EPA. (2006). Air Quality Criteria for Ozone and 
Related Photochemical Oxidants (Final). EPA/600/R-05/004aF-cF. 
Washington, DC: U.S. EPA.
    \35\ U.S. EPA. (2007). Review of the National Ambient Air 
Quality Standards for Ozone: Policy Assessment of Scientific and 
Technical Information, OAQPS Staff Paper. EPA-452/R-07-003. 
Washington, DC, U.S. EPA.
    \36\ National Research Council. (2008). Estimating Mortality 
Risk Reduction and Economic Benefits from Controlling Ozone Air 
Pollution. The National Academies Press: Washington, DC.
---------------------------------------------------------------------------

c. Current and Projected Ozone Levels
    Concentrations that exceed the level of the ozone NAAQS occur in 
many parts of the country, including many major population centers. In 
addition, our modeling without the proposed Tier 3 controls projects 
that in the future we will continue to have many areas that will have 
ambient ozone concentrations above the level of the NAAQS (see Section 
III.C.1). States will need to meet the standard in the 2015-2032 
timeframe. The emission reductions and significant ambient ozone 
improvements from this proposed rule, which would take effect starting 
in 2017, would be helpful to states as they work to attain and maintain 
the ozone NAAQS.
    The primary and secondary NAAQS for ozone are 8-hour standards with 
a level of 0.075 ppm. The most recent revision to the ozone standards 
was in 2008; the previous 8-hour ozone standards, set in 1997, had a 
level of 0.08 ppm. In 2004, the U.S. EPA designated nonattainment areas 
for the 1997 8-hour ozone NAAQS.37 38 As of December 14, 
2012, there were 41 ozone nonattainment areas for the 1997 ozone NAAQS 
composed of 221 full or partial counties with a total population of 
over 118 million. Nonattainment designations for the 2008 ozone 
standard were finalized on April 30, 2012 and May 31, 2012.\39\ These 
designations include 46 areas, composed of 227 full or partial 
counties, with a population of over 123 million. As of December 14, 
2012, over 138 million people are living in ozone nonattainment 
areas.\40\
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    \37\ 69 FR 23858 (April 30, 2004).
    \38\ A nonattainment area is defined in the Clean Air Act (CAA) 
as an area that is violating an ambient standard or is contributing 
to a nearby area that is violating the standard.
    \39\ 77FR 30088 (May 21, 2012).
    \40\ The 138 million total is calculated by summing, without 
double counting, the 1997 and 2008 ozone nonattainment populations 
contained in the Summary Nonattainment Area Population Exposure 
report (http://www.epa.gov/oar/oaqps/greenbk/popexp.html). If there 
is a population associated with both the 1997 and 2008 nonattainment 
areas, and they are not the same, then the larger of the two 
populations is included in the sum.
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    States with ozone nonattainment areas are required to take action 
to bring those areas into attainment. The attainment date assigned to 
an ozone nonattainment area is based on the area's classification. Most 
ozone nonattainment areas are required to attain the 1997 8-hour ozone 
NAAQS in the 2007 to 2013 time frame and then to maintain it 
thereafter.\41\ The attainment dates for areas designated nonattainment 
for the 2008 8-hour ozone NAAQS are in the 2015 to 2032 timeframe, 
depending on the severity of the problem in each area. In addition, EPA 
is working to complete the current review of the ozone NAAQS by mid-
2014. If EPA revises the ozone standards in 2014 pursuant to that 
review, the attainment dates associated with areas designated 
nonattainment for that NAAQS would likely be in the 2019 to 2036 
timeframe, depending on the severity of the problem in each area.
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    \41\ The Los Angeles South Coast Air Basin 8-hour ozone 
nonattainment area and the San Joaquin Valley Air Basin 8-hour ozone 
nonattainment area are designated as extreme and will have to attain 
before June 15, 2024. The Sacramento, Coachella Valley, Western 
Mojave and Houston 8-hour ozone nonattainment areas are designated 
as severe and will have to attain by June 15, 2019.
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    EPA has already adopted many emission control programs that are 
expected to reduce ambient ozone levels. As a result of these and other 
federal, state and local programs, 8-hour ozone levels are expected to 
improve in the future. However, even with the implementation of all 
current state and federal regulations, there are projected to be 
counties violating the ozone NAAQS well into the future. Thus 
additional federal control programs, such as Tier 3, can assist areas 
with attainment dates in 2017 and beyond in attaining the NAAQS as 
expeditiously as practicable and may relieve areas with already 
stringent local regulations from some of the burden associated with 
adopting additional local controls.
2. Particulate Matter
a. Background
    Particulate matter is a highly complex mixture of solid particles 
and liquid droplets distributed among numerous atmospheric gases which 
interact with solid and liquid phases. Particles range in size from 
those smaller than 1 nanometer (10-9 meter) to over 100 
micrometer ([mu]m, or 10-6 meter) in diameter (for 
reference, a typical strand of human hair is 70 [mu]m in diameter and a 
grain of salt is about 100 [mu]m). Atmospheric particles can be grouped 
into several classes according to their aerodynamic and physical sizes, 
including ultrafine particles (<0.1 [mu]m), accumulation mode or `fine' 
particles (< 1 to 3 [mu]m), and coarse particles (>1 to 3 [mu]m). For 
regulatory purposes, fine particles are measured as PM2.5 
and inhalable or thoracic coarse particles are measured as 
PM10-2.5, corresponding to their size (diameter) range in 
micrometers and referring to total particle mass under 2.5 and between 
2.5 and 10 micrometers, respectively. The EPA currently has standards 
that measure PM2.5 and PM10.\42\
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    \42\ Regulatory definitions of PM size fractions, and 
information on reference and equivalent methods for measuring PM in 
ambient air, are provided in 40 CFR parts 50, 53, and 58.
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    Particles span many sizes and shapes and consist of hundreds of 
different chemicals. Particles are emitted directly from sources and 
are also formed through atmospheric chemical reactions; the former are 
often referred to as ``primary'' particles, and the latter as 
``secondary'' particles. Particle pollution also varies by time of year 
and location and is affected by several weather-related factors, such 
as temperature, clouds, humidity, and wind. A further layer of 
complexity comes from particles' ability to shift between solid/liquid 
and gaseous phases, which is influenced by concentration and 
meteorology, especially temperature.
    Fine particles are produced primarily by combustion processes and 
by transformations of gaseous emissions (e.g., sulfur oxides 
(SOX), nitrogen oxides (NOX), and volatile 
organic compounds (VOC)) in the atmosphere. The chemical and physical 
properties of PM2.5 may vary greatly with time, region, 
meteorology, and source category. Thus, PM2.5 may include a 
complex mixture of different components including sulfates, nitrates, 
organic compounds, elemental carbon and metal compounds. These 
particles can remain in the atmosphere for days to weeks and travel 
hundreds to thousands of kilometers.
b. Health Effects of PM
    Scientific studies show ambient PM is associated with a series of 
adverse health effects. These health effects are discussed in detail in 
EPA's Integrated Science Assessment (ISA) for Particulate Matter.\43\ 
Further discussion of health effects associated with PM can also be 
found in the draft RIA. The ISA summarizes health effects evidence 
associated with both short-term and long-term exposures to 
PM2.5, PM10-2.5, and ultrafine particles.
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    \43\ U.S. EPA. (2009). Integrated Science Assessment for 
Particulate Matter (Final Report). U.S. Environmental Protection 
Agency, Washington, DC, EPA/600/R-08/139F.
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    The ISA concludes that health effects associated with short-term 
exposures (hours to days) to ambient PM2.5 include 
mortality, cardiovascular effects, such as

[[Page 29831]]

altered vasomotor function and myocardial ischemia, and hospital 
admissions and emergency department visits for ischemic heart disease 
and congestive heart failure, and respiratory effects, such as 
exacerbation of asthma symptoms in children and hospital admissions and 
emergency department visits for chronic obstructive pulmonary disease 
and respiratory infections.\44\ The ISA notes that long-term exposure 
(months to years) to PM2.5 is associated with the 
development/progression of cardiovascular disease, premature mortality, 
and respiratory effects, including reduced lung function growth in 
children, increased respiratory symptoms, and asthma development.\45\ 
The ISA concludes that the currently available scientific evidence from 
epidemiologic, controlled human exposure, and toxicological studies 
supports a causal association between short- and long-term exposures to 
PM2.5 and cardiovascular effects and premature mortality. 
Furthermore, the ISA concludes that the collective evidence supports 
likely causal associations between short- and long-term 
PM2.5 exposures and respiratory effects. The ISA also 
concludes that the scientific evidence is suggestive of a causal 
association for reproductive and developmental effects including 
respiratory-related infant mortality, and cancer, mutagenicity, and 
genotoxicity and long-term exposure to PM2.5.\46\
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    \44\ U.S. EPA. (2009). Integrated Science Assessment for 
Particulate Matter (Final Report). U.S. Environmental Protection 
Agency, Washington, DC, EPA/600/R-08/139F. Section 2.3.1.1.
    \45\ U.S. EPA. (2009). Integrated Science Assessment for 
Particulate Matter (Final Report). U.S. Environmental Protection 
Agency, Washington, DC, EPA/600/R-08/139F. page 2-12, Sections 
7.3.1.1 and 7.3.2.1.
    \46\ U.S. EPA. (2009). Integrated Science Assessment for 
Particulate Matter (Final Report). U.S. Environmental Protection 
Agency, Washington, DC, EPA/600/R-08/139F. Section 2.3.2.
---------------------------------------------------------------------------

    For PM10-2.5, the ISA concludes that the current 
evidence is suggestive of a causal relationship between short-term 
exposures and premature mortality, cardiovascular effects, and 
respiratory effects. Data are inadequate to draw conclusions regarding 
the health effects associated with long-term exposure to 
PM10-2.5.\47\
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    \47\ U.S. EPA. (2009). Integrated Science Assessment for 
Particulate Matter (Final Report). U.S. Environmental Protection 
Agency, Washington, DC, EPA/600/R-08/139F. Section 2.3.4 and Table 
2-6.
---------------------------------------------------------------------------

    For ultrafine particles, the ISA concludes that there is suggestive 
evidence of a causal relationship between short-term exposures and 
cardiovascular effects, such as changes in heart rhythm and blood 
vessel function. It also concludes that there is suggestive evidence of 
association between short-term exposure to ultrafine particles and 
respiratory effects. Data are inadequate to draw conclusions regarding 
the health effects associated with long-term exposure to ultrafine 
particles.\48\
---------------------------------------------------------------------------

    \48\ U.S. EPA. (2009). Integrated Science Assessment for 
Particulate Matter (Final Report). U.S. Environmental Protection 
Agency, Washington, DC, EPA/600/R-08/139F. Section 2.3.5 and Table 
2-6.
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c. Current and Projected PM2.5 Levels
    There are many areas of the country that are currently in 
nonattainment for the annual and 24-hour PM2.5 NAAQS. Our 
modeling without the proposed Tier 3 controls projects that in the 
future we will continue to have many areas that will have ambient 
PM2.5 concentrations above the level of the NAAQS (see 
Section III.C.2). States will need to meet the 24-hour standard in the 
2015-2019 timeframe and the annual standard in the 2021-2025 timeframe. 
The emission reductions and improvements in ambient PM2.5 
from this proposed rule, which would take effect starting in 2017, 
would be helpful to states as they work to attain and maintain the 
PM2.5 NAAQS.
    There are two NAAQS for PM2.5: an annual standard (12 
micrograms per cubic meter ([mu]g/m\3\)) and a 24-hour standard (35 
[mu]g/m\3\). The most recent revisions to these standards were in 1997, 
2006 and in December 2012. The December 2012 rule revised the level of 
the annual PM2.5 standard from 15 [mu]g/m\3\ to 12 [mu]g/
m\3\.\49\
---------------------------------------------------------------------------

    \49\ U.S. EPA (2012). National Ambient Air Quality Standards for 
Particulate Matter. http://www.epa.gov/PM/2012/finalrule.pdf.
---------------------------------------------------------------------------

    In 2005 EPA designated nonattainment areas for the 1997 
PM2.5 NAAQS.\50\ As of December 14, 2012, over 91 million 
people lived in the 35 areas that are designated as nonattainment for 
the 1997 PM2.5 NAAQS. These PM2.5 nonattainment 
areas are comprised of 191 full or partial counties. On October 8, 
2009, the EPA issued final nonattainment area designations for the 2006 
24-hour PM2.5 NAAQS.\51\ These designations include 32 areas 
composed of 121 full or partial counties with a population of over 70 
million. In total, there are 50 PM2.5 nonattainment areas 
with a population of over 105 million people.\52\
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    \50\ 70 FR 19844 (April 14, 2005).
    \51\ 74 FR 58688 (November 13, 2009).
    \52\ Data come from Summary Nonattainment Area Population 
Exposure Report, current as of December 14, 2012 at: http://www.epa.gov/oar/oaqps/greenbk/popexp.html and contained in Docket 
EPA-HQ-OAR-2011-0135.
---------------------------------------------------------------------------

    States with PM2.5 nonattainment areas will be required 
to take action to bring those areas into attainment in the future. Most 
1997 PM2.5 nonattainment areas are required to attain the 
1997 PM2.5 NAAQS in the 2010 to 2015 time frame and then 
required to maintain the 1997 PM2.5 NAAQS thereafter.\53\ 
The 2006 24-hour PM2.5 nonattainment areas will be required 
to attain the 2006 24-hour PM2.5 NAAQS in the 2014 to 2019 
time frame and then be required to maintain the 2006 24-hour 
PM2.5 NAAQS thereafter.\54\ The 2012 PM2.5 
nonattainment areas will likely be required to attain the 2012 
PM2.5 NAAQS in the 2020 to 2025 time frame, depending on the 
severity of an area's fine particle pollution problems and the 
availability of pollution controls. The standards proposed here begin 
taking effect in 2017.
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    \53\ U.S. EPA. (2007). PM2.5 National Ambient Air 
Quality Standard Implementation Rule (Final). Washington, DC: U.S. 
EPA. 72 FR 20586, April 25, 2007.
    \54\ U.S. EPA. (2011). PM Standards Revision--2006: Timeline. 
Available at http://www.epa.gov/PM/naaqsrev2006.html#timeline. 
Accessed December 31, 2011.
---------------------------------------------------------------------------

    EPA has already adopted many mobile source emission control 
programs that are expected to reduce ambient PM levels. As a result of 
these and other federal, state and local programs, the number of areas 
that fail to meet the PM2.5 NAAQS in the future is expected 
to decrease. However, even with the implementation of all current state 
and federal regulations, there are projected to be counties violating 
the PM2.5 NAAQS well into the future. Thus additional 
federal control programs, such as Tier 3, can assist areas with 
attainment dates in 2017 and beyond in attaining the NAAQS as 
expeditiously as practicable and may relieve areas with already 
stringent local regulations from some of the burden associated with 
adopting additional local controls.
3. Nitrogen Oxides and Sulfur Oxides
a. Background
    Nitrogen dioxide (NO2) is a member of the NOX 
family of gases. Most NO2 is formed in the air through the 
oxidation of nitric oxide (NO) emitted when fuel is burned at a high 
temperature. Sulfur dioxide (SO2), a member of the sulfur 
oxide (SOX) family of gases, is formed from burning fuels 
containing sulfur (e.g., coal or oil derived), extracting gasoline from 
oil, or extracting metals from ore.
    SO2 and NO2 and their gas phase oxidation 
products can dissolve in water droplets and further oxidize to form 
sulfuric and nitric acid which react with ammonia to form sulfates and

[[Page 29832]]

nitrates, both of which are important components of ambient PM. The 
health effects of ambient PM are discussed in Section II.B.2.b of this 
preamble. NOX and VOC are the two major precursors of ozone. 
The health effects of ozone are covered in Section II.B.2.1.b.
b. Health Effects of NO2
    Information on the health effects of NO2 can be found in 
the EPA Integrated Science Assessment (ISA) for Nitrogen Oxides.\55\ 
The EPA has concluded that the findings of epidemiologic, controlled 
human exposure, and animal toxicological studies provide evidence that 
is sufficient to infer a likely causal relationship between respiratory 
effects and short-term NO2 exposure. The ISA concludes that 
the strongest evidence for such a relationship comes from epidemiologic 
studies of respiratory effects including symptoms, emergency department 
visits, and hospital admissions. Based on both short- and long-term 
studies, the ISA concludes that associations of NO2 with 
respiratory health effects are stronger among a number of groups; these 
include individuals with preexisting pulmonary conditions (e.g., asthma 
or COPD), children and older adults. The ISA also draws two broad 
conclusions regarding airway responsiveness following NO2 
exposure. First, the ISA concludes that NO2 exposure may 
enhance the sensitivity to allergen-induced decrements in lung function 
and increase the allergen-induced airway inflammatory response 
following 30-minute exposures of asthmatics to NO2 
concentrations as low as 0.26 ppm. Second, exposure to NO2 
has been found to enhance the inherent responsiveness of the airway to 
subsequent nonspecific challenges in controlled human exposure studies 
of asthmatic subjects. Small but significant increases in non-specific 
airway hyperresponsiveness were reported following 1-hour exposures of 
asthmatics to 0.1 ppm NO2. Enhanced airway responsiveness 
could have important clinical implications for asthmatics since 
transient increases in airway responsiveness following NO2 
exposure have the potential to increase symptoms and worsen asthma 
control. Together, the epidemiologic and experimental data sets form a 
plausible, consistent, and coherent description of a relationship 
between NO2 exposures and an array of adverse health effects 
that range from the onset of respiratory symptoms to hospital 
admission.
---------------------------------------------------------------------------

    \55\ U.S. EPA (2008). Integrated Science Assessment for Oxides 
of Nitrogen--Health Criteria (Final Report). EPA/600/R-08/071. 
Washington, DC: U.S.EPA.
---------------------------------------------------------------------------

    Although the weight of evidence supporting a causal relationship is 
somewhat less certain than that associated with respiratory morbidity, 
NO2 has also been linked to other health endpoints. These 
include all-cause (nonaccidental) mortality, hospital admissions or 
emergency department visits for cardiovascular disease, and decrements 
in lung function growth associated with chronic exposure.
c. Health Effects of SO2
    Information on the health effects of SO2 can be found in 
the EPA Integrated Science Assessment for Sulfur Oxides.\56\ 
SO2 has long been known to cause adverse respiratory health 
effects, particularly among individuals with asthma. Other potentially 
sensitive groups include children and the elderly. During periods of 
elevated ventilation, asthmatics may experience symptomatic 
bronchoconstriction within minutes of exposure. Following an extensive 
evaluation of health evidence from epidemiologic and laboratory 
studies, the EPA has concluded that there is a causal relationship 
between respiratory health effects and short-term exposure to 
SO2. Separately, based on an evaluation of the epidemiologic 
evidence of associations between short-term exposure to SO2 
and mortality, the EPA has concluded that the overall evidence is 
suggestive of a causal relationship between short-term exposure to 
SO2 and mortality.
---------------------------------------------------------------------------

    \56\ U.S. EPA. (2008). Integrated Science Assessment (ISA) for 
Sulfur Oxides--Health Criteria (Final Report). EPA/600/R-08/047F. 
Washington, DC: U.S. Environmental Protection Agency.
---------------------------------------------------------------------------

d. Current Levels of NO2
    Between 2003 and 2005, national mean concentrations of 
NO2 were about 15 parts per billion (ppb) for averaging 
periods ranging from a day to a year.\57\ There are two NAAQS for 
NO2: an annual standard (53 ppb) and a 1-hour standard (100 
ppb). The primary NAAQS for NO2 was revised in January 2010. 
EPA completed area designations in January 2012 and there are currently 
no nonattainment areas. The designations were based on the existing 
community-wide monitoring network. Once the expanded network of 
NO2 monitors is fully deployed and three years of air 
quality data have been collected, EPA intends to redesignate areas, as 
appropriate, based on the air quality data from the new monitoring 
network.58 59
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    \57\ U.S. EPA. (2010). Final Regulatory Impact Analysis (RIA) 
for the NO2 National Ambient Air Quality Standards 
(NAAQS). http://www.epa.gov/ttn/ecas/regdata/RIAs/FinalNO2RIAfulldocument.pdf.
    \58\ U.S. EPA. (2012). Fact Sheet--Air Quality Designations for 
the 2010 Primary Nitrogen Dioxide (NO2) National Ambient 
Air Quality Standards. http://www.epa.gov/airquality/nitrogenoxides/designations/pdfs/20120120FS.pdf.
    \59\ U.S. Environmental Protection Agency (2013). Revision to 
Ambient Nitrogen Dioxide Monitoring Requirements. March 7, 2013. 
http://www.epa.gov/airquality/nitrogenoxides/pdfs/20130307fr.pdf.
---------------------------------------------------------------------------

4. Carbon Monoxide
    Carbon monoxide (CO) is a colorless, odorless gas emitted from 
combustion processes. Nationally and, particularly in urban areas, the 
majority of CO emissions to ambient air come from mobile sources.
a. Health Effects of Carbon Monoxide
    Information on the health effects of CO can be found in the EPA 
Integrated Science Assessment (ISA) for Carbon Monoxide.\60\ The ISA 
concludes that ambient concentrations of CO are associated with a 
number of adverse health effects.\61\ This section provides a summary 
of the health effects associated with exposure to ambient 
concentrations of CO.\62\
---------------------------------------------------------------------------

    \60\ U.S. EPA, (2010). Integrated Science Assessment for Carbon 
Monoxide (Final Report). U.S. Environmental Protection Agency, 
Washington, DC, EPA/600/R-09/019F, 2010. Available at http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=218686.
    \61\ The ISA evaluates the health evidence associated with 
different health effects, assigning one of five ``weight of 
evidence'' determinations: causal relationship, likely to be a 
causal relationship, suggestive of a causal relationship, inadequate 
to infer a causal relationship, and not likely to be a causal 
relationship. For definitions of these levels of evidence, please 
refer to Section 1.6 of the ISA.
    \62\ Personal exposure includes contributions from many sources, 
and in many different environments. Total personal exposure to CO 
includes both ambient and nonambient components; and both components 
may contribute to adverse health effects.
---------------------------------------------------------------------------

    Human clinical studies of subjects with coronary artery disease 
show a decrease in the time to onset of exercise-induced angina (chest 
pain) and electrocardiogram changes following CO exposure. In addition, 
epidemiologic studies show associations between short-term CO exposure 
and cardiovascular morbidity, particularly increased emergency room 
visits and hospital admissions for coronary heart disease (including 
ischemic heart disease, myocardial infarction, and angina). Some 
epidemiologic evidence is also available for increased hospital 
admissions and emergency room visits for congestive heart failure and 
cardiovascular disease as a whole. The ISA concludes that a causal 
relationship is likely to exist between short-term exposures to CO and 
cardiovascular

[[Page 29833]]

morbidity. It also concludes that available data are inadequate to 
conclude that a causal relationship exists between long-term exposures 
to CO and cardiovascular morbidity.
    Animal studies show various neurological effects with in-utero CO 
exposure. Controlled human exposure studies report inconsistent neural 
and behavioral effects following low-level CO exposures. The ISA 
concludes the evidence is suggestive of a causal relationship with both 
short- and long-term exposure to CO and central nervous system effects.
    A number of epidemiologic and animal toxicological studies cited in 
the ISA have evaluated associations between CO exposure and birth 
outcomes such as preterm birth or cardiac birth defects. The 
epidemiologic studies provide limited evidence of a CO-induced effect 
on preterm births and birth defects, with weak evidence for a decrease 
in birth weight. Animal toxicological studies have found associations 
between perinatal CO exposure and decrements in birth weight, as well 
as other developmental outcomes. The ISA concludes these studies are 
suggestive of a causal relationship between long-term exposures to CO 
and developmental effects and birth outcomes.
    Epidemiologic studies provide evidence of effects on respiratory 
morbidity such as changes in pulmonary function, respiratory symptoms, 
and hospital admissions associated with ambient CO concentrations. A 
limited number of epidemiologic studies considered copollutants such as 
ozone, SO2, and PM in two-pollutant models and found that CO 
risk estimates were generally robust, although this limited evidence 
makes it difficult to disentangle effects attributed to CO itself from 
those of the larger complex air pollution mixture. Controlled human 
exposure studies have not extensively evaluated the effect of CO on 
respiratory morbidity. Animal studies at levels of 50-100 ppm CO show 
preliminary evidence of altered pulmonary vascular remodeling and 
oxidative injury. The ISA concludes that the evidence is suggestive of 
a causal relationship between short-term CO exposure and respiratory 
morbidity, and inadequate to conclude that a causal relationship exists 
between long-term exposure and respiratory morbidity.
    Finally, the ISA concludes that the epidemiologic evidence is 
suggestive of a causal relationship between short-term exposures to CO 
and mortality. Epidemiologic studies provide evidence of an association 
between short-term exposure to CO and mortality, but limited evidence 
is available to evaluate cause-specific mortality outcomes associated 
with CO exposure. In addition, the attenuation of CO risk estimates 
which was often observed in copollutant models contributes to the 
uncertainty as to whether CO is acting alone or as an indicator for 
other combustion-related pollutants. The ISA also concludes that there 
is not likely to be a causal relationship between relevant long-term 
exposures to CO and mortality.
5. Mobile Source Air Toxics
    Light-duty vehicle emissions contribute to ambient levels of air 
toxics known or suspected as human or animal carcinogens, or that have 
noncancer health effects. The population experiences an elevated risk 
of cancer and other noncancer health effects from exposure to the class 
of pollutants known collectively as ``air toxics.'' \63\ These 
compounds include, but are not limited to, benzene, 1,3-butadiene, 
formaldehyde, acetaldehyde, acrolein, polycyclic organic matter, and 
naphthalene. These compounds were identified as national or regional 
risk drivers or contributors in the 2005 National-scale Air Toxics 
Assessment and have significant inventory contributions from mobile 
sources.\64\
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    \63\ U.S. EPA. (2011) Summary of Results for the 2005 National-
Scale Assessment. www.epa.gov/ttn/atw/nata2005/05pdf/sum_results.pdf.
    \64\ U.S. EPA (2011) 2005 National-Scale Air Toxics Assessment. 
http://www.epa.gov/ttn/atw/nata2005.
---------------------------------------------------------------------------

a. Health Effects of Air Toxics
i. Benzene
    The EPA's IRIS database lists benzene as a known human carcinogen 
(causing leukemia) by all routes of exposure, and concludes that 
exposure is associated with additional health effects, including 
genetic changes in both humans and animals and increased proliferation 
of bone marrow cells in mice.65 66 67 EPA states in its IRIS 
database that data indicate a causal relationship between benzene 
exposure and acute lymphocytic leukemia and suggest a relationship 
between benzene exposure and chronic non-lymphocytic leukemia and 
chronic lymphocytic leukemia. EPA's IRIS documentation for benzene also 
lists a range of 2.2 x 10-6 to 7.8 x 10-6 as the 
unit risk estimate (URE) for benzene.68 69 The International 
Agency for Research on Carcinogens (IARC) has determined that benzene 
is a human carcinogen and the U.S. Department of Health and Human 
Services (DHHS) has characterized benzene as a known human 
carcinogen.70 71
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    \65\ U.S. EPA. (2000). Integrated Risk Information System File 
for Benzene. This material is available electronically at: http://www.epa.gov/iris/subst/0276.htm.
    \66\ International Agency for Research on Cancer, IARC 
monographs on the evaluation of carcinogenic risk of chemicals to 
humans, Volume 29, Some industrial chemicals and dyestuffs, 
International Agency for Research on Cancer, World Health 
Organization, Lyon, France 1982.
    \67\ Irons, R.D.; Stillman, W.S.; Colagiovanni, D.B.; Henry, 
V.A. (1992). Synergistic action of the benzene metabolite 
hydroquinone on myelopoietic stimulating activity of granulocyte/
macrophage colony-stimulating factor in vitro, Proc. Natl. Acad. 
Sci. 89:3691-3695.
    \68\ A unit risk estimate is defined as the increase in the 
lifetime risk of an individual who is exposed for a lifetime to 1 
[micro]g/m3 benzene in air.
    \69\ U.S. EPA. (2000). Integrated Risk Information System File 
for Benzene. This material is available electronically at: http://www.epa.gov/iris/subst/0276.htm.
    \70\ International Agency for Research on Cancer (IARC). (1987). 
Monographs on the evaluation of carcinogenic risk of chemicals to 
humans, Volume 29, Supplement 7, Some industrial chemicals and 
dyestuffs, World Health Organization, Lyon, France.
    \71\ U.S. Department of Health and Human Services National 
Toxicology Program. (2011). 12th Report on Carcinogens. Available 
at: http://ntp.niehs.nih.gov/?objectid=03C9AF75-E1BF-FF40-DBA9EC0928DF8B15.
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    A number of adverse noncancer health effects including blood 
disorders, such as preleukemia and aplastic anemia, have also been 
associated with long-term exposure to benzene.72 73 The most 
sensitive noncancer effect observed in humans, based on current data, 
is the depression of the absolute lymphocyte count in 
blood.74 75 EPA's inhalation reference concentration (RfC) 
for benzene is 30 [micro]g/m\3\. The RfC is based on suppressed 
absolute lymphocyte counts seen in humans under occupational exposure 
conditions. In addition, recent work, including studies sponsored by 
the Health Effects Institute (HEI), provides evidence that biochemical 
responses are occurring at lower levels of benzene exposure than 
previously known.76 77 78 79 EPA's IRIS program has

[[Page 29834]]

not yet evaluated these new data. EPA does not currently have an acute 
reference concentration for benzene. The Agency for Toxic Substances 
and Disease Registry (ATSDR) Minimal Risk Level (MRL) for acute 
exposure to benzene is 29 [micro]g/m\3\ for 1-14 days 
exposure.80 81
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    \72\ Aksoy, M. (1989). Hematotoxicity and carcinogenicity of 
benzene. Environ. Health Perspect. 82: 193-197.
    \73\ Goldstein, B.D. (1988). Benzene toxicity. Occupational 
medicine. State of the Art Reviews. 3: 541-554.
    \74\ Rothman, N., G.L. Li, M. Dosemeci, W.E. Bechtold, G.E. 
Marti, Y.Z. Wang, M. Linet, L.Q. Xi, W. Lu, M.T. Smith, N. Titenko-
Holland, L.P. Zhang, W. Blot, S.N. Yin, and R.B. Hayes. (1996). 
Hematotoxicity among Chinese workers heavily exposed to benzene. Am. 
J. Ind. Med. 29: 236-246.
    \75\ U.S. EPA. (2002). Toxicological Review of Benzene 
(Noncancer Effects). Environmental Protection Agency, Integrated 
Risk Information System (IRIS), Research and Development, National 
Center for Environmental Assessment, Washington DC. This material is 
available electronically at http://www.epa.gov/iris/subst/0276.htm.
    \76\ Qu, O.; Shore, R.; Li, G.; Jin, X.; Chen, C.L.; Cohen, B.; 
Melikian, A.; Eastmond, D.; Rappaport, S.; Li, H.; Rupa, D.; 
Suramaya, R.; Songnian, W.; Huifant, Y.; Meng, M.; Winnik, M.; Kwok, 
E.; Li, Y.; Mu, R.; Xu, B.; Zhang, X.; Li, K. (2003). HEI Report 
115, Validation & Evaluation of Biomarkers in Workers Exposed to 
Benzene in China.
    \77\ Qu, Q., R. Shore, G. Li, X. Jin, L.C. Chen, B. Cohen, et 
al. (2002). Hematological changes among Chinese workers with a broad 
range of benzene exposures. Am. J. Industr. Med. 42: 275-285.
    \78\ Lan, Qing, Zhang, L., Li, G., Vermeulen, R., et al. (2004). 
Hematotoxically in Workers Exposed to Low Levels of Benzene. Science 
306: 1774-1776.
    \79\ Turtletaub, K.W. and Mani, C. (2003). Benzene metabolism in 
rodents at doses relevant to human exposure from Urban Air. Research 
Reports Health Effect Inst. Report No.113.
    \80\ U.S. Agency for Toxic Substances and Disease Registry 
(ATSDR). (2007). Toxicological profile for benzene. Atlanta, GA: 
U.S. Department of Health and Human Services, Public Health Service. 
http://www.atsdr.cdc.gov/ToxProfiles/tp3.pdf.
    \81\ A minimal risk level (MRL) is defined as an estimate of the 
daily human exposure to a hazardous substance that is likely to be 
without appreciable risk of adverse noncancer health effects over a 
specified duration of exposure.
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ii. Formaldehyde
    In 1991, EPA concluded that formaldehyde is a carcinogen based on 
nasal tumors in animal bioassays.\82\ An Inhalation Unit Risk for 
cancer and a Reference Dose for oral noncancer effects were developed 
by the Agency and posted on the Integrated Risk Information System 
(IRIS) database. Since that time, the National Toxicology Program (NTP) 
and International Agency for Research on Cancer (IARC) have concluded 
that formaldehyde is a known human carcinogen.83 84 85
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    \82\ EPA. Integrated Risk Information System. Formaldehyde 
(CASRN 50-00-0) http://www.epa.gov/iris/subst/0419/htm.
    \83\ National Toxicology Program, U.S. Department of Health and 
Human Services (HHS), 12th Report on Carcinogens, June 10, 2011.
    \84\ IARC Monographs on the Evaluation of Carcinogenic Risks to 
Humans Volume 88 (2006): Formaldehyde, 2-Butoxyethanol and 1-tert-
Butoxypropan-2-ol.
    \85\ IARC Mongraphs on the Evaluation of Carcinogenic Risks to 
Humans Volume 100F (2012): Formaldehyde.
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    The conclusions by IARC and NTP reflect the results of 
epidemiologic research published since 1991 in combination with 
previous animal, human and mechanistic evidence. Research conducted by 
the National Cancer Institute reported an increased risk of 
nasopharyngeal cancer and specific lymphohematopoietic malignancies 
among workers exposed to formaldehyde.86 87 88 A National 
Institute of Occupational Safety and Health study of garment workers 
also reported increased risk of death due to leukemia among workers 
exposed to formaldehyde.\89\ Extended follow-up of a cohort of British 
chemical workers did not report evidence of an increase in 
nasopharyngeal or lymphohematopoietic cancers, but a continuing 
statistically significant excess in lung cancers was reported.\90\ 
Finally, a study of embalmers reported formaldehyde exposures to be 
associated with an increased risk of myeloid leukemia but not brain 
cancer.\91\
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    \86\ Hauptmann, M.; Lubin, J.H.; Stewart, P.A.; Hayes, R.B.; 
Blair, A. 2003. Mortality from lymphohematopoetic malignancies among 
workers in formaldehyde industries. Journal of the National Cancer 
Institute 95: 1615-1623.
    \87\ Hauptmann, M.; Lubin, J.H.; Stewart, P.A.; Hayes, R.B.; 
Blair, A. 2004. Mortality from solid cancers among workers in 
formaldehyde industries. American Journal of Epidemiology 159: 1117-
1130.
    \88\ Beane Freeman, L.E.; Blair, A.; Lubin, J.H.; Stewart, P.A.; 
Hayes, R.B.; Hoover, R.N.; Hauptmann, M. 2009. Mortality from 
lymphohematopoietic malignancies among workers in formaldehyde 
industries: The National Cancer Institute cohort. J. National Cancer 
Inst. 101: 751-761.
    \89\ Pinkerton, L.E. 2004. Mortality among a cohort of garment 
workers exposed to formaldehyde: an update. Occup. Environ. Med. 61: 
193-200.
    \90\ Coggon, D, EC Harris, J Poole, KT Palmer. 2003. Extended 
follow-up of a cohort of British chemical workers exposed to 
formaldehyde. J National Cancer Inst. 95:1608-1615.
    \91\ Hauptmann, M.; Stewart P.A.; Lubin J.H.; Beane Freeman, 
L.E.; Hornung, R.W.; Herrick, R.F.; Hoover, R.N.; Fraumeni, J.F.; 
Hayes, R.B. 2009. Mortality from lymphohematopoietic malignancies 
and brain cancer among embalmers exposed to formaldehyde. Journal of 
the National Cancer Institute 101:1696-1708.
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    Health effects of formaldehyde in addition to cancer were reviewed 
by the Agency for Toxics Substances and Disease Registry in 1999 \92\ 
and supplemented in 2010,\93\ and by the World Health Organization.\94\ 
These organizations reviewed the literature concerning effects on the 
eyes and respiratory system, the primary point of contact for inhaled 
formaldehyde, including sensory irritation of eyes and respiratory 
tract, pulmonary function, nasal histopathology, and immune system 
effects. In addition, research on reproductive and developmental 
effects and neurological effects were discussed.
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    \92\ ATSDR. 1999. Toxicological Profile for Formaldehyde, U.S. 
Department of Health and Human Services (HHS), July 1999.
    \93\ ATSDR. 2010. Addendum to the Toxicological Profile for 
Formaldehyde. U.S. Department of Health and Human Services (HHS), 
October 2010.
    \94\ IPCS. 2002. Concise International Chemical Assessment 
Document 40. Formaldehyde. World Health Organization.
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    EPA released a draft Toxicological Review of Formaldehyde--
Inhalation Assessment through the IRIS program for peer review by the 
National Research Council (NRC) and public comment in June 2010.\95\ 
The draft assessment reviewed more recent research from animal and 
human studies on cancer and other health effects. The NRC released 
their review report in April 2011.\96\ The EPA is currently revising 
the draft assessment in response to this review.
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    \95\ EPA (U.S. Environmental Protection Agency). 2010. 
Toxicological Review of Formaldehyde (CAS No. 50-00-0)--Inhalation 
Assessment: In Support of Summary Information on the Integrated Risk 
Information System (IRIS). External Review Draft. EPA/635/R-10/002A. 
U.S. Environmental Protection Agency, Washington DC [online]. 
Available: http://cfpub.epa.gov/ncea/irs_drats/recordisplay.cfm?deid=223614.
    \96\ NRC (National Research Council). 2011. Review of the 
Environmental Protection Agency's Draft IRIS Assessment of 
Formaldehyde. Washington DC: National Academies Press. http://books.nap.edu/openbook.php?record_id=13142.
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iii. Acetaldehyde
    Acetaldehyde is classified in EPA's IRIS database as a probable 
human carcinogen, based on nasal tumors in rats, and is considered 
toxic by the inhalation, oral, and intravenous routes.\97\ The URE in 
IRIS for acetaldehyde is 2.2 x 10-6 per [micro]g/m\3\.\98\ 
Acetaldehyde is reasonably anticipated to be a human carcinogen by the 
U.S. DHHS in the 12th Report on Carcinogens and is classified as 
possibly carcinogenic to humans (Group 2B) by the 
IARC.99 100 EPA is currently conducting a reassessment of 
cancer risk from inhalation exposure to acetaldehyde.
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    \97\ U.S. EPA (1991). Integrated Risk Information System File of 
Acetaldehyde. Research and Development, National Center for 
Environmental Assessment, Washington, DC. This material is available 
electronically at http://www.epa.gov/iris/subst/0290.htm.
    \98\ U.S. EPA (1991). Integrated Risk Information System File of 
Acetaldehyde. This material is available electronically at http://www.epa.gov/iris/subst/0290.htm.
    \99\ NTP. (2011). Report on Carcinogens, Twelfth Edition. 
Research Triangle Park, NC: U.S. Department of Health and Human 
Services, Public Health Service, National Toxicology Program. 499 
pp.
    \100\ International Agency for Research on Cancer (IARC). 
(1999). Re-evaluation of some organic chemicals, hydrazine, and 
hydrogen peroxide. IARC Monographs on the Evaluation of Carcinogenic 
Risk of Chemical to Humans, Vol 71. Lyon, France.
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    The primary noncancer effects of exposure to acetaldehyde vapors 
include irritation of the eyes, skin, and respiratory tract.\101\ In 
short-term (4 week) rat studies, degeneration of olfactory epithelium 
was observed at various concentration levels of acetaldehyde 
exposure.102 103 Data from

[[Page 29835]]

these studies were used by EPA to develop an inhalation reference 
concentration of 9 [micro]g/m\3\. Some asthmatics have been shown to be 
a sensitive subpopulation to decrements in functional expiratory volume 
(FEV1 test) and bronchoconstriction upon acetaldehyde inhalation.\104\ 
The agency is currently conducting a reassessment of the health hazards 
from inhalation exposure to acetaldehyde.
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    \101\ U.S. EPA (1991). Integrated Risk Information System File 
of Acetaldehyde. This material is available electronically at http://www.epa.gov/iris/subst/0290.htm.
    \102\ U.S. EPA. (2003). Integrated Risk Information System File 
of Acrolein. Research and Development, National Center for 
Environmental Assessment, Washington, DC. This material is available 
electronically at http://www.epa.gov/iris/subst/0364.htm.
    \103\ Appleman, L.M., R.A. Woutersen, and V.J. Feron. (1982). 
Inhalation toxicity of acetaldehyde in rats. I. Acute and subacute 
studies. Toxicology. 23: 293-297.
    \104\ Myou, S.; Fujimura, M.; Nishi K.; Ohka, T.; and Matsuda, 
T. (1993) Aerosolized acetaldehyde induces histamine-mediated 
bronchoconstriction in asthmatics. Am. Rev. Respir. Dis. 148(4 Pt 
1): 940-943.
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iv. Acrolein
    EPA most recently evaluated the toxicological and health effects 
literature related to acrolein in 2003 and concluded that the human 
carcinogenic potential of acrolein could not be determined because the 
available data were inadequate. No information was available on the 
carcinogenic effects of acrolein in humans and the animal data provided 
inadequate evidence of carcinogenicity.\105\ The IARC determined in 
1995 that acrolein was not classifiable as to its carcinogenicity in 
humans.\106\
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    \105\ U.S. EPA. (2003). Integrated Risk Information System File 
of Acrolein. Research and Development, National Center for 
Environmental Assessment, Washington, DC. This material is available 
at http://www.epa.gov/iris/subst/0364.htm.
    \106\ International Agency for Research on Cancer (IARC). 
(1995). Monographs on the evaluation of carcinogenic risk of 
chemicals to humans, Volume 63. Dry cleaning, some chlorinated 
solvents and other industrial chemicals, World Health Organization, 
Lyon, France.
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    Lesions to the lungs and upper respiratory tract of rats, rabbits, 
and hamsters have been observed after subchronic exposure to 
acrolein.\107\ The Agency has developed an RfC for acrolein of 0.02 
[micro]g/m\3\ and an RfD of 0.5 [micro]g/kg-day.\108\ EPA is 
considering updating the acrolein assessment with data that have become 
available since the 2003 assessment was completed.
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    \107\ U.S. EPA. (2003). Integrated Risk Information System File 
of Acrolein. Office of Research and Development, National Center for 
Environmental Assessment, Washington, DC. This material is available 
at http://www.epa.gov/iris/subst/0364.htm.
    \108\ U.S. EPA. (2003). Integrated Risk Information System File 
of Acrolein. Office of Research and Development, National Center for 
Environmental Assessment, Washington, DC. This material is available 
at http://www.epa.gov/iris/subst/0364.htm.
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    Acrolein is extremely acrid and irritating to humans when inhaled, 
with acute exposure resulting in upper respiratory tract irritation, 
mucus hypersecretion and congestion. The intense irritancy of this 
carbonyl has been demonstrated during controlled tests in human 
subjects, who suffer intolerable eye and nasal mucosal sensory 
reactions within minutes of exposure.\109\ These data and additional 
studies regarding acute effects of human exposure to acrolein are 
summarized in EPA's 2003 IRIS Human Health Assessment for 
acrolein.\110\ Studies in humans indicate that levels as low as 0.09 
ppm (0.21 mg/m\3\) for five minutes may elicit subjective complaints of 
eye irritation with increasing concentrations leading to more extensive 
eye, nose and respiratory symptoms. Acute exposures in animal studies 
report bronchial hyper-responsiveness. Based on animal data (more 
pronounced respiratory irritancy in mice with allergic airway disease 
in comparison to non-diseased mice \111\) and demonstration of similar 
effects in humans (e.g., reduction in respiratory rate), individuals 
with compromised respiratory function (e.g., emphysema, asthma) are 
expected to be at increased risk of developing adverse responses to 
strong respiratory irritants such as acrolein. EPA does not currently 
have an acute reference concentration for acrolein. The available 
health effect reference values for acrolein have been summarized by EPA 
and include an ATSDR MRL for acute exposure to acrolein of 7 [micro]g/
m\3\ for 1-14 days exposure; and Reference Exposure Level (REL) values 
from the California Office of Environmental Health Hazard Assessment 
(OEHHA) for one-hour and 8-hour exposures of 2.5 [micro]g/m\3\ and 0.7 
[micro]g/m\3\, respectively.\112\
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    \109\ U.S. EPA. (2003) Toxicological review of acrolein in 
support of summary information on Integrated Risk Information System 
(IRIS) National Center for Environmental Assessment, Washington, DC. 
EPA/635/R-03/003. p. 10. Available online at: http://www.epa.gov/ncea/iris/toxreviews/0364tr.pdf.
    \110\ U.S. EPA. (2003) Toxicological review of acrolein in 
support of summary information on Integrated Risk Information System 
(IRIS) National Center for Environmental Assessment, Washington, DC. 
EPA/635/R-03/003. Available online at: http://www.epa.gov/ncea/iris/toxreviews/0364tr.pdf.
    \111\ Morris JB, Symanowicz PT, Olsen JE, et al. (2003). 
Immediate sensory nerve-mediated respiratory responses to irritants 
in healthy and allergic airway-diseased mice. J Appl Physiol 
94(4):1563-1571.
    \112\ U.S. EPA. (2009). Graphical Arrays of Chemical-Specific 
Health Effect Reference Values for Inhalation Exposures (Final 
Report). U.S. Environmental Protection Agency, Washington, DC, EPA/
600/R-09/061, 2009. http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=211003.
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v. 1,3-Butadiene
    EPA has characterized 1,3-butadiene as carcinogenic to humans by 
inhalation.113 114 The IARC has determined that 1,3-
butadiene is a human carcinogen and the U.S. DHHS has characterized 
1,3-butadiene as a known human carcinogen.115 116 117 There 
are numerous studies consistently demonstrating that 1,3-butadiene is 
metabolized into genotoxic metabolites by experimental animals and 
humans. The specific mechanisms of 1,3-butadiene-induced carcinogenesis 
are unknown; however, the scientific evidence strongly suggests that 
the carcinogenic effects are mediated by genotoxic metabolites. Animal 
data suggest that females may be more sensitive than males for cancer 
effects associated with 1,3-butadiene exposure; there are insufficient 
data in humans from which to draw conclusions about sensitive 
subpopulations. The URE for 1,3-butadiene is 3 x 10-5 per 
[micro]g/m\3\.\118\ 1,3-butadiene also causes a variety of reproductive 
and developmental effects in mice; no human data on these effects are 
available. The most sensitive effect was ovarian atrophy observed in a 
lifetime bioassay of female mice.\119\ Based on this critical effect 
and the benchmark concentration methodology,

[[Page 29836]]

an RfC for chronic health effects was calculated at 0.9 ppb 
(approximately 2 [micro]g/m\3\).
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    \113\ U.S. EPA. (2002). Health Assessment of 1,3-Butadiene. 
Office of Research and Development, National Center for 
Environmental Assessment, Washington Office, Washington, DC. Report 
No. EPA600-P-98-001F. This document is available electronically at 
http://www.epa.gov/iris/supdocs/buta-sup.pdf.
    \114\ U.S. EPA. (2002). ``Full IRIS Summary for 1,3-butadiene 
(CASRN 106-99-0)'' Environmental Protection Agency, Integrated Risk 
Information System (IRIS), Research and Development, National Center 
for Environmental Assessment, Washington, DC http://www.epa.gov/iris/subst/0139.htm.
    \115\ International Agency for Research on Cancer (IARC). 
(1999). Monographs on the evaluation of carcinogenic risk of 
chemicals to humans, Volume 71, Re-evaluation of some organic 
chemicals, hydrazine and hydrogen peroxide and Volume 97 (in 
preparation), World Health Organization, Lyon, France.
    \116\ International Agency for Research on Cancer (IARC). 
(2008). Monographs on the evaluation of carcinogenic risk of 
chemicals to humans, 1,3-Butadiene, Ethylene Oxide and Vinyl Halides 
(Vinyl Fluoride, Vinyl Chloride and Vinyl Bromide) Volume 97, World 
Health Organization, Lyon, France.
    \117\ NTP. (2011). Report on Carcinogens, Twelfth Edition. 
Research Triangle Park, NC: U.S. Department of Health and Human 
Services, Public Health Service, National Toxicology Program. 499 
pp.
    \118\ U.S. EPA. (2002). ``Full IRIS Summary for 1,3-butadiene 
(CASRN 106-99-0)'' Environmental Protection Agency, Integrated Risk 
Information System (IRIS), Research and Development, National Center 
for Environmental Assessment, Washington, DC http://www.epa.gov/iris/subst/0139.htm.
    \119\ Bevan, C.; Stadler, J.C.; Elliot, G.S.; et al. (1996). 
Subchronic toxicity of 4-vinylcyclohexene in rats and mice by 
inhalation. Fundam. Appl. Toxicol. 32:1-10.
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vi. Ethanol
    EPA is planning to develop an assessment of the health effects of 
exposure to ethanol, a compound which is not currently listed on EPA's 
IRIS database. Extensive health effects data are available for 
ingestion of ethanol, while data on inhalation exposure effects are 
sparse. In developing the assessment, EPA is evaluating pharmacokinetic 
models as a means of extrapolating across species (animal to human) and 
across exposure routes (oral to inhalation) to better characterize the 
health hazards and dose-response relationships for low levels of 
ethanol exposure in the environment.
vii. Polycyclic Organic Matter
    The term polycyclic organic matter (POM) defines a broad class of 
compounds that includes the polycyclic aromatic hydrocarbon compounds 
(PAHs). One of these compounds, naphthalene, is discussed separately 
below. POM compounds are formed primarily from combustion and are 
present in the atmosphere in gas and particulate form. Cancer is the 
major concern from exposure to POM. Epidemiologic studies have reported 
an increase in lung cancer in humans exposed to diesel exhaust, coke 
oven emissions, roofing tar emissions, and cigarette smoke; all of 
these mixtures contain POM compounds.120 121 Animal studies 
have reported respiratory tract tumors from inhalation exposure to 
benzo[a]pyrene and alimentary tract and liver tumors from oral exposure 
to benzo[a]pyrene.\122\ In 1997 EPA classified seven PAHs 
(benzo[a]pyrene, benz[a]anthracene, chrysene, benzo[b]fluoranthene, 
benzo[k]fluoranthene, dibenz[a,h]anthracene, and indeno[1,2,3-
cd]pyrene) as Group B2, probable human carcinogens.\123\ Since that 
time, studies have found that maternal exposures to PAHs in a 
population of pregnant women were associated with several adverse birth 
outcomes, including low birth weight and reduced length at birth, as 
well as impaired cognitive development in preschool children (3 years 
of age).124 125 These and similar studies are being 
evaluated as a part of the ongoing IRIS assessment of health effects 
associated with exposure to benzo[a]pyrene.
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    \120\ Agency for Toxic Substances and Disease Registry (ATSDR). 
(1995). Toxicological profile for Polycyclic Aromatic Hydrocarbons 
(PAHs). Atlanta, GA: U.S. Department of Health and Human Services, 
Public Health Service. Available electronically at http://www.atsdr.cdc.gov/ToxProfiles/TP.asp?id=122&tid=25.
    \121\ U.S. EPA (2002). Health Assessment Document for Diesel 
Engine Exhaust. EPA/600/8-90/057F Office of Research and 
Development, Washington DC. http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=29060.
    \122\ International Agency for Research on Cancer (IARC). 
(2012). Monographs on the Evaluation of the Carcinogenic Risk of 
Chemicals for Humans, Chemical Agents and Related Occupations. Vol. 
100F. Lyon, France.
    \123\ U.S. EPA (1997). Integrated Risk Information System File 
of indeno(1,2,3-cd)pyrene. Research and Development, National Center 
for Environmental Assessment, Washington, DC. This material is 
available electronically at http://www.epa.gov/ncea/iris/subst/0457.htm.
    \124\ Perera, F.P.; Rauh, V.; Tsai, W-Y.; et al. (2002). Effect 
of transplacental exposure to environmental pollutants on birth 
outcomes in a multiethnic population. Environ Health Perspect. 111: 
201-205.
    \125\ Perera, F.P.; Rauh, V.; Whyatt, R.M.; Tsai, W.Y.; Tang, 
D.; Diaz, D.; Hoepner, L.; Barr, D.; Tu, Y.H.; Camann, D.; Kinney, 
P. (2006). Effect of prenatal exposure to airborne polycyclic 
aromatic hydrocarbons on neurodevelopment in the first 3 years of 
life among inner-city children. Environ Health Perspect 114: 1287-
1292.
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viii. PAN
    PAN (peroxy acetyl nitrate) has not been evaluated by EPA's IRIS 
program. Information regarding the potential carcinogenicity of PAN is 
limited. As noted in the EPA air quality criteria document for ozone 
and related photochemical oxidants, cytogenetic studies indicate that 
PAN is not a potent mutagen, clastogen (a compound that can cause 
breaks in chromosomes), or DNA-damaging agent in mammalian cells either 
in vivo or in vitro. Some studies suggest that PAN may be a weak 
bacterial mutagen at concentrations much higher than exist in present 
urban atmospheres.\126\
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    \126\ U.S. EPA. (2006). Air quality criteria for ozone and 
related photochemical oxidants (Ozone CD). Research Triangle Park, 
NC: National Center for Environmental Assessment; report no. EPA/
600/R-05/004aF-cF.3v. page 5-78. Available at http://cfpub.epa.gov/ncea/.
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    Effects of ground-level smog causing intense eye irritation have 
been attributed to photochemical oxidants, including PAN.\127\ Animal 
toxicological information on the inhalation effects of the non-ozone 
oxidants has been limited to a few studies on PAN. Acute exposure to 
levels of PAN can cause changes in lung morphology, behavioral 
modifications, weight loss, and susceptibility to pulmonary infections. 
Human exposure studies indicate minor pulmonary function effects at 
high PAN concentrations, but large inter-individual variability 
precludes definitive conclusions.\128\
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    \127\ U.S. EPA (2005). Air Quality Criteria for Ozone and 
Related Photochemical Oxidants (Final). U.S. Environmental 
Protection Agency, Washington, DC, EPA 600/R-05/004aF-cF, 2006. page 
5-63. This document is available in Docket EPA-HQ-OAR-2005-0161. 
This document may be accessed electronically at: http://www.epa.gov/ttn/naaqs/standards/ozone/s_o3_cr_cd.html.
    \128\ U.S. EPA (2005). Air Quality Criteria for Ozone and 
Related Photochemical Oxidants (Final). U.S. Environmental 
Protection Agency, Washington, DC, EPA 600/R-05/004aF-cF, 2006. page 
5-78. This document is available in Docket EPA-HQ-OAR-2005-0161. 
This document may be accessed electronically at: http://www.epa.gov/ttn/naaqs/standards/ozone/s_o3_cr_cd.html.
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ix. Naphthalene
    Naphthalene is found in small quantities in gasoline and diesel 
fuels. Naphthalene emissions have been measured in larger quantities in 
both gasoline and diesel exhaust compared with evaporative emissions 
from mobile sources, indicating it is primarily a product of 
combustion. Acute (short-term) exposure of humans to naphthalene by 
inhalation, ingestion, or dermal contact is associated with hemolytic 
anemia and damage to the liver and the nervous system.\129\ Chronic 
(long term) exposure of workers and rodents to naphthalene has been 
reported to cause cataracts and retinal damage.\130\ EPA released an 
external review draft of a reassessment of the inhalation 
carcinogenicity of naphthalene based on a number of recent animal 
carcinogenicity studies.\131\ The draft reassessment completed external 
peer review.\132\ Based on external peer review comments received, a 
revised draft assessment that considers all routes of exposure, as well 
as cancer and noncancer effects, is under development. The external 
review draft does not represent official agency opinion and was 
released solely for the purposes of external peer review and public 
comment. The National Toxicology Program listed naphthalene

[[Page 29837]]

as ``reasonably anticipated to be a human carcinogen'' in 2004 on the 
basis of bioassays reporting clear evidence of carcinogenicity in rats 
and some evidence of carcinogenicity in mice.\133\ California EPA has 
released a new risk assessment for naphthalene, and the IARC has 
reevaluated naphthalene and re-classified it as Group 2B: possibly 
carcinogenic to humans.\134\
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    \129\ U.S. EPA. 1998. Toxicological Review of Naphthalene 
(Reassessment of the Inhalation Cancer Risk), Environmental 
Protection Agency, Integrated Risk Information System, Research and 
Development, National Center for Environmental Assessment, 
Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0436.htm.
    \130\ U.S. EPA. 1998. Toxicological Review of Naphthalene 
(Reassessment of the Inhalation Cancer Risk), Environmental 
Protection Agency, Integrated Risk Information System, Research and 
Development, National Center for Environmental Assessment, 
Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0436.htm.
    \131\ U.S. EPA. (1998). Toxicological Review of Naphthalene 
(Reassessment of the Inhalation Cancer Risk), Environmental 
Protection Agency, Integrated Risk Information System, Research and 
Development, National Center for Environmental Assessment, 
Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0436.htm.
    \132\ Oak Ridge Institute for Science and Education. (2004). 
External Peer Review for the IRIS Reassessment of the Inhalation 
Carcinogenicity of Naphthalene. August 2004. http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=84403.
    \133\ NTP. (2011). Report on Carcinogens, Twelfth Edition. 
Research Triangle Park, NC: U.S. Department of Health and Human 
Services, Public Health Service, National Toxicology Program. 499 
pp.
    \134\ International Agency for Research on Cancer (IARC). 
(2002). Monographs on the Evaluation of the Carcinogenic Risk of 
Chemicals for Humans. Vol. 82. Lyon, France.
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    Naphthalene also causes a number of chronic non-cancer effects in 
animals, including abnormal cell changes and growth in respiratory and 
nasal tissues.\135\ The current EPA IRIS assessment includes noncancer 
data on hyperplasia and metaplasia in nasal tissue that form the basis 
of the inhalation RfC of 3 [micro]g/m\3\.\136\ The ATSDR MRL for acute 
exposure to naphthalene is 0.6 mg/kg/day.
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    \135\ U.S. EPA. (1998). Toxicological Review of Naphthalene, 
Environmental Protection Agency, Integrated Risk Information System, 
Research and Development, National Center for Environmental 
Assessment, Washington, DC. This material is available 
electronically at http://www.epa.gov/iris/subst/0436.htm.
    \136\ U.S. EPA. (1998). Toxicological Review of Naphthalene. 
Environmental Protection Agency, Integrated Risk Information System 
(IRIS), Research and Development, National Center for Environmental 
Assessment, Washington, DC http://www.epa.gov/iris/subst/0436.htm.
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x. Other Air Toxics
    In addition to the compounds described above, other compounds in 
gaseous hydrocarbon and PM emissions from light-duty vehicles would be 
affected by this proposal. Mobile source air toxic compounds that would 
potentially be impacted include ethylbenzene, propionaldehyde, toluene, 
and xylene. Information regarding the health effects of these compounds 
can be found in EPA's IRIS database.\137\
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    \137\ U.S. EPA Integrated Risk Information System (IRIS) 
database is available at: www.epa.gov/iris.
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b. Current Levels of Air Toxics
    The majority of Americans continue to be exposed to ambient 
concentrations of air toxics at levels which have the potential to 
cause adverse health effects.\138\ The levels of air toxics to which 
people are exposed vary depending on where people live and work and the 
kinds of activities in which they engage, as discussed in detail in 
U.S. EPA's most recent Mobile Source Air Toxics Rule.\139\ According to 
the National Air Toxic Assessment (NATA) for 2005,\140\ mobile sources 
were responsible for 43 percent of outdoor toxic emissions and over 50 
percent of the cancer risk and noncancer hazard associated with primary 
emissions. Mobile sources are also large contributors to precursor 
emissions which react to form secondary concentrations of air toxics. 
Formaldehyde is the largest contributor to cancer risk of all 80 
pollutants quantitatively assessed in the 2005 NATA. Mobile sources 
were responsible for over 40 percent of primary emissions of this 
pollutant in 2005, and are major contributors to formaldehyde precursor 
emissions. Benzene is also a large contributor to cancer risk, and 
mobile sources account for over 70 percent of ambient exposure. Over 
the years, EPA has implemented a number of mobile source and fuel 
controls which have resulted in VOC reductions, which also reduced 
formaldehyde, benzene and other air toxic emissions.
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    \138\ U.S. Environmental Protection Agency (2007). Control of 
Hazardous Air Pollutants from Mobile Sources; Final Rule. 72 FR 
8434, February 26, 2007.
    \139\ U. S. Environmental Protection Agency (2007). Control of 
Hazardous Air Pollutants from Mobile Sources; Final Rule. 72 FR 
8434, February 26, 2007.
    \140\ U.S. EPA. (2011). 2005 National-Scale Air Toxics 
Assessment. http://www.epa.gov/ttn/atw/nata2005/.
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6. Near-Roadway Pollution
    Locations in close proximity to major roadways generally have 
elevated concentrations of many air pollutants emitted from motor 
vehicles. Hundreds of such studies have been published in peer-reviewed 
journals, concluding that concentrations of CO, NO, NO2, 
benzene, aldehydes, particulate matter, black carbon, and many other 
compounds are elevated in ambient air within approximately 300-600 
meters (about 1,000-2,000 feet) of major roadways. Highest 
concentrations of most pollutants emitted directly by motor vehicles 
are found at locations within 50 meters (about 165 feet) of the edge of 
a roadway's traffic lanes.
    A recent large-scale review of air quality measurements in vicinity 
of major roadways between 1978 and 2008 concluded that the pollutants 
with the steepest concentration gradients in vicinities of roadways 
were CO, ultrafine particles, metals, elemental carbon (EC), NO, 
NOX, and several VOCs.\141\ These pollutants showed a large 
reduction in concentrations within 100 meters downwind of the roadway. 
Pollutants that showed more gradual reductions with distance from 
roadways included benzene, NO2, PM2.5, and 
PM10. In the review article, results varied based on the 
method of statistical analysis used to determine the trend.
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    \141\ Karner, A.A.; Eisinger, D.S.; Niemeier, D.A. (2010). Near-
roadway air quality: synthesizing the findings from real-world data. 
Environ Sci Technol 44: 5334-5344.
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    For pollutants with relatively high background concentrations 
relative to near-road concentrations, detecting concentration gradients 
can be difficult. For example, many aldehydes have high background 
concentrations as a result of photochemical breakdown of precursors 
from many different organic compounds. This can make detection of 
gradients around roadways and other primary emission sources difficult. 
However, several studies have measured aldehydes in multiple weather 
conditions, and found higher concentrations of many carbonyls downwind 
of roadways.142 143 These findings suggest a substantial 
roadway source of these carbonyls.
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    \142\ Liu, W.; Zhang, J.; Kwon, J.l; et al. (2006). 
Concentrations and source characteristics of airborne carbonyl 
compounds measured outside urban residences. J Air Waste Manage 
Assoc 56: 1196-1204.
    \143\ Cahill, T.M.; Charles, M.J.; Seaman, V.Y. (2010). 
Development and application of a sensitive method to determine 
concentrations of acrolein and other carbonyls in ambient air. 
Health Effects Institute Research Report 149.Available at http://dx.doi.org.
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    In the past 15 years, many studies have been published with results 
showing that populations who live, work, or go to school near high-
traffic roadways experience higher rates of numerous adverse health 
effects, compared to populations far away from major roads.\144\ In 
addition, numerous studies have found adverse health effects associated 
with spending time in traffic, such as commuting or walking along high-
traffic roadways. The health outcomes with the strongest evidence 
linking them with traffic-associated air pollutants are respiratory 
effects, particularly in asthmatic children, and cardiovascular 
effects.
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    \144\ In the widely-used PubMed database of health publications, 
between January 1, 1990 and August 18, 2011, 605 publications 
contained the keywords ``traffic, pollution, epidemiology,'' with 
approximately half the studies published after 2007.
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    Numerous reviews of this body of health literature have been 
published as well. In 2010, an expert panel of the Health Effects 
Institute (HEI) published a review of hundreds of exposure, 
epidemiology, and toxicology studies.\145\ The panel rated how the 
evidence for each type of health outcome supported a conclusion of a 
causal association with traffic-

[[Page 29838]]

associated air pollution as either ``sufficient,'' ``suggestive but not 
sufficient,'' or ``inadequate and insufficient.'' The panel categorized 
evidence of a causal association for exacerbation of childhood asthma 
as ``sufficient.'' The panel categorized evidence of a causal 
association for new onset asthma as between ``sufficient'' and as 
``suggestive but not sufficient.'' ``Suggestive of a causal 
association'' was how the panel categorized evidence linking traffic-
associated air pollutants with exacerbation of adult respiratory 
symptoms and lung function decrement. It categorized as ``inadequate 
and insufficient'' evidence of a causal relationship between traffic-
related air pollution and health care utilization for respiratory 
problems, new onset adult asthma, chronic obstructive pulmonary disease 
(COPD), nonasthmatic respiratory allergy, and cancer in adults and 
children. Other literature reviews have been published with conclusions 
similar to the HEI panel's.146 147 148 Health outcomes with 
few publications suggest the possibility of other effects still lacking 
sufficient evidence to draw definitive conclusions. Among these 
outcomes with a small number of positive studies are neurological 
impacts (e.g., autism and reduced cognitive function) and reproductive 
outcomes (e.g., preterm birth, low birth 
weight).149 150 151 152
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    \145\ Health Effects Institute Panel on the Health Effects of 
Traffic-Related Air Pollution. (2010). Traffic-related air 
pollution: a critical review of the literature on emissions, 
exposure, and health effects. HEI Special Report 17. Available at 
http://www.healtheffects.org.
    \146\ Boothe, V.L.; Shendell, D.G. (2008). Potential health 
effects associated with residential proximity to freeways and primay 
roads: review of scientific literature, 1999-2006. J Environ Health 
70: 33-41.
    \147\ Salam, M.T.; Islam, T.; Gilliland, F.D. (2008). Recent 
evidence for adverse effects of residential proximity to traffic 
sources on asthma. Curr Opin Pulm Med 14: 3-8.
    \148\ Raaschou-Nielsen, O.; Reynolds, P. (2006). Air pollution 
and childhood cancer: a review of the epidemiological literature. 
Int J Cancer 118: 2920-9.
    \149\ Volk, H.E.; Hertz-Picciotto, I.; Delwiche, L.; et al. 
(2011). Residential proximity to freeways and autism in the CHARGE 
study. Environ Health Perspect 119: 873-877.
    \150\ Franco-Suglia, S.; Gryparis, A.; Wright, R.O.; et al. 
(2007). Association of black carbon with cognition among children in 
a prospective birth cohort study. Am J Epidemiol. doi: 10.1093/aje/
kwm308. [Online at http://dx.doi.org].
    \151\ Power, M.C.; Weisskopf, M.G.; Alexeef, SE.; et al. (2011). 
Traffic-related air pollution and cognitive function in a cohort of 
older men. Environ Health Perspect 2011: 682-687.
    \152\ Wu, J.; Wilhelm, M.; Chung, J.; et al. (2011). Comparing 
exposure assessment methods for traffic-related air pollution in and 
adverse pregnancy outcome study. Environ Res 111: 685-6692.
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    In addition to health outcomes, particularly cardiopulmonary 
effects, conclusions of numerous studies suggest mechanisms by which 
traffic-related air pollution affects health. Numerous studies indicate 
that near-roadway exposures increase systemic inflammation, affecting 
organ systems, including blood vessels and 
lungs.153 154 155 156 Long-term exposures in near-road 
environments have been associated with inflammation-associated 
conditions, such as atherosclerosis and asthma.157 158 159
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    \153\ Riediker, M. (2007). Cardiovascular effects of fine 
particulate matter components in highway patrol officers. Inhal 
Toxicol 19: 99-105. doi: 10.1080/08958370701495238 Available at 
http://dx.doi.org.
    \154\ Alexeef, S.E.; Coull, B.A.; Gryparis, A.; et al. (2011). 
Medium-term exposure to traffic-related air pollution and markers of 
inflammation and endothelial function. Environ Health Perspect 119: 
481-486. doi:10.1289/ehp.1002560 Available at http://dx.doi.org.
    \155\ Eckel. S.P.; Berhane, K.; Salam, M.T.; et al. (2011). 
Traffic-related pollution exposure and exhaled nitric oxide in the 
Children's Health Study. Environ Health Perspect (IN PRESS). 
doi:10.1289/ehp.1103516. Available at http://dx.doi.org.
    \156\ Zhang, J.; McCreanor, J.E.; Cullinan, P.; et al. (2009). 
Health effects of real-world exposure diesel exhaust in persons with 
asthma. Res Rep Health Effects Inst 138. [Online at http://www.healtheffects.org].
    \157\ Adar, S.D.; Klein, R.; Klein, E.K.; et al. (2010). Air 
pollution and the microvasculatory: a cross-sectional assessment of 
in vivo retinal images in the population-based Multi-Ethnic Study of 
Atherosclerosis. PLoS Med 7(11): E1000372. doi:10.1371/
journal.pmed.1000372. Available at http://dx.doi.org.
    \158\ Kan, H.; Heiss, G.; Rose, K.M.; et al. (2008). Proxpective 
analysis of traffic exposure as a risk factor for incident coronary 
heart disease: the Atherosclerosis Risk in Communities (ARIC) study. 
Environ Health Perspect 116: 1463-1468. doi:10.1289/ehp.11290. 
Available at http://dx.doi.org.
    \159\ McConnell, R.; Islam, T.; Shankardass, K.; et al. (2010). 
Childhood incident asthma and traffic-related air pollution at home 
and school. Environ Health Perspect 1021-1026.
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    Several studies suggest that some factors may increase 
susceptibility to the effects of traffic-associated air pollution. 
Several studies have found stronger respiratory associations in 
children experiencing chronic social stress, such as in violent 
neighborhoods or in homes with high family 
stress.160 161 162
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    \160\ Islam, T.; Urban, R.; Gauderman, W.J.; et al. (2011). 
Parental stress increases the detrimental effect of traffic exposure 
on children's lung function. Am J Respir Crit Care Med (In press)
    \161\ Clougherty, J.E.; Levy, J.I.; Kubzansky, L.D.; et al. 
(2007). Synergistic effects of traffic-related air pollution and 
exposure to violence on urban asthma etiology. Environ Health 
Perspect 115: 1140-1146.
    \162\ Chen, E.; Schrier, H.M.; Strunk, R.C.; et al. (2008). 
Chronic traffic-related air pollution and stress interact to predict 
biologic and clinical outcomes in asthma. Environ Health Perspect 
116: 970-5.
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    The risks associated with residence, workplace, or schools near 
major roads are of potentially high public health significance due to 
the large population in such locations. According to the 2009 American 
Housing Survey, over 22 million homes (17.0 percent of all U.S. housing 
units) were located within 300 feet of an airport, railroad, or highway 
with four or more lanes. This corresponds to a population of more than 
50 million U.S. residents in close proximity to high-traffic roadways 
or other transportation sources. As discussed in Section III, 
populations near major roads have higher fractions of minority 
residents and lower socioeconomic status. Furthermore, on average, 
Americans spend more than an hour traveling each day, bringing nearly 
all residents into a high-exposure microenvironment for part of the 
day.
    EPA continues to research near-road air quality, including the 
types of pollutants found in high concentrations near major roads and 
health problems associated with the mixture of pollutants near roads.
7. Environmental Impacts of Motor Vehicles and Fuels
a. Plant and Ecosystem Effects of Ozone
    Elevated ozone levels contribute to environmental effects, with 
impacts to plants and ecosystems being of most concern. Ozone can 
produce both acute and chronic injury in sensitive species depending on 
the concentration level and the duration of the exposure. Ozone effects 
also tend to accumulate over the growing season of the plant, so that 
even low concentrations experienced for a longer duration have the 
potential to create chronic stress on vegetation. Ozone damage to 
plants includes visible injury to leaves and impaired photosynthesis, 
both of which can lead to reduced plant growth and reproduction, 
resulting in reduced crop yields, forestry production, and use of 
sensitive ornamentals in landscaping. In addition, the impairment of 
photosynthesis, the process by which the plant makes carbohydrates (its 
source of energy and food), can lead to a subsequent reduction in root 
growth and carbohydrate storage below ground, resulting in other, more 
subtle plant and ecosystems impacts.
    These latter impacts include increased susceptibility of plants to 
insect attack, disease, harsh weather, interspecies competition and 
overall decreased plant vigor. The adverse effects of ozone on forest 
and other natural vegetation can potentially lead to species shifts and 
loss from the affected ecosystems, resulting in a loss or reduction in 
associated ecosystem goods and services. Lastly, visible ozone injury 
to leaves can result in a loss of aesthetic value in areas of special 
scenic significance like national parks and wilderness areas. The final 
2006 Ozone Air Quality Criteria Document presents more detailed 
information on ozone effects on vegetation and ecosystems.

[[Page 29839]]

b. Visibility
    Visibility can be defined as the degree to which the atmosphere is 
transparent to visible light.\163\ Visibility impairment is caused by 
light scattering and absorption by suspended particles and gases. 
Visibility is important because it has direct significance to people's 
enjoyment of daily activities in all parts of the country. Individuals 
value good visibility for the well-being it provides them directly, 
where they live and work, and in places where they enjoy recreational 
opportunities. Visibility is also highly valued in significant natural 
areas, such as national parks and wilderness areas, and special 
emphasis is given to protecting visibility in these areas. For more 
information on visibility see the final 2009 PM ISA.\164\
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    \163\ National Research Council, (1993). Protecting Visibility 
in National Parks and Wilderness Areas. National Academy of Sciences 
Committee on Haze in National Parks and Wilderness Areas. National 
Academy Press, Washington, DC. This book can be viewed on the 
National Academy Press Web site at http://www.nap.edu/books/0309048443/html/.
    \164\ U.S. EPA. (2009). Integrated Science Assessment for 
Particulate Matter (Final Report). U.S. Environmental Protection 
Agency, Washington, DC, EPA/600/R-08/139F.
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    EPA is pursuing a two-part strategy to address visibility 
impairment. First, EPA developed the regional haze program which was 
put in place in July 1999 to protect the visibility in Mandatory Class 
I Federal areas.\165\ There are 156 national parks, forests and 
wilderness areas categorized as Mandatory Class I Federal areas.\166\ 
These areas are defined in CAA section 162 as those national parks 
exceeding 6,000 acres, wilderness areas and memorial parks exceeding 
5,000 acres, and all international parks which were in existence on 
August 7, 1977. Second, EPA has concluded that PM2.5 causes 
adverse effects on visibility in other areas that are not protected by 
the Regional Haze Rule, depending on PM2.5 concentrations 
and other factors that control their visibility impact effectiveness 
such as dry chemical composition and relative humidity (i.e., an 
indicator of the water composition of the particles). EPA revised the 
PM2.5 standards in December 2012 and established a target 
level of protection that is expected to be met through attainment of 
the existing secondary standards for PM2.5.
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    \165\ 64 FR 35714 (July 1, 1999).
    \166\ 62 FR 38680-38681 (July 18, 1997).
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i. Current Visibility Levels
    As mentioned in Section II.B.2.c, millions of people live in 
nonattainment areas for the PM2.5 NAAQS. These populations, 
as well as large numbers of individuals who travel to these areas, are 
likely to experience visibility impairment. In addition, while 
visibility trends have improved in mandatory class I federal areas, the 
most recent data show that these areas continue to suffer from 
visibility impairment. In summary, visibility impairment is experienced 
throughout the U.S., in multi-state regions, urban areas, and remote 
mandatory class I federal areas.
c. Atmospheric Deposition
    Wet and dry deposition of ambient particulate matter delivers a 
complex mixture of metals (e.g., mercury, zinc, lead, nickel, aluminum, 
cadmium), organic compounds (e.g., polycyclic organic matter, dioxins, 
furans) and inorganic compounds (e.g., nitrate, sulfate) to terrestrial 
and aquatic ecosystems. The chemical form of the compounds deposited 
depends on a variety of factors including ambient conditions (e.g., 
temperature, humidity, oxidant levels) and the sources of the material. 
Chemical and physical transformations of the compounds occur in the 
atmosphere as well as the media onto which they deposit. These 
transformations in turn influence the fate, bioavailability and 
potential toxicity of these compounds. Atmospheric deposition has been 
identified as a key component of the environmental and human health 
hazard posed by several pollutants including mercury, dioxin and 
PCBs.\167\
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    \167\ U.S. EPA. (2000). Deposition of Air Pollutants to the 
Great Waters: Third Report to Congress. Office of Air Quality 
Planning and Standards. EPA-453/R-00-0005.
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    Adverse impacts on water quality can occur when atmospheric 
contaminants deposit to the water surface or when material deposited on 
the land enters a waterbody through runoff. Potential impacts of 
atmospheric deposition to waterbodies include those related to both 
nutrient and toxic inputs. Adverse effects to human health and welfare 
can occur from the addition of excess nitrogen via atmospheric 
deposition. The nitrogen-nutrient enrichment contributes to toxic algae 
blooms and zones of depleted oxygen, which can lead to fish kills, 
frequently in coastal waters. Deposition of heavy metals or other 
toxics may lead to the human ingestion of contaminated fish, impairment 
of drinking water, damage to freshwater and marine ecosystem 
components, and limits to recreational uses. Several studies have been 
conducted in U.S. coastal waters and in the Great Lakes Region in which 
the role of ambient PM deposition and runoff is 
investigated.168 169 170 171 172
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    \168\ U.S. EPA. (2004). National Coastal Condition Report II. 
Office of Research and Development/Office of Water. EPA-620/R-03/
002.
    \169\ Gao, Y., E.D. Nelson, M.P. Field, et al. (2002). 
Characterization of atmospheric trace elements on PM2.5 
particulate matter over the New York-New Jersey harbor estuary. 
Atmos. Environ. 36: 1077-1086.
    \170\ Kim, G., N. Hussain, J.R. Scudlark, and T.M. Church. 
(2000). Factors influencing the atmospheric depositional fluxes of 
stable Pb, 210Pb, and 7Be into Chesapeake Bay. J. Atmos. Chem. 36: 
65-79.
    \171\ Lu, R., R.P. Turco, K. Stolzenbach, et al. (2003). Dry 
deposition of airborne trace metals on the Los Angeles Basin and 
adjacent coastal waters. J. Geophys. Res. 108(D2, 4074): AAC 11-1 to 
11-24.
    \172\ Marvin, C.H., M.N. Charlton, E.J. Reiner, et al. (2002). 
Surficial sediment contamination in Lakes Erie and Ontario: A 
comparative analysis. J. Great Lakes Res. 28(3): 437-450.
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    Atmospheric deposition of nitrogen and sulfur contributes to 
acidification, altering biogeochemistry and affecting animal and plant 
life in terrestrial and aquatic ecosystems across the United States. 
The sensitivity of terrestrial and aquatic ecosystems to acidification 
from nitrogen and sulfur deposition is predominantly governed by 
geology. Prolonged exposure to excess nitrogen and sulfur deposition in 
sensitive areas acidifies lakes, rivers and soils. Increased acidity in 
surface waters creates inhospitable conditions for biota and affects 
the abundance and nutritional value of preferred prey species, 
threatening biodiversity and ecosystem function. Over time, acidifying 
deposition also removes essential nutrients from forest soils, 
depleting the capacity of soils to neutralize future acid loadings and 
negatively affecting forest sustainability. Major effects include a 
decline in sensitive forest tree species, such as red spruce (Picea 
rubens) and sugar maple (Acer saccharum), and a loss of biodiversity of 
fishes, zooplankton, and macro invertebrates.
    In addition to the role nitrogen deposition plays in acidification, 
nitrogen deposition also leads to nutrient enrichment and altered 
biogeochemical cycling. In aquatic systems increased nitrogen can alter 
species assemblages and cause eutrophication. In terrestrial systems 
nitrogen loading can lead to loss of nitrogen sensitive lichen species, 
decreased biodiversity of grasslands, meadows and other sensitive 
habitats, and increased potential for invasive species. For a broader 
explanation of the topics treated here, refer to the description in 
Section 6.3.2 of the RIA.
    Adverse impacts on soil chemistry and plant life have been observed 
for areas heavily influenced by atmospheric

[[Page 29840]]

deposition of nutrients, metals and acid species, resulting in species 
shifts, loss of biodiversity, forest decline, damage to forest 
productivity and reductions in ecosystem services. Potential impacts 
also include adverse effects to human health through ingestion of 
contaminated vegetation or livestock (as in the case for dioxin 
deposition), reduction in crop yield, and limited use of land due to 
contamination.
    Atmospheric deposition of pollutants can reduce the aesthetic 
appeal of buildings and culturally important articles through soiling, 
and can contribute directly (or in conjunction with other pollutants) 
to structural damage by means of corrosion or erosion. Atmospheric 
deposition may affect materials principally by promoting and 
accelerating the corrosion of metals, by degrading paints, and by 
deteriorating building materials such as concrete and limestone. 
Particles contribute to these effects because of their electrolytic, 
hygroscopic, and acidic properties, and their ability to adsorb 
corrosive gases (principally sulfur dioxide).
i. Current Nitrogen and Sulfur Deposition
    Over the past two decades, the EPA has undertaken numerous efforts 
to reduce nitrogen and sulfur deposition across the U.S. Analyses of 
long-term monitoring data for the U.S. show that deposition of both 
nitrogen and sulfur compounds has decreased over the last 17 years. The 
data show that reductions were more substantial for sulfur compounds 
than for nitrogen compounds. In the eastern U.S., where data are most 
abundant, total sulfur deposition decreased by about 44 percent between 
1990 and 2007, while total nitrogen deposition decreased by 25 percent 
over the same time frame.\173\ These numbers are generated by the U.S. 
national monitoring network and they likely underestimate nitrogen 
deposition because neither ammonia nor organic nitrogen is measured. 
Although total nitrogen and sulfur deposition has decreased over time, 
many areas continue to be negatively impacted by deposition. Deposition 
of inorganic nitrogen and sulfur species routinely measured in the U.S. 
between 2005 and 2007 were as high as 9.6 kilograms of nitrogen per 
hectare (kg N/ha) averaged over three years and 20.8 kilograms of 
sulfur per hectare (kg S/ha) averaged over three years.\174\
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    \173\ U.S. EPA. (2012). U.S. EPA's Report on the Environment. 
Data accessed online February 15, 2012 at: http://cfpub.epa.gov/eroe/index.cfm?fuseaction=detail.viewPDF&ch=46&lShowInd=0&subtop=341&lv=list.listByChapter&r=216610.
    \174\ U.S. EPA. (2012). U.S. EPA's Report on the Environment. 
Data accessed online February 15, 2012 at: http://cfpub.epa.gov/eroe/index.cfm?fuseaction=detail.viewPDF&ch=46&lShowInd=0&subtop=341&lv=list.listByChapter&r=216610.
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d. Environmental Effects of Air Toxics
    Emissions from producing, transporting and combusting fuel 
contribute to ambient levels of pollutants that contribute to adverse 
effects on vegetation. Volatile organic compounds, some of which are 
considered air toxics, have long been suspected to play a role in 
vegetation damage.\175\ In laboratory experiments, a wide range of 
tolerance to VOCs has been observed.\176\ Decreases in harvested seed 
pod weight have been reported for the more sensitive plants, and some 
studies have reported effects on seed germination, flowering and fruit 
ripening. Effects of individual VOCs or their role in conjunction with 
other stressors (e.g., acidification, drought, temperature extremes) 
have not been well studied. In a recent study of a mixture of VOCs 
including ethanol and toluene on herbaceous plants, significant effects 
on seed production, leaf water content and photosynthetic efficiency 
were reported for some plant species.\177\
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    \175\ U.S. EPA. (1991). Effects of organic chemicals in the 
atmosphere on terrestrial plants. EPA/600/3-91/001.
    \176\ Cape JN, ID Leith, J Binnie, J Content, M Donkin, M 
Skewes, DN Price AR Brown, AD Sharpe. (2003). Effects of VOCs on 
herbaceous plants in an open-top chamber experiment. Environ. 
Pollut. 124:341-343.
    \177\ Cape JN, ID Leith, J Binnie, J Content, M Donkin, M 
Skewes, DN Price AR Brown, AD Sharpe. (2003). Effects of VOCs on 
herbaceous plants in an open-top chamber experiment. Environ. 
Pollut. 124:341-343.
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    Research suggests an adverse impact of vehicle exhaust on plants, 
which has in some cases been attributed to aromatic compounds and in 
other cases to nitrogen oxides.178 179 180
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    \178\ Viskari E-L. (2000). Epicuticular wax of Norway spruce 
needles as indicator of traffic pollutant deposition. Water, Air, 
and Soil Pollut. 121:327-337.
    \179\ Ugrekhelidze D, F Korte, G Kvesitadze. (1997). Uptake and 
transformation of benzene and toluene by plant leaves. Ecotox. 
Environ. Safety 37:24-29.
    \180\ Kammerbauer H, H Selinger, R Rommelt, A Ziegler-Jons, D 
Knoppik, B Hock. (1987). Toxic components of motor vehicle emissions 
for the spruce Picea abies. Environ. Pollut. 48:235-243.
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III. How would this proposal reduce emissions and air pollution?

A. Effects of the Proposed Vehicle and Fuel Changes on Mobile Source 
Emissions

    The vehicle and fuel standards that EPA is proposing would 
significantly reduce the tailpipe and evaporative emissions of light- 
and heavy-duty vehicles in several ways, as described in this section. 
In addition, the proposed gasoline sulfur standard would reduce 
emissions of SO2 from existing gasoline-powered vehicles and 
equipment. As described in Section II, all of these emission reductions 
would in turn improve air quality nationwide and reduce the health 
effects associated with air pollution from mobile sources.
    As with the Tier 2 program, EPA is proposing to implement closely-
coordinated requirements for both automakers and refiners in the same 
rulemaking action. The proposed vehicle emission standards and gasoline 
sulfur standards represent a ``systems approach'' to reducing vehicle-
related exhaust and evaporative emissions. By recognizing the 
relationships among the various sources of emissions addressed by this 
proposed rule, we have been able to integrate the provisions into a 
single, coordinated program.
1. How do vehicles produce the emissions addressed in this proposal?
    The degree to which vehicles produce exhaust and evaporative 
emissions depends on the design and functionality of the engine and the 
associated exhaust and evaporative emission controls, in concert with 
the properties of the fuel on which the vehicle is operating. In the 
following paragraphs, we discuss how light- and heavy-duty vehicles 
produce each of these types of emissions, both from the tailpipe and 
from the fuel system.
a. Tailpipe (Exhaust) Emissions
    Which pollutants are emitted at the vehicle's tailpipe and their 
quantities depend on how the fuel is combusted in the engine and how 
the resulting gases are treated in the exhaust system. Historically, 
much of tailpipe emission control has focused on hydrocarbon compounds 
(HC) and NOX. The portion of hydrocarbons that is methane is 
minimally reactive in forming ozone. Thus, for emission control 
purposes, the focus is generally on non-methane hydrocarbons (NMHC), 
which are also expressed as non-methane organic gases (NMOG) in order 
to account for oxygenates (usually ethanol) now usually present in the 
fuel.
    Tailpipe hydrocarbon emissions also include several toxic 
pollutants, including benzene, acetaldehyde, and formaldehyde. To 
varying degrees, the mass emissions of these pollutants are reduced 
along with other hydrocarbons by the catalytic converter and improved 
engine controls.

[[Page 29841]]

    Light- and heavy-duty gasoline vehicles also emit PM and CO. PM 
forms directly as a combustion product (primarily as elemental carbon, 
usually called soot) and also indirectly as semi-volatile hydrocarbon 
compounds that form particles in the exhaust system or soon after 
exiting the tailpipe. CO is a product of incomplete fuel combustion.
    When operating properly, modern exhaust emission controls 
(centering on the catalytic convertor) can reduce much of the HC 
(including toxics), NOX and CO exiting the engine. However, 
tailpipe emissions are increased during periods of vehicle startup, as 
catalytic convertors must warm up to be effective; during subsequent 
operation due to the interference of sulfur in the gasoline; during 
high load operating events, as the catalyst is overwhelmed or its 
operation is modified to protect against permanent damage; and as a 
vehicle ages, as the catalyst degrades in performance due to the 
effects of high temperature operation and contaminants in the fuel and 
lubricating oil.
b. Evaporative Emissions
    Gasoline vehicles also produce vapors in the fuel tank and fuel 
system that can be released as evaporative emissions. These vapors are 
primarily the lighter, more volatile hydrocarbon compounds in the 
gasoline, which, like exhaust hydrocarbons, contribute to 
concentrations of VOCs in the atmosphere.
    As discussed in Section IV below, vehicle evaporative (``evap'') 
control systems are designed to block or capture vapors as they are 
generated. Vapors are generated in the vehicle fuel tank and fuel 
system (and released to the atmosphere if not adequately controlled) as 
fuel heats up due to ambient temperature increase and/or vehicle 
operation. Fuel vapors are also released when they permeate through 
hose material, when they leak at connections or due to damaged 
components, and during refueling events.
    In general, the evap emission controls on current vehicles (and 
that would be improved under this proposed rule) consist of a canister 
filled with activated charcoal and connected by hoses to the fuel 
system. The hoses direct generated vapors to the canister, which 
collects the vapors on the carbon and stores them until the system 
experiences a ``purge'' event. During purge, the engine draws fresh air 
through the canister, carrying vapors released by the carbon to the 
engine to be combusted and restoring the capacity of the canister. 
Evaporative emissions occur when vapors are emitted to the atmosphere 
because the evap system is compromised, the carbon canister is 
overwhelmed, or vapors permeate or leak. As such, evaporative emission 
controls also involve proper material selection for fuel system 
components, careful design of these components, and onboard diagnostics 
to check the system for failure.
2. How would the proposed changes to gasoline sulfur content affect 
vehicle emissions?
    Gasoline vehicles depend to a great degree on catalytic converters 
to reduce levels of pollutants in their exhaust, including NMOG and 
NOX, as well as PM (specifically, the volatile hydrocarbon 
fraction), CO, and most air toxics. The presence of sulfur in gasoline 
has a strong impact on these emissions, particularly NOX, 
due to its impact on proper catalyst operation.
    Sulfur naturally occurs in crude oil and thus in gasoline. In 
vehicle catalytic converters, the precious metals that catalyze the 
reactions that convert the pollutants become significantly less 
efficient when sulfur is deposited (adsorbed) onto them. The Tier 2 
rulemaking required refiners to take steps to reduce sulfur levels in 
gasoline by approximately 90 percent, to an average of 30 ppm. At the 
time there were indications that sulfur reductions below 30 ppm may 
continue to provide additional emission benefits. However, the data was 
insufficient to quantify the benefits to the existing fleet, and the 
Tier 2 vehicle standards could be achieved without lowering sulfur 
further. As a result, to minimize the cost of the Tier 2 program, the 
sulfur standard was not further reduced below 30 ppm.
    As discussed in Section IV.A.6, subsequent research provides a 
compelling case that even this level of sulfur degrades the emission 
performance of vehicles on the road today, and inhibits necessary 
further reductions in vehicle emissions performance, which depend on 
optimum catalyst performance to reach emission targets. A study 
conducted by EPA and the auto industry in support of the Mobile Source 
Air Toxics (MSAT) rule found significant reductions in NOX, 
CO and total HC when nine Tier 2 vehicles were tested on low sulfur 
fuel, relative to 32-ppm fuel.\181\ In particular, the study found a 
nearly 50 percent increase in NOX when sulfur was increased 
from 6 ppm to 32 ppm. Another recent study by Umicore showed reductions 
of 41 percent for NOX and 17 percent for HC on a PZEV 
operating on fuel with 33-ppm and 3-ppm fuel.\182\
---------------------------------------------------------------------------

    \181\ Regulatory Impact Analysis for the Control of Hazardous 
Air Pollutants from Mobile Sources Final Rule, EPA 420-R-07-002, 
Chapter 6.
    \182\ Ball D., Clark D., Moser D. (2011). Effects of Fuel Sulfur 
on FTP NOx Emissions from a PZEV 4 Cylinder Application. SAE 2011 
World Congress Paper 2011-01-0300.
---------------------------------------------------------------------------

    A larger study recently completed by EPA confirmed these results, 
showing significant reductions in FTP-composite NOX (23 
percent), CO (12 percent) and total HC (13 percent) on the 5-ppm fuel, 
relative to 28-ppm fuel. For NOX, the majority of overall 
reductions were driven by large reductions on warmed-up periods of the 
test cycle (Bag 2), which showed a 59 percent reduction between 28 and 
5-ppm fuel, consistent with the role of sulfur in catalyst degradation 
discussed above. Applying individual bag reductions to in-use activity 
patterns from EPA emission models suggests an overall NOX 
reduction of nearly 40 percent on the road.
    Based on these studies, the benefits of the proposed Tier 3 sulfur 
standard are significant in two ways: they enable vehicles designed to 
the proposed Tier 3 tailpipe exhaust standards to meet these standards 
for the duration of their useful life, and they facilitate immediate 
emission reductions from all the vehicles on the road at the time the 
sulfur controls are implemented.

B. How would emissions be reduced?

    The proposed standards would reduce emissions of VOC, 
NOX (including NO2), direct PM2.5, CO, 
SO2, and air toxics. The proposed sulfur standards would 
reduce emissions from the on-road fleet immediately upon 
implementation, so to reflect these early reductions, we present 
emission reductions in calendar year 2017. The proposed vehicle 
standards would begin to reduce emissions as the cleaner cars and 
trucks begin to enter the fleet in model year 2017. The magnitude of 
reduction would grow as more Tier 3 vehicles enter the fleet. 
Therefore, we also present emission reductions in calendar year 2030, 
when model year 2017 and later cars and trucks contribute nearly 90 
percent of fleet-wide vehicle miles travelled. Although 2030 is the 
farthest year that is feasible for air quality modeling, the full 
reduction of the vehicle program would be realized after 2030, when the 
fleet has fully turned over to Tier 3 vehicles. In Chapter 7 of the 
RIA, we present emission reductions projected in 2050, as well as 
additional calendar years between 2017 and 2030.
    Emission reductions are estimated on an annual basis, for all 50 
U.S. states

[[Page 29842]]

plus the District of Columbia, Puerto Rico and the U.S. Virgin Islands. 
The reductions were estimated using a version of EPA's MOVES model 
updated for this analysis, as described in detail in Chapter 7 of the 
RIA. This version of MOVES includes our most recent data on how vehicle 
emissions are affected by changes in sulfur, ethanol, and other fuel 
properties. We estimated emission reductions compared to a reference 
case that assumed partial RFS2 implementation by 2017, with full 
implementation in 2022 and beyond. The ethanol scenarios used for the 
reference and control cases were the ``post-EPAct/EISA'' scenario 
defined in Chapter 7 of the RIA, reflecting a mix of E10 and E15 in 
2017, and E15 only in 2030. The reference case also assumed 
continuation of the Tier 2 vehicle program indefinitely, and an average 
sulfur level of 30 ppm (10 ppm in California).
    As discussed throughout this preamble, implementation of the 
proposed Tier 3 standards is aligned with the 2017 LD GHG standards to 
achieve significant criteria pollutant and GHG emissions reductions 
while providing regulatory certainty and compliance efficiency to the 
auto and oil industries. The 2017 LD GHG standards were still in a 
preliminary state of development (pre-proposal) at the time we 
finalized our assumptions for the Tier 3 emissions, air quality, and 
cost analyses, so we were not able to reflect them in these analyses. 
However, we continue to expect vehicle criteria pollutant performance 
to be neutral under the GHG program, because exhaust and evaporative 
emissions are not proportional to the amount of fuel burned; rather, 
our standards are expressed on a per-mile basis, not on a per-gallon 
basis. Vehicle criteria emissions are almost exclusively controlled by 
a vehicle's emissions aftertreatment system and not by the efficiency 
of the engine.
    The majority of the NMOG that is emitted from a gasoline engine is 
generated during cold start, before the catalyst is lit off, and 
NOX is often created during higher load operation. 
Optimizing catalyst efficiency, minimizing thermal parasitics, 
minimizing fuel system leaks, and lower gasoline sulfur will be key 
enablers for all vehicles to meet the Tier 3 standards, regardless of 
the vehicle's fuel efficiency. Because we do not expect the increase in 
fuel efficiency to result in lower criteria pollutant emissions, we did 
not claim in the 2017 LD GHG rule any reductions attributable to the 
ability of vehicles to meet lower criteria emission levels (see 77 FR 
62899-62901, October 15, 2012). In other words, in the 2017 LD GHG 
rule, we assumed that, absent the proposed Tier 3 standards, the light-
duty fleet would continue to meet the Tier 2 standards. Thus, we 
believe that the inclusion of the light-duty GHG standards in our cost 
and benefit analyses for the proposed Tier 3 standards would have had 
little or no impact on the results or our conclusions, as discussed in 
Sections 7.1.2 and 7.1.3.2.1 of the draft RIA. Nevertheless, for the 
final rulemaking we will include the LD GHG requirements in the 
analysis.
    The analysis described here does account for the following national 
onroad rules:

 Tier 2 Motor Vehicle Emissions Standards and Gasoline Sulfur 
Control Requirements (65 FR 6698, February 10, 2000)
 Heavy-Duty Engine and Vehicle Standards and Highway Diesel 
Fuel Sulfur Control Requirements (66 FR 5002, January 18, 2001)
 Mobile Source Air Toxics Rule (72 FR 8428, February 26, 2007)
 Regulation of Fuels and Fuel Additives: Changes to Renewable 
Fuel Standard Program (75 FR 14670, March 26, 2010)
 Light-Duty Vehicle Greenhouse Gas Emission Standards and 
Corporate Average Fuel Economy Standards for 2012-2016 (75 FR 25324, 
May 7, 2010)
The analysis also accounts for many other national rules and standards. 
In addition, the modeling accounts for state and local rules including 
local fuel standards, Inspection/Maintenance programs, Stage II 
refueling controls, the National Low Emission Vehicle Program (NLEV), 
and the section 177 states LEV and LEVII programs. See the Tier 3 
emissions modeling TSD for more detail.

    A summary of emission reductions projected to result from Tier 3, 
relative to the reference case, is shown in calendar years 2017 and 
2030 for NOX, VOC, direct PM2.5, CO, 
SO2, and total air toxics in Table III-1. For many 
pollutants, the immediate reductions in 2017 are significant; for 
example, combined NOX and VOC emissions would be reduced by 
over 300,000 tons. By 2030, combined NOX and VOC emissions 
would be reduced by roughly 750,000 tons, one quarter of the onroad 
inventory. Many of the modeled air toxics would be significantly 
reduced as well, including benzene, 1,3-butadiene, acetaldehyde, 
acrolein and ethanol (ranging from 20 to nearly 40 percent of the 
national onroad inventory by 2030). The relative reduction in overall 
emissions would continue to increase beyond 2030 as more of the fleet 
continues to turn over to Tier 3 vehicles; for example, by 2050, when 
nearly all of the fleet would have turned over to Tier 3 standards, we 
estimate the Tier 3 program would reduce onroad emissions of 
NOX and VOC nearly 40 percent from the level of emissions 
projected without Tier 3 controls.

                  Table III-1--Estimated Emission Reductions from the Proposed Tier 3 Standards
                                          [Annual U.S. short tons] \a\
----------------------------------------------------------------------------------------------------------------
                                                               2017                            2030
                                                ----------------------------------------------------------------
                                                                    Percent of                      Percent of
                                                      Tons            onroad           Tons           onroad
                                                                    inventory                        inventory
----------------------------------------------------------------------------------------------------------------
NOX............................................         284,381              8           524,790              28
VOC............................................          44,782              3           226,028              23
CO.............................................         746,683              4         5,765,362              30
Direct PM2.5...................................             121              0.1           7,458              10
Benzene........................................           1,625              4             8,582              36
SO2............................................          16,261             51            17,267              51
1,3-Butadiene..................................             322              5             1,087              37
Formaldehyde...................................             727              3             2,707              12
Acetaldehyde...................................             762              3             4,414              26
Acrolein.......................................              23              1               184              15

[[Page 29843]]

 
Ethanol........................................           2,684              2            27,821              24
----------------------------------------------------------------------------------------------------------------
\a\ This analysis assumed emissions reductions from the Tier 3 vehicle standards would occur in all states. For
  the final rule we will account for LEV III vehicle standards in states that have subsequently adopted it.

    Reductions for each pollutant are discussed in the following 
sections, focusing on the contribution of program elements to the total 
reductions summarized above.
1. NOX
    The proposed sulfur standards would significantly reduce 
NOX emissions immediately upon implementation of the 
program. As discussed above, recent research on the impact of sulfur on 
Tier 2 technology vehicles shows the potential for significant 
reductions in NOX emissions from the existing fleet of Tier 
2 vehicles by lowering sulfur levels to 10 ppm. Prior research shows 
that NOX emissions would also be expected to decrease from 
the fleet of older (pre-Tier 2) light-duty vehicles as well as heavy-
duty gasoline vehicles,\183\ although at to a lesser extent than for 
Tier 2 vehicles.
---------------------------------------------------------------------------

    \183\ Rao, V. (2001) Fuel Sulfur Effects on Exhaust Emissions: 
Recommendations for MOBILE6, EPA420-R-01-039.
---------------------------------------------------------------------------

    Table III-2 shows the reduction in NOX emissions, in 
annual short tons, projected in calendar years 2017 and 2030. The 
reductions are split into those attributable to the introduction of low 
sulfur fuel in the pre-Tier 3 fleet (defined for this analysis as model 
years prior to 2017); and reductions attributable to vehicle standards 
enabled by low sulfur fuel (model year 2017 and later). As shown, upon 
implementation of the proposed sulfur standards, total onroad 
NOX emissions are projected to drop 8 percent. This is 
primarily due to large reductions from Tier 2 gasoline vehicles, which 
contribute about one-quarter of the NOX emissions from the 
on-road fleet in 2017. The relative reduction grows as cleaner vehicles 
turn over into the fleet. By 2030, we project that the reduction in 
overall onroad NOX inventory would be close to 30 percent.

        Table III-2--Projected NOX Reductions From Tier 3 Program
                         [Annual U.S. Tons] \a\
------------------------------------------------------------------------
                                               2017            2030
------------------------------------------------------------------------
Total reduction.........................         284,381         524,790
Reduction from pre-Tier 3 fleet due to           264,653          66,286
 sulfur standard........................
Reduction from Tier 3 fleet due to                19,728         458,504
 vehicle and sulfur standards...........
Percent reduction in onroad NOX                       8%             28%
 emissions..............................
------------------------------------------------------------------------
\a\ This analysis assumed emissions reductions from the Tier 3 vehicle
  standards would occur in all states. For the final rule we will
  account for LEV III vehicle standards in states that have subsequently
  adopted it.

2. VOC
    Table III-3 shows the reduction in VOC emissions, in annual short 
tons, projected in calendar years 2017 and 2030 resulting from the 
proposed standards. In 2017, as with NOX, we project 
reductions from the pre-Tier 3 fleet with the proposed fuel standards. 
By 2030 the reduction in overall onroad VOC emissions would be over 20 
percent, the majority of this from the Tier 3 fleet. The proposed 
evaporative standards are projected to account for roughly one quarter 
of the overall vehicle program reduction in 2030.

        Table III-3--Projected VOC Reductions From Tier 3 Program
                         [Annual U.S. tons] \a\
------------------------------------------------------------------------
                                               2017            2030
------------------------------------------------------------------------
Total reduction.........................          44,782         226,028
Reduction from pre-Tier 3 fleet due to            39,561          13,739
 sulfur standard........................
Reduction from Tier 3 fleet due to                 5,222         212,289
 vehicle and sulfur standards...........
Exhaust.................................          41,433         168,264
Evaporative.............................           3,349          57,764
Percent reduction in onroad VOC                       3%             23%
 emissions..............................
------------------------------------------------------------------------
\a\ This analysis assumed emissions reductions from the Tier 3 vehicle
  standards would occur in all states. For the final rule we will
  account for LEV III vehicle standards in states that have subsequently
  adopted it.


[[Page 29844]]

3. CO
    Table III-4 shows the reductions for CO, broken down by pre- and 
post-Tier 3 in the manner described for NOX and VOC above. 
Based on research showing sizeable CO reductions from lower sulfur 
fuel, the immediate reductions in the onroad fleet from sulfur control 
are also significant. The CO exhaust standards are projected to reduce 
onroad CO emissions 30 percent by 2030.

        Table III-4--Projected CO Reductions From Tier 3 Program
                           [Annual U.S. tons]
------------------------------------------------------------------------
                                               2017            2030
------------------------------------------------------------------------
Total reduction.........................         746,683       5,765,362
Reduction from pre-Tier 3 fleet due to           608,502         139,074
 sulfur standard........................
Reduction from Tier 3 fleet due to               138,181       5,626,288
 vehicle and sulfur standards...........
Percent reduction in onroad CO emissions              4%             30%
------------------------------------------------------------------------
\a\ This analysis assumed emissions reductions from the Tier 3 vehicle
  standards would occur in all states. For the final rule we will
  account for LEV III vehicle standards in states that have subsequently
  adopted it.

4. Direct PM2.5
    Reductions in direct emissions of PM2.5 are projected to 
result solely from the proposed vehicle tailpipe standards, so 
meaningful reductions are realized mainly as the fleet turns over. By 
2030, we project a reduction of about 7,500 tons annually, which 
represents approximately 10 percent of the onroad direct 
PM2.5 inventory. However, since the PM standards are mainly 
focused on improving engine durability through the end of a vehicle's 
useful life, the relative reduction in onroad emissions is projected to 
grow to 17 percent with full fleet turnover in 2050. Reductions in 
NOX and VOC emissions would also reduce secondary PM 
formation, which is quantified as part of the air quality analysis 
described in Section III.C.
5. Air Toxics
    Emissions of air toxics also would be reduced by the proposed 
sulfur, exhaust and evaporative standards. Air toxics are generally a 
subset of compounds making up VOC, so the reduction trends tend to 
track the VOC reductions presented above. Table III-5 presents 
reductions for certain key air toxics, and Table III-6 presents 
reductions for the sum of 71 different toxic compounds.

                            Table III-5--Reductions for Certain Individual Compounds
                                               [Annual U.S. tons]
----------------------------------------------------------------------------------------------------------------
                                                                      Percent                         Percent
                                                   Tons reduced    reduction in    Tons reduced    reduction in
                                                      in 2017         onroad          in 2030         onroad
                                                                     emissions                       emissions
----------------------------------------------------------------------------------------------------------------
Acetaldehyde....................................             762               3           4,414              26
Formaldehyde....................................             727               3           2,707              12
Acrolein........................................              23               1             184              15
1,3-Butadiene...................................             322               5           1,087              37
Benzene.........................................           1,625               4           8,581              36
Naphthalene.....................................              96               2             420              17
Ethanol.........................................           2,684               2          27,821              24
----------------------------------------------------------------------------------------------------------------
\a\ This analysis assumed emissions reductions from the Tier 3 vehicle standards would occur in all states. For
  the final rule we will account for LEV III vehicle standards in states that have subsequently adopted it.

    The totals shown in Table III-6 represent the sum of 71 species 
including the toxics in Table III-5, 15 polycyclic aromatic hydrocarbon 
(PAH) compounds in gas and particle phase, and additional gaseous 
compounds such as toluene, xylenes, styrene, hexane, 2,2,4-
trimethylpentane, n-hexane, and propionaldehyde (Appendix 7A in the 
draft RIA). As shown, in 2030 the overall onroad inventory of total 
toxics would be reduced by over 20 percent, with nearly one third of 
the vehicle program reductions coming from the proposed evaporative 
standards.

        Table III-6--Reductions in Total Mobile Source Air Toxics
                           [Annual U.S. Tons]
------------------------------------------------------------------------
                                               2017            2030
------------------------------------------------------------------------
Total reduction.........................          15,156          89,685
Reduction from pre-Tier 3 fleet due to            12,452           5,022
 sulfur standard........................
Reduction from Tier 3 fleet due to                 2,683          84,663
 vehicle and sulfur standards...........
Exhaust.................................          13,748          64,144
Evaporative.............................           1,408          25,541
Percent reduction in onroad toxics                    3%            23%
 emissions..............................
------------------------------------------------------------------------
\a\ This analysis assumed emissions reductions from the Tier 3 vehicle
  standards would occur in all states. For the final rule we will
  account for LEV III vehicle standards in states that have subsequently
  adopted it.


[[Page 29845]]

6. SO2
    SO2 emissions from mobile sources are a direct function 
of sulfur in the fuel, and reducing sulfur in gasoline would result in 
immediate reductions in SO2 from the on and off-road fleet. 
The reductions, shown in Table III-7, are a function of the sulfur 
level and fuel consumption. This is reflected in the relative 
contribution of on-road vehicles and off-road equipment, where off-road 
gasoline consumption accounts for approximately 5 percent of overall 
gasoline use.\184\
---------------------------------------------------------------------------

    \184\ U.S. Energy Information Administration (2011), Annual 
Energy Outlook 2011, DOE/EIA-0383 (2011).

        Table III-7--Projected SO2 Reductions From Tier 3 Program
                           [Annual U.S. Tons]
------------------------------------------------------------------------
                                               2017            2030
------------------------------------------------------------------------
Total reduction.........................          16,261          17,267
Reduction from onroad vehicles due to             15,494          16,370
 sulfur standard........................
Reduction from off-road equipment due to             767             897
 sulfur standard........................
Percent reduction in onroad SO2                      51%             51%
 emissions..............................
------------------------------------------------------------------------

 7. Greenhouse Gases
    Reductions in nitrous oxide (N2O) emissions and methane 
(CH4) emissions, both potent greenhouse gas emissions, are 
projected for gasoline cars and trucks due to the proposed sulfur and 
tailpipe standards. A study conducted by the University of California 
at Riverside found a 29 percent reduction in N2O emissions 
over the FTP when sulfur was reduced from 30 to 5 ppm,\185\ while EPA 
research described in Section IV.A on sulfur effects found a 25 percent 
reduction in CH4 emissions when sulfur was reduced from 28 
to 5 ppm. Several studies have established correlations between 
reductions in tailpipe NOX emissions and reductions in 
N2O from gasoline cars and trucks,186 187 188 as 
well as correlations between reductions in tailpipe HC emissions and 
reductions in CH4.189 190 One such study 
(Behrentz et al.) reported an N2O: NOX ratio of 
0.095  0.035, and supported the application of 
N2O: NOX ratios to NOX emissions as a 
reasonable method for estimating N2O emission inventories. 
As detailed in RIA Chapter 7.3, a range of N2O reductions is 
bounded by applying this ratio to NOX reductions projected 
for this proposal (from Table III-1), and applying the UC Riverside 
sulfur results to MOVES N2O inventories for pre-Tier 3 
vehicles. Using a 100-year global warming potential of 298 for 
N2O according to the 2007 IPCC AR4,\191\ the range of 
reductions calculated for N2O is from 2.9 to 7.3 million 
metric tons of carbon dioxide equivalent (MMTCO2e) in 2017, 
growing to 12.3 to 13.5 MMTCO2e in 2030. MOVES can be used 
to directly estimate CH4 reductions from the sulfur and 
vehicle standards, estimating an additional 0.1 MMTCO2e 
reduction in 2017, growing to 0.5 MMTCO2e in 2030. The range of total 
GHG reductions from the Tier 3 rule is 3.0 to 7.4 MMTCO2e in 
2017, growing to 12.8 to 14.0 MMTCO2e in 2030.
---------------------------------------------------------------------------

    \185\ Huai, et al. (2004) Estimates of the emission rates of 
nitrous oxide from light-duty vehicles using different chassis 
dynamometer test cycles Atmospheric Environment 6621-6629.
    \186\ Michaels, H. (1998) Emissions of Nitrous Oxide from 
Highway Mobile Sources, U.S. EPA EPA420-R-98-009.
    \187\ Behrentz, et al. (2004), Measurements of nitrous oxide 
emissions from light-duty motor vehicles: a pilot study Atmospheric 
Environment 4291-4303.
    \188\ Meffert, et. al (2000) Analysis of Nitrous Oxide Emissions 
from Light Duty Passenger Cars, SAE 2000-01-1952.
    \189\ Meszler, D. (2004), Light Duty Vehicle Methane and Nitrous 
Oxide Emissions: Greenhouse Gas Impacts Study for Northeast States 
Center for a Clean Air Future.
    \190\ Graham, L. Greenhouse Gas Emissions from 1997-2005 Model 
Year Light Duty Vehicles Environment Canada ERMD Report 04-
44.
    \191\ The global warming potentials (GWP) used in this rule are 
consistent with the 100-year time frame values in the 2007 
Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment 
Report (AR4). At this time, the 1996 IPCC Second Assessment Report 
(SAR) 100-year GWP values are used in the official U.S. greenhouse 
gas inventory submission to the United Nations Framework Convention 
on Climate Change (per the reporting requirements under that 
international convention, which were last updated in 2006). 
N2O has a 100-year GWP of 298 and CH4 has a 
100-year GWP of 25 according to the 2007 IPCC AR4.
---------------------------------------------------------------------------

    These reductions would be offset to some degree by CO2 
emissions associated with higher energy use required in the process of 
removing sulfur within the refinery. To assess the potential refinery 
permitting implications of the Tier 3 proposal, we calculated the 
CO2 emission impacts on a refinery-by-refinery basis. We 
used the projected refinery-specific changes from our refinery-by-
refinery modeling (see Chapter 5 of the draft RIA) to estimate changes 
in process energy and then applied emission factors that correspond to 
those changes. The results showed an increase of up to 4.6 
MMTCO2e in 2017 for all U.S. refineries complying with the 
lower sulfur standards assuming that the proposed sulfur standards are 
fully phased-in.\192\ The actual increase is expected to be 
considerably lower, since this is a permitting analysis and refineries 
will not be operating at their permit capacity. The actual increase 
will also be a function of several factors, including technology 
options selected by the refineries and the projected use of averaging, 
banking and trading in avoiding the need for investments at some 
refineries. As a result, 4.6 MMTCO2e represents an upper-
bound estimate of the possible increase in refinery CO2 
emissions due to the need for additional process heat and hydrogen 
production to enable the additional hydrotreating required.
---------------------------------------------------------------------------

    \192\ Keller, P. (February, 2013). New Source Review Permitting 
Impact Analysis for Proposed Tier 3 Gasoline Program. Memorandum to 
the docket.
---------------------------------------------------------------------------

    In 2017, the range of potential decrease in CH4 and 
N2O emissions overlaps with the range of projected increase 
in CO2 from refinery processes, suggesting that a net 
increase or decrease in GHG emissions cannot be quantified with 
certainty. However, we estimate the program would result in net GHG 
reductions as the program continues into the future, as shown by our 
2030 estimates.
    We do not expect the Tier 3 vehicle standards to result in any 
discernible changes in vehicle CO2 emissions or fuel 
economy. Emissions of the pollutants that we have designed the program 
to address--NMOG, NOX, and PM--are not a function of the 
amount of fuel consumed, since manufacturers need to design their 
catalytic emission control systems to reduce these emissions regardless 
of their engine-out levels. However, there may be some slight reduction 
of vehicle mass if manufacturers explore lighter exhaust manifold 
materials in order to reduce thermal mass and promote earlier catalyst 
light-off. EPA invites comments on any potential impacts of the 
proposed Tier 3 program on vehicle CO2 emissions and fuel 
economy.

[[Page 29846]]

C. How would air pollution be reduced?

    Reductions in emissions of NOX, VOC, PM2.5 
and air toxics expected as a result of the proposed Tier 3 standards 
are projected to lead to significant decreases in ambient 
concentrations of ozone, PM2.5, and air toxics. The results 
of our air quality modeling of the impacts of the Tier 3 proposal are 
summarized in the following section. The air quality modeling predicts 
significant improvements in ozone concentrations due to the proposed 
Tier 3 standards. Ambient PM2.5 and NO2 
concentrations are also expected to improve as a result of the proposed 
Tier 3 program. Decreases in ambient concentrations of air toxics are 
projected with the proposed standards, including notable nationwide 
reductions in benzene concentrations. Our air quality modeling also 
predicts improvements in visibility and sulfur deposition, as well as 
substantial decreases in nitrogen deposition as a result of the 
proposed standards.
1. Ozone
    The air quality modeling done for this proposal projects that in 
2017, with all current controls in effect but excluding the emissions 
changes expected to occur as a result of this proposed action or any 
other additional controls, at least 40 counties, with a projected 
population of almost 50 million people, would have projected design 
values above the level of the 2008 8-hour ozone standard of 75 ppb. 
Even in 2030 the modeling projects that in the absence of additional 
controls there would be 12 counties with a population of almost 32 
million people with projected design values above the level of the 2008 
8-hour ozone standard of 75 ppb. Since the emission changes from this 
proposal go into effect during the period when some areas are still 
working to attain the ozone NAAQS, the projected emission changes would 
help state and local agencies in their effort to attain and maintain 
the ozone standard.
    Air quality modeling indicates ozone design value concentrations 
would decrease dramatically in many areas of the country as a result of 
this action and in some places those decreases would be enough to 
change the projected design values from being above the NAAQS to being 
below the NAAQS. The decreases in ozone design values are likely due to 
projected tailpipe reductions in NOX and VOCs from 
reductions in fuel sulfur and engine controls.
    In 2017, the majority of the design value decreases are between 0.5 
and 1.0 ppb. The projected population-weighted average design value 
concentration without the proposed rule is 71.3 ppb in 2017. The 
proposed rule would also reduce the projected ozone design values in 
three counties from above the level of the standard to below. These 
three counties are Bucks County in Pennsylvania, Arlington County in 
Virginia and St Louis County in Missouri. The projected population in 
these three counties in 2017 is almost 2 million people. In 2030, the 
proposed rule would result in larger decreases in ozone design values, 
with the majority of counties projecting decreases of between 1.0 and 
1.5 ppb, and over 200 more counties with decreases greater than 1.5 
ppb. The projected population-weighted average design value 
concentration without the proposed rule is 66.7 ppb in 2030. There are 
also two more counties whose projected design values would be reduced 
from above the level of the ozone standard to below by the proposed 
rule in 2030. These counties are Hudson County in New Jersey and 
Brazoria County in Texas. The projected population in these two 
counties in 2030 is over 1 million people.
    Table III-8 and Table III-9 show the average change in 2017 and 
2030 8-hour ozone design values for: (1) All counties with 2005 
baseline design values, (2) counties with 2005 baseline design values 
that exceeded the 2008 ozone standard, (3) counties with 2005 baseline 
design values that did not exceed the 2008 standard, but were within 10 
percent of it, (4) counties with 2017/2030 design values that exceeded 
the 2008 ozone standard, and (5) counties with 2017/2030 design values 
that did not exceed the standard, but were within 10 percent of it. 
Counties within 10 percent of the standard are intended to reflect 
counties that although not violating the standards, will also be 
impacted by changes in ozone as they work to ensure long-term 
maintenance of the ozone NAAQS. All of these metrics show a decrease in 
2017 and 2030, indicating in five different ways the overall 
improvement in air quality.
    On a population-weighted basis, the average modeled future-year 8-
hour ozone design values are projected to decrease by 0.47 ppb in 2017 
and 1.55 ppb in 2030. On a population-weighted basis design values in 
those counties that are projected to be above the 2008 ozone standard 
in 2017 and 2030 are projected to decrease by 0.30 and 1.62 ppb 
respectively due to the proposed standards.

                 Table III-8--Average Change in Projected 8-Hour Ozone Design Value in 2017 \c\
----------------------------------------------------------------------------------------------------------------
                                                                                                  Change in 2017
                           Average \a\                            Number of U.S.       2020        design value
                                                                     counties     population \b\       (ppb)
----------------------------------------------------------------------------------------------------------------
All.............................................................             676     238,026,106           -0.50
All, population-weighted........................................  ..............  ..............           -0.47
Counties whose 2005 base year is violating the 2008 8-hour ozone             393     176,910,535           -0.56
 standard.......................................................
Counties whose 2005 base year is violating the 2008 8-hour ozone  ..............  ..............           -0.51
 standard, population-weighted..................................
Counties whose 2005 base year is within 10 percent of the 2008 8-            201      40,516,171           -0.47
 hour ozone standard............................................
Counties whose 2005 base year is within 10 percent of the 2008 8- ..............  ..............           -0.42
 hour ozone standard, population-weighted.......................
Counties whose 2017 control case is violating the 2008 8-hour                 37      47,659,433           -0.35
 ozone standard.................................................
Counties whose 2017 control case is violating the 2008 8-hour     ..............  ..............           -0.30
 ozone standard, population-weighted............................
Counties whose 2017 control case is within 10 percent of the                 124      68,625,934           -0.51
 2008 8-hour ozone standard.....................................
Counties whose 2017 control case is within 10 percent of the      ..............  ..............           -0.49
 2008 8-hour ozone standard, population-weighted................
----------------------------------------------------------------------------------------------------------------
\a\ Averages are over counties with 2005 modeled design values.
\b\ Population numbers based on Woods & Poole data. Woods & Poole Economics, Inc. 2001. Population by Single
  Year of Age CD.
\c\ This analysis assumed emissions reductions from Tier 3 vehicle standards would occur in all states and did
  not account for emission reductions associated with LEV III vehicle standards in California and other states
  that have subsequently adopted it. The analysis for the final rule will account for LEV III vehicle standards.


[[Page 29847]]


                 Table III-9--Average Change in Projected 8-Hour Ozone Design Value in 2030 \c\
----------------------------------------------------------------------------------------------------------------
                                                                                                  Change in 2030
                           Average\a\                             Number of U.S.       2030        design value
                                                                     counties     population \b\       (ppb)
----------------------------------------------------------------------------------------------------------------
All.............................................................             676     261,497,900           -1.35
All, population-weighted........................................  ..............  ..............           -1.55
Counties whose 2005 base year is violating the 2008 8-hour ozone             393     194,118,748           -1.54
 standard.......................................................
Counties whose 2005 base year is violating the 2008 8-hour ozone  ..............  ..............           -1.69
 standard, population-weighted..................................
Counties whose 2005 base year is within 10 percent of the 2008 8-            201      44,436,103           -1.18
 hour ozone standard............................................
Counties whose 2005 base year is within 10 percent of the 2008 8- ..............  ..............           -1.25
 hour ozone standard, population-weighted.......................
Counties whose 2030 control case is violating the 2008 8-hour                 10      30,619,714           -1.49
 ozone standard.................................................
Counties whose 2030 control case is violating the 2008 8-hour     ..............  ..............           -1.62
 ozone standard, population-weighted............................
Counties whose 2030 control case is within 10 percent of the                  40      21,541,863           -1.37
 2008 8-hour ozone standard.....................................
Counties whose 2030 control case is within 10 percent of the      ..............  ..............           -1.50
 2008 8-hour ozone standard, population-weighted................
----------------------------------------------------------------------------------------------------------------
\a\ Averages are over counties with 2005 modeled design values.
\b\ Population numbers based on Woods & Poole data. Woods & Poole Economics, Inc. 2001. Population by Single
  Year of Age CD.
\c\ This analysis assumed emissions reductions from Tier 3 vehicle standards would occur in all states and did
  not account for emission reductions associated with LEV III vehicle standards in California and other states
  that have subsequently adopted it. The analysis for the final rule will account for LEV III vehicle standards.

2. Particulate Matter
    The air quality modeling conducted for this proposal projects that 
in 2030, with all current controls in effect but excluding the 
emissions changes expected to occur as a result of this proposal or any 
other additional controls, at least 14 counties, with a projected 
population of over 28 million people, would have projected design 
values above the level of the annual standard of 12 [micro]g/
m3 and at least 21 counties, with a projected population of 
over 31 million people, would have projected design values above the 
level of the 24-hour standard of 35 [mu]g/m3. \193\ Since 
the emission changes from this proposed action would go into effect 
during the period when some areas are still working to attain the 
PM2.5 NAAQS, the projected emission changes would be useful 
to state and local agencies in their effort to attain and maintain the 
PM2.5 standard.
---------------------------------------------------------------------------

    \193\ The projections from the modeling analysis for the Tier 3 
proposal differ from what was presented in the recent PM NAAQS RIA 
(http://www.epa.gov/pm/actions.html). The differences in modeling 
between the analyses stem primarily from the difference in modeling 
platform and the different years being evaluated (2020 vs. 2030).
---------------------------------------------------------------------------

    The proposed rule would reduce 24-hour and annual PM2.5 
design values in 2030. Annual PM2.5 design values in the 
majority of modeled counties would decrease by between 0.01 and 0.05 
[micro]g/m3 and in over 100 additional counties design 
values are projected to decrease by greater than 0.05 [mu]g/
m3. The projected population-weighted average design value 
concentration without the proposed rule is 9.5 [micro]g/m3 
in 2030. The average modeled future-year annual PM2.5 design 
values in 2030 decrease by 0.06 [micro]g/m3 on a population-
weighted basis. Design values in those counties that are projected to 
be above the annual PM2.5 standard in 2030 decrease even 
more, by 0.11 [micro]g/m\3\ on a population-weighted basis, due to the 
proposed standards. In addition, the average modeled future-year 24-
hour PM2.5 design values in 2030 decrease by 0.20 [micro]g/
m3 on a population-weighted basis. The projected population-
weighted average design value concentration without the proposed rule 
is 24.3 [micro]g/m3 in 2030. The decreases in 
PM2.5 design values are likely due to the projected tailpipe 
reductions in primary PM2.5, NOX and VOCs. The 
proposed rule has little impact on PM2.5 design values for 
the majority of counties in 2017, although our air quality modeling 
underestimated the PM decreases that would result from this proposal 
(see Section 7.4.2.3 of the draft RIA for more detail).
    Table III-10 and Table III-11 present the average change in 2030 
annual and 24-hour PM2.5 design values for: (1) All counties 
with 2005 baseline design values, (2) counties with 2005 baseline 
design values that exceeded the PM2.5 standard, (3) counties 
with 2005 baseline design values that did not exceed the standard, but 
were within 10 percent of it, (4) counties with 2030 design values that 
exceeded the PM2.5 standard, and (5) counties with 2030 
design values that did not exceed the standard, but were within 10 
percent of it. Counties within 10 percent of the standard are intended 
to reflect counties that although not violating the standards, will 
also be impacted by changes in PM2.5 as they work to ensure 
long-term maintenance of the annual and/or 24-hour PM2.5 
NAAQS. All of these metrics show a decrease in 2030. On a population-
weighted basis, there is a 0.06 [micro]g/m3 decrease in the 
average modeled future-year annual PM2.5 design values in 
2030 and a decrease of 0.11 [micro]g/m\3\ in those counties that are 
projected to be above the annual PM2.5 standard in 2030. In 
addition, the average population-weighted modeled future-year 24-hour 
PM2.5 design values are projected to decrease by 0.20 
[micro]g/m3 due to the proposed standards and design values 
in those counties that are projected to be above the 24-hour 
PM2.5 standard in 2030 would decrease by 0.32 [micro]g/
m3.

                Table III-10--Average Change in Projected Annual PM2.5 Design Values in 2030 \c\
----------------------------------------------------------------------------------------------------------------
                                                                                                  Change in 2030
                           Average \a\                            Number of U.S.       2030        design value
                                                                     counties       Population     ([mu]g/m\3\)
----------------------------------------------------------------------------------------------------------------
All.............................................................             576     247,415,381           -0.05

[[Page 29848]]

 
All, population-weighted........................................  ..............  ..............           -0.06
Counties whose 2005 base year is violating the annual PM2.5                  314     152,109,569           -0.05
 standard.......................................................
Counties whose 2005 base year is violating the annual PM2.5       ..............  ..............           -0.07
 standard, population-weighted..................................
Counties whose 2005 base year is within 10 percent of the annual              83      31,863,376           -0.05
 PM2.5 standard.................................................
Counties whose 2005 base year is within 10 percent of the annual  ..............  ..............           -0.05
 PM2.5 standard, population-weighted............................
Counties whose 2030 control case is violating the annual PM2.5                14      28,624,758           -0.11
 standard \d\...................................................
Counties whose 2030 control case is violating the annual PM2.5    ..............  ..............           -0.10
 standard, population-weighted \d\..............................
Counties whose 2030 control case is within 10 percent of the                  28      23,840,272           -0.07
 annual PM2.5 standard..........................................
Counties whose 2030 control case is within 10 percent of the      ..............  ..............           -0.09
 annual PM2.5 standard, population-weighted.....................
----------------------------------------------------------------------------------------------------------------
\a\ Averages are over counties with 2005 modeled design values.
\b\ Population numbers based on Woods & Poole data. Woods & Poole Economics, Inc. 2001. Population by Single
  Year of Age CD.
\c\ This analysis assumed emissions reductions from Tier 3 vehicle standards would occur in all states and did
  not account for emission reductions associated with LEV III vehicle standards in California and other states
  that have subsequently adopted it. The analysis for the final rule will account for LEV III vehicle standards.
\d\ Eight of these counties are in California, see Table 7-35 in the DRIA.


                Table III-11--Average Change in Projected 24-hour PM2.5 Design Values in 2030 \c\
----------------------------------------------------------------------------------------------------------------
                                                                                                  Change in 2030
                           Average \a\                            Number of U.S.       2030        design value
                                                                     counties     Population \b\   ([mu]g/m\3\)
----------------------------------------------------------------------------------------------------------------
All.............................................................             569     245,111,480           -0.16
All, population-weighted........................................  ..............  ..............           -0.20
Counties whose 2005 base year is violating the 2006 24-hour                  108      91,474,036           -0.29
 PM2.5 standard.................................................
Counties whose 2005 base year is violating the 2006 24-hour       ..............  ..............           -0.27
 PM2.5 standard, population-weighted............................
Counties whose 2005 base year is within 10 percent of the 2006               140      53,990,060           -0.18
 24-hour PM2.5 standard.........................................
Counties whose 2005 base year is within 10 percent of the 2006    ..............  ..............           -0.21
 24-hour PM2.5 standard, population-weighted....................
Counties whose 2030 control case is violating the 2006 24-hour                21      31,002,272           -0.50
 PM2.5 standard \d\.............................................
Counties whose 2030 control case is violating the 2006 24-hour    ..............  ..............           -0.32
 PM2.5 standard, population-weighted \d\........................
Counties whose 2030 control case is within 10 percent of the                   7       4,212,913           -0.37
 2006 24-hour PM2.5 standard....................................
Counties whose 2030 control case is within 10 percent of the      ..............  ..............           -0.50
 2006 24-hour PM2.5 standard, population-weighted...............
----------------------------------------------------------------------------------------------------------------
\a\ Averages are over counties with 2005 modeled design values.
\b\ Population numbers based on Woods & Poole data. Woods & Poole Economics, Inc. 2001. Population by Single
  Year of Age CD.
\c\ This analysis assumed emissions reductions from Tier 3 vehicle standards would occur in all states and did
  not account for emission reductions associated with LEV III vehicle standards in California and other states
  that have subsequently adopted it. The analysis for the final rule will account for LEV III vehicle standards.
\d\ Eleven of these counties are in California, see Table 7-37 in the DRIA.

3. Nitrogen Dioxide
    Although our modeling indicates that by 2030 the majority of the 
country will experience decreases of less than 0.1 ppb in their annual 
NO2 concentrations due to this proposal, annual 
NO2 concentrations are projected to decrease by more than 
0.3 ppb in most urban areas. These emissions reductions would also 
likely decrease 1-hour NO2 concentrations and help any 
potential nonattainment areas to attain and maintain the standard. 
Additional information on the emissions reductions that are projected 
with this proposal is available in Section 7.2.1 of the draft RIA.
4. Air Toxics
    Our modeling indicates that the impacts of proposed Tier 3 
standards include generally small decreases in ambient concentrations 
of air toxics, especially in urban areas, with notable nationwide 
reductions in benzene. Although reductions are greater in 2030 (when 
Tier 3 cars and trucks would contribute nearly 90 percent of fleet-wide 
vehicle miles travelled) than in 2017 (the first year of the proposed 
program), our modeling projects there would be small immediate 
reductions in ambient concentrations of air toxics due to the proposed 
sulfur controls in 2017. Furthermore, the full reduction of the vehicle 
program would be realized after 2030, when the fleet has fully turned 
over to Tier 3 vehicles. Air toxics pollutants dominated by primary 
emissions (or a decay product of a directly emitted pollutant) have the 
largest impacts, rather than air toxics that primarily result from 
photochemical transformation. Specifically, in 2030, our modeling 
projects that the proposal would decrease ambient benzene 
concentrations across much of the country on the order of 1 to 5 
percent, with reductions ranging from 10 to 25 percent in some urban 
areas. Our modeling also shows reductions of 1,3-butadiene and acrolein 
concentrations in 2030 ranging between 1 and 25 percent, with 1,3-
butadiene decreases of at least 0.005 [mu]g/m\3\ in urban areas. These 
toxics are national risk drivers and the reductions in ambient

[[Page 29849]]

concentrations from this proposed rule would result in reductions in 
risks from cancer and noncancer health effects. In some parts of the 
country (mainly urban areas), ethanol and formaldehyde concentrations 
are projected to decrease on the order of 1 to 5 percent in 2030 as a 
result of the proposal. Decreases in ethanol concentrations are 
expected due to reductions in VOC as a result of the proposed 
standards. Changes in ambient acetaldehyde concentrations are generally 
less than 1 percent across the U.S., although the proposal may decrease 
acetaldehyde concentrations in some urban areas by 1 to 2.5 percent in 
2030.
    Although the reductions in ambient air toxics concentrations 
expected from the proposed Tier 3 standards are generally small, they 
are projected to benefit the majority of the U.S. population. As shown 
in Table III-12, over 80 percent of the total U.S. population is 
projected to experience a decrease in ambient benzene and acrolein 
concentrations of at least 2.5 percent, with more than 90 percent of 
the populations projected to experience 1,3-butadiene concentrations of 
similar magnitude. Over 80 percent of the U.S population is projected 
to experience at least a 1 percent decrease in ambient ethanol 
concentrations, and over 60 percent would experience a similar decrease 
in ambient formaldehyde concentrations with the proposed standards.

 Table III-12--Percent of Total Population Experiencing Changes in Annual Ambient Concentrations of Toxic Pollutants in 2030 as a Result of the Proposed
                                                                      Standards \a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Benzene        Acrolein      1,3-Butadiene   Formaldehyde       Ethanol      Acetaldehyde
                     Percent change                          (percent)       (percent)       (percent)       (percent)       (percent)       (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
<= -50..................................................  ..............  ..............  ..............  ..............  ..............  ..............
> -50 to <= -25.........................................  ..............  ..............             0.1  ..............  ..............  ..............
> -25 to <= -10.........................................             2.8             0.7            56.8  ..............  ..............  ..............
> -10 to <= -5..........................................            23.7            36.8            30.8  ..............  ..............  ..............
> -5 to <= -2.5.........................................            54.5            43.7             7.1             1.2            33.0             0.3
> -2.5 to <= -1.........................................            17.7            15.3             3.4            63.2            55.3            25.1
> -1 to < 1.............................................             1.4             3.5             1.7            35.6            11.6            74.6
>= 1 to < 2.5...........................................  ..............  ..............             0.0  ..............  ..............  ..............
>= 2.5 to < 5...........................................  ..............  ..............  ..............  ..............  ..............  ..............
>= 5 to < 10............................................  ..............  ..............  ..............  ..............  ..............  ..............
>= 10 to < 25...........................................  ..............  ..............  ..............  ..............  ..............  ..............
>= 25 to < 50...........................................  ..............  ..............  ..............  ..............  ..............  ..............
>= 50...................................................  ..............  ..............  ..............  ..............  ..............  ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ This analysis assumed emissions reductions from Tier 3 vehicle standards would occur in all states and did not account for emission reductions
  associated with LEV III vehicle standards in California and other states that have subsequently adopted it. The analysis for the final rule will
  account for LEV III vehicle standards.

5. Visibility
    Air quality modeling conducted for this proposed action was used to 
project visibility conditions in 139 mandatory class I federal areas 
across the U.S. The results show that in 2030 all the modeled areas 
would continue to have annual average deciview levels above background 
and the proposed rule would improve visibility in all these areas.\194\ 
The average visibility at all modeled mandatory class I federal areas 
on the 20 percent worst days is projected to improve by 0.04 deciviews, 
or 0.28 percent, in 2030. Section 7.2.5.5 of the draft RIA contains 
more detail on the visibility portion of the air quality modeling.
---------------------------------------------------------------------------

    \194\ The level of visibility impairment in an area is based on 
the light-extinction coefficient and a unitless visibility index, 
called a ``deciview'', which is used in the valuation of visibility. 
The deciview metric provides a scale for perceived visual changes 
over the entire range of conditions, from clear to hazy. Under many 
scenic conditions, the average person can generally perceive a 
change of one deciview. The higher the deciview value, the worse the 
visibility. Thus, an improvement in visibility is a decrease in 
deciview value.
---------------------------------------------------------------------------

6. Nitrogen and Sulfur Deposition
    Our air quality modeling projects substantial decreases in nitrogen 
deposition as a result of the proposed standards. The standards would 
result in annual percent decreases of greater than 5 percent in most 
major urban areas and greater than 7 percent in a few areas. In 
addition, smaller decreases, in the 1 to 1.5 percent range, would occur 
over most of the rest of the country. The impacts of the proposed 
standards on sulfur deposition are smaller, ranging from no change to 
decreases of over 2 percent in some areas. For maps of 2030 deposition 
impacts and additional information on these impacts see Section 7.2.5.6 
of the draft RIA.
7. Environmental Justice
    Environmental justice (EJ) is a principle asserting that all people 
deserve fair treatment and meaningful involvement with respect to 
environmental laws, regulations, and policies. EPA seeks to provide the 
same degree of protection from environmental health hazards for all 
people. As referenced below, numerous studies have found that some 
environmental hazards are more prevalent in areas with high population 
fractions of racial/ethnic minorities and people with low socioeconomic 
status (SES), as would be expected on the basis of those areas' share 
of the general population.
    As discussed in Section II of this document, concentrations of many 
air pollutants are elevated near high-traffic roadways. If minority 
populations and low-income populations disproportionately live near 
such roads, then an issue of EJ may be present. Such disparities may be 
due to multiple factors.\195\
---------------------------------------------------------------------------

    \195\ Depro, B.; Timmins, C. (2008) Mobility and environmental 
equity: do housing choices determine exposure to air pollution? 
North Caroline State University Center for Environmental and 
Resource Economic Policy.
---------------------------------------------------------------------------

    People with low SES often live in neighborhoods with multiple 
stressors and health risk factors, including reduced health insurance 
coverage rates, higher smoking and drug use rates, limited access to 
fresh food, visible neighborhood violence, and elevated rates of 
obesity and some diseases such as asthma, diabetes, and ischemic heart 
disease. Although questions remain, several studies find stronger 
associations between air pollution and health in locations with such 
chronic neighborhood stress, suggesting that populations in these areas 
may be more susceptible to the effects of air

[[Page 29850]]

pollution.196 197 198 199 Household-level stressors such as 
parental smoking and relationship stress also may increase 
susceptibility to the adverse effects of air 
pollution.200 201
---------------------------------------------------------------------------

    \196\ Clougherty, J.E.; Kubzansky, L.D. (2009) A framework for 
examining social stress and susceptibility to air pollution in 
respiratory health. Environ Health Perspect 117: 1351-1358. 
Doi:10.1289/ehp.0900612 [Online at http://dx.doi.org].
    \197\ Clougherty, J.E.; Levy, J.I.; Kubzansky, L.D.; Ryan, P.B.; 
Franco Suglia, S.; Jacobson Canner, M.; Wright, R.J. (2007) 
Synergistic effects of traffic-related air pollution and exposure to 
violence on urban asthma etiology. Environ Health Perspect 115: 
1140-1146. doi:10.1289/ehp.9863 [Online at http://dx.doi.org].
    \198\ Finkelstein, M.M.; Jerrett, M.; DeLuca, P.; Finkelstein, 
N.; Verma, D.K.; Chapman, K.; Sears, M.R. (2003) Relation between 
income, air pollution and mortality: a cohort study. Canadian Med 
Assn J 169: 397-402.
    \199\ Shankardass, K.; McConnell, R.; Jerrett, M.; Milam, J.; 
Richardson, J.; Berhane, K. (2009) Parental stress increases the 
effect of traffic-related air pollution on childhood asthma 
incidence. Proc Natl Acad Sci 106: 12406-12411. doi:10.1073/
pnas.0812910106 [Online at http://dx.doi.org].
    \200\ Lewis, A.S.; Sax, S.N.; Wason, S.C.; Campleman, S.L (2011) 
Non-chemical stressors and cumulative risk assessment: an overview 
of current initiatives and potential air pollutant interactions. Int 
J Environ Res Public Health 8: 2020-2073. Doi:10.3390/ijerph8062020 
[Online at http://dx.doi.org].
    \201\ Rosa, M.J.; Jung, K.H.; Perzanowski, M.S.; Kelvin, E.A.; 
Darling, K.W.; Camann, D.E.; Chillrud, S.N.; Whyatt, R.M.; Kinney, 
P.L.; Perera, F.P.; Miller, R.L (2010) Prenatal exposure to 
polycyclic aromatic hydrocarbons, environmental tobacco smoke and 
asthma. Respir Med (In press). doi:10.1016/j.rmed.2010.11.022 
[Online at http://dx.doi.org].
---------------------------------------------------------------------------

    To address the existing conditions in areas near major roadways, in 
comparison with other locations, we reviewed existing scholarly 
literature examining the topic, and conducted our own evaluation of two 
national datasets: the U.S. Census Bureau's American Housing Survey for 
calendar year 2009 and the U.S. Department of Education's database of 
school locations.
    Existing publications that address EJ issues generally report that 
populations living near major roadways (and other types of 
transportation infrastructure) tend to be composed of larger fractions 
of nonwhite residents. People living in neighborhoods near such sources 
of air pollution also tend to be lower in income than people living 
elsewhere. Numerous studies evaluating the demographics and 
socioeconomic status of populations or schools near roadways have found 
that they include a greater percentage of minority residents, as well 
as lower SES (indicated by variables such as median household income). 
Locations in these studies include Los Angeles, CA, Seattle, WA, Wayne 
County, MI, Orange County, FL, and the State of California 
202 203 204 205 206 207
---------------------------------------------------------------------------

    \202\ Marshall, J.D. (2008) Environmental inequality: air 
pollution exposures in California's South Coast Air Basin.
    \203\ Su, J.G.; Larson, T.; Gould, T.; Cohen, M.; Buzzelli, M. 
(2010) Transboundary air pollution and environmental justice: 
Vancouver and Seattle compared. GeoJournal 57: 595-608. doi:10.1007/
s10708-009-9269-6 [Online at http://dx.doi.org].
    \204\ Chakraborty, J.; Zandbergen, P.A. (2007) Children at risk: 
measuring racial/ethnic disparities in potential exposure to air 
pollution at school and home. J Epidemiol Community Health 61: 1074-
1079. doi: 10.1136/jech.2006.054130 [Online at http://dx.doi.org].
    \205\ Green, R.S.; Smorodinsky, S.; Kim, J.J.; McLaughlin, R.; 
Ostro, B. (2003) Proximity of California public schools to busy 
roads. Environ Health Perspect 112: 61-66. doi:10.1289/ehp.6566 
[http://dx.doi.org].
    \206\ Wu, Y; Batterman, S.A. (2006) Proximity of schools in 
Detroit, Michigan to automobile and truck traffic. J Exposure Sci & 
Environ Epidemiol. doi:10.1038/sj.jes.7500484 [Online at http://dx.doi.org].
    \207\ Su, J.G.; Jerrett, M.; de Nazelle, A.; Wolch, J. (2011) 
Does exposure to air pollution in urban parks have socioeconomic, 
racial, or ethnic gradients? Environ Res 111: 319-328.
---------------------------------------------------------------------------

    We analyzed two national databases that allowed us to evaluate 
whether homes and schools were located near a major road. One database, 
the American Housing Survey (AHS), includes descriptive statistics of 
over 70,000 housing units across the nation. The study is conducted 
every two years by the U.S. Census Bureau. We analyzed data from the 
2009 AHS. The second database we analyzed was the U.S. Department of 
Education's Common Core of Data, which includes enrollment and location 
information for schools across the U.S.
    In analyzing the 2009 AHS, we focused on whether or not a housing 
unit was located within 300 feet of ``4-or-more lane highway, railroad, 
or airport.'' \208\ We analyzed whether there were differences between 
houses and householders in such locations and those not in them.\209\ 
We found that houses with a nonwhite householder were 22-34 percent 
more likely to be located within 300 feet of these large transportation 
facilities, while houses with a Hispanic householder were 17-33 percent 
more likely. Households near large transportation facilities were, on 
average, lower in income and educational attainment, more likely to be 
a rental property and located in an urban area.
---------------------------------------------------------------------------

    \208\ This variable primarily represents roadway proximity. 
According to the Central Intelligence Agency's World Factbook, in 
2010, the United States had 6,506,204 km or roadways, 224,792 km of 
railways, and 15,079 airports. As such, highways represent the 
overwhelming majority of transportation facilities described by this 
factor in the AHS.
    \209\ Bailey, C. (2011) Demographic and Social Patterns in 
Housing Units Near Large Highways and other Transportation Sources. 
Memorandum to docket.
---------------------------------------------------------------------------

    In examining schools near major roadways, we examined the Common 
Core of Data (CCD) from the U.S. Department of Education, which 
includes information on all public elementary and secondary schools and 
school districts nationwide.\210\ To determine school proximities to 
major roadways, we used a geographic information system (GIS) to map 
each school and roadways based on the U.S. Census's TIGER roadway 
file.\211\ We found that minority students were overrepresented at 
schools within 200 meters of the largest roadways, and that schools 
within 200 meters of the largest roadways also had higher than expected 
numbers of students eligible for free or reduced-price lunches. For 
example, Black students represent 21.57 percent of students at schools 
located within 200 meters of a primary road, whereas Black students 
represent 16.62 percent of students in all U.S. schools. Hispanic 
students represent 30.13 percent of students at schools located within 
200 meters of a primary road, whereas Hispanic students represent 21.93 
percent of students in all U.S. schools.
---------------------------------------------------------------------------

    \210\ http://nces.ed.gov/ccd/.
    \211\ Pedde, M.; Bailey, C. (2011) Identification of Schools 
within 200 Meters of U.S. Primary and Secondary Roads. Memorandum to 
the docket.
---------------------------------------------------------------------------

    Overall, there is substantial evidence that people who live or 
attend school near major roadways are more likely to be of a minority 
race, Hispanic ethnicity, and/or low SES. The reduction of near-roadway 
concentrations of many pollutants, discussed above, is likely to help 
in mitigating this disparity in racial, ethnic, and economically-based 
exposures.

IV. Proposed Vehicle Emissions Program

    In the more than 10 years since EPA finalized the Tier 2 Vehicle 
Program, manufacturers of light-duty vehicles have continued to develop 
a wide range of improved technologies capable of reducing key exhaust 
emissions, especially hydrocarbons, nitrogen oxides (NOX), 
and particulate matter (PM). The California LEV II program has been 
instrumental in the continuous technology improvements by requiring 
year after year reductions in fleet average hydrocarbon levels in 
addition to requiring the introduction of advanced exhaust and 
evaporative emission controls in partial zero emission vehicles 
(PZEVs). This progress in vehicle technology has made it possible for 
manufacturers to achieve

[[Page 29851]]

emission reductions well beyond the requirements of the Tier 2 program 
if gasoline sulfur levels are lowered further.
    Extensive data from existing Tier 2 (and California LEV II) 
vehicles show the opportunity for further reductions, especially in 
addressing emissions produced at start-up, emissions under high-speed, 
high-load conditions, the effects of sulfur in gasoline, the effects of 
increased oil consumption, and the effects of vehicle and control 
systems age. For these reasons, we are proposing more stringent 
standards designed to reduce emissions, primarily non-methane organic 
gases (NMOG), NOX, and PM from new vehicles. As discussed in 
detail below and in the draft RIA, we have concluded that, in 
conjunction with the reductions in fuel sulfur proposed in this action, 
the proposed vehicle emissions standards are feasible and cost-
effective across the fleet in the proposed timeframe. We believe that 
simultaneous reductions in fuel sulfur would be a key factor in 
enabling the entire fleet of light-duty vehicles to meet the proposed 
emission standards in-use, throughout the life of the vehicle.
    This section describes in detail the proposed program for reducing 
tailpipe and evaporative emissions from light-duty vehicles (LDVs, or 
passenger cars), light-duty trucks (LDT1s, 2s, 3s, and 4s), Medium-Duty 
Passenger Vehicles (MDPVs), and heavy-duty vehicles (HDVs). Sections 
IV.A and B discuss the proposed tailpipe emission standards and time 
lines, and other provisions for new light-duty vehicles and MDPVs and 
for new heavy-duty vehicles up to 14,000 lbs Gross Vehicle Weight 
Rating (GVWR). Section IV.C presents the proposed evaporative emissions 
standards and program as well as proposed improvements to the existing 
Onboard Diagnostics (OBD) provisions. In Section IV.D, we describe our 
proposal to update our federal certification fuel to better match 
today's in-use fuel and to be forward-looking with respect to potential 
future gasoline ethanol and sulfur content. We also discuss in this 
section proposed compliance flexibilities for small companies and 
small-volume manufacturers (IV.E) and test procedure and other 
compliance provisions (IV.F).

A. Tailpipe Emission Standards for Light-Duty Vehicles, Light-Duty 
Trucks, and Medium-Duty Passenger Vehicles

1. Overview
    The proposed Tier 3 standards are very similar in structure to 
those in the Tier 2 program. As with the Tier 2 program, the proposed 
standards would apply to all LDVs and LDTs below 8,500 lbs GVWR, and 
MDPVs (8,500 to 10,000 lbs GVWR). (We discuss the proposed standards 
for heavy-duty vehicles up to 14,000 lbs GVWR other than MDPVs, in 
Section IV.B below.) Also as with Tier 2, manufacturers would select 
from several ``bins'' of emission standards such that the average of 
their vehicles' emissions complies with the proposed fleet-average 
standards.
    In the discussions of the various elements of our proposed program 
for light- and heavy-duty vehicles throughout this preamble, we 
describe how the provisions would be consistent with the California Air 
Resources Board (CARB) LEV III program.\212\ Auto manufacturers have 
stressed to us the importance of their being able to design and produce 
a single fleet of vehicles in all 50 states that would comply with 
requirements under the Tier 3 program and the LEV III program, as well 
as greenhouse gas/CAFE requirements in the same timeframe. Consistency 
among the federal and California programs means that special versions 
of vehicles with different emission control hardware and calibrations 
would not be necessary for different geographic areas. This would allow 
manufacturers to avoid the additional costs of parallel design, 
development, calibration, and manufacturing. Consistency among programs 
would also eliminate the need to supply aftermarket parts for repair of 
multiple versions of a vehicle. We believe that the most cost-effective 
national program will result from close coordination of CARB LEV III 
and federal Tier 3 program elements and their implementation. To that 
end, we worked closely with CARB and the vehicle manufacturers, both 
individually and through their trade associations, to align the two 
programs.
---------------------------------------------------------------------------

    \212\ LEV III program as approved by the California Air 
Resources Board, January 2012.
---------------------------------------------------------------------------

    The Tier 3 program we are proposing is identical to LEV III in most 
major respects for both light-duty and heavy-duty vehicle exhaust and 
evaporative emissions requirements, as discussed in detail below in 
this section. The levels and the timing of the light-duty and heavy-
duty declining fleet-average NMOG+NOx standards that we are proposing 
would be identical to those in LEV III. Also, the Tier 3 emissions bins 
to which manufacturers would certify individual vehicle models in order 
to comply with the average standards, for both light- and heavy-duty 
vehicles, would also be identical to those in LEV III. Similarly, the 
proposed Tier 3 per-vehicle PM standards match LEV III standards 
through MY 2024. In addition, our proposed primary evaporative 
emissions standards and onboard diagnostics requirements are also 
identical to the LEV III requirements.
    We note there are a few proposed Tier 3 provisions that CARB and 
EPA understand would be different, for reasons discussed below. 
Specifically, these include the LEV III program and our proposed Tier 3 
program would have different light-duty PM requirements late in the 
program (i.e., after MY 2024 (IV.A.3.b.)), would require different test 
fuels (E10 and E15, respectively (IV.A.3.c)), and only EPA would have 
an evaporative leak test (IV.C.5.b). EPA and CARB will continue to work 
toward additional consistency between our programs whenever practicable 
as both programs are implemented. Beyond these three provisions, the 
differences between the programs would not be major and would exist 
only in the early transitional years of the Tier 3 program. These 
differences would result from the fact that the LEV III requirements 
begin slightly earlier and that a limited phase-in of some provisions 
would be necessary for a smooth transition to overall aligned programs. 
These temporary differences would include the process for how early 
compliance credits would be generated and used (e.g., Section 
IV.A.7.a); how quickly manufacturers would need move toward certifying 
all of their vehicle models to longer useful-life values (e.g., Section 
IV.A.7.b) and on the new test fuel (e.g., Section IV.A.7.c); and 
transitional emissions bins to facilitate the transition from Tier 2 to 
Tier 3 (IV.A.7.m). Similarly, the primary Tier 3 evaporative standards 
would have a brief phase in period, temporarily resulting in 
requirements that would be slightly different from those in LEV III.
    The proposed Tier 3 program is designed primarily to reduce exhaust 
and evaporative emissions during summer ambient temperature conditions 
when NMOG, NOX and PM emissions contribute to air quality 
concerns. We are not proposing new emission requirements for any 
vehicle or fuel over the cold temperatures test cycles (i.e., the 
20[emsp14][deg]F cold CO and NMHC tests). However, we seek comment on 
the need for doing so, including vehicles operating on E85 fuel, and on 
the appropriate form and level for any such cold-temperature 
requirements.

[[Page 29852]]

2. Summary of Proposed FTP and SFTP Tailpipe Standards
    We are proposing a comprehensive program that would address the key 
pollutants of concern. We are proposing new standards for the sum of 
NMOG and NOX emissions, presented as NMOG+NOX, 
and PM. As discussed in Section III above, these proposed standards 
would result in very significant improvements in vehicle emissions from 
the levels of the Tier 2 program. For these pollutants, we are 
proposing standards as measured on test procedures that represent a 
range of vehicle operation, including the Federal Test Procedure (FTP) 
and the Supplemental Federal Test Procedure (SFTP). Unless otherwise 
specified, the proposed FTP and SFTP standards would apply to vehicles 
operating on gasoline, diesel, and alternative fuels, including both 
flexible fuel and dedicated alternative fuel vehicles.
    The proposed FTP and SFTP NMOG+NOX standards would be 
fleet-average standards, meaning that the manufacturer would calculate 
the average emissions of the vehicles it sells in each model year and 
compare that average to the applicable standard for that model year. 
The proposed fleet average standards for NMOG+NOX evaluated 
over the FTP are summarized in Table I-1. (For comparison, the average 
NMOG and NOX standard for the Tier 2 program, when added 
together, equal 160 mg/mi). The standards would begin in MY 2017 at a 
level representing a 46 percent reduction from the current Tier 2 
requirements for lighter vehicles and would become increasingly 
stringent, culminating in an 81 percent reduction in MY 2025. The 
proposed FTP NMOG+NOX program includes separate fleet 
average standards for lighter and heavier vehicles that would converge 
at 30 milligrams per mile (mg/mi) in MY 2025 and 
later.213 214
---------------------------------------------------------------------------

    \213\ The proposed declining NMOG+NOX fleet-average 
standards would consist of one set of declining standards that would 
apply to light-duty vehicles (LDVs) and small light trucks (LDT1s) 
and a second set of declining standards that would apply to heavier 
light trucks (LDT2s, LDT3s. LDT4s), and MDPVs.
    \214\ This preamble presents the proposed standards in terms of 
milligrams per mile for convenience. The associated regulatory 
language will continue to present the standard in terms of grams per 
mile for consistency with earlier programs.
---------------------------------------------------------------------------

    Manufacturers would determine their fleet average FTP 
NMOG+NOX emission values based on the per-vehicle ``bin 
standards'' to which they certified each vehicle model. As with the 
Tier 2 program, manufacturers would be free to choose to certify 
vehicles to any of the bins, so long as the sales-weighted average of 
the NMOG+NOX values from the selected bins met the fleet 
average standard for that model year. Table IV-1 presents the per-
vehicle bin standards. Similarly, the proposed fleet average 
NMOG+NOX standards measured over the SFTP are summarized in 
Table I-2. The proposed SFTP NMOG+NOX fleet average 
standards decline from MY 2017 until MY 2025. In this case, the same 
standards would apply to both lighter and heavier vehicles. In MY 2025, 
the SFTP NMOG+NOX standard would reach its fully phased-in 
fleet average level of 50 mg/mi. We are also proposing PM standards as 
part of this Tier 3 program. The proposed PM standards would apply to 
each vehicle separately (i.e., not as a fleet average). Also, in 
contrast to the declining NMOG+NOX standards, the proposed 
certification PM standard on the FTP is 3 mg/mi for all vehicles and 
for all model years, but phasing in beginning in MY 2017 for vehicles 
at or below 6,000 lbs GVWR and in MY 2018 for vehicles above 6,000 lbs 
GVWR. Based on EPA and CARB test programs, most current light duty 
vehicles are already performing at or below this level. However, some 
vehicles are emitting above this level, due to such factors as 
combustion chamber designs, and fuel and oil consumption controls that 
are not optimized for low PM emissions. The intent of the proposed 3 
mg/mi standard is to bring all light-duty vehicles to the PM level 
typical of that being demonstrated by most light-duty vehicles today.
    To address the uncertainties that will accompany the introduction 
of new technologies, the proposed program also includes a separate in-
use FTP PM standard of 6 mg/mi for the testing of in-use vehicles 
during the phase-in period, as described in more detail below. As 
presented in Table I-3, for vehicles at or below 6000 lbs GVWR, these 
FTP certification and in-use standards would be phased in beginning 
with a requirement that at least 20 percent of a company's U.S. sales 
meet the standards in MY 2017 and reaching a 100 percent compliance 
requirement in MY 2021. The proposed standards represent a significant 
numerical reduction from the Tier 2 PM emission standards of 10 mg/mi 
for light-duty vehicles. Finally, the proposed Tier 3 program includes 
PM standards evaluated over the US06 cycle (a component of the SFTP 
test, discussed further below) at a level of 10 mg/mi for vehicles at 
or below 6,000 lbs GVWR and 20 mg/mi for heavier vehicles. We are 
proposing separate standards for different sizes of vehicles because PM 
generation typically increases when vehicles are carrying heavier loads 
and/or when they are pulling trailers. The US06 PM standards would 
phase in on the same schedule as the FTP PM standards, reaching 100 
percent of each company's U.S. sales by MY 2022. These US06 standards 
would apply to the same vehicle models that a manufacture chose to 
certify to the FTP PM standard during the percent phase in period. PM 
levels over the US06 are typically higher than the PM emitted over the 
FTP due to the increased load on the vehicle. As in the case of the FTP 
PM standards, the intent of the proposed standard is to bring the 
emission performance of all vehicles to that already being demonstrated 
by many vehicles in the current light-duty fleet.
    As with the FTP PM standard, we propose a separate in-use US06 PM 
standard during the percent phase-in period of 15 and 25 mg/mi for 
vehicles of 6000 lbs GVWR and less, and for vehicles above 6,000 lbs 
GVWR, respectively.
    The next subsections describe in more detail the proposed 
standards, how they would be implemented over time, and the 
technological approaches that we believe will be available to 
manufacturers in order to comply.
3. Proposed FTP Standards
    As summarized above, we propose new standards for the primary 
pollutants of concern for this rule (NMOG, NOX, and PM) as 
measured on the FTP. The following paragraphs describe in more detail 
these FTP standards for NMOG+NOX and PM, as well as for 
carbon monoxide (CO) and formaldehyde (HCHO).
a. FTP NMOG+NOX Standards
    We propose that the Tier 3 NMOG and NOX standards, both 
of which are important to reduce ambient ozone concentrations, be 
expressed in terms of the sum of the two pollutants, or as 
NMOG+NOX in mg/mi.\215\ This approach contrasts with the 
Tier 2 standards, which were expressed as separate NMOG and 
NOX standards. We believe that the combined standard is 
appropriate for this proposed program for several reasons. At the 
stringent proposed emission levels, combining NMOG and NOX 
would provide a small amount of compliance flexibility, while at the 
same time significantly reducing both NMOG and NOX emission 
levels.

[[Page 29853]]

For example, the combined standard would allow a gasoline vehicle 
manufacturer to have slightly higher NMOG if it were offset by lower 
NOX, or allow a diesel vehicle manufacturer to have slightly 
higher NOX if offset by lower NMOG. This approach still 
ensures major reductions in both pollutants compared to today's levels. 
This is because the very stringent level of the fully phased-in 
proposed combined standard (30 mg/mi NMOG+NOX) means that 
even with a degree of allowed trading off of one pollutant for the 
other, the maximum emissions of either pollutant would need to be well 
below current levels. The standards of the California LEV III program 
would also be expressed as NMOG+NOX; aligning Tier 3 with 
LEV III in this respect would facilitate an important element of a 
national program.
---------------------------------------------------------------------------

    \215\ In the past, EPA has taken a similar combined-standard 
approach for heavy-duty highway engines and many categories of 
nonroad engines.
---------------------------------------------------------------------------

    We believe that a fully phased-in level for the proposed fleet-
average standard of 30 mg/mi is the most stringent level that we could 
reasonably propose in the context of our proposed 10-ppm average 
standard for gasoline sulfur. As discussed in the feasibility Section 
IV.A.5 below, when necessary margins of compliance are considered, this 
proposed standard is very close to zero. We request comment on this 
level for the proposed standard, as well as the declining standards 
during the transition years (see Table IV-3 below). EPA is proposing 
compliance mechanisms for the new Tier 3 FTP standards that are the 
same in most respects as those of the Tier 2 program. Using the Tier 2 
approaches as much as possible would streamline the implementation of 
the program by maintaining most of the compliance processes that 
manufacturers are familiar with today.
    A key compliance mechanism adapted from the Tier 2 program is a 
``bin'' structure for the proposed emission standards. For these 
purposes, a bin is a set of several standards that are intended to be 
complied with as a group. Thus each Tier 3 bin would have an 
NMOG+NOX standard and a PM standard, as well as CO and HCHO 
standards. A manufacturer choosing to certify a vehicle to a certain 
bin would need to meet each of that bin's standards for the full useful 
life of the vehicle. In this approach, manufacturers could certify 
vehicles to any of the bins, but they would have to ensure that average 
NMOG+NOX of the bins to which all of its vehicles were 
certified met the fleet average standard specific to the vehicle 
category (i.e., LDV/LDT1 and LDT2/3/4/MDPVs) for that model year. That 
is, a manufacturer would comply by ensuring that the sales-weighted 
average of the NMOG+NOX values of the bins to which each of 
its vehicle models was certified was lower than the fleet average 
standard that applied for that model year.
    For each proposed bin, we are including CO and HCHO standards at 
levels intended to prevent new engine and emission control designs that 
would result in increases in today's CO and HCHO emissions. The 
standards are based on the comparable current LEV II and Tier 2 bin 
standards for these pollutants. The current standards do not appear to 
be technology-forcing, and we believe that this would continue to be 
the case as Tier 3 technologies are developed.
    The bin structure that we are proposing for light duty vehicles, 
light-duty trucks, and MDPVs standards is presented in Table IV-1.

                       Table IV-1--Proposed FTP Standards for LDVs, LDTs and MDPVs (mg/mi)
----------------------------------------------------------------------------------------------------------------
                                                   NMOG+NOX (mg/
                       Bin                              mi)       PM \a\ (mg/mi)     CO (g/mi)     HCHO (mg/mi)
----------------------------------------------------------------------------------------------------------------
Bin 160.........................................             160               3             4.2               4
Bin 125.........................................             125               3             2.1               4
Bin 70..........................................              70               3             1.7               4
Bin 50..........................................              50               3             1.7               4
Bin 30..........................................              30               3             1.0               4
Bin 20..........................................              20               3             1.0               4
Bin 0...........................................               0               0               0               0
----------------------------------------------------------------------------------------------------------------
\a\ In MYs 2017-20, the PM standard applies only to that segment of a manufacturer's vehicles covered by the
  percent of sales phase-in for that model year.

    Consistent with the Tier 2 principle of vehicle and fuel 
neutrality, we are proposing that the same standards apply to LDVs, 
LDTs, or MDPVs, regardless of the fuel they use. That is, vehicles 
certified to operate on any fuel (e.g., gasoline, diesel fuel, E85, 
CNG, LNG, hydrogen, and methanol) would all be subject to the same 
standards.
    We propose to maintain the fleet-average approach of the Tier 2 
standards. Unlike Tier 2, the proposed Tier 3 fleet-average standards 
would decline annually to a fully phased-in level of 30 mg/mi 
NMOG+NOX. (The Tier 2 program, after a period of transition, 
established a single fleet average standard for all model years.) 
Specifically, we are proposing NMOG+NOX standards as 
measured on the FTP that would reduce the combined fleet-average 
emissions gradually from MY 2017 through 2025, as shown in Table IV-2 
below. Beginning in MY 2017, we propose separate fleet average 
standards for lighter and heavier vehicles that would both decline 
annually, converging in MY 2025. These proposed declining average 
standards are identical to CARB's LEV III standards.\216\
---------------------------------------------------------------------------

    \216\ See California Low-Emission Vehicles (LEV) & GHG 2012 
regulations adopted by State of California Air Resources Board, 
March 22, 2012, Resolution 12-21 incorporating by reference 
Resolution 12-11, which was adopted January 26, 2012. Available at 
http://www.arb.ca.gov/regact/2012/leviiighg2012/leviiighg2012.htm 
(last accessed November 19, 2012).
---------------------------------------------------------------------------

    The declining fleet-average NMOG+NOX standard 
requirement would begin in 2017 for light-duty vehicles and light-duty 
trucks with a GVWR up to and including 6,000 lbs and in 2018 for all 
other light-duty vehicles and light-duty trucks (i.e., those with a 
GVWR greater than 6,000 lbs). The standards would apply to the heavier 
vehicles a year later to facilitate the transition to a 50-state 
program for all manufacturers. During this transition period, there 
would be two fleet-average NMOG+NOX standards for each model 
year, one for LDVs and LDT1s and a second fleet-average standard for 
all other LDTs (LDT2s, LDT3s, and LDT4s) and for MDPVs. We are 
proposing that the fleet-average standards decline in a linear way from 
MY 2017 through MY 2025, at which point the two fleet-average standards 
would converge and stabilize for later model years at the same level, 
30 mg/mi, as shown in Table IV-2. Note that these fleet average 
standards are for LDT2 and larger vehicles, and for LDVs and LDT1s that

[[Page 29854]]

manufacturers certify to the 150,000 mile useful life value. Section 
IV.A.7.b discusses how the Clean Air Act defines the useful life values 
for certification purposes and how EPA proposes to also provide for 
certification to slightly lower emissions standards to a useful life 
value of 120,000 miles, representing a level of stringency that is 
equivalent to that of the emission standards corresponding to the 
150,000 mile useful life, for LDVs and LDT1s.

                                      Table IV-2--Proposed LDV, LDT, and MDPV Fleet Average FTP NMOG+NOX Standards
                                                                         [mg/mi]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                   Model Year
                                                      --------------------------------------------------------------------------------------------------
                                                                                                                                                2025 and
                                                        2017 \a\     2018       2019       2020       2021       2022       2023       2024      later
--------------------------------------------------------------------------------------------------------------------------------------------------------
LDV/LDT1\b\..........................................         86         79         72         65         58         51         44         37         30
LDT2,3,4 and MDPV....................................        101         92         83         74         65         56         47         38         30
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ For vehicles above 6,000 lbs GVWR, the fleet average standards would apply beginning in MY 2018.
\b\ These proposed standards apply for a 150,000 mile useful life. Manufacturers could choose to certify all of their LDVs and LDV1s to a useful life of
  120,000 miles. If any of these families are certified to the shorter useful life, a proportionally lower numerical fleet average standard would apply,
  calculated by multiplying the respective 150,000 mile standard by 0.85 and rounding to the nearest mg.

    EPA is also proposing an alternative phase-in of the 30 mg/mi FTP 
NMOG+NOX standard that would be available if a manufacturer 
prefers a stable standard and four full years of lead time, as 
specified in the Clean Air Act for vehicles above 6,000 lbs GVWR. For 
MYs 2017 and 2018, a manufacturer would certify vehicles up to 6,000 
lbs GVWR to the primary declining FTP fleet average standards, as in 
the primary program. Then, beginning in MY 2019, a stable fleet average 
standard of 30 mg/mi would apply to an increasing percentage of a 
manufacturer's light-duty vehicles, light-duty trucks, and MDPVs, both 
up to and above 6,000 lbs GVWR. The percent phase-in would match the 
proposed PM percent phase-in schedule, as discussed below--specifically 
40 percent of sales in MY 2019, 70 percent in MY 2020, and 100 percent 
in MY 2021 and later model years. A manufacturer choosing to certify 
any vehicle to this alternative phase-in would need to use this 
approach for all its models in MYs 2019 and later; certifying part of 
its fleet to the declining fleet average after MY 2018 would not be 
permitted, since the structures of the two approaches, including the 
early credits provisions of the NMOG+NOx fleet average program, would 
not be consistent. A manufacturer certifying to this alternative phase-
in would also need to comply with the alternative SFTP NMOG+NOx phase-
in and the alternative FTP PM and US06 PM phase-ins as described below. 
Vehicles covered by the alternative phase-in programs would be 
considered ``final Tier 3'' vehicles and thus would also comply with 
the Tier 3 certification fuel and full useful life provisions. EPA 
requests comment on this alternative phase-in approach as well as on 
the primary option above.
b. FTP PM Standards
    We also propose new FTP standards for PM emissions, as summarized 
in Table IV-3 below. For many years, EPA's focus for mobile source PM 
was on diesel engine emissions. In recent years, the very effective 
controls on PM exhaust emissions that manufacturers have developed for 
heavy-duty diesel engines have been successfully applied to light-duty 
diesel engines as well. At the same time, attention to gasoline engine 
PM emissions has increased as research has demonstrated that the level 
of PM from gasoline light duty vehicles is more significant than had 
been previously thought.\217\
---------------------------------------------------------------------------

    \217\ Nam, E.; Fulper, C.; Warila, J.; Somers, J.; Michaels, H.; 
Bauldauf, R.; Rykowski, R.; and Scarboro, C. Analysis of Particulate 
Matter Emissions from Light-Duty Gasoline Vehicles in Kansas City, 
EPA420-R-08-010. Assessment and Standards Division Office of 
Transportation and Air Quality U.S. Environmental Protection Agency 
Ann Arbor, MI, April 2008.
---------------------------------------------------------------------------

    Under typical driving, as simulated by the FTP, the PM emissions of 
most current-technology gasoline vehicles are fairly low, well below 
the Tier 2 PM standards. At the same time we see considerable variation 
in PM emissions among vehicle models not consistently associated with 
any specific engine or emission control technology (Section 1.5.1 of 
the draft RIA). As a result, we are proposing a new FTP PM standard 
that is set to ensure that all new vehicles would perform at a level 
representing what is already being achieved by well-designed Tier 2 
emission control technologies.
    PM emissions over the FTP are generally attributed to the cold 
start, when PM formation from combustion of the fuel is facilitated by 
the operating conditions, including a cold combustion chamber and fuel 
enrichment. During cold start, PM control via oxidation of semi-
volatile organic compounds from the lubricating oil by catalytic 
converters is less effective. We believe that the proposed FTP PM 
standard can be achieved with improvements to the fuel controls during 
the cold start without the need for any new technology or hardware. 
Improvements in cold-start exhaust catalyst performance for NMOG+NOx 
control will also reduce emissions of semi-volatile organic PM. As 
such, cold start PM levels are relatively independent of vehicle 
application and therefore we are proposing a single FTP PM standard for 
all light-duty and MDPV vehicles. The PM standard level we are 
proposing would ensure that future PM performance is consistent with 
current well-performing Tier 2 vehicles. Unlike the NMOG+NOX 
FTP standard, the PM standard would not decline over time, since most 
manufacturers are already producing vehicles that would meet the 
proposed new standards.
    Although we believe it is important that the proposed FTP PM 
standard apply from the beginning of the Tier 3 program, we are 
proposing several provisions to provide a degree of flexibility for 
manufacturers in how many vehicle models would need to meet that 
standard in the early years of the program. Manufacturers have raised 
several issues that we believe these provisions would address.
    In meetings with EPA, several manufacturers have expressed concerns 
about how a PM standard in the range of the proposed 3 mg/mi standard 
would be implemented. One concern related to the initial uncertainties 
about PM emissions performance that will accompany the development of 
new engine technologies, including those that may be introduced to 
address the GHG emissions/fuel economy standards that EPA and NHTSA 
recently finalized for these vehicles. Also, manufacturers expressed 
concerns related to the testing

[[Page 29855]]

of PM on the FTP, particularly about potential updates to the test 
procedures required to accurately measure PM at very low levels. 
Finally, related to the concerns about the new test procedures are the 
current limitations that exist for some manufacturers regarding the 
capacity of their test facilities to perform a significant volume of 
gasoline vehicle PM testing.
    For these reasons, we are proposing a percent-of-sales phase-in 
during the first 5 years of the program to address these concerns. 
Beginning in MY 2017 (and in MY 2018 for vehicles over 6,000 lbs GVWR), 
manufacturers would comply with the PM standard with a minimum of 20 
percent of their U.S. sales. As shown in Table IV-3, the percentage of 
the manufacturer's sales that would need to comply would increase each 
year, reaching 100 percent in MY 2021. In addition to this percent 
phase-in, we are proposing a separate PM standard of 6 mg/mi that would 
apply only for in-use testing of vehicles certified to the new 
standards, and only during the percent phase-in period.
    Due to the MY 2018 start date for vehicles over 6,000 lbs GVWR, 
manufacturers that have few or no vehicle models over 6,000 lbs GVWR 
would be required to certify a larger percentage of their total light-
duty sales in MY 2017 than full line manufacturers. While we believe 
that most manufacturers would likely choose a single large-volume 
durability group to meet the 2017 requirements, we seek comment on an 
option to comply with the MY 2017 PM requirements by allowing 
manufactures to certify 10 percent of all their light-duty vehicle 
sales in MY 2017 to the new PM standards, including light-duty vehicles 
over 6,000 lbs GVWR and MDPVs. This approach would be consistent with 
the CARB LEVIII program, which requires that 10 percent of all light-
duty vehicle sales meet the new PM standards in MY 2017.
    Because of the expected time and expense of performing emission 
tests on the improved PM test procedures, we are proposing to limit the 
number of tests using the new procedures that a manufacturer would need 
to perform at certification and during in-use testing. Specifically, 
manufacturers would be required to test vehicles representing a minimum 
of 25 percent of a model's durability test groups during certification 
each model year (and a minimum of 2 durability groups).\218\ 
Manufacturers could select which durability groups to test, but would 
need to rotate the groups tested each year to eventually cover their 
whole fleet. Similarly, manufacturers performing in-use testing under 
the In-Use Verification Program could limit their testing to 50 percent 
of their low- and high-mileage test vehicles. Again, manufacturers 
would need to rotate their vehicle models so that each model would be 
tested every other year. Overall, we believe that the flexibility that 
these proposed provisions would provide would facilitate the 
expeditious implementation of the proposed program, with no significant 
impact on the potential benefits of the program.
---------------------------------------------------------------------------

    \218\ Durability groups are a subset of engine families. Several 
engine families may have the same durability group.
---------------------------------------------------------------------------

    The PM standards that we are proposing are the most stringent 
technically feasible standards within the implementation timeframe of 
this proposal. Although the CARB LEV III program includes a 1 mg/mi 
standard which will begin phasing in starting in MY 2025, they 
acknowledge that there is a need for continuing PM measurement method 
development prior to implementing this standard.\219\ In order for EPA 
to propose a standard at this level, there must be established methods 
to reliably and consistently measure PM below that standard, for 
compliance purposes.
---------------------------------------------------------------------------

    \219\ California Air Resources Board (CARB) Initial Statement of 
Reasons, Public Hearing to Consider LEV III, December 7, 2011
---------------------------------------------------------------------------

    We request comment on all of the proposed FTP standards, their 
structure, and their implementation schedules.

                                                      Table IV-3--Summary of Proposed FTP Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                    Program Element                          Units                                Model Year                                 Notes
                                                        ---------------------------------------------------------------------
                                                                          \a\      2018     2019     2020     2021     2022     2023
                                                                          2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
NMOG+NOX Standard (fleet average)                            mg/mi          Per declining fleet average for cars and trucks (see Table IV[dash]2) \b\
--------------------------------------------------------------------------------------------------------------------------------------------------------
PM Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
Phase-in                                                 %............       20       20       40       70      100      100      100  .................
--------------------------------------------------------------------------------------------------------------------------------------------------------
FTP..............................  Certification.......  mg/mi........        3        3        3        3        3        3        3  Note c
                                  ----------------------------------------------------------------------------------------------------------------------
                                   In-use..............  mg/mi........        6        6        6        6        6        3        3  Note d
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ For vehicles above 6,000 lbs GVWR, the proposed FTP PM would apply beginning in MY 2018.
\b\ The percent phase-in would not apply to the declining fleet average standards.
\c\ Manufacturers would be required to test 25 percent of each model year's durability groups, minimum of 2.
\d\ Manufacturers would be required to test 50 percent of their low and high mileage in-use vehicles.

    As with the proposed FTP NMOG+NOX standards, EPA is also 
proposing an alternative phase-in of the 3 mg/mi FTP PM standard that 
would be available if a manufacturer prefers 4 full years of lead time 
for vehicles above 6,000 lbs GVWR. A manufacturer that chooses the 
alternative phase-in for the FTP NMOG+NOX program above 
could also postpone the beginning of the phase-in for PM compliance for 
vehicles above 6,000 lbs GVWR until MY 2019. For MYs 2017 and 2018, a 
manufacturer would certify vehicles up to 6,000 lbs GVWR to the 3 mg/mi 
FTP PM standard (and have a 6 mg/mi in-use PM standard) for 20 percent 
of its sales in each of those years, as with the primary PM percent 
phase-in schedule. Then, for MYs 2019 and later, it would comply with 
the 3 mg/mi (and 6 mg/mi in-use) PM standards for their LDVs, LDTs, and 
MDPVs, both up to and above 6,000 lbs GVWR. For MYs 2019 and 2020 
(i.e., before the phase-in is fully implemented in MY 2021), 
manufacturers choosing this alternative would be required to meet the 
PM standard on the same segment of their fleet vehicles being used to 
meet the NMOG+ NOX fleet average standard, and at the 
applicable phase-in percentage of sales for the given model year. 
Manufacturers

[[Page 29856]]

certifying to the alternative PM phase-in standard would also need to 
comply with the alternative US06 PM phase-in as described below, as 
well as the NMOG+ NOX FTP and SFTP phase-ins. EPA requests 
comment on this alternative phase-in approach as well as on the primary 
PM phase-in option above.
4. Proposed SFTP Standards
    In addition to the proposed FTP standards, we are proposing 
NMOG+NOX and PM standards as measured on the SFTP. The SFTP 
(and specifically the US06 component of the test) is designed to 
simulate higher speeds and higher acceleration rates (and thus higher 
loads) when substantially more heat can be generated during the 
combustion process. It is during these kinds of operation that engines 
can go into a fuel ``enrichment'' mode, where the engine's controls may 
temporarily create a rich air/fuel mixture to protect exhaust 
components from thermal damage. Enrichment can increase emissions of 
NMOG+NOX and PM, primarily due to the incomplete combustion 
that occurs under rich conditions and the diminished effectiveness of 
the catalyst in these circumstances. However, enrichment can be 
minimized or eliminated in current and future engines, where components 
can be thermally protected even under high-load conditions by careful 
electronic management of the air/fuel mixture and the combustion 
process. To reduce emissions caused by excessive enrichment, we are 
proposing new SFTP standards. Further, as described in Section IV.A.4.c 
below, we are proposing limitations on the magnitude of enrichment that 
could be commanded by the vehicle operator. We describe the proposed 
SFTP standards in the following paragraphs.
    We are also proposing an SFTP composite CO standard of 4.2 g/mi for 
all model years 2017 (or 2018) and later. This standard represents no 
effective change from the current Tier 2 SFTP CO standard, which we 
believe is already at a level that is sufficiently stringent.
a. SFTP NMOG+NOX Standards
    We have reviewed certification and in-use NMOG and NOX 
data on a wide range of recent vehicles as tested on the US06 cycle. 
See Chapter 1 of the draft RIA for an analysis of this data. It is 
clear that most current vehicles are generally avoiding significant 
enrichment events during high-load operation and thus achieve 
relatively low NMOG+NOX emissions on the US06 test. The data 
shows that with minor (if any) improvements to engine calibrations and 
with no significant loss of performance, manufacturers are able to 
essentially eliminate enrichment events and their emissions 
consequences. Thus, as presented in Table IV-5 below, we are proposing 
new composite SFTP standards for NMOG+NOX at levels that 
would be more stringent than those required by the existing Tier 2 
program. We believe that the new standards would require emission 
performance at levels currently achieved today by most vehicles under 
high-load operation, and we do not believe that significant additional 
reductions would result from SFTP standards more stringent than the 
proposed 50 mg/mi fully phased-in level. The SFTP emissions value for 
certification of gaseous pollutants would continue to be calculated as 
a weighted composite value of emissions on three cycles (0.35 x FTP + 
0.28 x US06 + 0.37 x SC03), as is done for the Tier 2 SFTP standards.
    We believe that the proposed standards could be more challenging in 
the early years of the program. Thus, we propose a declining fleet 
average standard that would become increasingly stringent from MY 2017 
to MY 2025. Manufacturers would comply with a declining 
NMOG+NOX fleet-average SFTP standard for each year beginning 
in MY 2017 (MY 2018 for vehicles over 6000 lbs GVWR) and culminating 
for MY 2025 and later with a fleet-average standard of 50 mg/mi.
    To provide flexibility in meeting the fleet-average standards, 
manufacturers would determine for themselves what the specific SFTP 
composite standard would be for an individual vehicle family and report 
that self-selected standard and the measured emission performance. 
(These self-selected standards are analogous to ``family emission 
limits,'' or ``FELs,'' used in other programs (e.g., heavy-duty highway 
engine standards).) For each family, a manufacturer would choose any 
composite NMOG+NOX standard, up to 180 mg/mi, in even 10 mg/
mi increments. The manufacturer would then calculate the sales-weighted 
average of all the selected standards of the families across its fleet 
and compare that emissions value to the applicable fleet-average 
standards for that model year. Table IV-4 presents the proposed 
declining fleet-average SFTP NMOG+NOX standards.
    As with the proposed FTP NMOG+NOX and PM standards, EPA 
is also proposing an alternative phase-in of the 50 mg/mi SFTP 
NMOG+NOX standard that would be available if a manufacturer 
prefers a stable standard and four full years of lead time for vehicles 
above 6,000 lbs GVWR. For MYs 2017 and 2018, a manufacturer would 
certify vehicles up to 6,000 lbs GVWR to the primary SFTP declining 
fleet average standards, as in the primary program. Then, beginning in 
MY 2019, a stable fleet average standard of 50 mg/mi would apply to an 
increasing percentage of a manufacturer's light-duty vehicles, light-
duty trucks, and MDPVs, both up to and above 6,000 lbs GVWR. The 
percent phase-in would match the proposed PM percent phase-in schedule, 
as discussed below. A manufacturer certifying to this alternative 
phase-in would also need to comply with the alternative FTP 
NMOG+NOX phase-in and the alternative FTP PM and US06 PM 
phase-ins, as described elsewhere in this section. EPA requests comment 
on this alternative phase-in approach as well as on the primary option 
above.
b. US06 PM Standards
    Our proposed approach to addressing PM emissions on the US06 test 
(a component of the composite SFTP standard) is somewhat different from 
the SFTP standards that we are proposing for NMOG and NOX 
emissions. In the case of PM, US06 data on recent vehicles shows that 
current gasoline vehicles can have very low PM emissions, but US06 PM 
emission levels vary depending on many factors. In some cases, 
manufacturer emission control strategies that are sensitive to 
variations in operating conditions (e.g., variation due to driver 
behavior or automatic transmission shift points) appear to result in 
very low PM levels during some tests and yet higher PM on other tests 
on the same vehicle when driven slightly differently. We also believe 
that some of the observed high PM emissions may be partly due to 
increasing oil consumption in vehicles as they age, especially under 
higher-load conditions or hard closed-throttle deceleration conditions. 
Thus, we now believe that more focus on vehicles as they age is 
important.
    We have designed the proposed US06 PM standards in light of all of 
these factors, which relate to PM emission formation under relatively 
extreme driving conditions. For these standards, we are proposing to 
focus on the US06 cycle component of the composite SFTP, since most of 
our concern about PM formation and sensitivity of engine controls 
arises from high-speed, high-load driving conditions. Similarly, the 
quantity of PM emissions from warmed-up engines is closely related to 
engine load, since the higher rate of fuel consumption results in more

[[Page 29857]]

opportunities for PM to form. For this reason, we propose that heavier 
vehicles, which face high-load conditions more frequently than lighter 
vehicles, comply with a higher US06 standard and lighter vehicles 
comply with a lower standard. The proposed US06 PM standard would be 10 
mg/mi for vehicles at or below 6,000 lbs GVWR and 20 mg/mi for heavier 
vehicles.
    EPA is seeking comment on the use of vehicle weight to establish 
separate US06 PM standards for cars and trucks. The data presented in 
Chapter 1 of the draft RIA demonstrate that today's heavier vehicles 
are already achieving PM emission levels well below our proposed 20 mg/
mi standard and are approximately equivalent to the performance of 
lighter vehicles. According to our data, manufacturers appear to be 
controlling PM emissions in heavier vehicles over severe duty cycles. 
Thus, EPA seeks comment on the proposed US06 PM standards in general, 
including whether EPA should adopt a common US06 standard of 10 mg/mi 
for all light-duty vehicles.
    As is the case for the proposed FTP PM standards, we are proposing 
a single per-vehicle maximum standard to apply in each model year, with 
an allowable percentage phase-in schedule identical to the FTP PM 
phase-in.
    Finally, as with the FTP PM standard (and for the same reasons), we 
propose a slightly less stringent in-use US06 PM standard that would 
apply during the percent phase-in period only. The proposed in-use SFTP 
PM standards would be 15 mg/mi for vehicles at or below 6,000 lbs GVWR 
and 25 mg/mi for heavier vehicles.
    As with the proposed FTP and SFTP NMOG+NOX standards and 
FTP PM standards, EPA is also proposing an alternative phase-in of the 
20 mg/mi PM standard as measured on the US06 cycle, that would be 
available if a manufacturer prefers 4 full years of lead time for 
vehicles above 6,000 lbs GVWR. A manufacturer that chooses the 
alternative phase-in for the FTP NMOG+NOX program above 
could also postpone the beginning of the phase-in for US06 PM 
compliance for vehicles above 6,000 lbs GVWR until MY 2019. For MYs 
2017 and 2018, a manufacturer would certify vehicles up to 6,000 lbs 
GVWR to the 10 mg/mi FTP PM standard (and have a 15 mg/mi in-use 
standard) for 20 percent of its sales in each of those years, as with 
the primary PM percent phase-in schedule. Then, for MYs 2019 and later, 
it would comply with the respective standards for vehicles up to and 
above 6,000 lbs GVWR for their LDVs, LDTs, and MDPVs (i.e., 10 mg/mi 
and 15 mg/mi (in-use) for vehicles up to 6,000 lbs GVWR, and 20 mg/mi 
and 25 mg/mi (in-use) for vehicles above 6,000 lbs GVWR.) For MYs 2019 
and 2020, manufacturers choosing this alternative would be required to 
meet both the FTP PM and the US06 PM standards on the same segment of 
their fleet vehicles being used to meet the 30 mg/mi fleet average 
NMOG+NOX standards, at the applicable percent phase-in 
requirement for the given model year. Manufacturers certifying to the 
alternative US06 PM phase-in standard would also need to comply with 
the alternative FTP PM phase-in as described above, as well as the 
NMOG+NOX FTP and SFTP phase-ins. EPA requests comment on 
this alternative phase-in approach as well as on the primary US06 
phase-in option above.
    All of the proposed SFTP/US06 standards are shown in Table IV-4 and 
Table IV-5.

                                         Table IV-4--Proposed LD and MDPV SFTP Composite Fleet Average Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                   Model year
                                                      --------------------------------------------------------------------------------------------------
                                                                                                                                                2025 and
                                                          2017       2018       2019       2020       2021       2022       2023       2024      later
--------------------------------------------------------------------------------------------------------------------------------------------------------
NMOG+NOX (mg/mi).....................................    \a\ 103         97         90         83         77         70         63         57         50
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO (g/mi)............................................                                               \a\ 4.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ For vehicles above 6,000 lbs GVWR, the NMOG+NOX and CO standards would apply beginning in MY 2018.


                                                     Table IV-5--Summary of Proposed SFTP Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Model year
            Program element                     Units        ----------------------------------------------------------------------         Notes
                                                              \a\ 2017    2018      2019      2020      2021      2022      2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
NMOG+NOX Standard (fleet average).....  mg/mi...............           Per declining fleet average for cars and trucks (see Table IV[dash]4) \b\
                                                             -------------------------------------------------------------------------------------------
PM Standards:
    Phase-in..........................  %...................        20        20        40        70       100       100       100
US06:
    LDV, LDT1&2 Certification.........  mg/mi...............        10        10        10        10        10        10        10  Note c.
    LDV, LDT1&2 In-use................  mg/mi...............        15        15        15        15        15        10        10  Note d.
US06:
    LDT3&4, MDPV Certification........  mg/mi...............        20        20        20        20        20        20        20  Note c.
    LDT3&4, MDPV In-use...............  mg/mi...............        25        25        25        25        25        20        20  Note d.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ For vehicles above 6,000 lbs GVWR, the standards would apply beginning in MY 2018.
\b\ The percent phase-in would not apply to the declining fleet average standards.
\c\ Manufacturers would be required to test 25 percent of each model year's durability groups, minimum of 2.
\d\ Manufacturers would be required to test 50 percent of their low and high mileage in-use vehicles.

    We request comment on our proposed SFTP NMOG+NOX and PM 
standards, their structure, and their implementation schedules.
c. Enrichment Limitation for Spark-Ignition Engines
    To prevent emissions from excessive enrichment during operating 
conditions represented by the SFTP cycles, we are proposing limitations 
on the magnitude of enrichment that could be commanded, including 
enrichment episodes encountered during in-use

[[Page 29858]]

operation. During conditions where enrichment was demonstrated to be 
present on the SFTP, the nominal air to fuel ratio could not be richer 
at any time than the leanest air to fuel ratio required to obtain 
maximum torque (lean best torque or LBT). An air to fuel ratio of LBT 
plus a tolerance of 4 percent additional enrichment would be allowed in 
actual vehicle testing to protect for any in-use variance in the air to 
fuel ratio from the nominal LBT air to fuel determination, for such 
reasons as air or fuel distribution differences from production 
variances or aging.
    LBT is defined as the leanest air to fuel ratio required at a speed 
and load point with a fixed spark advance to make peak torque. 
Specifically, an increase in fuel would not result in an increase in 
torque while maintaining a fixed spark advance. LBT is determined by 
setting the spark advance to a setting that is less than or equal to 
the spark advance required for best torque (MBT) and maintaining that 
spark advance when sweeping the air to fuel ratio. This fixed spark 
advance requirement is intended to prevent torque changes related to 
spark changes masking true LBT. Manufacturers may request approval of 
an alternative LBT definition for a unique technology or control 
strategy. The Agency could determine that an enrichment amount was 
excessive or not necessary and therefore deem that the approach did not 
meet the air to fuel ratio requirements.
    Enrichment required for thermal protection would continue to be 
allowed upon demonstration of necessity to the Agency, based upon 
temperature limitations of the engine or exhaust components. 
Manufacturers would be required to provide descriptions of all 
components requiring thermal protection, temperature limitations of the 
components, how the enrichment strategy will detect over-temperature 
conditions and correct them, and a justification regarding why the 
enrichment is the minimum necessary to protect the specific components. 
The Agency may determine that the enrichment is not justified or is not 
the minimum necessary based on the use of engineering judgment using 
industry-reported thermal protection requirements.
5. Feasibility of the Proposed NMOG+NOX and PM Standards
    In this section, with additional support in Chapter 1 of the draft 
RIA, we describe how we reached our conclusion that the proposed Tier 3 
standards would be technologically feasible in the time frame of the 
program. For each of the proposed emission standards, the lead time 
provided by the proposed program is more than sufficient for all 
manufacturers to comply. First, manufacturers in many cases are already 
adopting complying technologies for reasons other than this proposed 
rulemaking. For example, many of the technologies that manufacturers 
will begin to develop as early as MY 2014 in response to the CARB LEV 
III FTP and SFTP NMOG+NOX standards for the California 
market will likely represent steps toward compliance with this proposed 
national program. Similarly, manufacturers are already building some 
vehicles that comply with our proposed evaporative emissions standards 
in response to the CARB LEV III evaporative standards. In addition, as 
described above, our proposed program incorporates a number of phase-in 
provisions that would ease the transition to compliance, including time 
some manufacturers would need to install PM testing capability and to 
ramp up production on a national scale. We invite comment on our 
conclusions relating to the feasibility of the proposed program for 
each of the standards, as discussed below, including our overall 
conclusion that technological lead time is not a driving factor in 
complying with any of the proposed standards.
    This feasibility assessment is based on a variety of complementary 
technical data, studies, and analyses. As described below, these 
include our analysis of the stringency of the proposed standards as 
compared to current Tier 2 emission levels. We also discuss below our 
observation that manufacturers are currently certifying several vehicle 
models under the California LEV II program that could likely achieve 
the proposed Tier 3 NMOG+NOX and PM standards or similar 
levels. EPA has assessed the emissions control challenges manufacturers 
would generally face (e.g., cold start NMOG reductions and running 
(warmed-up) NOX emissions under typical and more aggressive 
driving conditions) and the corresponding technologies that we expect 
to be available to manufacturers to meet these challenges. Our 
feasibility assessment accounts for the fact that the proposed Tier 3 
program would apply to all types of new vehicles, ranging from small 
cars to large pick-up trucks and MDPVs and representing a wide 
diversity in applications and in specific engine designs.
    It is important to note that our primary assessment of the 
feasibility of engine and emission control technologies is based on the 
assumption that vehicles would be certified on gasoline with a fuel 
sulfur content of 10 ppm and operated on in-use gasoline with 10 ppm 
sulfur or less.\220\ Therefore, our primary assessment does not 
incorporate the degradation of emission control system caused by higher 
levels of sulfur content, as is discussed in Section IV.6 below and in 
the draft RIA. This assessment reinforces the critical role of gasoline 
sulfur control, as proposed in Section V below, in making it possible 
for EPA to propose emission standards at these very stringent levels. 
See Section IV.6 below for a full discussion of our current knowledge 
of the effects of gasoline sulfur on current vehicle emissions as well 
as our projections of how we expect that sulfur would affect compliance 
with standards in the range of the proposed Tier 3 standards.
---------------------------------------------------------------------------

    \220\ Our technology, feasibility, and cost assessments are also 
consistent with an assumption that certification fuel would contain 
15 percent ethanol and would have other properties as specified in 
Section IV.D below.
---------------------------------------------------------------------------

    Since there are multiple aspects to the Tier 3 program, it is 
necessary to consider technical feasibility in light of the different 
program requirements and their interactions with each other. In many 
cases, manufacturers would be able to address more than one requirement 
with the same general technological approach (e.g., faster catalyst 
light-off can improve both FTP NMOG+NOX and PM emissions). 
At the same time, the feasibility assessment must consider that 
different technologies may be needed on different types of vehicle 
applications (i.e., cars versus trucks) and must consider the relative 
effectiveness of these technologies in reducing emissions for the full 
useful life of the vehicle while operating on expected in-use fuel. For 
example, certain smaller vehicles with correspondingly small engines 
may be less challenged to meet FTP standards than larger vehicles with 
larger engines. Conversely, these smaller vehicles may have more 
difficulty meeting the more aggressive SFTP requirements than vehicles 
with larger and more powerful engines. Additionally, the ability to 
meet the proposed SFTP emission requirements can also be impacted by 
the path taken to meet the FTP requirements (e.g., larger volume 
catalysts for US06 emissions control vs. smaller catalysts for improved 
FTP cold-start emissions control). Throughout the following discussion, 
we address how these factors, individually and in interaction with each 
other, affect the feasibility of the proposed program. We

[[Page 29859]]

invite comment on our assessments of these or any other such potential 
interactions. Also, although we are not aware of any technological 
reasons that vehicle emission controls responding to new Tier 3 
requirements should affect vehicle CO2 emissions or fuel 
economy in any significant way, it is possible that such interactions 
could occur. For example, there may be some slight change in vehicle 
mass if manufacturers explore lighter exhaust manifold materials in 
order to reduce thermal mass and promote earlier catalyst light-off or 
add emissions control equipment such as hydrocarbon adsorbers. We 
invite comment on any such potential effects as well.
a. FTP NMOG+NOX Standards
    The proposed new emission requirements include stringent 
NMOG+NOX standards on the FTP that would require new vehicle 
hardware in order to achieve the 30 mg/mi fleet average level in 2025. 
The type of new hardware that would be required would vary depending on 
the specific application and emission challenges. Smaller vehicles with 
corresponding smaller engines would generally need less new hardware 
while larger vehicles may need additional hardware and improvements 
beyond what would be needed for the smaller vehicles. While some 
vehicles, especially larger light trucks, may face higher costs in 
meeting the proposed standards, it is important to remember that not 
every vehicle needs to meet the standard. The proposed program has been 
structured to provide higher emission standard ``bins'' (see Table IV-1 
above) to which manufacturers may certify more challenged vehicles, so 
long as these vehicles are offset with vehicles certified in lower 
emission bins such that the fleet-wide average meets the standard. We 
believe that the availability of the proposed less-stringent bins would 
allow for feasible and cost-effective compliance for all vehicles. In 
the Tier 2 program, manufacturers took advantage of this flexibility, 
especially in the early years of the program. Then, as technologies 
improved and/or became less expensive and the need for averaging 
diminished, manufacturers began certifying all or most of their fleets 
to the average bin (Tier 2 Bin 5). We anticipate that manufacturers 
will follow a similar trend with the proposed Tier 3 standards, relying 
on fleet averaging more significantly in the transitional years but 
certifying increasing numbers of their vehicles to the final fleet 
average standard of 30 mg/mi in the later years of the program.
    In order to assess the technical feasibility of a 30 mg/mi 
NMOG+NOX national fleet average FTP standard, EPA conducted 
two supporting analyses. The initial analyses performed were of the 
current Tier 2 and LEV II fleets. This provided a baseline for the 
current federal fleet emissions performance, as well as the emissions 
performance of the California LEV II fleet. The second consideration 
was a modal analysis of typical vehicle emissions under certain 
operating conditions. In this way EPA determined the specific emissions 
performance challenges that vehicle manufacturers would face in meeting 
the lower fleet average emission standards. Each of these 
considerations is described in greater detail below.
    The current federal fleet is certified to an average of Tier 2 Bin 
5, equivalent to 160 mg/mi NMOG+NOX.\221\ For MY 2009, 92 
percent of LDVs and LDT1s were certified to Tier 2 Bin 5 and 91 percent 
of LDT2s through LDT4s were certified to Tier 2 Bin 5. This was not an 
unexpected result as there is currently no motivation for vehicle 
manufacturers to produce a federal fleet that over-complies with 
respect to the current Tier 2 standards. By comparison, in the 
California fleet, where compliance with the ``PZEV'' program encourages 
manufacturers to certify vehicles to cleaner levels, only 30 percent of 
the LDVs and LDT1s are certified to Tier 2 Bin 5 and 60 percent are 
certified to Tier 2 Bin 3. The situation regarding the truck fleet in 
California is similarly stratified, with 37 percent of the LDT2s 
through LDT4s being certified to Tier 2 Bin 5 and 55 percent being 
certified to Tier 2 Bin 3. In many cases identical vehicles are being 
certified to a lower standard in California and a higher standard 
federally. We note that vehicles certified to a lower standard in 
California are operated on gasoline with an average sulfur content of 
10 ppm and thereby are able to maintain their emissions performance in-
use. Based on these patterns of federal and California certification, 
EPA believes that much of the existing Tier 2 fleet could be certified 
to a lower federal fleet average immediately, with no significant 
feasibility concerns, if lower sulfur gasoline were made available 
nationwide.
---------------------------------------------------------------------------

    \221\ The current Tier 2 program does not combine NMOG and 
NOX emissions into one fleet-average standard. The fleet-
average standard in that program is for NOX emissions 
alone.
---------------------------------------------------------------------------

    Regardless of the Tier 2 bin standards at which manufacturers 
choose to certify their vehicles, actual measured emissions performance 
of these vehicles is typically well below the numerical standards. This 
difference is referred to as ``compliance margin'' and is a result of 
manufacturers' efforts to address all the sources of variability, 
including:

 Test-to-test variability (within one test site and lab-to-lab)
 Build variation expectations
 Manufacturing tolerances and stack-up
 Vehicle operation (for example: driving habits, ambient 
temperature, etc.)
 Fuel composition
 The effects of fuel sulfur on exhaust catalysts and oxygen 
sensors
 The effects of other fuel components, including ethanol and 
gasoline additives
 Oil consumption
 The impact of oil additives and oil ash on exhaust catalysts 
and oxygen sensors

    For MY 2009, the compliance margin for a Tier 2 Bin 5 vehicle 
averaged approximately 60 percent. In other words, actual vehicle 
emissions performance was on average about 40 percent of a 160 mg/mi 
NMOG+NOX standard, or about 64 mg/mi. By comparison, for 
California-certified vehicles, the average Super Ultra Low Emission 
Vehicle (SULEV) compliance margin was somewhat less for the more 
stringent standards, approximately 50 percent. We believe that the 
recent California experience is a likely indicator of compliance 
margins that manufacturers would design for in order to comply with the 
proposed Tier 3 FTP standards. Thus, a typical Tier 2 Bin 5 vehicle, 
performing at 40 percent of the current standard (i.e., at about 64 mg/
mi) would need improvements sufficient to reach about 15 mg/mi (50 
percent of a 30 mg/mi standards).
    To understand how the several currently-used technologies described 
below could be used by manufacturers to reach the stringent proposed 
Tier 3 NMOG+NOX standards, it is helpful to consider 
emissions formation in common modes of operation for gasoline engines, 
or modal analysis.\222\ The primary challenge faced by manufacturers 
for producing Tier 3 compliant light-duty gasoline vehicle powertrains 
would be to reduce the emissions during cold-start operation which, 
based on modal analysis of a gasoline powered vehicle being operated on 
the FTP cycle, occurs during about the first 50 seconds after engine 
start. Thus, effective control of

[[Page 29860]]

these cold-start emissions would be the primary technological goal of 
manufacturers complying with the proposed Tier 3 FTP standards. As 
discussed below, light-duty manufacturers are already applying several 
technologies capable of significant reductions in these cold start 
emissions to vehicles currently on the road.
---------------------------------------------------------------------------

    \222\ A modal analysis provides a second-by-second view of the 
total amount of emissions over the entire cycle being considered.
---------------------------------------------------------------------------

b. SFTP NMOG+NOX Standards
    The increase in the stringency of the SFTP NMOG+NOX 
standards, specifically across the US06 cycle, would generally only 
require additional focus on fuel control of the engines and diligent 
implementation of new technologies that manufacturers are already 
introducing or are likely to introduce in response to the current and 
2017 LD GHG emission standards. These include downsized gasoline direct 
injection (GDI) and turbocharged engines, which may also include 
improvements to the engine and emission control hardware to tolerate 
higher combustion and exhaust temperatures expected in these future 
GHG-oriented engine designs. The upgraded materials or components would 
enable manufacturers to rely less on fuel enrichment during high-speed/
high-load operation to protect components from overheating. This fuel 
enrichment is currently the source of elevated VOC, NOX, and 
PM emissions seen in a subset of the current Tier 2 fleet.
    With respect to enrichment, changes to the fuel/air mixture by 
increasing the fuel fraction has historically been the primary method 
available to manufacturers to protect the catalyst and other exhaust 
components from over-temperature conditions. Changing the fuel/air 
mixture is no longer the only tool available to manufacturers for this 
purpose. With the application of electronic throttle controls, variable 
valve timing, exhaust gas recirculation and other exhaust temperature 
influencing technologies on nearly every light-duty vehicle, the 
manufacturer has the ability to systematically control the operation 
and combustion processes of the engine to minimize or altogether avoid 
areas and modes of operation where thermal issues can occur. While some 
of these solutions could in some cases result in a small and temporary 
reduction in vehicle performance (absolute power levels), we believe 
that it could be an effective way to reduce NMOG+NOX 
emissions over the SFTP test.
    Additionally, some components, especially catalysts, can experience 
accelerated thermal deterioration that occurs when operating at higher 
temperatures for more time than expected under normal operation (e.g., 
trailer towing, mountain grades). Some upgrades of existing vehicle 
emission control technology, like catalyst substrates and washcoats may 
be required to limit thermal deterioration and ensure vehicle emissions 
compliance throughout the useful life of the vehicle.
    In order to assess the technical feasibility of a 50 mg/mi 
NMOG+NOX national fleet average SFTP standard, EPA conducted 
an analysis of SFTP levels of Tier 2 and LEV II vehicles. The analysis 
was performed on the US06 results from current Tier 2 and LEV II 
vehicles tested in the in-use verification program (IUVP) by 
manufacturers and submitted to EPA. This analysis provided a baseline 
for the current Tier 2 and LEV II fleet emissions performance, as well 
as the SFTP emissions performance capability of the cleanest vehicles 
meeting the proposed Tier 3 FTP standards. The analysis concluded that 
most vehicles in the IUVP testing program are already capable of 
meeting the composite SFTP standard of 50 mg/mi when the Tier 3 FTP 
standard levels are factored into the composite calculation. With the 
technological improvements already underway as discussed above, we 
believe all 2017 and later vehicles would be able to comply with the 
proposed SFTP standards, directly, or through the flexibility of the 
averaging, banking and trading program. For further information on the 
analysis see Chapter 1 of the draft RIA.
c. FTP and SFTP PM Standards
    As described above for NMOG+NOX over the SFTP, the 
increase in the stringency of the FTP and SFTP PM standards would 
generally also only require additional focus on fuel control of the 
engines and diligent implementation of new technologies like gasoline 
direct injection (GDI) and turbocharged engines. Some upgrades of 
existing vehicle emission control technology may be required to ensure 
vehicle emissions performance is maintained throughout the useful life 
of the vehicle. These upgrades may include improvements to the engine 
to control wear that could result in increased PM from oil consumption 
and selection of GDI systems that would be capable of continuing to 
perform optimally even as the systems age.
    We based our conclusions about the ability of manufacturers to meet 
the proposed PM standards largely on the PM performance of the existing 
fleet, both on the FTP and SFTP. In the case of FTP testing of current 
vehicles, data on both low and high mileage light-duty vehicles 
demonstrate that the majority of vehicles are currently achieving 
levels at or below the proposed Tier 3 FTP standards.
    The testing results can be found in Chapter 1 of the draft RIA. A 
small number of vehicles are at or just over the proposed FTP PM 
standard at low mileage and could require calibration changes and/or 
catalyst changes to meet the new standards. It is our expectation that 
the same calibration and catalyst changes required to address NMOG 
would also provide the necessary PM control. Vehicles that currently 
have higher PM emissions over the FTP or SFTP at higher mileages would 
likely be required to control oil consumption and combustion chamber 
deposits.
    We also analyzed PM test data on US06 emissions for current Tier 2 
vehicles. The data show that many vehicles are already at or below the 
proposed standards on the US06. Vehicles that have high PM emission 
rates on the US06 would likely need to control enrichment, and oil 
consumption particularly later in life. As described above for SFTP 
NMOG+NOX control, enrichment can be more accurately managed 
through available electronic engine controls. The strategies for 
reducing oil consumption are similar to those described above for 
controlling oil consumption on the FTP. However, given the higher 
engine speeds experienced on the US06 and the increase in oil 
consumption that can accompany this kind of operation, manufacturers 
would most likely focus on oil sources stemming from the piston to 
cylinder interface and positive crankcase ventilation (PCV).
    Manufacturers have informed us that they have already reduced or 
are planning to reduce the oil consumption of their engines by improved 
sealing of the paths of oil into the combustion chamber and improved 
piston-to-cylinder interfaces. They are already taking or considering 
these actions to address issues of customer satisfaction and cost of 
ownership. In addition, many vehicle manufacturers acknowledge the 
relationship between combustion chamber deposits and PM formation and 
are actively pursuing design changes to mitigate fuel impingement 
within the combustion chamber and its commensurate PM effects. Both 
types of controls are being widely applied by manufacturers today.
d. Technologies Manufacturers Are Likely To Apply
    Most of the technologies expected to be applied to light-duty 
vehicles to meet

[[Page 29861]]

the stringent proposed standards would address the emissions control 
system's ability to control emission during cold start. The 
effectiveness of current vehicle emissions control systems depends in 
large part on the time it takes for the catalyst to light off, which is 
typically defined as the catalyst reaching a temperature of 250 [deg]C. 
In order to improve catalyst light-off, we expect that manufacturers 
would add technologies that provide heat from combustion more readily 
to the catalyst or improve the catalyst efficiency at lower 
temperatures. These technologies include calibration changes, thermal 
management, close-coupled catalysts, catalyst platinum group metals 
(PGM) loading and strategy, and secondary air injection, all which 
generally improve emission performance of all pollutants. In some cases 
where the catalyst light-off and efficiency are not enough to address 
the cold start NMOG emissions, hydrocarbon adsorbers may be applied to 
trap hydrocarbons until such time that the catalyst is lit off. Note 
that with the exception of hydrocarbon adsorbers each of these 
technologies addresses NMOG, NOX, and PM performance. The 
technologies are described in greater detail below. Additional 
information on these technologies can also be found in Chapter 1 of the 
RIA.
     Engine Control Calibration Changes--These include changes 
to retard spark and/or adjust air/fuel mixtures such that more 
combustion heat is created during the cold start. Control changes may 
include injection strategies in GDI applications, unique cold-start 
variable valve timing and lift, and other available engine parameters. 
Engine calibration changes can affect NMOG, NOX and PM 
emissions.
     Catalyst PGM Loading--Additional PGM loading, increased 
loading of other active materials, and improved dispersion of PGM and 
other active materials in the catalyst provide a greater number of 
sites available to catalyze emissions and addresses NMOG, 
NOX and PM emissions. Catalyst PGM loading, when implemented 
in conjunction with low sulfur gasoline, will effectively eliminate 
NOX emissions under warmed-up conditions.
     Thermal Management--This category of technologies includes 
all design attributes meant to conduct the combustion heat into the 
catalyst with minimal cooling. This includes insulating the exhaust 
piping between the engine and the catalyst, reducing the wetted area of 
the exhaust path, reducing the thermal mass of the exhaust system, and/
or using close-coupled catalysts (i.e., the catalysts are packaged as 
close as possible to the engine's cylinder head to mitigate the cooling 
effects of longer exhaust piping). Thermal management technologies 
primarily address NMOG emissions, but also affect NOX and PM 
emissions.
     Secondary Air Injection--By injecting air directly into 
the exhaust stream, close to the exhaust valve, combustion can be 
maintained within the exhaust, creating additional heat by which to 
increase the catalyst temperature. The air/fuel mixture must be 
adjusted to provide a richer exhaust gas for the secondary air to be 
effective.
     Hydrocarbon Adsorber--Traps hydrocarbons during a cold 
start until the catalyst lights off, and then releases the hydrocarbons 
to be converted by the catalyst.
     Gasoline Sulfur--The relative effectiveness for NMOG and 
NOX control of the exhaust-catalyst related technologies are 
constrained by gasoline fuel sulfur levels. Thus, reduced sulfur in 
gasoline is an enabling technology to achieve the standards and 
maintain this performance during in-use operation. We discuss the 
relationship between gasoline sulfur and emissions in greater detail in 
Section IV.6 below and in the draft RIA.
    Discussions between EPA, CARB, vehicle manufacturers, and major 
component suppliers indicated that large light-duty trucks (e.g., 
pickups and full-size sport utility vehicles (SUVs) in the LDT3 and 
LDT4 categories) would be the most challenging light-duty vehicles to 
bring into compliance with the proposed Tier 3 NMOG+NOX 
standards at the 30 mg/mi corporate average emissions level. A similar 
challenge was addressed when large light-duty trucks were brought into 
compliance with the Tier 2 standards over the past decade. Figure IV-1 
provides a graphical representation of the effectiveness of Tier 3 
technologies for large light-duty truck applications. A compliance 
margin is shown in both cases. Note that the graphical representation 
of the effectiveness of catalyst technologies on NOX and 
NMOG when going from Tier 2 to Tier 3 levels also includes a reduction 
in gasoline sulfur levels from 30 ppm to 10 ppm.

[[Page 29862]]

[GRAPHIC] [TIFF OMITTED] TP21MY13.000

6. Impact of Gasoline Sulfur Control on the Feasibility of the Proposed 
Vehicle Emission Standards
---------------------------------------------------------------------------

    \223\ The technologies and levels of control in this figure are 
based on a combination of confidential business information 
submitted by auto manufacturers and suppliers, public data, and EPA 
staff engineering judgment.
---------------------------------------------------------------------------

a. Fuel Sulfur Impacts on Exhaust Catalysts
    Modern three-way catalytic exhaust systems utilize platinum group 
metals (PGM), metal oxides and other active materials to selectively 
oxidize organic compounds and carbon monoxide in the exhaust gases. 
These systems simultaneously reduce nitrogen oxides when air-to-fuel 
ratio control operates in a condition of relatively low amplitude/high 
frequency oscillation about the stoichiometric point. Sulfur is a well-
known catalyst poison. There is a large body of work demonstrating 
sulfur inhibition of the emissions control performance of PGM three-way 
exhaust catalyst 
systems.224 225 226 227 228 229 230 231 232 233 The nature 
of sulfur interactions with washcoat materials, active catalytic

[[Page 29863]]

materials and catalyst substrates is complex and varies with catalyst 
composition and exhaust gas composition and exhaust temperature. The 
variation of these interactions with exhaust gas composition and 
temperature means that the operational history of a vehicle is an 
important factor; continuous light-load operation, throttle tip-in 
events and enrichment under high-load conditions can all impact sulfur 
interactions with the catalyst.
---------------------------------------------------------------------------

    \224\ Beck, D.D., Sommers, J.W., DiMaggio, C.L. (1994). Impact 
of sulfur on model palladium-only catalysts under simulated three-
way operation. Applied Catalysis B: Environmental 3, 205-227.
    \225\ Beck, D.D., Sommers, J.W. (1995). ``Impact of sulfur on 
the performance of vehicle aged palladium monoliths.'' Applied 
Catalysis B: Environmental 6, 185-200.
    \226\ Beck, D.D., Sommers, J.W., DiMaggio, C.I. (1997). Axial 
characterization of oxygen storage capacity in close coupled 
lightoff and underfloor catalytic converters and impact of sulfur. 
Applied Catalysis B: Environmental 11, 273-290.
    \227\ Waqif, M., Bazin, P., Saur, O. Lavalley, J.C., Blanchard, 
G., Touret, O. (1997), Study of ceria sulfation. Applied Catalysis 
B: Environmental 11, 193-205.
    \228\ Bazin, P., Saur, O. Lavalley, J.C., Blanchard, G., 
Visciglio, V., Touret, O. (1997). ``Influence of platinum on ceria 
sulfation.'' Applied Catalysis B: Environmental 13, 265-274.
    \229\ Takei, Y., Kungasa, Y., Okada, M., Tanaka, T. Fujimoto, Y. 
(2000). Fuel Property Requirement for Advanced Technology Engines. 
SAE Technical Paper 2000-01-2019.
    \230\ Takei, Y., Kungasa, Y., Okada, M., Tanaka, T. Fujimoto, Y. 
(2001). ``Fuel properties for advanced engines.'' Automotive 
Engineering International 109 12, 117-120.
    \231\ Kubsh, J.E., Anthony, J.W. (2007). The Potential for 
Achieving Low Hydrocarbon and NOX Exhaust Emissions from 
Large Light-Duty Gasoline Vehicles. SAE Technical Paper 2007-01-
1261.
    \232\ Shen, Y., Shuai, S., Wang, J. Xiao, J. (2008). Effects of 
Gasoline Fuel Properties on Engine Performance. SAE Technical Paper 
2008-01-0628.
    \233\ Ball, D., Clark, D., Moser, D. (2011). Effects of Fuel 
Sulfur on FTP NOX Emissions from a PZEV 4 Cylinder 
Application. SAE Technical Paper 2011-01-0300.
---------------------------------------------------------------------------

    Sulfur from gasoline is oxidized during spark-ignition engine 
combustion primarily to SO2 and, to a much lesser extent, 
SO3-2. Sulfur oxides selectively chemically bind 
(chemisorb) with, and in some cases react with, active sites and 
coating materials within the catalyst, thus inhibiting the intended 
catalytic reactions. Sulfur oxides inhibit pollutant catalysis chiefly 
by selective poisoning of active PGM, ceria sites, and alumina 
washcoatings (see Figure IV-2).\234\ The amount of sulfur retained by 
the catalyst is primarily a function of its operating temperature, the 
active materials and coatings used within the catalyst, the 
concentration of sulfur oxides in the incoming exhaust gases, and air-
to-fuel ratio feedback and control by the engine management system.
---------------------------------------------------------------------------

    \234\ Heck, R.M., Farrauto, R.J. (2002). Chapter 5: Catalyst 
Deactivation in Catalytic Air Pollution Control, 2nd Edition. John 
Wiley and Sons, Inc.
[GRAPHIC] [TIFF OMITTED] TP21MY13.001


[[Page 29864]]


Selective sulfur poisoning of platinum (Pt) and rhodium (Rh) is 
primarily from surface-layer chemisorption. Sulfur poisoning of 
palladium (Pd) and ceria appears to be via chemisorption combined with 
formation of more stable metallic sulfur compounds, e.g. PdS and 
Ce2O2S, present in both surface and bulk form 
(i.e., below the surface layer.235 236 237 238 Ceria, 
zirconia and other oxygen storage components (OSC) play an important 
role that is crucial to NOX reduction over Rh as the engine 
air-to-fuel ratio oscillates about the stoichiometric closed-loop 
control point.\239\ Water-gas-shift reactions are important for 
NOX reduction over catalysts combining Pd and ceria. This 
reaction can be blocked by sulfur poisoning and may be responsible for 
observations of reduced NOX activity over Pd/ceria catalysts 
even with exposure to fairly low levels of sulfur (equivalent to 15 ppm 
in gasoline).240 241 Pd is also of increased importance for 
meeting Tier 3 standards due to its unique application in the closed-
coupled-catalysts location required for vehicles certifying to very 
stringent emission standards. Pd is required in closed-coupled 
catalysts due to its resistance to high temperature thermal sintering. 
Sulfur removal from Pd requires rich operation at higher temperatures 
than required for sulfur removal from other PGM catalysts.\242\
---------------------------------------------------------------------------

    \235\ Luo, T. Gorte, R.J. (2003). A Mechanistic Study of Sulfur 
Poisoning of the Water-Gas-Shift Reaction Over Pd/Ceria.'' Catalysis 
Letters, 85, Issues 3-4, pg. 139-146.
    \236\ Li-Dun, A., Quan, D.Y. (1990). ``Mechanism of sulfur 
poisoning of supported Pd(Pt)/Al2O3 catalysts 
for H2-O2 reaction.'' Applied Catalysis 61, 
Issue 1, pg. 219-234.
    \237\ Heck, R.M., Farrauto, R.J. (2002). Chapter 6: Automotive 
Catalyst in Catalytic Air Pollution Control, 2nd Edition. John Wiley 
and Sons, Inc.
    \238\ Maricq, M. M. Chace, R.E., Xu, N., Podsiadlik, D.H. 
(2002). The Effects of the Catalytic Converter and Fuel Sulfur Level 
on Motor Vehicle Particulate Matter Emissions: Gasoline Vehicles. 
Environmental Science and Technology, 36, No. 2 pg. 276-282.
    \239\ Heck, R.M., Farrauto, R.J. (2002). Chapter 6: Automotive 
Catalyst in Catalytic Air Pollution Control, 2nd Edition. John Wiley 
and Sons, Inc.
    \240\ Luo, T. Gorte, R.J. (2003) A Mechanistic Study of Sulfur 
Poisoning of the Water-Gas-Shift Reaction Over Pd/Ceria. Catalysis 
Letters, 85, Issues 3-4, pg. 139-146.
    \241\ Ball, D., Clark, D., Moser, D. (2011). Effects of Fuel 
Sulfur on FTP NOX Emissions from a PZEV 4 Cylinder 
Application. SAE Technical Paper No. 2011-01-0300.
    \242\ Beck, D.D., Sommers, J.W. (1995) Impact of sulfur on the 
performance of vehicle aged palladium monoliths. Applied Catalysis 
B: Environmental 6, 185-200.
---------------------------------------------------------------------------

    In addition to its interaction with catalyst materials, sulfur can 
also react with the washcoating itself to form alumina sulfate, which 
in turn can block coating pores and reduce gaseous diffusion to active 
materials below the coating surface.\243\ This may be a significant 
mechanism for the observed storage of sulfur compounds at light and 
moderate load operation with subsequent, rapid release as sulfate 
particulate matter when high-load, high-temperature conditions are 
encountered.\244\
---------------------------------------------------------------------------

    \243\ Maricq, M. M. Chace, R.E., Xu, N., Podsiadlik, D.H. 
(2002). The Effects of the Catalytic Converter and Fuel Sulfur Level 
on Motor Vehicle Particulate Matter Emissions: Gasoline Vehicles. 
Environmental Science and Technology, 36, No. 2 pg. 276-282.
    \244\ Maricq, M. M. Chace, R.E., Xu, N., Podsiadlik, D.H. 
(2002). The Effects of the Catalytic Converter and Fuel Sulfur Level 
on Motor Vehicle Particulate Matter Emissions: Gasoline Vehicles. 
Environmental Science and Technology, 36, No. 2 pg. 276-282.
---------------------------------------------------------------------------

    Operating the catalyst at a sufficiently high temperature under net 
reducing conditions (e.g., air-to-fuel equivalence that is net fuel-
rich of stoichiometry) can effectively release the sulfur oxides from 
the catalyst components. Thus, regular operation at sufficiently high 
temperatures at rich air-to-fuel ratios can minimize the effects of 
fuel sulfur levels on catalyst active materials and catalyst 
efficiency. However, it cannot completely eliminate the effects of 
sulfur poisoning. A study of Tier 2 vehicles in the in-use fleet 
recently completed by EPA shows that emission levels immediately 
following high speed/load operation is still a function of fuel sulfur 
level, suggesting that lower fuel sulfur levels will bring emission 
benefits unachievable by catalyst regeneration procedures alone.\245\ 
Furthermore, regular operation at these temperatures and at rich air-
to-fuel ratios is not desirable, for several reasons. The temperatures 
necessary to release sulfur oxides are high enough to lead to thermal 
degradation of the catalyst over time via thermal sintering of active 
materials. Sintering reduces the surface area available to participate 
in reactions. Additionally, it is not always possible to maintain these 
catalyst temperatures (because of cold weather, idle conditions, light 
load operation) and the rich air-to-fuel ratios necessary can result in 
increased PM, NMOG and CO emissions. Thus, reducing fuel sulfur levels 
has been the primary regulatory mechanism to minimize sulfur 
contamination of the catalyst and ensure optimum emissions performance 
over the useful life of a vehicle. The impact of gasoline sulfur has 
become even more important as vehicle emission standards have become 
more stringent. Some studies have suggested an increase in catalyst 
sensitivity to sulfur (in terms of percent conversion efficiency) when 
standards increase in stringency and emissions levels decrease. 
Emission standards under the programs that preceded the Tier 2 program 
(Tier 0, Tier 1 and National LEV, or NLEV) were high enough that the 
impact of sulfur was considered negligible. The Tier 2 program 
recognized the importance of sulfur and reduced the sulfur levels in 
the fuel from around 300 ppm to 30 ppm in conjunction with the new 
emission standards.\246\ At that time, very little work had been done 
to evaluate the effect of further reductions in fuel sulfur, especially 
on in-use vehicles that may have some degree of catalyst deterioration 
due to real-world operation.
---------------------------------------------------------------------------

    \245\ See Chapter 1 of the RIA (Section 1.2.3.2) for more 
details on this study and its results.
    \246\ Tier 2 Regulatory Impact Analysis (EPA 420-R-99-023, 
December 22, 1999), available at http://epa.gov/tier2/finalrule.htm#regs.
---------------------------------------------------------------------------

    In 2005, EPA and several automakers jointly conducted a program 
that examined the effects of sulfur and other gasoline properties, 
benzene, and volatility on emissions from a fleet of nine Tier 2 
compliant vehicles. Section 1.2.3 of the draft RIA provides details of 
the Mobile Source Air Toxics (MSAT) Study.\247\ The study found 
significant reductions in NOX, CO and total hydrocarbons 
(HC) when the vehicles were tested on low sulfur fuel, relative to 32 
ppm fuel.\248\ In particular, the study found a nearly 50 percent 
increase in NOX over the FTP when sulfur was increased from 
6 ppm to 32 ppm. Given the prep procedures related to catalyst clean-
out and loading used by these studies, these results may represent a 
``best case'' scenario relative to what would be expected under more 
typical driving conditions. Nonetheless, these data suggested the 
effect of sulfur loading was reversible for Tier 2 vehicles, and that 
there were likely to be significant emission reductions possible with 
further reductions in gasoline sulfur level. For more discussion of the 
impact of gasoline fuel sulfur on the current light-duty vehicle fleet, 
see Section III.A.
---------------------------------------------------------------------------

    \247\ This test program is described in Chapter 6 of the RIA of 
the MSAT2 final rulemaking, EPA 420-R-07-002, February 2007, 
available at http://www.epa.gov/otaq/regs/toxics/420r07002chp6.pdf.
    \248\ See Chapter 6 of the Regulatory Impact Analysis for the 
Control of Hazardous Air Pollutants from Mobile Sources Final Rule, 
EPA 420-R-07-002.
---------------------------------------------------------------------------

b. EPA Gasoline Sulfur Effects Testing
    Both the MSAT and Umicore studies showed the emission reduction 
potential of lower sulfur fuel on Tier 2 and later technology vehicles 
over the FTP cycle. However, assessing the potential for reduction on 
the in-use

[[Page 29865]]

fleet requires understanding how sulfur exposure over time impacts 
emissions, and what the state of loading is for the typical vehicle in 
the field. In response to these data needs, EPA conducted a new study 
to assess the emission reductions expected from the in-use Tier 2 fleet 
with a reduction in fuel sulfur level from current levels. It was 
designed to take into consideration what was known from prior studies 
on sulfur build-up in catalysts over time and the effect of periodic 
regeneration events that may result from higher speed and load 
operation over the course of day-to-day driving.
    The study sample described in this analysis consisted of 81 cars 
and light trucks recruited from owners in southeast Michigan, covering 
model years 2007-9 with approximately 20,000-40,000 odometer miles. The 
makes and models targeted for recruitment were chosen to be 
representative of high sales vehicles covering a range of types and 
sizes. Test fuels were two non-ethanol gasolines with properties 
typical of certification test fuel, one at a sulfur level of 5 ppm and 
the other at 28 ppm. A nominal concentration of approximately 25 ppm 
was targeted for the high level to be representative of retail fuel 
available to the public in the vehicle recruiting area. All emissions 
data was collected using the FTP cycle at a nominal temperature of 75 
[deg]F.
    Using the 28 ppm test fuel, emissions data were collected from 
vehicles in their as-received state as well as following a high-speed/
load ``clean-out'' procedure consisting of two back-to-back US06 cycles 
intended to reduce sulfur loading in the catalyst. A statistical 
analysis of this data showed highly significant reductions in several 
pollutants including NOX and hydrocarbons, suggesting that 
reversible sulfur loading exists in the in-use fleet and has a 
measurable effect on aftertreatment performance (Table IV-6). For 
example, Bag 2 NOX emissions dropped 32 percent between the 
pre- and post-cleanout tests on 28 ppm fuel.

                                   Table IV-6--Average Clean-Out Effect on In-Use Emissions Using 28 ppm Test Fuel\a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           NOX (p-value)   THC (p-value)   CO (p-value)   NMHC (p-value)   CH4 (p-value)   PM (p-value)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bag 1...................................................  ..............  ..............            4.7%  ..............  ..............           15.4%
                                                                                                (0.0737)                                       (<0.0001)
Bag 2...................................................           31.9%           16.5%  ..............           17.8%           15.3%  ..............
                                                                (0.0009)        (0.0024)                        (0.0181)        (0.0015)
Bag 3...................................................           38.3%           21.4%           19.5%           27.8%           12.0%           24.5%
                                                               (<0.0001)       (<0.0001)        (0.0011)       (<0.0001)       (<0.0001)       (<0.0001)
FTP Composite...........................................           11.4%            4.1%            7.6%            3.0%            6.9%           13.7%
                                                               (<0.0001)        (0.0187)        (0.0008)        (0.0751)        (0.0003)       (<0.0001)
Bag 1-Bag 3.............................................  ..............  ..............            4.2%  ..............  ..............  ..............
                                                                                                (0.0714)
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ The clean-out effect is not significant at [alpha] = 0.10 when no reduction estimate is provided.

    To assess the impact of lower sulfur fuel on in-use emissions, 
further testing was conducted on a representative subset of vehicles on 
28 ppm and 5 ppm fuel with accumulated mileage. A first step in this 
portion of the study was to assess differences in the effectiveness of 
the clean-out procedure when done using different fuel sulfur levels. 
Table IV-7 presents a comparison of emissions immediately following 
(<50 miles) the clean-out procedures at the low vs. high sulfur level. 
These results show significant emission reductions for the 5 ppm fuel 
relative to the 28 ppm fuel immediately after this clean-out; for 
example, Bag 2 NOX emissions were 47 percent lower on the 5 
ppm fuel vs. the 28 ppm fuel. This indicates that the catalyst is not 
fully desulfurized, even after a clean out procedure, as long as there 
is sulfur in the fuel.

   Table IV-7--Percent Reduction in Exhaust Emissions When Going From 28 ppm to 5 ppm Sulfur Gasoline for the First Three Repeat FTP Tests Immediately
                                                                   Following Clean-Out
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           NOX (p-value)   THC (p-value)   CO (p-value)   NMHC (p-value)   CH4 (p-value)       PM\a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bag 1...................................................            5.9%            5.4%            7.3%            4.6%           11.1%  ..............
                                                                (0.0896)        (0.0118)        (0.0023)        (0.0465)       (<0.0001)
Bag 2...................................................           47.3%           40.2%            -\a\           34.4%           53.6%  ..............
                                                                (0.0010)       (<0.0001)                        (0.0041)       (<0.0001)
Bag 3...................................................           51.2%           35.0%           10.1%           45.0%           25.4%  ..............
                                                               (<0.0001)       (<0.0001)        (0.0988)       (<0.0001)       (<0.0001)
FTP Composite...........................................           17.7%           11.2%            8.3%            8.8%           21.4%  ..............
                                                                (0.0001)       (<0.0001)        (0.0003)        (0.0003)       (<0.0001)
Bag 1-Bag 3.............................................            -\a\            -\a\            5.8%            -\a\            -\a\  ..............
                                                                                                (0.0412)
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Sulfur level not significant at [alpha] = 0.10.

    To assess the overall in-use reduction between high and low sulfur 
fuel, a mixed model analysis of all data as a function of fuel sulfur 
level and miles driven after cleanout was performed. This analysis 
found highly significant reductions for several pollutants, as shown in 
Table IV-8. Reductions for Bag 2 NOX were particularly high, 
estimated at 59 percent between 28 ppm and 5 ppm overall. For some 
pollutants, such as Bag 2 NOX, the model fitting did not 
find a significant miles-by-sulfur interaction, suggesting the relative 
differences were not dependent on

[[Page 29866]]

miles driven after clean-out. Other results, such as Bag 1 
hydrocarbons, did show a significant miles-by-sulfur interaction. In 
this case, determination of a sulfur level effect for the in-use fleet 
required estimation of a miles-equivalent level of sulfur loading, 
which was determined by the cleanout results obtained from the baseline 
testing on the vehicles as-received.

 Table IV-8--Summary of Mixed Model Results for Emission Reductions When Going From 28 ppm to 5 ppm Sulfur Gasoline, Adjusted for In-Use Sulfur Loading
                                                        (Mileage Accumulation) Where Appropriate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                           NOX+NMOG (p-
                                           NOX (p-value)   THC (p-value)   CO (p-value)   NMHC (p-value)   CH4 (p-value)      value)           PM\a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bag 1...................................           10.7%         \b\8.5%         \b\7.5%            7.5%        \b\13.9%             N/A  ..............
                                                (0.0033)        (0.0382)        (0.0552)      (< 0.0001)       (<0.0001)
Bag 2...................................           59.2%           48.8%            -\a\        \b\44.8%           49.9%             N/A  ..............
                                               (<0.0001)       (<0.0001)                        (0.0260)       (<0.0001)
Bag 3...................................           62.1%           40.2%           20.1%           49.9%           29.2%             N/A  ..............
                                               (<0.0001)       (<0.0001)       (<0.0001)       (<0.0001)       (<0.0001)
FTP Composite...........................        \b\23.0%        \b\13.0%        \b\11.9%        \b\10.6%        \b\25.8%           17.3%  ..............
                                                (0.0180)        (0.0027)        (0.0378)        (0.0032)       (<0.0001)        (0.0140)
Bag 1-Bag 3.............................            -\a\            5.2%            4.3%            5.1%            4.6%             N/A  ..............
                                                                (0.0063)        (0.0689)        (0.0107)        (0.0514)
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Sulfur level not significant at [alpha] = 0.10. For THC Bag 1 and CH4 Bag 1, because the effect of clean-out was not statistically significant, the
  reduction estimates are based on the estimates of least squares means.
\b\ Model with significant sulfur and mileage interaction term.

    Major findings from this study include:
     Reversible sulfur loading is occurring in the in-use fleet 
of Tier 2 vehicles and has a measureable effect on emissions of 
NOX, hydrocarbons, and other pollutants of interest.
     The effectiveness of high speed/load procedures in 
restoring catalyst efficiency is limited when operating on higher 
sulfur fuel.
     Reducing fuel sulfur levels from current levels to levels 
in the range of the proposed gasoline sulfur standards would be 
expected to achieve significant reductions in emissions of 
NOX, hydrocarbons, and other pollutants of interest in the 
in-use fleet.
    The overall reductions found in this study are in agreement with 
other low sulfur studies conducted on Tier 2 vehicles. The magnitude of 
NOX and HC reductions found in this study when switching 
from 28 ppm to 5 ppm fuel are consistent with those found in MSAT and 
Umicore studies mentioned above. For further details regarding the Tier 
2 In-Use Gasoline Sulfur Effects Study, see the draft report on this 
work.\249\
---------------------------------------------------------------------------

    \249\ U.S. EPA. 2013. ``The Effects of Fuel Sulfur Level on 
Emissions from Tier 2 Vehicles In-Use.'' EPA-420-D-13-003. Available 
in the docket for this rule.
---------------------------------------------------------------------------

c. Fuel Sulfur Impacts on Vehicles at the Proposed Tier 3 Levels
    As discussed in previous sections, the Tier 3 Program would reduce 
fleet average NMOG+NOX emissions by over 80 percent. The 
feasibility of the proposed 30 mg/mi NMOG+NOX fleet average 
standard depends on a degree of emissions control from exhaust catalyst 
systems that will require gasoline at 10 ppm sulfur or lower. The most 
likely control strategies would involve using exhaust catalyst 
technologies and powertrain calibration primarily focused on reducing 
cold-start emissions of NMOG and on both cold-start and warmed-up 
(running) emissions of NOX. An important part of this 
strategy, particularly for larger vehicles having greater difficulty 
achieving cold-start NMOG emissions control, would be to reduce 
NOX emissions to near-zero levels. This would allow 
sufficient NMOG compliance margin to allow vehicles to meet the 
combined NMOG+NOX emissions standards for their full useful 
life.
    Achieving the proposed Tier 3 emission standards would require very 
careful control of the exhaust chemistry and exhaust temperatures to 
ensure high catalyst efficiency. The impact of sulfur on OSC components 
in the catalyst makes this a challenge even at relatively low (10 ppm) 
gasoline sulfur levels. NOX conversion by exhaust catalysts 
is strongly influenced by the OSC components like ceria. Ceria 
sulfation may play an important role in the degradation of 
NOX emission control with increased fuel sulfur levels 
observed in the MSAT, Umicore and EPA Tier 2 In-Use Gasoline Sulfur 
Effects studies.\250\
---------------------------------------------------------------------------

    \250\ Heck, R.M., Farrauto, R.J. (2002). Chapter 6: Automotive 
Catalyst in Catalytic Air Pollution Control, 2nd Edition. John Wiley 
and Sons, Inc.
---------------------------------------------------------------------------

    Light-duty vehicles certified to CARB SULEV and federal Tier 2 Bin 
2 exhaust emission standards accounted for approximately 3.1 percent 
and 0.4 percent, respectively of vehicle sales for MY2009. Light-duty 
vehicles certified to SULEV under LEV II are more typically certified 
federally to Tier 2 Bin 3, Bin 4 or Bin 5, and vehicles certified to 
SULEV and Tier 2 Bins 3-5 comprised approximately 2.5 percent of sales 
for MY2009. In particular, nonhybrid vehicles certified in California 
as SULEV are not certified to federal Tier 2 Bin 2 emissions standards 
even though the numeric limits for NOX and NMOG are shared 
between the California LEV II and federal Tier 2 programs for SULEV and 
Bin 2. Confidential business information shared by the auto companies 
indicate that the primary reason is an inability to demonstrate 
compliance with SULEV/Bin 2 emission standards after vehicles have 
operated in-use on gasoline with greater than 10 ppm sulfur and with 
exposure to gasoline up to the Tier 2 80 ppm gasoline sulfur cap. While 
vehicles certified to the SULEV and Tier 2 Bin 2 standards both 
demonstrate compliance using certification gasoline with 15-40 ppm 
sulfur content, in-use compliance of SULEV vehicles in California 
occurs after operation on gasoline with an average of 10 ppm sulfur and 
a maximum cap of 30 ppm sulfur while federally certified vehicles 
operate on gasoline with an average of 30 ppm sulfur and a maximum cap 
of 80 ppm sulfur. Although the SULEV and Tier 2 Bin 2 standards are 
numerically equivalent, the increased sulfur exposure of in-use 
vehicles certified under the federal Tier 2 program results in a need 
for a higher emissions compliance margin to take into account the 
impact of in-use gasoline sulfur on full useful life vehicle emissions. 
As a result, vehicles certified

[[Page 29867]]

to California SULEV typically certify to emissions standards under the 
federal Tier 2 program that are 1-2 certification bins higher (e.g., 
SULEV certified federally as Tier 2 Bin 3 or Bin 4) in order to ensure 
in-use compliance with emissions standards out to the full useful life 
of the vehicle when operating on higher-sulfur gasoline.
    Emissions of vehicles certified to the SULEV standard of the 
California LEV II program, or the equivalent Tier 2 Bin 2 standards, 
can provide some insight into the impact of fuel sulfur on vehicles at 
the very low proposed Tier 3 emissions levels. Vehicle testing by 
Toyota of LEV I, LEV II ULEV and prototype SULEV vehicles showed larger 
percentage increases in NOX and HC emissions for SULEV 
vehicles as gasoline sulfur increased from 8 ppm to 30 ppm, as compared 
to other LEV vehicles they tested. Testing of a SULEV-certified PZEV 
vehicle by Umicore showed a pronounced, progressive trend of increasing 
NOX emissions (referred to as ``NOX creep'') when 
switching from a 3 ppm sulfur gasoline to repeated, back-to-back FTP 
tests using 33 ppm sulfur gasoline.\251\ The PZEV Chevrolet Malibu, 
after being aged to an equivalent of 150,000 miles, demonstrated 
emissions at a level equivalent to the compliance margin for the Tier 3 
Bin 30 NMOG+NOX standard when operated on 3 ppm sulfur fuel 
and for at least one FTP test after switching to 33 ppm certification 
fuel. Following operation over 2 FTP cycles on 33 ppm sulfur fuel, 
NOX emissions alone were more than double the proposed Tier 
3 30 mg/mi NMOG+NOX standard.\252\ This represents a 
NOX percentage increase that is approximately 2-3 times of 
what has been reported for similar changes in fuel sulfur level for 
Tier 2 and older vehicles over a similar difference in fuel 
sulfur.253 254 There are no LDTs larger than LDT2 and no 
larger non-hybrid LDVs. We expect that additional catalyst 
technologies, for example increasing catalyst surface area (volume or 
substrate cell density) and/or increased PGM loading, would need to be 
applied to larger vehicles in order to achieve the catalyst 
efficiencies necessary to comply with the proposed Tier 3 standards. 
Any sulfur impact on catalyst efficiency would have a larger impact on 
vehicles and trucks that rely more on very high catalyst efficiencies 
in order to achieve very low emissions.
---------------------------------------------------------------------------

    \251\ Heck, R.M., Farrauto, R.J. (2002). Chapter 6: Automotive 
Catalyst in Catalytic Air Pollution Control, 2nd Edition. John Wiley 
and Sons, Inc.
    \252\ Ball, D., Clark, D., Moser, D. (2011). Effects of Fuel 
Sulfur on FTP NOX Emissions from a PZEV 4 Cylinder 
Application. SAE Technial Paper No. 2011-01-0300.
    \253\ Butler, A. and Choi, D. (2012). The Effects of Fuel Sulfur 
Level on Emissions In-Use Tier 2 Vehicles. Found in the docket, EPA-
HQ-OAR-2011-0135.
    \254\ Shapiro, E. (2009). National Clean Gasoline--An 
Investigation of Costs and Benefits. Published by the Alliance of 
Automobile Manufacturers.
---------------------------------------------------------------------------

    The negative impact of gasoline sulfur on catalytic activity and 
the resultant loss of exhaust catalyst effectiveness to chemically 
reduce NOX and oxidize NMOG and air toxic emissions occurs 
across all vehicle categories. However, the impact of gasoline sulfur 
on NOX emissions control of catalysts in the fully-warmed-up 
condition is particularly of concern for larger vehicles (the largest 
LDVs and LDT3s, LDT4s, and MDPVs). Manufacturers face the most 
significant challenges in reducing cold-start NMOG emissions for these 
vehicles. Because of the need to reach near-zero NOX levels, 
any significant degradation in NOX emissions control over 
the useful life of the vehicle would likely prevent some if not most 
larger vehicles from reaching a combined NMOG+NOX low enough 
to comply with the 30 mg/mi fleet-average standard. These vehicles 
represent a sufficiently large segment of light-duty vehicle sales now 
and in the foreseeable future that their emissions could not be offset 
(and thus the fleet-average standard achieved) by certifying vehicles 
to bins below the fleet average. Any degradation in catalyst 
performance due to gasoline sulfur would reduce or eliminate the margin 
necessary to ensure in-use compliance with the proposed Tier 3 
emissions standards. Certifying to a useful life of 150,000 miles 
versus the current 120,000 miles would further add to manufacturers' 
compliance challenge for Tier 3 large light trucks (See Section IV.7.b 
below for more on the useful life requirements.)
d. Gasoline Sulfur Control Required To Meet Tier 3 Emissions Standards
    The impact of gasoline sulfur poisoning on exhaust catalyst 
performance and the relative stringency of the Tier 3 standards, 
particularly for larger vehicles and trucks, when considered together 
make a compelling argument for the virtual elimination of sulfur from 
gasoline. As discussed in Section V.A.2, the proposed 10-ppm standard 
for sulfur in gasoline represents the lowest practical limit from a 
standpoint of fuel production, handling and transport. While lowering 
gasoline sulfur to levels below 10 ppm would further help ensure in-use 
vehicle compliance with the Tier 3 standards, the Agency believes that 
a gasoline sulfur standard of 10 ppm would allow compliance by 
gasoline-fueled engines with a national fleet average of 30 mg/mi 
NMOG+NOX. The level of the proposed Tier 3 standards was 
considered in light of a 10-ppm average sulfur level for gasoline. Not 
only should a 10-ppm sulfur standard enable vehicle manufacturers to 
certify their entire product line of vehicles to the Tier 3 fleet 
average standards, but based on the results of testing both Tier 2 
vehicles and SULEV vehicles as discussed above, reducing gasoline 
sulfur to 10 ppm should enable these vehicles to maintain their 
emission performance in-use over their full useful life. It is 
important to note that while the preceding discussion focused on 
gasoline sulfur control, spark ignition engines operating on other 
fuels (i.e., CNG, LPG, E85) and utilizing a three way catalyst systems 
for control of emission are similarly affected by the sulfur levels in 
the fuel. We invite comment on all aspects of our analysis of gasoline 
sulfur effects and our conclusions, especially comments that include 
any additional relevant testing data.
7. Other Provisions
a. Early Credits
    The California LEV III program is scheduled to begin at least two 
model years earlier than the proposed federal Tier 3 program.\255\ As 
stated earlier, EPA proposes to implement the Tier 3 standards in MY 
2017, for vehicles 6,000 lbs GVWR and less, and in MY 2018 for vehicles 
over 6,000 lbs GVWR. As a result, LEV III vehicles sold in California 
beginning in MY 2015 will be required to meet a lower fleet average 
NMOG+NOX level than the federal fleet is meeting at that 
time. In addition, the California NMOG+NOX standards will 
continue to decline resulting in the gap growing between the current 
federal program and LEV III. The early credit program we are proposing 
is designed to accomplish three goals: (1) Encourage manufacturers to 
produce a cleaner federal fleet earlier than otherwise required; (2) 
provide needed flexibility to the manufacturers to facilitate the 
``step down'' from the current Tier 2 Bin 5 fleet average required in 
MY 2016 to the LEV III-based declining fleet average in MY 2017; and 
(3) create a Tier 3 program that is equivalent in stringency to the LEV 
III program such that manufacturers will be able to produce a 50-state 
fleet at the earliest opportunity.
---------------------------------------------------------------------------

    \255\ The LEV III program as approved by the California Air 
Resources Board, January 2012.
---------------------------------------------------------------------------

    The first provision that we are proposing to address these goals is 
to allow manufacturers to generate early federal credits against the 
current Tier 2

[[Page 29868]]

Bin 5 requirement \256\ in MYs 2015 and 2016 for vehicles under 6,000 
lbs GVWR and MYs 2016 and 2017 for vehicles greater than 6,000 lbs 
GVWR. (Early credits would only be available for manufacturers 
complying under the primary program (declining fleet average), not the 
alternative phase-in approach (Section IV.A.3.a above). In order to 
generate these credits, manufacturers would sum the NMOG and 
NOX certification standards for each federally certified 
Tier 2 vehicle and calculate an NMOG+NOX fleet average. 
Credits would be based on the difference between the new, cleaner, 
fleet average and the Tier 2 Bin 5 requirement (160 mg/mi total of NMOG 
and NOX). We expect that manufacturers could accomplish this 
by certifying existing Tier 2 vehicles to a lower fleet average, mainly 
for the higher bins as the current sulfur content in gasoline would 
preclude them from certifying the cleanest bins federally (Our 
analysis, presented in Section IV.A.5 above and Chapter 1 of the draft 
RIA, shows that many vehicles currently certified to Tier 2 Bin 5 could 
likely be certified to a lower bin with some reduction in compliance 
margin; e.g., from Bin 5 to Bin 4 or Bin 3.) We expect to realize early 
environmental benefits, as the result of a cleaner federal fleet, that 
justify the credits generated.
---------------------------------------------------------------------------

    \256\ Tier 2 standards are not set in the form of 
NMOG+NOX. The equivalent Tier 2 Bin 5 fleet average in 
NMOG+NOX terms would be equal to 160 mg/mi (90 mg/mi NMOG 
+ 70 mg/mi NOX).
---------------------------------------------------------------------------

    We believe that this provision would help us realize both our first 
and our second goals. For example, a manufacturer certifying their 
federal fleet to Tier 2 Bin 4 would earn 50 mg/mi of 
NMOG+NOX credits per vehicle (i.e., 160 mg/mi minus 110 mg/
mi) which should encourage manufacturers to certify a cleaner federal 
fleet and provide ample opportunity for credit generation to facilitate 
the ``step down'' in stringency. However, if we allowed excessive early 
credits to be generated it could allow manufacturers to delay their 
federal compliance with the same fleet average as California for 
several years. This would be in direct conflict with our third goal of 
creating a program of equal stringency to the California program as 
early as possible. In order to address this concern we are proposing 
that the application of the early federal credits be constrained under 
the following conditions:
     Early federal credits generated under the provision 
described above could be used without limitation in MY 2017.
     Credits used for compliance in MY 2018 and beyond would be 
capped at an amount equal to the lesser of the manufacturer's federal 
credits as calculated above or the manufacturer's LEV III credits 
multiplied by the ratio of 50-state sales to California only sales. 
Calculation of these credits would account for the fact that some LEV 
III credits may have begun to expire and would no longer be eligible as 
a basis for Tier 3 early credits.
    By capping the available federal credits we believe that the two 
programs, LEV III and Tier 3 would be at parity starting in 2018 MY. In 
addition, because the number of federal early credits that could be 
used would be based on the number of LEV III credits that the 
manufacturer had generated, there may be additional motivation for 
manufacturers to over-perform in California during the initial model 
years.
    We are proposing that early credit life be limited to 5 years with 
no discounting, consistent with the California LEV II and LEV III 
programs and similar to the basic credit carry-forward provisions of 
the recent light-duty and heavy-duty greenhouse gas rules. We are not 
proposing any carry-over of Tier 2 credits for use in the Tier 3 
program. We seek comment on the 5-year credit life in the context of 
the programs goals of harmonization with California LEV III and whether 
the added flexibility would be advantageous relative to any added 
burden associated with corresponding record retention requirements.
b. Useful Life
    The ``useful life'' of a vehicle is the period of time, in terms of 
years and miles, during which a manufacturer is responsible for the 
vehicle's emissions performance.\257\ For LDVs and LDTs (including 
MDPVs) under the Tier 2 program, 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. For the Tier 3 program, 
we are proposing several changes to the current useful life provisions 
that are appropriate to the proposed standards described above.
---------------------------------------------------------------------------

    \257\ The useful life of the vehicle should not be confused with 
the vehicle's emissions warranty. The useful life value is relevant 
for certification and in-use compliance purposes; the emissions 
warranty relates to the period during which the manufacturer is 
obligated to repair or replace failing emission control equipment on 
a properly maintained vehicle.
---------------------------------------------------------------------------

    Every vehicle manufacturer with which the EPA has met has expressed 
the desire for a single national vehicle fleet and has indicated an 
ability and willingness to certify their vehicles to a 150,000 mile, 15 
year full useful life in support of that goal, since the LEV III 
program would apply a single 150,000 mile, 15 year useful life value 
for all of the new standards. However, the CAA, written at a time when 
vehicles did not last as long as today, precludes EPA from requiring a 
useful life value longer than the 120,000 mile (and 10 or 11 year, as 
applicable) value set in Tier 2, for all LDVs and for LDTs up to 3,750 
lbs LVW and up to 6,000 lbs GVWR (LDT1s). For vehicles heavier than 
these limits (i.e., LDT2s, 3s, 4s, as well as MDPVs, representing a 
large fraction of the light-duty fleet) we are proposing a 150,000 
mile, 15 year useful life value. For the lighter vehicles, we are 
proposing to continue to apply the 120,000 mile (and 10 or 11 year, as 
applicable) full useful life requirement from the Tier 2 program. 
Numerically, we are proposing 120,000 mile useful life 
NMOG+NOX standards that are 85 percent of the respective 
NMOG+ NOX 150,000 mile standards. (See Chapter 1 of the 
draft RIA for a description of our analysis of this relationship.) For 
the lighter vehicles, we propose that manufacturers be allowed to 
choose to certify to either useful life value in complying with the 
proposed fleet average and per-vehicle standards.\258\ A manufacturer 
choosing to comply with the 120,000 mile useful life standards for any 
of their lighter vehicles would demonstrate compliance with the 
numerically lower fleet-average NMOG+ NOX standards for all 
LDV and LDT1 families. Standards for all other pollutants \259\ would 
remain the same regardless of whether compliance was at the 120,000 
mile or the 150,000 mile useful life periods. If a vehicle manufacturer 
chose to comply with the 120,000 mile useful life standards for their 
lighter vehicles, it would be required to separately demonstrate that 
its larger vehicles complied with the 150,000 mile fleet average 
standards.
---------------------------------------------------------------------------

    \258\ CARB has stated that they do not expect to accept vehicles 
certified under the federal Tier 3 program to a 120,000 mile useful 
life value for California certification, and thus for meeting 
California's fleet average NMOG+NOX standards.
    \259\ PM, CO, and HCHO
---------------------------------------------------------------------------

    Except for vehicles not required to meet a 150,000 miles useful 
life and for which a manufacturer chose to apply the 120,000 mile 
useful life value, we propose that manufacturers be required to certify 
vehicles to the 150,000 mile useful life beginning with the first model 
year that a vehicle model is certified to the FTP NMOG+NOX 
Bin 70 or lower. This useful-life requirement

[[Page 29869]]

would apply beginning in MY 2017. Beginning in MY 2020, all vehicles 
would need to certify to the 150,000 mile useful life, regardless of 
NMOG+NOX certification bin, unless they are allowed and the 
manufacturer has chosen to remain at 120,000 mile useful life. (Note 
that the timing of the requirement to certify on the new test fuel 
would follow the same approach as for the useful life requirement 
(i.e., based on the first year a model is certified to Bin 70 or below) 
as described in Section IV.A.7.c below.)
    We request comment on the proposed useful life provisions, 
including the 85 percent factor we propose to use to establish the 
standards for the 120,000 mile useful life.
c. Test Fuels
    We recognize that test fuels are an important element of a national 
program. Vehicle manufacturers have emphasized the desire to reduce 
test burden by producing one vehicle that is tested to a single test 
procedure and a single fuel and meets both California and federal 
requirements. Although we have been able to reasonably align the 
proposed Tier 3 program with the LEV III program in most key respects, 
we recognize that there would still exist some differences in emissions 
performance between vehicles operated on the LEV III and Tier 3 
certification fuels. The largest differences between the two fuels are 
the amount of ethanol they contain and the Reid Vapor Pressure (RVP). 
The proposed Tier 3 NMOG+NOX standards assume operation on 
federal certification fuel.
    We propose that manufacturers begin to certify vehicles on the new 
Tier 3 fuels \260\ beginning with the first model year that a vehicle 
model is certified to the FTP NMOG+NOX Bin 70 or lower, 
independent of its useful life. The new-fuel requirement would apply 
beginning in MY 2017. Beginning in MY 2020, all gasoline-fueled models 
would need to certify on the new fuel, regardless of their 
certification bin.\261\ As discussed in Section IV.A.7.b above, 
manufacturers would also need to apply the 150,000 mile useful life 
value to these same vehicles as they begin to be certified to Bin 70 
and lower.
---------------------------------------------------------------------------

    \260\ This includes fuels used for low temperature and high 
altitude testing and durability requirements. See Section IV.D 
below.
    \261\ Diesel fueled and alternative fueled vehicles would 
continue to test on the fuels used under the Tier 2 program.
---------------------------------------------------------------------------

    During the transition period from Tier 2 fuel to the new Tier 3 and 
LEV III fuels, manufacturers have indicated a substantial workload 
challenge of developing and certifying a vehicle to the two new fuels 
simultaneously. To address this potential workload and certification 
challenge, we propose that vehicles certified in MY 2015 through 2019 
to California LEV III standards using California LEV III certification 
fuels and test procedures could be used for certifying to EPA 
standards. (For example, for MY 2015 and 2016, EPA would consider such 
vehicles to be Tier 2 vehicles, although they could be tested on 
California LEV III fuel.\262\ Similarly, for MY 2017 through 2019, EPA 
would consider such vehicles to be Interim Tier 3 vehicles, although 
they could be tested on California LEV III fuel.) For these vehicles 
only, we would not perform or require in-use exhaust testing on Tier 3 
fuel.
---------------------------------------------------------------------------

    \262\ Because the Tier 2 program has NOX fleet 
average standards (instead of the NMOG+NOX fleet average 
standard of LEV III and Tier 3), manufacturers certifying to LEV III 
standards in MY 2015 and 2016 would not include such vehicles in 
their Tier 2 NOX fleet average calculation. Tier 2 
provisions that are not a part of the California program would still 
apply. For example, high altitude testing, which is only required in 
the federal program, would still need be performed on federal Tier 2 
fuel.
---------------------------------------------------------------------------

    California does not have fuel specifications for high altitude 
testing or cold CO and hydrocarbon testing. For this reason, we are 
proposing that for vehicles that manufacturers choose to certify using 
LEV III fuel and test procedures, they can use test fuels meeting 
either Tier 2 or Tier 3 fuel specifications to comply with these 
federal-only requirements. We would perform in-use testing for these 
vehicles on the same fuel as selected by the manufacturer at 
certification.
    Certifications after MY 2019, however, would be required to use the 
Tier 3 fuel and carry-over certifications using LEV II, LEV III or Tier 
2 certification fuels would not be allowed after MY 2019. CARB has 
indicated that they would accept Tier 3 test data (on federal 
certification fuel) to obtain a California certificate as early as MY 
2015. In this manner manufacturers should be able to avoid compliance 
testing on more than one fuel as vehicles certified to LEV III using 
federal certification fuel could obtain Final Tier 3 status.\263\
---------------------------------------------------------------------------

    \263\ That is, a manufacturer that certifies a vehicle to LEV 
III in MY 2015 and MY 2016.
---------------------------------------------------------------------------

d. High Altitude Requirements
    FTP emission standards are historically designed to be applicable 
at all altitudes. Under Tier 2, the same FTP emission bin standards 
applied to vehicles tested at both low and high-altitude. However, 
fundamental physical challenges exist at high altitude resulting in 
typically higher emissions during cold starts compared with starts at 
lower altitudes (i.e., sea level). This expected increase in emissions 
is primarily due to the lower air density at higher altitudes. Due to 
the lower air density, the needed volume of the hot combustion exhaust 
required to quickly heat the catalyst in the first minute after a cold 
start is reduced. As a result, catalyst light-off is delayed and cold 
start emissions increase. Vehicles under the Tier 2 program typically 
had sufficient compliance margins to absorb this increase in emissions 
during testing under high-altitude conditions. However, given the near-
zero standards we are proposing in Tier 3, vehicles will have less 
compliance margin with which to address the issue.
    Under the Tier 3 program, we expect that the emission control 
technologies selected for low altitude performance would also provide 
very significant emission control at high altitude.\264\ However, as 
explained above, unique emission challenges exist with operation at 
higher altitude. The stringency of the Tier 2 standards is such that 
manufacturers comply with the same standards at all altitudes without 
the need to design their emission control strategies specifically for 
the more challenging high altitude operation. The Tier 3 stringency may 
not allow manufacturers emission control strategies at lower altitude 
to maintain sufficient compliance margin when tested at higher 
altitude, therefore requiring manufacturers to design their emission 
controls specifically for higher altitude.
---------------------------------------------------------------------------

    \264\ High-altitude conditions means a test altitude of 1,620 
meters (5,315 feet). Low altitude conditions means a test altitude 
less than 549 meters (1,800 feet).
---------------------------------------------------------------------------

    To avoid requiring special high-altitude emission control 
technologies, we propose to allow manufacturers the limited relief of 
complying with the next less-stringent bin for testing at high altitude 
for vehicles certified at sea level to Bin 20, 30, and 50 (e.g., 
certifying to Bin 50 for testing at high altitude versus Bin 30 at sea 
level). For vehicles certified at sea level to Bins 70 and 125, 35 mg/
mi of relief will be provided. No relief is proposed for Bin 160.
    We do not believe that the impact of the fairly small fraction of 
overall U.S. driving that occurs in high altitude locations warrants a 
requirement for additional technologies to be applied specifically for 
high-altitude conditions. In addition, this provision is intended to be 
applicable to all Final Tier 3 vehicles for the duration of the Tier 3 
program.

[[Page 29870]]

    While vehicles would need to meet the Tier 3 standards at all 
intermediate altitudes, the question remains as to what the value of 
the standard should be at a given intermediate altitude. We request 
comment on both the level of the proposed high altitude standards and 
the appropriate level of the standard at intermediate altitudes. In 
particular, we seek comment on whether this could be addressed by 
requiring that all emission control strategies remain in effect at 
altitudes that are in between the specific altitudes used for high and 
low altitude testing and that any altitude-related auxiliary emission 
control device (AECD) must be identified by the manufacturer and 
justified as not being defeat devices.

              Table IV-9--Proposed High Altitude Standards
------------------------------------------------------------------------
                                           Sea level FTP   Altitude FTP
                   Bin                     standard (mg/   standard (mg/
                                           mi NMOG+NOX)    mi NMOG+NOX)
------------------------------------------------------------------------
Bin 160.................................             160             160
Bin 125.................................             125             160
Bin 70..................................              70             105
Bin 50..................................              50              70
Bin 30..................................              30              50
Bin 20..................................              20              30
------------------------------------------------------------------------

e. Highway Test Standards
    Sustained high-speed operation can result in NOX 
emissions that may not be represented on either the FTP or SFTP cycles. 
Although we are not aware of any serious issues with this mode of 
operation with current Tier 2 vehicles, we are interested in preventing 
increases in these NOX emissions as manufacturers develop 
new or improved engine and emission control technologies.
    For this reason, we are proposing that the same FTP 
NMOG+NOX standards proposed above also apply on the Highway 
Fuel Economy Test (HFET), which is performed as a part of GHG and Fuel 
Economy compliance testing. Thus, the FTP NMOG+NOX standard 
for the bin at which a manufacturer has chosen to certify a vehicle 
would also apply on the HFET test. For example, if a manufacturer 
certifies a vehicle to Bin 70, the vehicle's NMOG+NOX 
performance over the HFET could not exceed 70 mg/mi. Manufacturers 
would simply need to ensure that the same emission control strategies 
implemented for the FTP and SFTP cycles were also effectively utilized 
during the highway test cycle. We believe that this proposed 
requirement would not require manufacturers to take any unique 
technological action, would not add technology costs, and would not add 
significantly to the certification burden. We request comment on this 
proposed provision.
f. Interim 4,000 mile SFTP Standards
    During the period of the declining NMOG+NOX standards, 
we are proposing that interim Tier 3 vehicles meet 4,000 mile SFTP 
standards, consistent with the existing Tier 2 and LEV II program 
requirements. The 4,000 mile standards are designed to prevent 
excessive emission levels from a single vehicle or a single SFTP cycle, 
which can occur if only a composite approach is taken. Under the Tier 3 
program, the proposed composite standards would be fleet average 
standards that would decline from 2017 until 2025, as described in 
Section IV.A.4. While this approach is expected to result in fleet-wide 
reductions in SFTP emissions during all years of the declining 
standard, the level of the fleet average requirement during the initial 
years provides an opportunity for backsliding of SFTP emissions on 
individual vehicles or on individual SFTP cycles. We believe it is 
appropriate to require any individual Interim Tier 3 vehicle to at a 
minimum meet the same requirements under the Tier 2 and LEV II 
programs. Table IV-10 below presents the proposed 4,000 mile SFTP 
standards for interim Tier 3 vehicles.

        Table IV-10--Proposed 4,000 Mile SFTP Exhaust Standards for Interim Tier 3 Vehicles (Grams/mile)
----------------------------------------------------------------------------------------------------------------
         Vehicle category            US06 NMOG+NOX      US06 CO      SC03 NMOG+NOX      SC03 CO
--------------------------------------------------------------------------------------------------
LDV/LDT1..........................            0.14             8.0            0.20             2.7
LDT2..............................            0.25            10.5            0.27             3.5
LDT3..............................            0.4             10.5            0.31             3.5
LDT4..............................            0.6             11.8            0.44             4.0
----------------------------------------------------------------------------------------------------------------

    We believe that vehicles considered to be Final Tier 3 (i.e., they 
meet the Tier 3 PM requirements, specifically the stringent SFTP PM 
standards) will have sufficiently robust designs that the 4,000 mile 
SFTP standards will no longer be necessary. Additionally, once the 
program reaches the fully phased-in fleet average composite standard of 
50 mg/mi in 2025, high SFTP emissions even on a limited portion of a 
manufacturer's fleet should be effectively mitigated. We seek comment 
on this proposed 4,000 mile SFTP provision.
g. Phase-In Schedule
    As described in Section IV.A.3, under the proposed Tier 3 program, 
manufacturers would be required to certify each vehicle model to an FTP 
bin, which would then be used to calculate the NMOG+NOX 
fleet average of all of its vehicles. Manufacturers would also need to 
determine the SFTP levels of each model and calculate the 
NMOG+NOX fleet average for the SFTP requirements as 
described in Section IV.A.4. These separate FTP and SFTP fleet average 
calculations would satisfy one aspect of certification under the Tier 3 
program, specifically the standards associated with each model year.
    As described in Sections IV.A.7.b and IV.A.7.c above, the longer 
(150,000 mile) useful life value, as applicable, and the new Tier 3 
certification fuel for exhaust testing would be implemented as 
manufacturers certified vehicles to more stringent NMOG+NOX 
standards, with the threshold to implement both of these provisions 
being Bin 70. Beginning in MY 2017, any vehicle certified to Bin 70 or 
lower would be required to be certified on Tier 3 test fuel. In 
addition, any vehicle certified to Bin 70 or lower that would be 
required to meet the longer 150,000 mile useful life would be required 
to do so. Beginning in MY 2020 all vehicles would be required to be 
certified to on the Tier 3 test fuel, regardless of the bin they are 
certified to or the useful life they are required to meet.
    Manufacturers would also be required to comply with more stringent 
PM standards on a percent phase-in schedule. Compliance with the PM 
standards, which is consistent with the CARB LEV III program, would be 
independent of the fleet average requirements described above. The PM 
emission standards for FTP and SFTP described in Section IV.A.3 and 4 
respectively would be implemented as a

[[Page 29871]]

percent phase-in requirement as described below under a basic phase-in 
schedule or under an optional phase-in schedule.
    Vehicles certified to a Tier 3 bin, meeting the requirements of the 
PM phase-in schedule, and complying with the other Tier 3 requirements 
(i.e., 150,000 mile useful life (as applicable) and Tier 3 
certification fuel, as applicable) would be considered ``Final Tier 3'' 
compliant vehicles. All other vehicles certified to Tier 3 bins but not 
yet meeting the PM and other Tier 3 requirements would be considered 
``Interim Tier 3'' compliant vehicles. At the completion of the percent 
phase-in period for PM (2021 for the basic PM phase-in schedule and 
2022 for the alternative PM phase-in schedule, as described below), 100 
percent of vehicles would need to meet the all Tier 3 requirements and 
would be considered ``Final Tier 3'' vehicles.
    For the PM requirements, each year manufacturers would be required 
to meet either the basic PM percent phase-in or alternative PM phase-in 
as described in the following subsections. The basic percent PM phase-
in schedule is composed of fixed yearly minimum phase-in percentages 
that we expect that most manufacturers would meet to comply with the 
Tier 3 requirements. The alternative PM phase-in schedule provides 
additional flexibility for manufacturers with product offerings that 
may not provide sufficient vehicle model granularity to allow for a 
gradual transition into the Final Tier 3 requirements as described 
below. In either case, Interim Tier 3 vehicles not yet meeting the Tier 
3 PM standards must at a minimum meet the Tier 2 PM full useful life 
FTP standard of 10 mg/mi and the SFTP weighted composite standard of 70 
mg/mi.
i. Basic PM Percent Phase-In Schedule
    It is important to note that the percent phase-in of the new Tier 3 
standards that we are proposing and the declining fleet average 
standards to which a manufacturer's fleet is held are separate and 
independent elements of the Tier 3 program. ``Phase-in'' in this 
context means the fraction of a manufacturer's fleet that would be 
required to meet the new Tier 3 PM standards in a given model year. We 
expect manufacturer fleets to consist of a mix of vehicles certified to 
Tier 2, LEV II, LEV III and Tier 3 standards throughout the percent 
phase-in period.
    As discussed above, vehicles originally certified to Tier 2, LEV 
II, and LEV III would be carried over into the Tier 3 program as 
Interim Tier 3 vehicles. A vehicle would be considered a ``Final Tier 3 
vehicle'' when it is certified to one of the Tier 3 bins; meets the 
Tier 3 PM standards; certifies to the 150,000 useful life value (for 
LDT2s, LDT3s, LDT4s, and MDPVs); and certifies on the new certification 
test fuel. Table IV-11 below presents the proposed PM phase-in schedule 
for Final Tier 3 vehicles.

                                               Table IV-11--PM Phase-In Schedule for Final Tier 3 Vehicles
--------------------------------------------------------------------------------------------------------------------------------------------------------
             Model year                              2017                      2018            2019            2020            2021       2022 and later
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manufacturer's Fleet (%)............  20\a\.............................              20              40              70             100             100
                                                                         -------------------------------------------------------------------------------
Vehicle Types.......................  <= 6,000 lbs GVWR.................                     All vehicles <= 8,500 lbs GVWR and MDPVs
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ In 2017 model year, a manufacturer may optionally include vehicles up to 8,500 lbs GVWR and/or MDPVs in its phase-in calculation.

ii. Optional PM Phase-In
    The proposed PM percent-of-sales phase-in schedule described above 
would allow manufacturers with multiple vehicle models to plan the 
phase-in of those models based on anticipated volumes of each vehicle 
model. However, manufacturers certifying only a few vehicle models 
might not benefit from this schedule. This is because, in order to 
satisfy the phase-in schedule percentages, they might have to over-
comply with the required percentages earlier than would a manufacturer 
with many vehicle models available for the phase-in.
    For instance, a manufacturer with only two models that each equally 
accounted for 50 percent of their sales would be required to introduce 
(at least) one of the models in MY 2017 meet the PM phase-in 
requirement of 20 percent in the first year. Because it represented 50 
percent of the manufacturer's sales, this model would then also meet 
the requirements for MY 2018 (20 percent) and MY 2019 (40 percent). To 
meet the MY 2020 requirement of 70 percent of sales, however, the 
manufacturer would need to introduce the second Tier 3 vehicle that 
year. Thus the manufacturer would have introduced 100 percent of its 
Tier 3 models one year earlier than would have been required of a 
manufacturer that was able to delay the final 30 percent of its fleet 
until MY 2021 (by distributing its their models over the entire phase-
in period).
    To provide for more equal application of this benefit among all 
manufacturers in the early years of the program, we are proposing an 
optional ``indexed'' PM phase-in schedule that could be used by a 
manufacturer to meet its PM percent phase-in requirements. A 
manufacturer that exceeded the phase-in requirements in any given year 
would be allowed to, in effect, offset some of the phase-in 
requirements in a later model year. The optional phase-in schedule 
would be acceptable if it passes a mathematical test. The mathematical 
test is designed to provide manufacturers a benefit from certifying to 
the standards at higher volumes than obligated to under the normal 
phase-in schedule, while ensuring that significant numbers of vehicles 
are meeting the new Tier 3 requirements during each year of the 
optional phase-in schedule. In this approach, manufacturers would 
weight the earlier years by multiplying their percent phase-in by the 
number of years prior to MY 2022 (i.e., the second year of the 100 
percent phase-in requirement).
    The proposed mathematical equation for applying the optional PM 
phase-in is as follows:

(5 x APP2017) + (4 x APP2018) + (3 x APP2019) + (2 x APP2020) + (1 x 
APP2021) >=540,

where APP is the anticipated phase-in percentage for the referenced 
model year.
    The sum of the calculation would need to be greater than or equal 
to 540, which is the result when the optional phase-in equation is 
applied to the primary percent phase-in schedule (i.e., 5 x 20% + 4 x 
20% + 3 x 40% + 2 x 70% + 1 x 100% = 540).
    Applying the proposed optional PM phase-in equation to the 
hypothetical manufacturer in the example above, the manufacturer could 
postpone its model introductions by one year each, to MY 2018 and MY 
2021. Its calculation would be (5 x 0% + 4 x 50% + 3 x 50% + 2 x 50% + 
1 x 100% = 550, and thus the phase-in would be acceptable.
    EPA requests comment on the proposed PM phase-in schedules.

[[Page 29872]]

h. In-Use Standards
i. NMOG+NOX
    The proposed Tier 3 emission standards would require a substantial 
migration of emission control technology historically used only on a 
small percent of the fleet and typically limited to smaller vehicles 
and engines. While we believe that these technologies can generally be 
used on any vehicle and are applicable to the entire fleet, 
manufacturers have less experience with the in-use performance of these 
technologies across the fleet. For example, technologies that 
accelerate catalyst warm-up such as catalyst location close to the 
engine exhaust ports and other advanced thermal management approaches 
would be new to certain vehicle types, particularly larger vehicles 
(i.e., LDT3/4s), which have historically not relied on these 
technologies to meet emission standards.
    To help manufacturers address the lack of in-use experience and 
associated challenges with the expanded introduction of these 
technologies particularly in the larger vehicles, we are proposing 
temporarily-relaxed in-use NMOG+NOX standards that would 
apply to all vehicles certified to Bins 70 and cleaner as Interim or 
Final Tier 3 vehicles. The in-use standards would apply during the 
entire percent phase-in period (i.e., through MY 2021). The proposed 
in-use standards would be 40 percent less stringent than the 
certification standards, providing a significant but reasonable 
temporary cushion for the uncertainties associated with new 
technologies (or new applications of existing technologies) over the 
life of the vehicle.
    The proposed in-use NMOG+NOX standards are shown in 
Table IV-12.

 Table IV-12--Proposed FTP In-Use Standards for Light Duty Vehicles and
                                  MDPVs
                                 [mg/mi]
------------------------------------------------------------------------
                                                           NMOG+NOX (mg/
                           Bin                                  mi)
------------------------------------------------------------------------
Bin 160.................................................             160
Bin 125.................................................             125
Bin 70..................................................              98
Bin 50..................................................              70
Bin 30..................................................              42
Bin 20..................................................              28
------------------------------------------------------------------------

ii. PM
    As with the proposed NMOG+NOX standards, the 
introduction of new emission control technologies or new applications 
of existing technologies (e.g., GDI, turbocharging, downsized engines) 
would create significant uncertainties for manufacturers about in-use 
performance over the vehicle's useful life. We are proposing a 
temporary in-use FTP standard for PM of 6 mg/mi for all light duty 
vehicles and MDPVs certified to the Tier 3 full useful life 3 mg/mi 
standard. Since the Tier 3 PM standard has a percent phase-in schedule 
spread over several years, starting in 2017 with full phase-in 
completed in 2022, we are proposing that the in-use standard apply to 
all vehicles certified to the new PM standards during the entire 
percent phase-in period (i.e., through MY 2021).
    We are also proposing temporarily-relaxed in-use US06 PM standards. 
We propose in-use standards 5 mg/mi less stringent than the 
certification standards, or 15 mg/mi for all light duty vehicles up to 
and including 6,000 lbs GVWR and 25 mg/mi for all light duty vehicles 
and light-duty trucks over 6,000 lbs GVWR and MDPVs. Consistent with 
the FTP in-use standards, these in-use standards would apply to all 
vehicles certified to the new PM standards during the entire percent 
phase-in period (i.e., through MY 2021).
    EPA requests comment on the proposed in-use standards.
i. FFVs
    Because of the physical and chemical differences in how emissions 
are generated and controlled between vehicles operating on gasoline and 
ethanol, manufacturers of vehicles designed for high-percentage blends 
of ethanol (usually called Flexible Fuel Vehicles, or FFVs) may face 
unique compliance challenges under the proposed Tier 3 program. 
Historically, under the Tier 2 program, FFVs have only been required to 
meet all Tier 2 emission standards while operating on gasoline; when 
operating on the alternative fuel (generally this means a blend that is 
nominally 85 percent ethanol, or E85), they have only been required to 
meet the FTP emission standards.
    However, E85 use may rise considerably in the future as ethanol use 
increases in response to the Renewable Fuels Standards (RFS). Thus, it 
is increasingly important that FFVs maintain their emission performance 
when operating on E85 across different operating conditions.
    We believe that at standard test conditions, requiring 
manufacturers to meet the Tier 3 standards on any blend of gasoline and 
ethanol would not add technological feasibility concerns beyond 
compliance on gasoline alone (or low-level blends like E10 or E15). We 
are thus proposing that in addition to complying with the Tier 3 
requirements when operating on gasoline, FFVs also comply with both the 
FTP and the SFTP emission standards when operating on E85. This would 
include the requirement to meet emission standards for both gasoline 
and E85 for the FTP, highway test, and SFTP emission standards at 
standard test temperatures (i.e., 68 [deg]F to 86 [deg]F). Since FFVs 
can operate on any blend of gasoline and ethanol (up to a nominal 85 
percent ethanol), the emission requirements apply to operation at all 
levels of the alternative fuel that can be achieved with commercially 
available fuels. However, for emission compliance demonstration 
purposes, we will continue to test on gasoline and the highest 
available level ethanol.
    EPA welcomes comment on this proposed approach to FFV compliance.
j. Credit for Direct Ozone Reduction (DOR) Technology
    Since the late 1990s, technologies have been commercialized with 
which vehicles can remove ozone from the air that flows over the 
vehicle's coolant radiator. In such direct ozone reduction (DOR) 
technology, a catalytic coating on the radiator is designed to convert 
ambient ozone into gaseous oxygen, addressing the air quality concerns 
about ozone. Detailed technical analyses for the California LEV II and 
the federal Tier 2 programs showed that when properly designed these 
systems can remove sufficient ozone from the air to be equivalent to a 
quantifiable reduction in tailpipe NMOG emissions. In the earlier 
programs, both California and EPA provided methodologies through which 
a manufacturer could demonstrate the capability and effectiveness of 
the ozone-reducing technology and be granted an NMOG credit. A small 
number of vehicle models with DOR applications received credit under 
the LEV II program; no manufacturer formally applied for credits under 
the federal Tier 2 program.
    Some manufacturers have expressed an interest in the continued 
availability of a DOR credit as a part of their potential LEV III and 
Tier 3 compliance strategies. EPA believes that when a DOR system is 
shown to be effective in reducing ozone, a credit toward Tier 3 
compliance is warranted. We propose that manufacturers following the 
California methodology for demonstrating effectiveness and calculating 
a appropriate credit for a DOR system be granted a specific credit 
toward the NMOG portion of the

[[Page 29873]]

NMOG+NOX standard.\265\ As with the California program, such 
a credit could not exceed 5 mg/mi NMOG. We invite comment on the 
appropriateness of this proposed DOR credit approach, including the 
application of the California methodology to the federal Tier 3 
program.
---------------------------------------------------------------------------

    \265\ EPA is incorporating the CARB DOR methodology by 
reference.
---------------------------------------------------------------------------

k. Credit for Adopting a 150,000-Mile Emissions Warranty
    Under the Tier 3 standards proposed above manufacturers would be 
expected to design their emission control systems to continue to 
operate effectively for a useful life of 150,000 miles (120,000 miles 
for some smaller vehicles). However, as with the current Tier 2 
program, manufacturers are only required to replace failed emission 
control components or systems on customers' vehicles for a limited time 
period, specified in the Clean Air Act (80,000 miles/8 years for key 
emission control components). EPA believes that voluntary extension of 
this warranty obligation by manufacturers would provide additional 
emission reductions by helping ensure that controls continue to operate 
effectively in actual operation through the full life of the vehicle.
    We propose that a manufacturer providing its customers with a 
robust emission control system warranty of 15 years or 150,000 miles be 
eligible for a modest credit of 5 mg/mi NMOG+NOX.\266\ 
Because of the significant liability that manufacturers would be 
accepting, we do not expect that the use of this credit opportunity 
would be widespread. However, based on our modeling of the expected 
deterioration of the emissions of future Tier 3 vehicles absent repair/
replacement of failed emission controls, we anticipate that the value 
to the environment of long emissions warranties in terms of reduced 
real-world emissions would significantly exceed the 5 mg/mi 
NMOG+NOX credit.\267\
---------------------------------------------------------------------------

    \266\ Manufacturers choosing to comply with the standards for a 
120,000 mile useful life for their LDVs and LDT1s would not be 
eligible for this extended warranty credit for those vehicles.
    \267\ Beardsley, M, et al. (2013, February). Updates to MOVES 
for the Tier 3 NPRM. Memorandum to the docket.
---------------------------------------------------------------------------

    We propose to use the same criteria for approving such a credit as 
does the parallel California program.\268\ Thus, in addition to 
committing to customers that failing emission controls would be 
repaired or replaced for 15 years/150,000 miles, manufacturers would 
also need to accept the liability that in the event that a specific 
emissions control device failed on greater than 4 percent of a vehicle 
model's production, they would recall the entire production of that 
model for repair. EPA requests comment on this optional credit 
opportunity.
---------------------------------------------------------------------------

    \268\ EPA is incorporating the CARB extended emission warranty 
provisions by reference.
---------------------------------------------------------------------------

l. Averaging, Banking, and Trading of Credits
    An averaging, banking, and trading (ABT) program was established in 
the Tier 2 program to provide for credits to be generated by certifying 
vehicles that perform better than the standards, for those credits to 
be used to offset vehicles that perform worse than the standards, and 
for credits to be banked for later use or traded to other 
manufacturers. The ABT program is largely unchanged by this Tier 3 
proposal. In some cases, especially during the transitional years, 
there would be specific restrictions on the generation of credits, as 
described above. Also, we are proposing that Tier 3 credits expire 
after 5 years, consistent with the LEV II and LEV III programs and 
similar to the basic credit carry-forward provisions in the recent 
light-duty and heavy-duty greenhouse gas rules. We invite comment on 
the ABT program in general, and specific comment on a longer Tier 3 
credit life, including any flexibilities that this may provide and any 
implications for record retention requirements by manufacturers.
m. Tier 3 Transitional Emissions Bins
    In discussions with manufacturers, EPA has become aware that some 
vehicles may continue to be produced as late as MY 2019 that could be 
certified to Tier 2 Bin 3 or Bin 4 standards. In order to provide 
manufacturers flexibility in meeting the fleet average standards and 
thus to further facilitate the transition from Tier 2 to Tier 3, we 
will allow manufacturers to certify to the combined NMOG+NOX 
levels of these bins through MY 2019. Two proposed transitional Tier 3 
bins, Bin 110 and Bin 85, would have NMOG+NOX standards on 
the FTP of 110 mg/mi and 85 mg/mi, respectively (i.e., the sum of the 
NMOG and NOX values from the Tier 2 bins); the associated 
FTP standards for CO, PM, and HCHO corresponding to these bins would be 
identical to those for vehicles certified to the proposed Tier 3 Bin 
125. Tier 3 SFTP standards would apply to these vehicles, and these 
vehicles would be included in the Tier 3 p.m. percent phase-in 
calculations.
n. Compliance Demonstration
    In general, we are proposing that manufacturers demonstrate 
compliance with the proposed Tier 3 light-duty vehicle emission 
standards in a very similar manner to current Tier 2 vehicle compliance 
(see Sec.  86.1860 of the proposed regulatory language). However, we 
propose for Tier 3 that manufacturers calculate their compliance with 
the fleet average standards and percent phase-in standards based on 
annual nationwide sales, including sales in California and Clean Air 
Act Section 177 states. We believe that this approach represents 
another step toward achieving the goal of an effectively nationwide 
program as early as possible, which has been a basic principle in EPA's 
development of this proposed program and broadly supported by vehicle 
manufacturers. We also believe that basing compliance on nationwide 
sales may reduce the need for manufacturers to project future sales and 
track past years' sales in a disaggregated way. Because the proposed 
Tier 3 provisions will become increasingly consistent with LEV III 
provisions as the Tier 3 program phases in, we believe that any 
disproportionate impacts of different mixes of vehicles in different 
states are unlikely to occur. We seek comment on this approach to 
compliance demonstration.
    This proposed nationwide compliance calculation approach would 
apply to vehicles as they become subject to the Tier 3 provisions, 
either the declining fleet-average NMOG+NOX curves or the 
percent phase-in PM standards. Were any manufacturer to choose to use 
the alternative FTP and SFTP phase-ins, which are not a part of the LEV 
III program, the manufacturer would not include sales in California or 
in the Section 177 states in its compliance calculations.\269\


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

    \269\ If EPA ultimately decided to continue the disaggregated 
approach to fleet compliance calculations, we could potentially base 
compliance with the proposed Tier 3 emission requirements on U.S. 
sales (i.e., sales in non-California and non-Section 177 states).
---------------------------------------------------------------------------

B. Tailpipe Emissions Standards for Heavy-Duty Vehicles

1. Overview
    We are proposing Tier 3 exhaust emissions standards for heavy-duty 
vehicles (HDVs) between 8,501 and 14,000 lbs GVWR that are certified to 
gram per mile standards on a chassis dynamometer. Vehicles in this GVWR 
range are often referred to as Class 2b (8,501-10,000 lbs) and Class 3 
(10,001-14,000 lbs) vehicles, and are typically

[[Page 29874]]

full-size pickup trucks and work vans certified as complete 
vehicles.\270\ Most are built by companies with even larger light-duty 
truck markets, and as such they frequently share major design 
characteristics and potential emissions control technologies with their 
LDT counterparts. However, in contrast to the largely gasoline-fueled 
LDT fleet, roughly half of the HD pickup and van fleet in the U.S. is 
diesel-fueled, which is a consideration in setting emissions standards, 
as diesel engine emissions and control strategies differ from those of 
gasoline engines.
---------------------------------------------------------------------------

    \270\ 40 CFR 86.1803-01 defines HDVs to also include motor 
vehicles at or below 8,500 lbs GVWR that have a vehicle curb weight 
of more than 6,000 lbs or a basic vehicle frontal area in excess of 
45 square feet, and we are proposing that these vehicles also would 
be subject to the standards and other provisions applicable to Class 
2b vehicles discussed in this section.
---------------------------------------------------------------------------

    Manufacturers of diesel-fueled complete HDVs have the option under 
existing EPA regulations to satisfy EPA criteria emissions requirements 
for these vehicles by using engines certified through engine 
dynamometer testing, but for the most part have chosen to certify whole 
vehicles on the chassis test. We are proposing to codify this common 
practice and require that diesel-fueled Class 2b and 3 complete Tier 3 
vehicles, like their gasoline-fueled counterparts, be certified to the 
Tier 3 standards on the chassis test. The current prohibition in 40 CFR 
86.1863-07(d) on averaging, banking, and trading (ABT) credit 
generation and use by chassis-certified diesel HDVs would be replaced 
by the proposed fleetwide averaging program. We are not proposing 
changes to the heavy-duty engine certification requirements at this 
time.
    Manufacturers of incomplete HDVs that are sold to secondary 
manufacturers for subsequent completion (less than 10 percent of the 
Class 2b and 3 U.S. market) are also allowed under existing EPA 
regulations to certify via either the chassis or engine test, and those 
who choose to chassis-certify in the future would be subject to Tier 3 
requirements. We are not proposing to mandate chassis certification of 
incomplete Class 2b and 3 vehicles, but we note that California's LEV 
III program does include such a requirement for Class 2b and we request 
comment on doing the same in the federal program. We further note that 
MDPVs are classified as HDVs under the Clean Air Act but, as in our 
current Tier 2 program, would be covered as part of our Tier 3 light-
duty program discussed in Section IV.A, and not in the proposed program 
described here.
    The key elements of the proposed Tier 3 program for HDVs parallel 
those proposed for passenger cars and LDTs, with adjustments in 
standards levels, emissions test requirements, and implementation 
schedules, appropriate to this sector. These key elements include a 
combined NMOG+NOX declining fleet average standard beginning 
in 2018 and reaching the final, fully phased-in level in 2022, creation 
of a bin structure for standards, new stringent PM standards phasing in 
on a separate schedule, changes to the test fuel for gasoline- and 
ethanol-fueled vehicles, extension of the regulatory useful life to 
150,000 miles, and a new requirement to meet standards over the SFTP 
that would address real-world driving modes not well-represented by the 
FTP cycle alone. We believe that other requirements already in place 
for HDV testing and compliance remain appropriate. In particular, we 
believe the current HDV certification requirement to test at the 
adjusted loaded vehicle weight (ALVW), equal to vehicle curb weight 
plus one-half the payload weight, is more appropriate for these heavy-
duty work trucks and vans than the LDT requirement to test at curb 
weight plus 300 lbs. These differences from light-duty requirements 
also factor into the evaluation of potential control technologies and 
subsequent choice of standards levels, as discussed below.
    As with the proposed light-duty Tier 3 program, we are putting 
strong emphasis on coordinating this HDV Tier 3 proposal with 
California's LEV III program for Class 2b and 3 vehicles, referred to 
in LEV III as medium-duty vehicles (MDVs). The goal is to create a 
coordinated ``national program'' in which California would accept 
compliance with Tier 3 standards as sufficient to also satisfy LEV III 
requirements, thus allowing manufacturers to comply nationwide by 
marketing a single vehicle fleet. With this goal in mind, we discuss 
the relationship of the proposed HDV Tier 3 program provisions to LEV 
III throughout this section. As part of this effort, we are proposing 
that manufacturers of Tier 3 HDVs calculate compliance with the fleet 
average standards and percent phase-in standards discussed in this 
section based on annual nationwide sales, including sales in California 
and Clean Air Act Section 177 states. This would help to create an 
effectively nationwide program, which has been a basic principle in 
EPA's development of this proposed program and broadly supported by 
vehicle manufacturers. If this proposed approach to HDV fleet 
compliance calculations is not adopted, EPA could base compliance with 
the proposed Tier 3 requirements on U.S. sales outside of California 
and the Section 177 states.
    Furthermore, in 2011 EPA and NHTSA set first-ever standards for 
GHGs and fuel consumption from HD pickups and vans (as well as other 
heavy-duty vehicles and engines). These standards phase in over 2014-
2018, so in developing the Tier 3 HDV proposal we have carefully taken 
this new program into account to maximize the coordination between the 
two complementary heavy-duty regulatory programs and avoid 
inconsistencies.
2. HDV Exhaust Emissions Standards
a. Bin Standards
    We are proposing that manufacturers certify HDVs to Tier 3 
requirements by having them meet the standards for one of the bins 
listed in Table IV-13. Manufacturers would choose bins for their 
vehicles based on their product plans and corporate strategy for 
compliance with the fleet average standards discussed in Section 
IV.A.2.b, and once a vehicle's bin is designated, those bin standards 
apply throughout its useful life. Because the fleet average standards 
become more stringent over time, the bin mix would gradually shift from 
higher to lower bins. As in the past, we are proposing numerically 
higher standards levels for Class 3 vehicles than for Class 2b 
vehicles, reflective of the added challenge in reducing per-mile 
emissions from large work trucks designed to carry and tow heavier 
loads. Also, the proposed standards levels for both Class 2b and Class 
3 HDVs are significantly higher than those being proposed for light-
duty trucks due to marked differences in vehicle size and capability, 
and to our requirement to test HDVs in a loaded condition (at ALVW). By 
conducting emissions testing with loaded vehicles, the heavy-duty 
program ensures that emissions controls are effective when these 
vehicles are performing their core function: hauling heavy loads. This 
is a key difference between the heavy-duty and light-duty truck 
programs. The proposed bin structure and standards levels are 
consistent with those in the LEV III program. We request comment on the 
usefulness of creating additional bins between Bin 0 and the next 
lowest bin in each vehicle class, as a means of encouraging clean 
technologies and adding flexibility.

[[Page 29875]]



                                                      Table IV-13--Proposed FTP Standards for HDVs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         NMOG+NOX  (mg/                                                                    Formaldehyde
                                                               mi)        NMOG  (mg/mi)   NOX  (mg/mi)     PM  (mg/mi)      CO  (g/mi)        (mg/mi)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Class 2b (8,501-10,000 lbs GVWR)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bin 395 (interim)......................................  ..............             195             200               8              6.4               6
Bin 340 (interim)......................................  ..............             140             200               8              6.4               6
Bin 250................................................             250  ..............  ..............               8              6.4               6
Bin 200................................................             200  ..............  ..............               8              4.2               6
Bin 170................................................             170  ..............  ..............               8              4.2               6
Bin 150................................................             150  ..............  ..............               8              3.2               6
Bin 0..................................................               0  ..............  ..............               0              0                 0
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Class 3 (10,001-14,000 lbs GVWR)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bin 630 (interim)......................................  ..............             230             400              10              7.3               6
Bin 570 (interim)......................................  ..............             170             400              10              7.3               6
Bin 400................................................             400  ..............  ..............              10              7.3               6
Bin 270................................................             270  ..............  ..............              10              4.2               6
Bin 230................................................             230  ..............  ..............              10              4.2               6
Bin 200................................................             200  ..............  ..............              10              3.7               6
Bin 0..................................................               0  ..............  ..............               0              0                 0
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The proposed NMOG and NOX standards for the highest bins 
in each class (Class 2b Bin 395 and Class 3 Bin 630) are equal to the 
current non-methane hydrocarbon (NMHC) and NOX standards 
that took full effect in 2009, as well as to equivalent LEV standards 
in California's LEV II program. These bins are intended as carryover 
bins. That is, we would expect them to be populated with vehicles that 
are designed to meet the current standards, and that are being phased 
out as new lower-emitting vehicle designs phase in to satisfy the 
proposed Tier 3 fleet average NMOG+NOX standard. We also 
consider the next highest bins (Class 2b Bin 340 and Class 3 Bin 570) 
to be carryover bins, because they likewise can be readily achieved by 
vehicles designed for today's EPA and California LEV II emissions 
programs. As the 2018-2022 phase-in progresses, it would become 
increasingly difficult to produce vehicles in these bins and still meet 
the fleet average standard. Therefore vehicles in these bins (as well 
as some others not yet designed to meet Tier 3 PM standards described 
in Section IV.B.2.d) would be considered ``interim Tier 3'' vehicles, 
and the bins themselves would be considered ``interim bins.''
    To facilitate their use in this carryover function, we are 
proposing that the interim bins not include SFTP requirements, longer 
useful life requirements, or requirements to conduct exhaust emissions 
testing with the proposed new gasoline test fuel discussed in Section 
IV.D, although testing on this fuel would be allowed. For gasoline-
fueled HDVs in all other bins, we are proposing that exhaust emissions 
testing be conducted with the new test fuel. (See Section IV.D.5 for 
discussion of our request for comment on extending this requirement to 
testing of gasoline-fueled heavy-duty engines as well.) In the context 
of these proposed accommodations for the interim bins, we propose two 
additional measures to help ensure these bins are focused on their 
function of helping manufacturers transition to Final Tier 3 vehicles. 
First, we propose that the interim bins be available only in the phase-
in years of the program, that is, through MY 2021, as is appropriate to 
their interim status.
    Second, we are proposing that vehicles in the interim bins meet 
separate NMOG and NOX standards, as indicated in Table IV-
13, rather than combined NMOG+NOX standards. This proposed 
provision is intended to keep a manufacturer from redesigning or 
recalibrating a vehicle design under combined NMOG+NOX Tier 
3 standards for such purposes as reducing fuel consumption, through 
means that result in higher NOX or NMOG emissions than 
exhibited by today's vehicles, contrary to the intended carryover 
function of the interim bins. We note that other, more stringent, 
proposed bins also carry this potential but to a lesser degree, and we 
feel their relatively low NMOG+NOX standards levels 
sufficiently mitigate this concern, whereas the interim bins have the 
potential to allow a doubling of emissions or more. We request comment 
on this issue and the proposed approach to addressing it.
b. Fleet Average NMOG+NOX Standards
    As in the light-duty program, a key element of the Tier 3 program 
is a fleet average NMOG+NOX standard that becomes more 
stringent in successive model years: In the case of HDVs, from 2018 to 
2022. Each HDV sold by a manufacturer in each model year contributes to 
this fleet average based on the mg/mi NMOG+NOX level of the 
bin declared for it by the manufacturer. For the interim bins, with 
separate NMOG and NOX standards, the NMOG+NOX 
level is the simple sum of the NMOG and NOX standards. 
Manufacturers may also earn or use credits for fleet average 
NMOG+NOX levels below or above the standard in any model 
year, as described in Section IV.B.4. We are proposing the separate 
Class 2b and Class 3 fleet average standards shown in Table IV-14, 
though a manufacturer could effectively average the two fleet classes 
using credits (see Section IV.B.4). We believe this split-curve 
approach is superior to a single HDV phase-in because it recognizes the 
different Class 2b/Class 3 fleet mixes among manufacturers and the 
different challenges in meeting mg/mi standards between Class 2b and 
Class 3 vehicles, while still allowing for a corporate compliance 
strategy based on a combined HDV fleet through the use of credits.
    The proposed fleet average standards are consistent with those set 
for the MDV LEV III program in model years 2018 and later. Note that 
the LEV III program also sets standards for model years before 2018, 
something EPA is not requiring due to lead time considerations. 
However, we are proposing that manufacturers may voluntarily meet bin 
and fleet average standards in model years 2016 and 2017 that are 
consistent with the MDV LEV III standards, for the purpose of 
generating credits that can be used later

[[Page 29876]]

or traded to others. These proposed voluntary standards are shown in 
Table IV-14. This proposed voluntary opt-in program serves the 
important purpose of furthering consistency between the federal and 
California programs, such that manufacturers who wish to can produce a 
single vehicle fleet for sale nationwide, with the opportunity for 
reciprocal certification in affected model years. It further 
incentivizes pulling ahead of Tier 3 technologies, with resulting 
environmental benefits, by providing for early compliance credits in 
this nationwide fleet.
    Manufacturers choosing to opt into this early compliance program 
could start in either model year 2016 or 2017. They would have to meet 
the full complement of applicable bin standards and requirements, 
including SFTP standards, but not the Tier 3 PM FTP and SFTP standards 
discussed in Sections IV.B.2.d and IV.B.3.a, or the evaporative 
emissions standards discussed in Section IV.C, because these 
requirements phase in on a later schedule. We are also requesting 
comment on extending the voluntary compliance opportunity to the 2015 
model year.

                                               Table IV-14--Proposed HDV Fleet Average NMOG+NOX Standards
                                                                         [mg/mi]
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                            Voluntary
                                                                Required program
--------------------------------------------------------------------------------------------------------------------------------------------------------
Model Year.....................            2016            2017            2018            2019            2020            2021  2022 and later.
Class 2b.......................             333             310             278             253             228             203  178.
Class 3........................             548             508             451             400             349             298  247.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We believe that offering this voluntary opt-in would benefit the 
environment, the regulated industry, and vehicle purchasers, because it 
has potential to accomplish early emissions reductions while 
maintaining the goal of a cost-effective, nationwide vehicle program in 
every model year going forward. We request comment on all facets of 
this proposed approach.
    Although manufacturers would be allowed to meet the fleet average 
NMOG+NOX standard through whatever combination of bin-
specific vehicles they choose, it is instructive to note that the fully 
phased in fleet average standard for model years 2022 and later would 
be the equivalent of a Class 2b fleet mix of 90 percent Bin 170 and 10 
percent Bin 250 vehicles, and a Class 3 fleet mix of 90 percent Bin 230 
and 10 percent Bin 400 vehicles. Therefore, it is appropriate to 
consider Bin 170 Class 2b vehicles and Bin 230 Class 3 vehicles to be 
representative of Tier 3-compliant HDVs in the long term.
    The Tier 3 program we are proposing for HDVs would result in 
substantial reductions in harmful emissions from this large fleet of 
work trucks and vans, vehicles that are typically driven over high 
annual miles on every part of the nation's highway and urban roadway 
system. The Final Tier 3 standards levels for NMOG+NOX and 
PM are on the order of 60 percent lower than the current stringent 
standards that took full effect three years ago.
c. Alternative NMOG+NOX Phase-In
    We believe that the program described in Sections IV.B.2.a and b 
above would provide manufacturers with a flexible and effective 
compliance path. However, as in the case of the light-duty standards 
discussed above, we are proposing to provide an alternative compliance 
path that would be available to any manufacturer who prefers a stable 
standard and four full years of lead time, as specified in the Clean 
Air Act.\271\ This alternative approach would be equivalent to the 
primary approach that is based on NMOG+NOX declining fleet 
average standards and would apply during the program phase-in over the 
2016-2022 model years, with the first three of those model year 
standards made voluntary and set at levels to align with the California 
LEVIII program. We are proposing an alternative phase-in structured to 
require an annually increasing percent-of-sales of HDVs certified to 
the fully phased in 178 mg/mi (Class 2b) and 247 mg/mi (Class 3) 
standards, as shown in Table IV-15.
---------------------------------------------------------------------------

    \271\ For vehicles above 6,000 lbs GVWR, CAA section 
202(a)(3)(C) requires EPA to provide manufacturers with a minimum of 
4 years of lead time before mandatory changes to any standard 
applicable to HC, NOX, CO or PM can be implemented, and 3 
years of stability between changes to any such standard.

                                          Table IV-15--Proposed Percent-of-Sales Alternative NMOG+NOX Phase-in
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Voluntary
                                                        Required program
--------------------------------------------------------------------------------------------------------------------------------------------------------
Model Year.....................            2016            2017            2018            2019            2020            2021  2022 and later.
Class 2b.......................             29%             39%             54%             65%             77%             88%  100%.
Class 3........................             21%             32%             47%             60%             73%             87%  100%.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Under our alternative phase-in proposal, the availability of 
emissions averaging makes the two alternatives functionally equivalent, 
not just in the annual emissions reductions they achieve, but also in 
how manufacturers may design their mix of products to meet the phase-in 
standards. Although we are proposing to make the alternative approach 
available, we believe that the primary approach--the declining fleet 
average standard discussed above--is more consistent with the approach 
taken in California's LEV III program and in recent GHG reduction 
rules.
    To help ensure that the percent-of-sales alternative is fully 
equivalent to the primary program in terms of fleet-wide emissions 
control and technology mix choices, we are proposing that it include 
some additional provisions. First, we are proposing that the Tier 3 
vehicles being phased in under the percent-of-sales alternative, in 
addition to meeting the fully phased-in NMOG+NOX FTP 
standards, must also meet all other FTP and (as described below) SFTP 
standards required by the primary compliance program. These include the 
CO and formaldehyde FTP standards in Table IV-13, the 150,000 mile (15 
year) useful life requirement, exhaust emissions testing with the new

[[Page 29877]]

test fuel for gasoline- and ethanol-fueled vehicles discussed in 
Section IV.D, and the NMOG+NOX and CO SFTP standards in 
Table IV-16. The specific proposed standards are those for the bins in 
these tables closest to the fully phased-in NMOG+NOX 
standards: Bin 170 for Class 2b and Bin 230 for Class 3. (The PM and 
evaporative emissions standards phase in on separate schedules under 
both alternatives, as discussed in Sections IV.B.2.d and IV.C.)
    Second, we are proposing to make an ABT program available for the 
percent-of-sales alternative, structured like the one proposed for the 
primary option. This would involve certifying the vehicles in a 
manufacturer's HDV fleet to the bin standards in Table IV-13, and 
demonstrating compliance with the fleet average standards for the 
primary program in each model year, including through the use of ABT 
credits as in the primary program. We are proposing to use the fleet 
average calculation method for purposes of ABT because, as explained 
above, we have determined that making this demonstration is equivalent 
to demonstrating compliance with the percent-of-sales requirement, and 
we see no value in complicating the program with another set of 
calculations.
    However, we are proposing one difference between the primary and 
alternative options with respect to ABT provisions. Unlike in the 
primary option, manufacturers would not have to certify all vehicles 
into bins in order to take advantage of the ABT provisions under the 
percent-of-sales alternative. Rather they could choose to certify any 
``phase-out'' vehicles (that is, those not counting toward the percent-
of-sales phase-in) to the pre-Tier 3 NMHC and NOX standards, 
provided these vehicles do not have family emission limits (FELs) above 
those standards. These non-Tier 3 vehicles would not be subject to the 
Tier 3 standards or other vehicle-specific elements of the Tier 3 
compliance program. For the purposes of the fleet average ABT 
calculation, the NMOG+NOX levels for these non-Tier 3 
vehicles would be set equal to the sum of the NMOG and NOX 
standards for the highest bins: 395 mg/mi for Class 2b and 630 mg/mi 
for Class 3, because these standards are numerically equal to the pre-
Tier 3 NMHC and NOX standards.
d. Phase-In of PM Standards
    Consistent with the light-duty Tier 3 proposal discussed in Section 
IV.A, we are proposing to phase in the PM standards for HDVs as an 
increasing percentage of a manufacturer's production of chassis-
certified HDVs (combined Class 2b and 3) per year. The reasons 
discussed in Section IV.A for this phase-in schedule in the light-duty 
sector also apply to the heavy-duty sector. In addition to concerns 
regarding the availability and required upgrades of test facilities 
used for both light-duty and heavy-duty vehicle testing, manufacturers 
have expressed uncertainty about PM emissions with new engine and 
emissions control technologies entering the market as a result of new 
GHG standards. Therefore we are proposing the same phase-in schedule as 
proposed for the light-duty sector in model years 2018-2019-2020-2021: 
20-40-70-100 percent, respectively. This would apply to HDVs certified 
under either NMOG+NOX phase-in alternative. The California 
Air Resources Board is phasing in the LEV III PM standards for HDVs on 
the same schedule, except that LEVIII would also involve a 10 percent 
PM phase-in in the 2017 model year, and we ask for comment on our doing 
so as well, in the context of the voluntary opt-in discussed in Section 
IV.B.2.b. The voluntary NMOG+ NOX and PM standards may be 
pursued separately, with no requirement that they be met on the same 
vehicles.
    For manufacturers choosing the declining fleet average 
NMOG+NOX compliance path, the PM phase-in requirement for 
HDVs would be completely independent of the NMOG+NOX phase-
in. As a result, vehicles certified to any of the bin standards for 
NMOG and NOX need not necessarily meet Tier 3 PM standards 
before the 2021 model year. Instead, the current 0.02 g/mi PM standard 
would apply for those vehicles not yet phased into the Tier 3 PM 
standards. We are proposing that manufacturers choosing the percent-of-
sales phase-in alternative for NMOG+NOX would be required to 
meet the PM phase-in requirements with only those vehicles certified to 
the Tier 3 NMOG+NOX standard, except in the 2018 and earlier 
model years when the standards, including the PM standards, would be 
voluntary, and in the 2021 model year when the 100 percent PM phase-in 
requirement exceeds the 87-88 percent NMOG+NOX phase-in 
requirement.
    Consistent with the approach we are proposing for the light-duty 
sector, we would consider any vehicle under either compliance path that 
is not certified to Tier 3 standards for PM, NMOG, and NOX 
(as well as the other, concomitant Tier 3 standards and requirements 
such as extended useful life), an ``Interim Tier 3'' vehicle, a term 
that also applies to vehicles certified in one of the interim bins, as 
discussed above.
    Note that compliance with Tier 3 evaporative emissions requirements 
would follow a separate phase-in schedule as described in Section IV.C, 
such that a vehicle in an exhaust emissions family that the 
manufacturer has phased into the new useful life and test fuel 
requirements, may be in an evaporative emissions family that has not 
yet phased these in for evaporative emissions testing.
i. Optional PM Phase-In
    The proposed percent-of-sales phase-in schedule for the PM 
standard, described above, would allow manufacturers with multiple 
vehicle models to determine and plan the phase-in of those models based 
on anticipated volumes of each vehicle model. However, manufacturers 
certifying only a few vehicle models may not be able to take advantage 
of this schedule. This is because, in order to satisfy the phase-in 
schedule percentages, they may have to over-comply with the required 
percentages earlier than would a manufacturer with many vehicle models 
available for the phase-in.
    For instance, a manufacturer with only two models that each equally 
accounted for 50 percent of its sales would be required to introduce 
(at least) one of the models in MY 2018 to meet the phase-in 
requirement of 20 percent in the first year. At the 50 percent level, 
this model would then also meet the requirements for MY 2019 (40 
percent). To meet the MY 2020 requirement of 70 percent of sales, 
however, the manufacturer would need to introduce the second Tier 3 
vehicle that year. Thus the manufacturer would have introduced 100 
percent of its Tier 3 models one year earlier compared to a 
manufacturer that was able to delay the final 30 percent of its fleet 
until MY 2021 by distributing its redesigned models over the entire 
phase-in period.
    To provide for more equal application of this benefit among all 
manufacturers in the early years of the program, we are proposing an 
optional ``indexed'' phase-in schedule that could be used by a 
manufacturer to meet its phase-in requirements. A manufacturer that 
exceeded the phase-in requirements in any given year would be allowed 
to, in effect, offset some of the phase-in requirements in a later 
model year. The optional phase-in schedule would be acceptable if it 
passes a mathematical test. The mathematical test is designed to 
provide manufacturers a benefit from certifying to the standards at 
higher volumes than obligated to under the normal phase-in schedule, 
while ensuring that significant numbers of

[[Page 29878]]

vehicles are meeting the new Tier 3 requirements during each year of 
the optional phase-in schedule. In this approach, manufacturers would 
weight the earlier years by multiplying their percent phase-in by the 
number of years prior to MY 2022 (i.e., the second year of the 100 
percent phase-in requirement).
    The proposed mathematical equation for applying an optional phase-
in is as follows:

(4 x APP2018) + (3 x APP2019) + (2 x APP2020) + (1 x APP2021) >= 440,

where APP is the anticipated phase-in percentage for the referenced 
model year. The sum of the calculation would need to be greater than or 
equal to 440, which is the result when the optional phase-in equation 
is applied to the primary percent phase-in schedule (4 x 20% + 3 x 40% 
+ 2 x 70% + 1 x 100% = 440). EPA requests comment on this proposed 
optional phase-in mechanism.
e. NMOG+NOX and NMOG vs. NMHC
    The reasons for setting combined NMOG+NOX standards 
outlined in Section IV.A.1.a for the light-duty sector apply to HDVs 
certified in the non-interim Tier 3 bins as well. In fact, the combined 
standard is especially appropriate in the heavy-duty sector with 
comparable sales of diesel and gasoline-fueled vehicles, because it 
avoids the need to set ``lowest common denominator'' standards for NMOG 
(likely based on feasible gasoline vehicle technologies) and 
NOX (likely based on feasible diesel vehicle technologies). 
These considerations also apply to the form of the SFTP standards, 
discussed below.
    The current HDV standards that control emissions of volatile 
organic compounds (VOCs), adopted in a 2001 final rule,\272\ are in the 
form of NMHC. This is consistent with HD engine standards adopted in 
the same final rule, but contrasts with Tier 2 LDV/LDT standards to 
control VOCs that are in the form of NMOG. We believe it is appropriate 
to transition HDVs to NMOG-based standards, and further to combined 
NMOG+NOX standards, consistent with the light-duty Tier 3 
proposal and light- and medium-duty LEV III program. Further, the 
introduction of oxygenated test fuels requires an NMOG calculation to 
properly control VOC emissions not properly accounted for in an NMHC 
calculation. This would improve consistency with the LEV III program 
and help to facilitate a single nationwide vehicle fleet. We do not 
believe that this change would add significant cost to the program as 
manufacturers are already capable of and experienced in making NMOG 
determinations at their test facilities.

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

    \272\ 66 FR 5002 (January 18, 2001).
---------------------------------------------------------------------------

3. Supplemental FTP Standards for HDVs
    Unlike passenger cars and light trucks, HDVs are not currently 
subject to SFTP standards. SFTP standards are intended to ensure 
vehicles have robust emissions control over a wide range of real-world 
driving patterns not well-covered by the FTP drive cycle. Even though 
HDVs are not typically driven in the same way as passenger cars and 
LDTs, especially as they frequently carry or tow heavy loads, we 
believe some substantial portion of real world heavy-duty pickup and 
van driving is not well-represented on the FTP cycle.
    The goal in setting the SFTP standards levels is not to force 
manufacturers to add expensive new control hardware for off-FTP cycle 
conditions, but rather to ensure a robust overall control program that 
precludes high off-FTP cycle emissions by having vehicle designers 
consider them in their choice of compliance strategies. High off-FTP 
cycle emissions, even if encountered relatively infrequently in real-
world driving, could create a substantial inadequacy in the Tier 3 
program, which aims to achieve very low overall emissions in use. The 
SFTP provisions would also help make the HDV program more consistent 
with the HD engine program, which for several years has included ``not-
to-exceed'' provisions to control off-cycle emissions. Therefore, in 
addition to the SFTP provisions, we are further limiting enrichment on 
spark ignition engines in all areas of operation unless absolutely 
necessary.
a. SFTP NMOG+NOX, PM and CO Standards
    The proposed SFTP standards levels are provided in Table IV-16. 
These are consistent with those in the LEV III program.

                                  Table IV-16--Proposed SFTP Standards for HDVs
----------------------------------------------------------------------------------------------------------------
                   Vehicles in FTP bins                     NMOG+NOX (mg/mi)     PM (mg/mi)         CO (g/mi)
----------------------------------------------------------------------------------------------------------------
                              Class 2b with horsepower (hp)/GVWR <= 0.024 hp/lb \a\
----------------------------------------------------------------------------------------------------------------
FTP Bins 200, 250, 340....................................               550                 7              22.0
FTP Bins 150, 170.........................................               350                 7              12.0
----------------------------------------------------------------------------------------------------------------
                                                    Class 2b
----------------------------------------------------------------------------------------------------------------
FTP Bins 200, 250, 340....................................               800                10              22.0
FTP Bins 150, 170.........................................               450                10              12.0
----------------------------------------------------------------------------------------------------------------
                                                     Class 3
----------------------------------------------------------------------------------------------------------------
FTP Bins 270, 400, 570....................................               550                 7               6.0
FTP Bins 200, 230.........................................               350                 7               4.0
----------------------------------------------------------------------------------------------------------------
\a\ These standards apply for vehicles optionally tested using emissions from only the highway portion of the
  US06 cycle.

    We are proposing that Tier 3 SFTP implementation for HDVs be linked 
directly to the Tier 3 FTP phase-in and bins for these vehicles. That 
is, an HDV certified to any of the Tier 3 FTP bin standards must meet 
the SFTP standards for that bin as well. However, because the FTP PM 
standard would phase in on a separate schedule, we propose to require 
that SFTP PM compliance be linked to the same schedule. That is, an HDV 
certified to

[[Page 29879]]

the Tier 3 FTP PM standard must meet the applicable SFTP PM standard as 
well. This approach recognizes the complementary nature of FTP and SFTP 
provisions and helps to ensure that Tier 3 emissions controls are 
robust in real world driving. There are no proposed SFTP requirements 
for the interim Tier 3 bins in each class (Class 2b Bins 340 and 395 
and Class 3 Bins 570 and 630), because these are essentially carry-over 
bins from the previous standards to aid the transition to Tier 3, and 
therefore are not intended to prompt vehicle redesigns to new 
standards. These implementation provisions are consistent with the 
approach taken in the LEV III program, except that California would 
allow FTP and SFTP phase-in requirements to be met on different 
vehicles, and would apply more of the Tier 3 requirements for SFTP and 
extended useful life to vehicles in the interim bins. We request 
comment on the proposed standards, and on whether or not EPA should 
adopt any LEV III provisions that differ from what we are proposing, 
such as the application of PM SFTP standards to vehicles that are in 
the interim bins and that also are certified to the Tier 3 p.m. FTP 
standards.
    To help ensure a robust SFTP program that achieves good control 
over a wide range of real world conditions, the current Tier 2 light-
duty program adopted a weighted-composite cycle, and we are proposing 
to retain this approach for light-duty Tier 3 testing, as discussed in 
Section IV.A.1.c. Under this composite cycle, NMOG+NOX 
emissions are calculated from results of testing over three cycles: the 
US06, the FTP, and the SC03, weighting these results by 0.28, 0.35, and 
0.37, respectively. We considered applying the same composite cycle for 
all HDV SFTP testing. However, based on data provided by industry 
stakeholders, we decided that the full US06 cycle, combined with the 
ALVW loaded test condition, would not be sufficiently representative of 
real-world driving for two groups of HDVs: those with low power-to-
weight ratios and Class 3 vehicles.
    As part of their investigation of potential LEV III SFTP standards 
for MDVs, California Air Resources Board staff determined that it is 
not uncommon for vehicles above 8,500 lbs GVWR with low power-to-weight 
ratio, which are largely in Class 2b, to have to work extremely hard to 
keep up with the accelerations required in the initial and final 
portions of the full US06 cycle, even proving physically unable to do 
so in some cases, and raising the concern that these vehicles would not 
be able to run a valid emissions test.\273\ Although our SFTP 
provisions allow a test to continue when a vehicle is incapable of 
attaining the vehicle speed demanded by the drive trace, we believe 
routine occurrence of such an event for a group of vehicles would not 
be consistent with a well-designed test regime. We would expect results 
from such tests to exhibit significant test-to-test variability, making 
it difficult to draw reliable conclusions from them. Furthermore, in 
real-world driving, we would expect that most drivers who regularly 
demand and do not receive adequate response would modify either their 
driving behavior or their vehicle purchase decisions.
---------------------------------------------------------------------------

    \273\ Letter from Robert H. Cross, California Air Resources 
Board, to Dawn Friest, EMA, dated March 2, 2011.
---------------------------------------------------------------------------

    Based on manufacturer-supplied data, the California Air Resources 
Board staff established a power-to-weight (GVWR) ratio of 0.024 
horsepower (hp)/lb as an approximate threshold in their efforts to 
characterize this issue. The vast majority of Class 2b vehicles are 
above this threshold today. Those below it tend to be used in 
applications where towing is not done extensively and the need for 
cargo space is more important than payload weight. Furthermore, it is 
possible that this group of vehicles will grow as purchasers adjust to 
sustained high fuel prices and when EPA's GHG standards and NHTSA's new 
fuel consumption standards take effect.
    In consideration of this matter, we are proposing that, in SFTP 
testing of Class 2b vehicles at or below 0.024 hp/lb, manufacturers may 
at their option replace the full US06 component of the composite SFTP 
emissions with the test results from only the second of the three 
emissions sampling bags in the US06 test, generally referred to as the 
``highway'' portion of the US06, subject to correspondingly lower SFTP 
standards levels discussed above. (These vehicles would still be driven 
during the test in the same way as the higher power-to-weight Class 2b 
vehicles (over the full US06 cycle) just using best effort (maximum 
power) if the vehicle cannot maintain the driving schedule.) The large 
majority of Class 2b vehicles, with power-to-weight above 0.024 hp/lb, 
would be required to measure and use emissions over the full US06 cycle 
in the composite SFTP. We believe that this approach would provide a 
robust but repeatable and reliable test for the full range of Class 2b 
vehicles, as the highway portion of the US06 retains broad coverage of 
vehicle speed/acceleration combinations measured in real-world driving.
    For Class 3 vehicles, which can weigh as much as 14,000 lbs GVWR, 
we are also concerned that the full US06 cycle would not provide a 
representative drive cycle for SFTP testing. These vehicles are much 
larger than the light-duty vehicles that formed the basis for 
development of the US06 cycle, and loading them to ALVW for the SFTP 
test yields a very heavy test vehicle, not likely to be safely driven 
in the real world in the way typified by this aggressive cycle. We 
believe that the LA-92 (or ``Unified'') driving cycle developed by CARB 
is more representative of Class 3 truck driving patterns and would 
produce more robust results for use in SFTP evaluations. Therefore we 
are proposing that the LA-92 cycle be used in place of the US06 
component of the composite SFTP for Class 3 HDVs. The set of composite 
SFTP cycles we are proposing is fully consistent with the MDV LEV III 
program.
    Although we consider the highway portion of the US06 cycle 
appropriate for low power-to-weight vehicles, we also believe that the 
corresponding NMOG+NOX standards should be set at lower 
levels than for vehicles with emissions measured over the full US06 
test. Our goal is to provide roughly equivalent stringency and avoid 
creating an ease-of-compliance incentive to produce vehicles in one 
group or the other. We have reviewed the MDV SFTP standards set by the 
California Air Resources Board staff and consider them appropriate in 
achieving this goal. These proposed standards are included in Table IV-
16.
    HDVs do not have SC03 emissions requirements under the current HDV 
standards. Manufacturers of HDVs have indicated that they expect the 
SC03 emissions to be consistently lower than either the US06 or the FTP 
emissions levels, and therefore the added SC03 testing burden may be 
unnecessary. We are therefore proposing that HDV manufacturers have the 
option to substitute the FTP emissions levels for the SC03 emissions 
results for purposes of compliance. However, we would retain the 
ability to determine the composite emissions using SC03 test results in 
confirmatory or in-use testing.
b. Enrichment Limitation for Spark-Ignition Engines
    To prevent emissions from excessive enrichment in areas not fully 
encountered in the SFTP cycles, we are proposing limitations in the 
frequency and magnitude of enrichment episodes for spark-ignition HDVs. 
These limitations would be identical to those

[[Page 29880]]

for light-duty vehicles discussed in detail in Section IV.A.4.c.
4. HDV Emissions Averaging, Banking, and Trading
    This section describes our proposed approach for emissions credits 
related to exhaust emissions. See Section V.C for similar provisions 
that apply for evaporative emissions. We are proposing to continue the 
current practice of allowing manufacturers to satisfy standards through 
the averaging of emissions, as well as through the banking of emissions 
credits for later use and the trading of credits with others. There are 
a number of facets of this proposed Tier 3 ABT program for HDVs that 
would be different from the current program. First, instead of separate 
NMHC and NOX credits, manufacturers would earn combined 
NMOG+NOX credits, consistent with the form of the standards. 
Second, we are proposing to allow manufacturers to accrue a deficit in 
their credit balance. Deficits incurred in a model year may be carried 
forward for up to 3 model years, but must be made up with surplus 
credits after that to avoid noncompliance and possible penalties. 
Manufacturers would have to use any new credits to offset any shortfall 
before those credits can be traded or banked for additional model 
years. We are proposing that credits must be used within 5 years after 
they are earned, or otherwise be forfeited. The proposed 5/3-year 
credit/deficit life provisions are consistent with our proposed light-
duty Tier 3 approach, the California LEV III program for MDVs, and EPA 
programs for controlling GHG emissions from light- and heavy-duty 
vehicles.
    Third, as part of our proposal to require chassis certification of 
complete diesel HDVs, we are proposing to allow diesel HDVs to 
participate in this ABT program without restriction. Currently, they 
are not allowed to earn or use ABT credits. We are not proposing to 
restrict or adjust credit exchange between diesel and gasoline-fueled 
HDVs, consistent with our shift to combined NMOG+NOX 
standards that helps to ensure comparable stringency for these two 
engine types, and consistent also with the LEV III MDV program.
    We are proposing that credits earned by a Tier 3 HDV may be used to 
demonstrate compliance with NMOG+NOX standards for any other 
Tier 3 HDV, regardless of size and without adjustment. This effectively 
allows manufacturers to plan a comprehensive HDV compliance strategy 
for their entire Class 2b and Class 3 product offering, by balancing 
credits so as to demonstrate compliance with the standards for both 
classes. HDV manufacturers are currently certifying their vehicles to 
existing standards without the use of NOX or NMHC credits, 
and the levels we are proposing for Tier 3 standards are not based on 
any assumption of credit transfers into Tier 3. As a result, we are not 
proposing provisions for converting pre-Tier 3 credits, should any 
exist at the time, into Tier 3 credits, including for use in the 
interim bins.
    In the past we have set caps, called family emission limit (FEL) 
caps, on how high emissions can be for vehicles that use credits, 
regardless of how many credits might be available. Under our proposed 
bin structure, we believe that exhaust emission FEL caps are no longer 
relevant for Tier 3 HDVs, as every vehicle must meet whatever standards 
apply in the bin chosen for the vehicle by the manufacturer. (The bin 
standard becomes the effective FEL.) Indeed, because credits and 
deficits are calculated based on the difference between a 
manufacturer's fleet average emissions and the fleet average standards 
for a given model year, credits are not calculated for individual 
vehicle families at all. Under this proposed approach, the standards 
for NMOG and NOX in the highest available bin serve the 
purpose of the FEL caps in previous programs.
    We are proposing no averaging program for the HDV SFTP program, 
because we believe that the bin structure and FTP-centered 
NMOG+NOX ABT program provide adequate flexibility for smooth 
program implementation, especially in light of our aim to have the FTP 
standards be the primary technology forcers. A separate ABT program for 
SFTP compliance would add substantial complexity with little benefit, 
and, by making it possible to demonstrate robust SFTP control on a 
vehicle that lacks commensurate FTP control, could prove at odds with 
the primary goal of the supplemental test for HDVs. However, we note 
that California's LEV III program does provide some flexibility in this 
matter, on a vehicle-for-vehicle basis rather than through use of 
emissions credits, and for this reason we request comment on the need 
for and considerations surrounding our granting similar flexibility for 
HDVs in Tier 3.
5. Feasibility of HDV Standards
    The feasibility assessment, discussed in more detail in Chapter 1 
of the draft RIA, recognizes that the proposed Tier 3 program is 
composed of several new requirements for Class 2b and 3 heavy-duty 
vehicles, which include primarily large gasoline and diesel pick-up 
trucks and vans with diverse application-specific designs. These 
proposed new exhaust emissions requirements include stringent 
NMOG+NOX and PM standards for the FTP and the newly proposed 
SFTP, that would as a whole require new emissions control strategies 
and hardware in order to achieve the proposed standards. The type of 
new hardware that would be required will vary depending on the specific 
application and emissions challenges. Additionally, gasoline and diesel 
vehicles would require different emissions control strategies and 
hardware. The level of stringency for the proposed SFTP 
NMOG+NOX standards would generally only require additional 
precise control of the engine parameters not necessitated in the past 
because of the lack of SFTP requirements. Similarly, the new PM 
standards on both the FTP and SFTP cycles would require more precise 
control of engine operation on gasoline vehicles while diesels already 
equipped with diesel particulate filters would require minimal changes. 
The new PM standards may also require that manufacturers consider the 
durability of their engines to the 150,000 miles useful life 
requirement with respect to engine wear resulting in increased oil 
consumption and potentially higher PM emissions.
    In order to assess the technical feasibility of NMOG+NOX 
national fleet average FTP standards of 178 mg/mi for Class 2b vehicles 
and 247 mg/mi for Class 3 vehicles, we conducted an analysis of 
certification data for the HDVs certified in the 2010 and 2011 MYs. 
This analysis provided a baseline for the current HDV fleet emissions 
performance, as well as the emissions performance specific to the Class 
2b and 3 vehicles. The emissions performance of each heavy-duty vehicle 
class specific to gasoline and diesel is shown in Table IV-17 below. It 
is important to note that the emissions results are only the 4,000 mile 
test point results and do not incorporate any deterioration which 
manufacturers must account for when certifying to a full useful life 
standard. Designs limiting the deterioration of emission control 
hardware are critical to meeting the emission standards at the proposed 
useful life of the Tier 3 program. Deterioration factors to adjust the 
values to the proposed Tier 3 useful life standard of 150,000 miles 
were not available however deterioration factors to adjust to 120,000 
miles useful life are discussed in the RIA Chapter 1.
    The analysis also reflects the importance of the 
NMOG+NOX standard approach where diesels and gasoline MDVs 
can balance their combined

[[Page 29881]]

NMOG and NOX levels. Diesel vehicles in the analysis produce 
very low NMHC emissions (NMOG is not reported for diesels) but higher 
NOX emissions, while gasoline vehicles have opposite 
performance. The combined standard allows manufacturers to determine 
the proper balance of the unique emissions challenges of a diesel or 
gasoline vehicle.

                                             Table IV-17--2010/11 Certification Test Results at 4,000 Miles
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               NMHC            NMOG             NOX             CO           NMOG+NOX
--------------------------------------------------------------------------------------------------------------------------------------------------------
Gasoline..........................  Class 2b............  ..............           0.050           0.052           0.041           1.648           0.092
                                    Class 3.............  ..............           0.080           0.083           0.073           2.373           0.156
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                             NMHC+NOX
--------------------------------------------------------------------------------------------------------------------------------------------------------
Diesel............................  Class 2b............  ..............           0.037  ..............           0.138           0.195           0.174
                                    Class 3.............  ..............           0.019  ..............           0.249           0.158           0.268
-------------------------------------------------------------------------
Combined Class 2b.......................................................           0.043           0.026           0.089           0.922           0.133
Combined Class 3........................................................           0.050           0.041           0.161           1.265           0.212
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Manufacturers typically certify their vehicles at emissions levels 
well below the numerical standards. This difference is referred to as 
``compliance margin'' and is a result of manufacturers' efforts to 
address all the sources of variability that could occur during the 
certification or in-use testing processes and during in-use operation. 
These sources of variability include: Test-to-test variability, test 
location, build variation and manufacturing tolerances, vehicle 
operation (for example: Driving habits, ambient temperature, etc.), and 
the deleterious effects of sulfur and other oil and fuel contaminants. 
To meet the proposed NMOG+NOX standard of 178 mg/mi for 
Class 2b and 247 mg/mi for Class 3 vehicles and establish a compliance 
margin for these sources of variability, manufacturers will need to 
reduce their emission levels considerably from the levels indicated in 
this data set, particularly diesel vehicles.
    However, as discussed above, these emission results do not include 
the expected emissions deterioration which would be determined by 
manufacturers during development and certification testing. Therefore, 
manufacturers would need to further reduce emissions levels in 
anticipation of the unavoidable emissions deterioration that will occur 
during the useful life of the vehicle. Further, deterioration is a 
function of several factors, but it is predominantly due to emissions 
control hardware thermal exposure (high temperatures), which is 
typically a significant issue on vehicles used for performing work like 
Class 2b and 3 vehicles.
    We also expect that the 2011 heavy-duty GHG rule will present new 
challenges to manufacturers' emissions performance goals as vehicles 
begin to use new engines designed to meet the new GHG 
requirements.\274\ Some of these new technologies may result in 
emissions challenges that are specific to certain operating conditions. 
For example, downsized gasoline engines will likely have improved FTP 
exhaust emissions but have increased challenge with the high-load SFTP 
requirements. Diesel-fueled vehicles may need to carefully balance 
engine controls which reduce GHG emissions but can increase criteria 
emissions (NOX).
---------------------------------------------------------------------------

    \274\ 76 FR 57106 (September 15, 2011).
---------------------------------------------------------------------------

    With regard to the ability of the heavy-duty fleet to meet the 
proposed PM standards for the FTP and the SFTP, we based our 
conclusions on some testing of current HDGVs and the PM performance of 
the existing light-duty fleet with similar engines. Testing of two 
HDGVs with the highest sales volume (Ford F250 and Chevrolet Silverado 
2500), albeit not aged to full useful life, confirmed that they have 
similar PM emissions levels as the light-duty counterparts and 
therefore also meet the proposed standards for both the Class 2b and 
Class 3 configurations. Data from light-duty gasoline vehicles with 
similar or common engines with their heavy-duty ``sister'' vehicle 
models demonstrates that these vehicles are currently meeting the 
proposed Tier 3 FTP PM standards at the Tier 2 useful life mileage of 
120,000 miles. Heavy-duty diesel vehicles all are equipped with DPFs 
and have no challenges meeting the FTP or SFTP PM standards being 
proposed for Tier 3.
    The SFTP test data from the same two heavy-duty vehicles described 
above indicates that gasoline vehicles can achieve the proposed 
standards for SFTP NMOG+NOX and PM. Since heavy-duty 
vehicles are not currently required to comply with any of the SFTP 
requirements, manufacturers have not focused on improving the emissions 
performance specifically over the SFTP cycles (US06 and SC03). 
Therefore, although the limited testing results had a high degree of 
variability, several tests met the proposed PM standards for the high 
power-to-weight Class 2b vehicles. Consistent with light-duty, vehicles 
that are demonstrating high PM on the US06 would need to control 
enrichment and oil consumption from engine wear. Manufacturers have 
confirmed that they have been implementing product changes to reduce 
oil consumption to address both customer satisfaction issues and to 
reduce cost of vehicle ownership.
    Given the technologies likely to be applied to meet the proposed 
HDV exhaust emissions standards, discussed below, we consider the lead 
time available before the standards take effect under all of the 
proposed alternatives to be sufficient. HDV manufacturers are already 
adopting some of the complying technologies, especially for their 
light-duty vehicles, and these can readily be adapted for heavy-duty 
applications. In addition, manufacturers have already begun developing 
these technologies for HDVs, including diesels, in response to 
California's recently adopted LEV III MDV standards which begin to take 
effect in the 2015 model year. Finally, as described above in Sections 
IV.B.2, IV.B.3, and IV.B.4, our proposed program incorporates a number 
of phase-in and alternative compliance provisions that would ease the 
transition to final standards without disrupting HD pickup and van 
product redesign cycles. Among these is an alternative phase-in that 
starts mandatory standards in model year 2019. We invite comment on our 
conclusions relating to the feasibility of the proposed program in the 
lead time we are proposing.
    We are not proposing relaxed standards for in-use testing of Tier 3

[[Page 29882]]

HDVs because we do not believe additional flexibility provisions are 
needed to successfully implement the new emission control technologies 
in the proposed timeframe. However, we note that the LEV III program 
provides such standards for PM, and also for NMOG+NOX in the 
lower-emissions MDV bins (those at or below Bin 250 and Bin 400, for 
Class 2b and Class 3 vehicles, respectively), and we are taking comment 
on the need to do so in Tier 3 as well.
    We also note that the need for NMOG+NOX in-use testing 
standards is further mitigated by our proposed structuring of the 
NMOG+NOX standards as a declining fleet average with deficit 
and credit banking provisions. These provisions provide substantial 
flexibility to manufacturers in introducing any new NMOG or 
NOX control technologies for which long-term durability is 
not yet proven. Manufacturers can place any vehicles for which they 
have in-use performance concerns in a higher bin, and this is 
facilitated by the fact that, unlike LEV III, our Tier 3 proposal does 
not target sales volumes for any individual bins. Comments supporting 
relaxed in-use NMOG+NOX standards should therefore address 
why, in the absence of these standards, the proposed declining fleet 
average standard is not feasible in one or more model years.
    Commenters on this issue are asked to also address the applicable 
model years for any such in-use testing standards. The LEV III MDV 
program has four different applicability periods based on a combination 
of specific model years listed in the regulations (up to 2020) and a 
set number of model years (two or five) after a test group is first 
certified. Comments are requested on whether it might be preferable to 
adopt a simpler approach in Tier 3, such as making in-use testing 
standards available in the model years in which standards are phasing 
in, that is, through model year 2021.
i. Technologies Likely To Be Applied
    The technologies expected to be applied to vehicles to meet the 
lower proposed standards levels would address the emissions control 
system's ability to control emissions during cold start. Current 
vehicle emissions control systems depend on the time it takes for the 
catalyst to light-off, which is typically defined as the catalyst 
reaching a temperature of 250 [deg]C. While the specific emissions 
challenge is somewhat different for gasoline engines than for diesel 
engines, achieving the necessary temperatures in the catalysts is a 
common challenge. In order to improve catalyst light-off, the 
manufacturers would likely add technologies that provide heat from 
combustion more readily to the catalyst or improve the catalyst 
efficiency at lower temperatures. These technologies could include 
calibration changes, thermal management, close-coupled catalysts, 
catalyst PGM loading, and possibly secondary air injection. In some 
cases, where the catalyst light-off response and efficiency are not 
enough to address the cold start emissions, hydrocarbon adsorbers may 
be applied to trap hydrocarbons until such time that the catalyst is 
lit-off. Note that with the exception of hydrocarbon adsorbers each of 
these technologies addresses both NMOG and NOX performance. 
Key potential technologies are described in greater detail below.
     Engine Control Calibration Changes--These include changes 
to retard spark and/or adjust air/fuel mixtures such that more 
combustion heat is created during the cold start on gasoline engines. 
Diesel engines may use unique injection timing strategies or other 
available engine control parameters. Engine calibration changes can 
affect NMOG, NOX and PM emissions.
     Thermal Management--This technology includes all design 
attributes meant to conduct the combustion heat into the catalyst with 
minimal cooling on both gasoline and diesel engines. This includes 
insulating the exhaust piping between the engine and the catalyst, 
reducing the wetted area of the exhaust path and/or reducing the 
thermal mass of the exhaust system. Close-coupling of catalysts 
(packaging the catalysts as close to the head of the engine as possible 
to mitigate the cooling effects of longer exhaust piping) can also be 
effective, but is more difficult to employ than in light-duty 
applications because of durability concerns with highly loaded 
operation and the potential increase in fuel consumption to protect the 
catalyst from high temperatures.
     Catalyst PGM Loading--Additional Platinum Group Metal 
(PGM) loading in the catalyst provides a greater number of sites to 
catalyze emissions and addresses NMOG, NOX and PM emissions.
     Selective Catalytic Reduction Optimization--Diesel 
applications would need to continue to refine this NOX 
emissions control strategy through improved hardware design and 
implementation in vehicle applications. Additional engineering 
enhancements in the control of the SCR system and related processes 
would also help reduce emissions levels.
6. Other HDV Provisions
a. HDV Useful Life
    Currently the HDV regulatory useful life, the period of use or time 
during which emissions standards apply, is 120,000 miles or 11 years, 
whichever occurs first (40 CFR 86.1805-4). For Tier 3 vehicle criteria 
emissions we are proposing to extend the useful life to 150,000 miles 
or 15 years, whichever occurs first. This change would better reflect 
the improvements in vehicle durability and longevity that have occurred 
in the several years since the 120,000 mile useful life was 
established, and would maintain consistency with the LEV III MDV 
program and with our Tier 3 program for large LDTs, for which the same 
useful life period has been proposed. California's LEV III staff paper 
included a discussion of the feasibility of this longer useful life 
based on experience with it in the PZEV element of the ZEV 
mandate.\275\
---------------------------------------------------------------------------

    \275\ ``Preliminary Discussion Paper--Amendments to California's 
Low-Emission Vehicle Regulations for Criteria Pollutants--LEV III'', 
California Air Resources Board, February 8, 2010.
---------------------------------------------------------------------------

    We are proposing that the new useful life requirement apply to Tier 
3 HDVs in all bins except those designated as interim bins, consistent 
with the purpose of the interim bins to provide for limited carry-over 
of pre-Tier 3 vehicle designs during the phase-in period. Although the 
percentage application in each year will therefore depend on each 
manufacturer's fleet binning strategy, the declining NMOG+ 
NOX fleet average standard would ensure a robust phase-in of 
the new useful life requirement over the 2018-2022 model years, such 
that it is expected to be about 50 percent in 2018, and necessarily 
reaches 100 percent by 2022 when the interim bins are no longer 
available. For those manufacturers choosing to certify to the voluntary 
standards, the new useful life will apply even earlier, in 2016 or 
2017. For manufacturers choosing the alternative percent-of-sales NMOG+ 
NOX alternative, we are proposing that the new useful life 
requirement apply to all HDVs counted toward the phase-in requirement, 
resulting in a generally equivalent useful life phase-in rate to that 
of the primary approach. See Section IV.D.4.b for further discussion of 
useful life with regard to GHG standards. We are also proposing that 
manufacturers may optionally retain the 120,000 mile/11 year useful 
life for PM on interim Tier 3 vehicles that are not phased in to the 
Tier 3 p.m. standards.

[[Page 29883]]

b. Heavy-Duty Alternative Fuel Vehicles
    As in the proposed light-duty program, we are proposing that 
manufacturers demonstrate heavy-duty flex fuel vehicle (FFV) and dual-
fuel vehicle compliance with both the FTP and the SFTP emissions 
standards when operating on both the conventional petroleum-derived 
fuel and the alternative fuel. Dedicated alternative fuel vehicles 
would demonstrate compliance with both the FTP and SFTP emission 
standards while operating on the alternative fuel. For all of these 
vehicles, this includes the requirement to meet FTP emissions standards 
when conducting fuel consumption and GHG emissions testing, and also to 
meet the FTP and highway test requirements at high altitudes (see 
Sections IV.B.6.e and f). Because FFVs can operate on various 
combinations of their conventional and alternative fuel, the emissions 
requirements apply to operation at any mix of the fuels achievable in 
the fuel tank with commercially available fuels, including for 
compliance at high altitudes, even though the required demonstration of 
compliance is limited to the conventional and alternative fuels 
designated for certification testing.
c. Optional Certification for Vehicles Above 14,000 lbs GVWR
    The HD greenhouse gas (GHG) standards include a provision for 
optional certification of complete gasoline-fueled HDVs above 14,000 
lbs GVWR to g/mi GHG standards on the chassis test.\276\ Because that 
rule does not change the requirements for certification to criteria 
pollutant standards, manufacturers choosing this option would have to 
certify the vehicle for GHGs, but use installed engines certified to g/
hp-hr standards for all other emissions. We believe it may provide 
benefits for both the environment and the manufacturers to allow 
consistent certification of these vehicles on a chassis test for all 
emissions, treating any vehicles so certified in the same way as Class 
3 vehicles, including applicable standards, inclusion into fleet 
average calculations, test fuel, useful life, and the application of 
Tier 3 evaporative emissions requirements.
---------------------------------------------------------------------------

    \276\ 76 FR 57106 (September 15, 2011).
---------------------------------------------------------------------------

    We request comment on the value of, and any issues concerning, our 
providing such an option to manufacturers of both gasoline and diesel-
fueled HDVs above 14,000 lbs GVWR, including the applicability of the 
existing chassis test cycles for these larger trucks. Comment is also 
requested on whether manufacturers of such vehicles that are certified 
to a Final Tier 3 bin should be allowed to exclude them from the fleet 
average NMOG+NOX calculation, as a means of encouraging the 
production of such low-emissions vehicles by not penalizing them for 
having emissions somewhat above the Class 3 fleet average. Finally, we 
also request comment on whether any such option for diesel-fueled HDVs 
should extend to GHG emissions as well.
d. Existing Provision To Waive HDV PM Testing
    EPA's existing program includes a provision for manufacturers to 
waive measurement of PM emissions in non-diesel heavy-duty vehicle 
emissions testing. We are proposing to eliminate this provision. We 
believe that the PM standards we are proposing for these vehicles are 
of sufficient stringency that routine waiver of testing would not be 
appropriate. The California Air Resources Board LEV III program 
reflects this view. We do not expect this change to be onerous for 
manufacturers, as the number of heavy-duty vehicle families is not 
large. Even so, we request comment on alternative approaches, such as 
that being proposed for light-duty vehicles, involving measuring PM on 
a subset of families each year. We request comment on any other 
potential situations in which waiver of PM measurement may be 
appropriate. Note that we are proposing to waive the PM emissions 
measurement requirement for small manufacturers, for reasons explained 
in Section IV.E.
e. Meeting HDV Standards in Fuel Consumption and GHG Emissions Testing
    As with the proposed light-duty Tier 3 program, we are proposing 
that HDVs must meet the FTP bin standards when tested over both the 
city and highway test cycles. We do not believe this adds a very 
significant test burden as vehicle emissions are already required to be 
measured when these tests are run for GHG and fuel consumption 
determinations. Nor do we believe that this proposed requirement is 
design forcing. Rather, we are proposing this requirement to ensure 
that test vehicle calibrations are not set by manufacturers to minimize 
fuel consumption and GHG emissions, at the expense of high criteria 
pollutant emissions. Considering the additional work involved in 
measuring PM emissions and the reduced likelihood of high PM emissions 
on the highway test, we are not proposing that PM emissions testing be 
included in this requirement, but we ask for comment on whether we 
should instead include them, but waive the requirement to measure them 
in manufacturers' certification testing, to ensure that any unforeseen 
PM control technology challenges in highway driving conditions are 
addressed in the future.
f. HDV Altitude Requirements
    As in the past, we intend that HDV Tier 3 standards result in 
emissions controls that are effective over a full range of operating 
altitudes. We do not anticipate that the proposed FTP bin standards 
would require the use of special hardware to achieve compliance at 
altitude. We also do not believe that adjustment to the FTP standards 
is appropriate for HDV testing at altitude, as we expect that 
manufacturers would be able to meet these standards with adequate 
compliance margin to cover this test condition. As in the proposed 
light-duty program, and for the same reasons, we are not proposing to 
require that HDVs comply with SFTP standards at altitude.

C. Evaporative Emissions Standards and Onboard Diagnostic System 
Requirements

    Gasoline vapor emissions from vehicle fuel systems, which are a 
mixture of hydrocarbon compounds, occur when a vehicle is in operation, 
when it is parked, and when it is being refueled. These evaporative 
emissions from gasoline-powered vehicles which occur on a daily basis 
are primarily functions of temperature, fuel vapor pressure, and 
activity. EPA first instituted evaporative emissions standards in the 
early 1970s to address hydrocarbon emissions when vehicles are parked 
after being driven. These are commonly referred to as hot soak and 
diurnal emissions. Over the subsequent years the test procedures have 
been modified and improved, the standards have been revised to be more 
stringent, and we have addressed emissions which arose from new fuel 
system designs by establishing new requirements such as running loss 
emission standards and test procedure provisions to address resting 
losses (e.g., permeation). Onboard refueling vapor recovery (ORVR) 
requirements for control of refueling emissions first began to phase-in 
for light-duty vehicles (LDVs) and light-duty trucks (LDTs) in the 1998 
MY. These were later expanded to cover medium-duty passenger vehicles 
(MDPVs) and some heavy-duty gasoline vehicles (HDGVs). Even though 
evaporative and refueling emission control systems have been in place 
for

[[Page 29884]]

most of these vehicles for many years, evaporative emissions still 
contribute 30-40 percent of the on-road mobile source hydrocarbon 
inventory. These fuel vapor emissions are ozone and PM precursors, and 
also contain air toxics such as benzene. Even though there are mature 
evaporative emission control programs in place, further hydrocarbon 
emission reductions are needed and can be achieved from highway motor 
vehicles. Vehicles demonstrating near zero fuel vapor emissions have 
been certified by CARB and a limited number are in-use in California 
and other states. Furthermore, test programs conducted by the 
Coordinating Research Council and EPA show that attention is needed to 
insure better in-use performance of current evaporative control 
systems. Cost effective hydrocarbon emission reductions can be achieved 
through new vehicle standards and improved focus on in-use performance.
    This section discusses the proposed vehicle-related evaporative 
emission standards and related provisions for LDVs, LDTs, MDPVs, and 
HDGVs. As discussed below, we are proposing more stringent standards 
that would apply for the 2- and 3-day evaporative emissions tests, a 
new canister bleed test and emission standard, a new certification test 
fuel specification,\277\ and a new fuel/evaporative system leak test 
procedure and emission standard. We are also proposing refueling 
emission controls for a portion of HDGVs over 10,000 lbs gross vehicle 
weight rating (GVWR). This section also describes proposed phase-in 
flexibilities, credit and allowance programs, and seeks comment on 
several other issues related to evaporative emissions control.
---------------------------------------------------------------------------

    \277\ For flexible fuel vehicles (FFVs) certification fuel for 
evaporative and refueling emissions testing would remain a 9 RVP 
gasoline splash blended with ethanol to yield a blend containing 15 
percent ethanol.
---------------------------------------------------------------------------

    The proposed evaporative emissions program has six basic elements: 
(1) The Tier 3 evaporative emission phase-in program (MY 2018-2022+), 
(2) the early allowance/credit program (MY 2015-2016), (3) the 
transitional program (MY 2017), (4) requirements for HDGVs including 
ORVR, (5) a leak emission standard and test procedures, and (6) other 
miscellaneous proposed changes and areas for comment.
    In this proposed rule, the vehicle classifications, LDVs, LDTs, 
MDPVs, and HDGVs, would remain unchanged from Tier 2. For purposes of 
this discussion of the proposed Tier 3 evaporative emissions program, 
the vehicle standards can be further placed in four categories: (1) 
``Zero evaporative emission'' PZEV vehicles certified by CARB as part 
of the ZEV program, (2) vehicles certified by CARB to meet LEV III 
evaporative emission program requirements on CARB certification fuel (7 
RVP E10), (3) vehicles meeting the proposed Tier 3 evaporative 
emissions program requirements using the proposed certification test 
fuel (9 RVP E15), and (4) transitional vehicles meeting current EPA 
evaporative requirements on Tier 2 certification fuel (9 RVP 
E0).278 279 For ease of reference these four categories may 
be referred to as PZEV evap, LEV III evap, Tier 3 evap, and Tier 2 evap 
in this section.\280\

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

    \278\ We adopted the most recent vehicle evaporative emission 
standards for LDVs, LDTs, and MDPVs in 2007 (72 FR 8428, February 
26, 2007). The most recent standards for HDGVs were adopted in 2000 
(66 FR 5165, January 18, 2001).
    \279\ See Section IV.D.1 for a discussion of the proposed 
certification fuel changes, including discussion of options for and 
implications of the certification test fuel having 10 percent 
ethanol.
    \280\ ``PZEV evap'' as discussed here refers only to the 
evaporative emission and useful life requirements of the PZEV 
program, not the exhaust emission requirements.
---------------------------------------------------------------------------

1. Tier 3 Evaporative Emission Standards
a. Proposed Standards
    This proposal for evaporative emissions builds on previous EPA 
requirements as well as CARB's recent LEV III rule which starts phasing 
in with the 2018 MY. This proposal facilitates a national program for 
vehicle evaporative emissions control. We believe the proposed program 
is appropriate since it would require new evaporative emissions control 
technology in new vehicles while also achieving improved in-use system 
performance.
    This section describes proposed requirements for LDVs, LDTs, MDPVs, 
and HDGVs. The proposal includes more stringent emission standards for 
hot soak plus diurnal emissions (2- and 3-day tests), plus a new 
canister bleed standard and testing requirement for measuring emissions 
from the fuel tank and the evaporative canister. The proposal also 
introduces a limited corporate averaging program for demonstrating 
compliance with the hot soak plus diurnal standards. We are proposing a 
phase-in of the Tier 3 evaporative emission standards that would begin 
with the 2017 MY, with incentives for manufacturers to introduce Tier 3 
compliant vehicles earlier or in greater numbers than required. The 
proposal includes revised provisions for demonstrating compliance with 
the evaporative emission standards at high altitude. See Section IV.C.3 
for additional provisions for the HDGV category.
i. Hot Soak Plus Diurnal Standards
    Previous hot soak and diurnal emission controls have dramatically 
reduced vehicle evaporative emissions over the past thirty plus years. 
However, some emissions remain and control technology is available to 
capture these emissions in a cost effective manner. Toward that end, 
EPA is proposing more stringent hot soak plus diurnal evaporative 
emission standards for the Tier 3 program. The standards apply to both 
the 2-day and 3-day evaporative emission test requirements.
    The standards are designed to bring into the broader motor vehicle 
fleet the ``zero evap'' technology used by the manufacturers in their 
partial zero emission vehicles (PZEVs). Manufacturers developed this 
``zero evap'' technology as part of their response to meeting the 
requirements of the CARB Zero Emission Vehicle (ZEV) program. This 
program, which is in effect in 11 other states, allows manufacturers to 
meet their ZEV mandate percentages (totally or in-part) by the use of 
vehicles which among other characteristics have very low fuel vapor 
emissions.
    The standard levels presented in Table IV-18 are designed primarily 
to accommodate what is often referred to as new vehicle background 
hydrocarbon emissions. These emissions arise from the off-gassing of 
volatile hydrocarbons from plastics, rubbers, and other polymers found 
in new vehicles (e.g., new tires, interiors, seats, fuel system 
components, paints, and adhesives). In the field these emissions 
decrease over time as the vehicle ages, but this cannot necessarily be 
replicated in the time that manufacturers normally allocate for vehicle 
certification. In the past manufacturers have employed techniques such 
as vehicle baking (discussed below) to accelerate the rate of this off-
gassing, and until recently it has not been a major consideration for 
certification.
    In the past EPA has set relatively uniform (but not identical) 
evaporative emission standards for LDVs and LDTs and somewhat higher 
values for HDGVs. The proposed hot soak plus diurnal emission standards 
presented in Table IV-18 are somewhat higher as vehicles get larger in 
weight and physical size. This is because in general the vehicles have 
higher levels of non-fuel background emissions as they get larger. As 
mentioned above, the standards, which are approximately a 50 percent 
reduction from the existing hot soak plus diurnal standards, are 
intended

[[Page 29885]]

primarily to accommodate non-fuel background emissions. Thus, the 
technology focus for the proposed Tier 3 evaporative emission standards 
is for vehicles to have essentially zero fuel vapor emissions.
    As described in more detail in Section IV.C.2 below, EPA is 
proposing a program that would allow manufacturers to demonstrate 
compliance with the proposed hot soak plus diurnal evaporative emission 
standards using averaging concepts. Under the proposal, manufacturers 
may comply by averaging within each of the four vehicle categories but 
for the reasons discussed below, may not rely on averaging across 
categories. The technical approaches to meeting the proposed standards 
are discussed in Section IV.C.2. EPA is not proposing any changes to 
the existing light-duty running loss or refueling emission standards 
with the Tier 3 proposal, with the exception of the certification test 
fuel requirement.

  Table IV-18--Proposed Evaporative Emission Standards (g/test) \a\ \b\
                                   \c\
------------------------------------------------------------------------
                                                    Highest hot soak +
                                                   diurnal level (over
                Vehicle category                   both 2-day and 3-day
                                                      diurnal tests)
------------------------------------------------------------------------
LDV, LDT1......................................                    0.300
LDT2...........................................                    0.400
LDT3, LDT4, MDPV...............................                    0.500
HDGVs..........................................                    0.600
------------------------------------------------------------------------
\a\ The standards are in grams of hydrocarbons as measured by flame
  ionization detector during the diurnal and hot soak emission tests in
  the enclosure known as the sealed housing for evaporative
  determination (SHED).
\b\ Note that the proposed standards are the same for both tests;
  current standards are slightly different for the 2- and 3-day tests.
\c\ Vehicle categories are the same as in EPA's Tier 2 final rule; see
  65 FR 6698, February 10, 2000.

ii. Canister Bleed Emission Standard
    In addition to more stringent hot soak plus diurnal standards, EPA 
is proposing a new canister bleed emission test and standard as part of 
the Tier 3 program. The proposed bleed test procedure is described in 
Section IV.C.4.a., below. The purpose of the new test and standard is 
to ensure that near-zero fuel vapor emissions are being emitted by 
vehicles from the fuel tank through the evaporative emission canister. 
Under this proposal, manufacturers would be required to measure diurnal 
emissions over the 2-day diurnal test procedure from just the fuel tank 
and the evaporative emission canister and comply with a 0.020 g/test 
standard for all LDVs, LDTs, and MDPVs and 0.030 g/test for HDGVs. The 
feasibility of this standard is discussed in Section IV.C.2.g.ii below. 
EPA is proposing not to apply the averaging program to this new bleed 
test standard as compliance is relatively straightforward and low in 
cost. Therefore, each evaporative/refueling emission family certified 
by manufacturers would need to demonstrate compliance with their 
respective standard. As discussed below, the canister bleed standard 
would not apply at high altitude. The canister bleed test and standard 
drives canister design elements such as total gasoline working 
capacity, internal architecture, and the type of carbon used. Since the 
performance of the canister is also evaluated in the hot soak plus 
diurnal evaporative emissions sealed housing for evaporative 
determination (SHED) test we are proposing that the canister bleed 
emission standard not be included in the In-Use Verification Program 
but it must be met in use. We would not expect to have canister bleed 
specific family criteria for certification but the test would have to 
be completed and the standard met for each evaporative/refueling family 
including potentially twice if there were two canisters used. A 
deterioration factor would not be required, but as mentioned above, the 
standard would have to be met in-use and could be evaluated in EPA 
confirmatory testing.
iii. Early and Transitional Hot Soak Plus Diurnal Standard
    As part of its LEV III program, CARB has included an alternative 
set of evaporative emission standards, referred to as Option 1 
standards. These are shown in Table IV-19.

                            Table IV-19--CARB Option 1 Evaporative Emission Standards
----------------------------------------------------------------------------------------------------------------
                                                             Highest hot soak + diurnal level
                                                              (over both 2- and 3-day diurnal
                     Vehicle category                                 tests) (g/test)           Running Loss (g/
                                                           ------------------------------------       mile)
                                                              Vehicle SHED        Rig SHED
----------------------------------------------------------------------------------------------------------------
Passenger Car.............................................             0.350               0.0              0.05
LDT <= 6,000 lbs GVWR.....................................             0.500               0.0              0.05
All other vehicles > 6,000 lbs GVWR.......................             0.750               0.0              0.05
----------------------------------------------------------------------------------------------------------------

     The Option 1 standards include evaporative emission standards (hot 
soak plus diurnal) that are slightly higher numerically than our 
proposed standards. Vehicles certified under this option may not use 
averaging in the CARB LEV III program because they basically represent 
the same evaporative emission standards as exist for PZEVs under CARBs 
ZEV program wherein averaging is not permitted. Option 1 also includes 
an additional test of the vehicle fuel system (rig test) that from an 
engineering perspective is practically more difficult to conduct than 
the bleed test discussed above and is intended to force manufacturers 
to demonstrate at certification that their stand alone (not in chassis) 
fuel/vapor control system designs have no (<=54 mg) fuel vapor 
emissions. EPA is not proposing that Option 1 be part of the long term 
Tier 3 evaporative emission program. While we see the merit of the rig 
test as an engineering design and development tool for the 
manufacturers, by its very nature, the rig SHED standard is not 
implementable as an enforceable standard. We believe that the hot soak 
plus diurnal SHED test and the canister bleed test will accomplish the 
same objective of keeping fuel vapor emissions to a minimum.
    EPA believes most manufacturers will prefer to certify to the 
averaging based standards proposed by EPA (similar in

[[Page 29886]]

stringency and program construct to CARB Option 2). However, because 
some manufacturers may have vehicle models meeting the CARB Option 1 
standards and emission requirements now or in the near future, EPA is 
proposing that compliance with the CARB Option 1 standards would be an 
acceptable interim alternative to compliance with the proposed Tier 3 
evaporative emission standards if the model is certified by CARB before 
the 2017 MY. EPA proposes that these vehicles could then be certified 
using carryover provisions through the 2019 MY.\281\ As noted in the 
following sections, vehicles certified under this provision would count 
toward the phase-in percentage requirements and could earn allowances 
as discussed below, but the vehicles would not be eligible to earn or 
use credits for the evaporative emissions averaging program. Carryover 
vehicles would have to meet EPA leak emission standard to be counted 
toward the sales percentage requirements for 2018 and later model 
years.
---------------------------------------------------------------------------

    \281\ EPA is proposing to incorporate by reference the CARB 
Option 1 test procedures and emission standards for this interim 
period.
---------------------------------------------------------------------------

b. Useful Life
    Trends indicate that vehicle lifetimes are increasing. It is 
important that emission control systems be designed to meet 
requirements while vehicles are in use. As discussed in Section IV.A 
and IV.B of this proposal, along with the new emission standards, we 
are proposing a longer useful life of 150,000 miles/15 years, whichever 
comes first, for LDTs up to 6,000 lbs GVWR but over 3,750 lbs loaded 
vehicle weight (LVW) (LDT2s), all LDTs over 6,000 lbs GVWR (LDT3/4), 
MDPVs, and HDGVs between 8,501 and 14,000 lbs GVWR. The proposed longer 
useful life would also apply to certifications to the Tier 3 
evaporative emission requirements. For an evaporative/refueling family 
certified to 150,000 miles/15 year useful life for evaporative 
emissions this useful life would also apply to the refueling, leak, and 
high altitude standards, where applicable when a family certifies to 
the Tier 3 evaporative emission requirements. All of these standards 
impact the fuel and vapor control systems and it is technologically 
consistent to require the same useful life for these standards because 
they all rely on the mechanical integrity, durability, and operational 
performance of the same components in the evaporative emissions control 
system.
    Due to limitations in the CAA, for LDVs and for LDTs up to 6,000 
lbs GVWR and at or below 3,750 lbs LVW (LDT1s), we are keeping the 
current useful life of 120,000 miles/10 years unless, as described in 
Section IV.A, a manufacturer elects alternative exhaust emission 
requirements that are associated with 150,000 mile/15 year useful life 
for these vehicles. For manufacturers that select those optional 
standards, the useful life of 150,000 miles/15 years would apply for 
all Tier3 evaporative emission standards including the hot soak plus 
diurnal emission standards, the refueling emission standard, and the 
leak standard because of the design and operating relationships between 
the engine, the fuel system, the evaporative control system and their 
various components.
    During the early and transitional program periods and until the 
final year of the allowed phase-in period for the Tier 3 evaporative 
emission program (MY 2015-2022) the differences between the proposed 
exhaust and evaporative emission phase-in programs presents the 
possibility that in some cases a manufacturer could certify a model to 
the Tier 3 exhaust requirements but not necessarily to the Tier 3 
evaporative emission requirements.\282\ In those situations, we are 
proposing that a family could have a 150,000 miles/15 years useful life 
for exhaust emissions but maintain the current useful life for all of 
the evaporative and refueling emission standards. We also propose that 
during the phase-in period, if a family is certified to the Tier 3 
evaporative emission requirements but not yet certified for Tier 3 
exhaust emission requirements, then the useful life could be 150,000 
miles/15 years for evaporative and refueling emissions standards but 
the current useful life for exhaust emissions, However, by the 2022 MY 
EPA proposes that the useful life for all of these requirements would 
be 150,000 miles/15 years for LDT2/3/4s, MDPVs, and HDGVs since by that 
model year all vehicles must be certified using Tier 3 certification 
fuel and test procedures and meet Tier 3 evaporative emission 
standards.\283\
---------------------------------------------------------------------------

    \282\ By the 2020 MY, all Tier 3 evaporative system emissions 
certifications must use Tier 3 certification test fuel and test 
procedures. This affects evaporative (hot soak plus diurnal), 
canister bleed, refueling, and leak emission standards 
certification.
    \283\ The only exception here would be for vehicles not meeting 
Tier 3 evaporative emission requirements in the 2022 MY as a result 
of the use of previously earned allowances and small businesses 
which have until the 2022 MY to meet the proposed Tier 3 evaporative 
emission requirements.
---------------------------------------------------------------------------

    OBD regulations call for the systems to operate effectively over 
the useful life of the vehicle. We are not proposing to change that 
requirement, but rather to clarify that during the early and transition 
years of the phase-in (MY 2015-2022), all of the OBD monitoring 
requirements have the same useful life as that for the exhaust emission 
standard except for the evaporative system leak monitoring requirement 
which has the same as that required for the evaporative and refueling 
emission standards control systems.
2. Evaporative Emissions Program Structure and Implementation 
Flexibilities
a. Percentage Phase-In Requirements
    The proposed Tier 3 evaporative emission standards would be phased 
in over a period of six model years (MYs), including a transitional 
year in 2017. For MY 2017, except as discussed below, the requirement 
would apply to 40 percent of a manufacturer's combined sales of LDVs, 
LDT1s, and LDT2s. To be consistent with the start date for new exhaust 
standards affecting these vehicles, the phase-in requirements would not 
include vehicles over 6,000 lbs GVWR until the 2018 MY. For the 2018-
2019 MYs, the requirement would apply to 60 percent of a manufacturer's 
sales of all LDVs, LDTs, MDPVs, and HDGVs. This would increase to 80 
percent for MYs 2020 and 2021 and by MY 2022 it would apply to 100 
percent of sales in these four categories. Beginning in MY 2018 any 
vehicle included in the percentage projection, except vehicles that had 
earned allowances would have to meet the leak emission standard.
    Our proposal for MY 2017 has two options and we are seeking comment 
on a third option. The first, which we are calling the ``percentage'' 
option, would require that 40 percent of a manufacturer' s LDVs, LDT1s, 
and LDT2s sold outside of California and the states that have adopted 
the CARB ZEV or LEV III programs must meet the Tier 3 evaporative 
emission requirements on average. The second which we are calling the 
``PZEV zero evap only'' option, would require a manufacturer to sell 
all of the LDVs, LDT1s, and LDT2s certified with CARB as meeting the 
PZEV evaporative emission requirements (zero evap) in MY 2017 
throughout all of the U.S. and not to offer for sale any non-PZEV zero 
evap version of those vehicles in any state whose vehicles are covered 
by the Tier 3 evaporative emission standards. Thus, this would apply to 
sales in any state except for California and states that

[[Page 29887]]

have adopted the CARB ZEV or LEV III programs under section 177 of the 
Clean Air Act. Under this second option, no tracking of sales or end of 
year compliance calculation would be required. Some manufacturers may 
find this option attractive, as they have more limited product 
offerings and find tracking of production and sales more difficult.
    The basic goal of the 2017 MY program is to provide evaporative 
emission reductions benefits in the other states which are similar to 
those expected in California and the states which adopted LEV III under 
section 177 of the Clean Air Act. Due to model phase-out and phase-in 
issues related to current and future products, some manufacturers have 
indicated that increasing production of Tier 3 evaporative emission 
compliant vehicles for the 2017 MY to meet the 40 percent value 
discussed above could be difficult and costly. To address this issue, 
we are asking for comment on a third option: decreasing this value from 
40 percent to 20 percent but requiring that these same vehicles also 
meet the leak emission standard in the 2017 MY. This approach has the 
potential to address the transition issue and EPA believes that the 
leak standard will provide evaporative emission reduction benefits 
equal to or greater than the Tier 3 evaporative emission standards. 
Thus, under this approach, the manufacturers' product transition 
concerns could be addressed and the overall evaporative emission 
reductions would still be achieved for 2017 MY vehicles. As discussed 
below, beginning in the 2018 MY, a Tier 3 compliant vehicle must also 
meet the leak emission standard. This option would be effective only in 
the 2017 MY. EPA asks for comment on whether this option should require 
the leak emission standard to apply to the same 20 percent of vehicles 
that are complying with the Tier 3 evaporative emission requirements, 
or whether this option should allow manufacturers the flexibility to 
meet some or all of the 20 percent leak emission standard requirement 
with vehicles not yet compliant with the Tier 3 evaporative 
requirements.
    At the time of certification, manufacturers would identify which 
families would be included in their Tier 3 evaporative emission 
percentage calculations (this could be families above or below the 
individual Tier 3 evaporative emission standards for the given class of 
vehicles as well as vehicles meeting CARB's Option 1 standards) and 
could also include earned allowances as discussed below. They would use 
projected sales information for these families plus allowances as 
desired and available, to show how they expect to meet the phase-in 
percentages for the model year of interest. At the end of the model 
year they would be expected to show that the percentages were met and 
if not they would either use additional allowances or bring more 
vehicle families into the calculation.
    Requiring a showing at the time of certification based on projected 
sales requires due diligence by the manufacturers and EPA, but the Tier 
3 evaporative emissions program allows for fleet averaging, so a 
validation or ``truing up'' of these sales projections is necessary for 
determining compliance with the requirements of the standard. This is 
discussed in Sections IV.C.2.c.and d. As discussed further below, 
validated sales information would also be used for earning early 
allowances and to show compliance with the alternative phase-in 
schedule approach.
    For these purposes, vehicles included in the phase-in percentage 
could be: (1) Families which certified to CARB LEV III requirements in 
MYs 2015 and 2016 (CARB Option 1), (2) families certified to meet Tier 
3 evaporative emission requirements, and (3) vehicles from the early 
allowance program. However, beginning in the 2017 MY, any new 
evaporative/refueling emission family certifications would have to meet 
the proposed EPA Tier 3 certification requirements for both test 
procedure and certification test fuel for the evaporative and refueling 
emission standards. The leak emission standard would apply in the 2018 
MY. Furthermore, assuming other regulatory provisions related to 
carryover of emissions data are met, 2015-2016 MY CARB evaporative 
emissions certifications could be carried over until the end of the 
2019 MY and included as compliant vehicles within the program if they 
met the leak emission standard.
    The phase-in percentages for MYs 2017 through 2022 reflect a 
percentage phase-in concept applied successfully by EPA in previous 
rules involving evaporative and refueling emissions control. The 
proposed phase-in provides an appropriate balance between the needed 
emission reductions and time for the manufacturers to make an orderly 
transition to the new technology on such a broad scale. The higher 
initial percentage here is appropriate because the expected evaporative 
emission control technology is already being used to varying degrees by 
16 manufacturers on over 50 vehicle models today and is projected to 
gain even deeper penetration by 2017 due to the partial zero emission 
vehicles (PZEV) option within the CARB ZEV program.
    As a flexibility, we are proposing to allow manufacturers to 
demonstrate compliance with the phase-in percentage requirements of the 
evaporative emissions program by using a manufacturer-determined 
alternative phase-in percentage scheme. Under this approach, before the 
2018 MY, manufacturers would have to present a plan to EPA which 
demonstrates that the sum of the product of a weighting factor and the 
percentages of their U.S. vehicle sales for each model year from 2018 
through 2022 is greater than or equal to 1040. The 1040 value is equal 
to the sum of the product of the weighting factors and the percentage 
requirements for MYs 2018 through 2022, calculated in the following 
manner: [(5)(2018MY %)+4(2019MY %)+3(2020MY %)+2(2021MY %)+(1)(2022MY 
%)]. This would allow manufacturers to use a phase-in more consistent 
with product plans which may call for a lower percentage in the early 
years or to benefit from producing and selling more than the minimum 
percentage of compliant vehicles early. This flexibility could also be 
helpful in the event that a manufacturer elects to put some vehicles on 
a different phase-in schedule for meeting Tier 3 exhaust and 
evaporative emission standards. As explained further below, any 
allowances earned could be counted toward compliance with the 1040 
value. Within this proposed flexibility EPA asks for comment in three 
areas. First, we seek comment on the need for and value of this 
alternative phase-in percentage flexibility option. Second, we did not 
include the 2017 MY in this flexibility because we believe that the 
PZEV zero evap nationwide option, the use of any earned allowances, and 
the ability to have a deficit in a given year are sufficient. However, 
we ask for comment on including the 2017 MY ``percentage'' option in 
this flexibility (both the 40 and 20 percent approaches discussed 
above). If after comment the 40 percent option from the 2017 MY is 
included in the final rule, the sum of the percentages would include an 
additional 240= (6)(40) for a total; of 1280; the equation above would 
add a term of (6)(2017MY %). Similarly, we ask for comment on whether 
the 20 percent option from the 2017 MY should be included in the 
alternative phase-in approach. If it is included in the final rule, the 
sum of the percentages would include an additional 120= (6)(20) for a 
total; of 1160; the equation above would add a term of (6)(2017MY %).

[[Page 29888]]

b. Early Allowance Program
    We are proposing incentives for early introduction of vehicles 
compliant with the Tier 3 evaporative emission regulations. 
Manufacturers could take advantage of these incentives prior to MY 2018 
by selling vehicles that meet the Tier 3 evaporative emission 
regulations earlier than required or in greater numbers than required.
    As described below, manufacturers could earn ``allowances'' for 
selling any vehicle certified to the proposed Tier 3 evaporative 
emission regulations earlier than required. The vehicles could be LDVs, 
LDTs, MDPVs, or HDGVs. Specifically these include the following: (1) 
For MYs 2015 and 2016, any LDVs and LDTs meeting the Tier 3 evaporative 
emission regulations and sold outside of California and the states that 
have adopted CARB's ZEV or LEV III programs, (2) for MYs 2015-2017, any 
MDPV or HDGV meeting the Tier 3 evaporative emission regulations early 
and sold in any state, (3) for MY 2017, any LDT3/4 meeting the Tier 3 
evaporative emission regulations and sold outside of California and the 
states that have adopted CARB's LEV III or ZEV programs, and (4) for 
MYs 2015-2017, any HDGV between 10,001 and 14,000 lbs GVWR meeting the 
refueling emissions regulations and sold outside of California and the 
states that have adopted CARB's LEV III or ZEV programs.
    In order to demonstrate compliance with the proposed Tier 3 
evaporative emission regulations, the vehicles could be certified to 
either the proposed Tier 3 evaporative emission standards or CARB's 
PZEV zero evaporative emission and useful life requirements. Vehicles 
generating allowances would have to meet the proposed evaporative 
emission standards (CARB Option 1 or EPA Tier 3), the high altitude 
evaporative emission standard, the canister bleed standard as well as 
the refueling emission standards. Manufacturers would earn one 
allowance for each qualifying vehicle sold. Manufacturers can use these 
allowances in MY 2017 through 2022 to help demonstrate compliance with 
the phase-in percentage requirements and fleet average evaporative 
emission standards for those years.
    Allowances would be used in the compliance determination in the 
following manner. Vehicles qualifying for allowances could be used in 
the fleet average evaporative emission standard calculation for any 
year during the phase-in. This would apply to the primary phase-in and 
alternative phase-in programs. Allowance vehicles would be entered into 
the compliance calculation with an emission value equivalent to the 
evaporative emission standard for their vehicle category from Table IV-
18 even if it was certified to CARB Option 1 standards (Table IV-19). 
For the percent phase-in requirement in either the primary or 
alternative phase-in schemes, allowance vehicles would count for one 
vehicle for each allowance used within their vehicle category. For the 
primary scheme this would be counted as one vehicle, but for the 
alternative phase-in option the value would be multiplied by the 
weighting factor (5 for 2018, 4 for 2019, 3 for 2020, etc). Within the 
alternative phase-in scheme the manufacturer would be limited to using 
these early allowances for no more than 10 percentage points of the 
phase-in requirements in any given model year (e.g., MYs 2018-2022). 
EPA believes this limitation is appropriate. Early introduction of 
``zero evap'' technology should be encouraged, but not necessarily at 
the expense of its widespread use across the various vehicle categories 
as the phase-in progresses. The proposed allowances are designed 
primarily to facilitate manufacturer transition during the program 
phase-in. As such, we propose that they could not be traded between 
manufacturers and unused allowances would expire after the 2022 MY.
    An example here may be helpful in demonstrating how the proposed 
concept would work. Take a hypothetical manufacturer who earned 10,000 
allowances in 2015 and 2016 and sells 100,000 units per year. In 2018, 
the manufacturer would have a phase-in requirement of 60 percent or 
60,000 vehicles. For the primary phase-in option the manufacturer could 
use part or all of its allowances in 2018. For the alternative phase-in 
scheme the proposed regulations would limit the use of allowances to 10 
percentage points at the 60 percent. Without a multiplier this would 
require the use of all 10,000 allowances in 2018, but with the proposed 
multiplier only 2,000 allowances would be needed to reach the 10 
percentage point maximum. Using a similar calculus, the manufacturer 
could use another 10 percentage points in 2019, but it would require 
2,500 allowances since the multiplier is 4. The number of allowances to 
reach 10 percentage points would increase each year as the multiplier 
decreased.
    For the MY 2017, manufacturers choosing EPA's proposed 
``percentage'' option (see Section IV.C.2.a) could earn allowances for 
sales of LDT3s, LDT4s, MDPVs, and HDGVs that meet the proposed Tier 3 
evaporative emission standards and other related requirements assuming 
their LDV, LDT1/2 sales meet the 40 percent requirement. Similarly, 
manufacturers choosing EPA's proposed ``PZEV zero evap only'' option 
could earn allowances in MY 2017 for LDT3/4s, MDPVs, and HDGVs that 
meet the CARB Option 1 evaporative emission standards and related 
requirements. For both the ``percentage'' and ``PZEV zero evap only'' 
options for the 2017 model year, to avoid double counting, the 
allowances would be earned only for those vehicles sold outside of 
California and the states that have adopted CARB's LEV III/ZEV program 
requirements. Vehicles earning allowances could either be vehicles 
certified to the Tier 3 evaporative emission standards or vehicles 
certified using carryover data from the CARB PZEV zero evaporative 
emission requirements from the 2015 or 2016 MYs. Since credits and 
allowances serve primarily the same purpose and allowing for splits of 
allowances/credits greatly complicates program implementation, we are 
proposing that manufacturers could only earn allowances in MYs 2015-
2017 for any qualifying LDT3s, LDT4s, MDPVs, and HDGVs since these 
vehicles are not covered by the proposed Tier 3 standards until the 
2018 MY. EPA asks for comment on whether this opportunity to earn 
allowances coupled with the aforementioned restriction on their use is 
the appropriate balance.
c. Evaporative Emissions ABT
    Throughout EPA's programs for mobile source emission controls, we 
have often included emission averaging programs for exhaust emissions. 
An emission averaging program is an important factor we take into 
consideration in setting emission standards under the Clean Air Act. An 
emission averaging program can reduce the cost and improve the 
technological feasibility of achieving standards, helping to ensure the 
standards achieve the greatest achievable reductions, considering cost 
and other relevant factors, in a time frame that is earlier than might 
otherwise be possible. Manufacturers gain flexibility in product 
planning and the opportunity for a more cost-effective introduction of 
product lines meeting a new standard. Emission averaging programs also 
create an incentive for the early introduction of new technology, which 
allows certain emission families to act as leaders for new technology. 
This can help provide valuable information to manufacturers on the 
technology before they apply the technology throughout their product 
line.

[[Page 29889]]

    These programs generally involve averaging and banking, and 
sometimes trading (ABT). Averaging allows a manufacturer to certify one 
or more families at emission levels above the applicable emission 
standards as long as the increased emissions are offset by one or more 
families certified below the applicable standards. These are referred 
to as family emission limits (FELs). The over-complying families 
generate credits that are used by the under-complying families. 
Compliance is determined on a total mass emissions basis to account for 
differences in production volume, and on other factors as necessary. 
The average of all emissions for a particular manufacturer's production 
within category must be at or below the level of the applicable 
emission standards. Banking allows a manufacturer to generate emission 
credits and bank them for future use in its own averaging program in 
later years. Trading allows a manufacturer to sell credits or obtain 
credits from another manufacturer.
    EPA is proposing an emissions ABT program for the Tier 3 hot soak 
plus diurnal evaporative emissions standards. This would be the EPA's 
first averaging program for evaporative emissions from light-duty or 
heavy-duty vehicles. It would not apply to the high altitude standard, 
the canister bleed standard or the leak emission standard because it is 
the low altitude ``zero evap'' hot soak plus diurnal standard which 
will drive the fundamental technology used to comply with all of these 
requirements. EPA is proposing to include trading of emission credits 
between manufacturers, but in past similar programs there have been 
very few trades. Incorporating trading within the program adds a 
significant degree of complexity, so we are seeking comment on the need 
for and value of including trading.
    The evaporative emissions ABT program would start with the 2017 MY 
for the percentage option. The programs would continue for the 2018 MY 
and beyond and would not sunset, as does the allowance program. 
Vehicles generating averaging/banking credits in the 2017 MY or later 
would not be permitted to also generate allowances as this would be 
double counting.
    A key element of an averaging program is the identification of the 
averaging sets. This sets the criteria for which emission families can 
be averaged for purposes of compliance as well as credit and deficit 
determinations. We are proposing four averaging sets and the applicable 
emission standard for each of the averaging sets as shown in Table IV-
18. Except as noted in section d below, credit exchanges between 
averaging sets would not be permitted. Participation in averaging is 
voluntary since a manufacturer could elect to certify each family 
within the averaging set to its individual limit as if there was no 
averaging program.
    An evaporative emission ABT includes two very distinct steps. The 
first is the determination of the credit/deficit status of each family 
relative to its applicable standard from Table IV-18. The second is the 
role of ABT in the overall compliance demonstration which will be 
discussed in Section IV.C.2.d which follows.
    A manufacturer choosing to participate in the evaporative emissions 
ABT program would certify each emission family to an FEL. The FEL 
selected by the manufacturer becomes the emission standard for that 
emission family. As noted below, emission credits (or deficits) are 
based on the difference between the emission standard that applies (by 
vehicle category) and the FEL. The vehicles would have to meet the FEL 
for all emission testing.
    We are proposing that the FELs selected by the manufacturer would 
have to be selected at 0.025 g/test increments above or below the 
applicable Tier 3 evaporative emission standards for each vehicle 
category. FELs could not be set any higher than 0.500 g/test for LDVs, 
0.650 g/test for LDT1s and LDT2s, 0.900 g/test for LDT3s and LDT4s, 
1.000 g/test for MDPVs, 1.4 g/test for HDGVs at or below 14,000 lbs 
GVWR, and 1.9 g/test for those above 14,000 lbs GVWR, respectively. 
These FEL caps are the 3-day hot soak plus diurnal emission standards 
currently applicable under EPA's regulations. The vehicle groupings for 
defining these FEL caps differ somewhat from the groupings that apply 
for the standards; we request comment on the need to reconcile these 
different groupings.
    Evaporative emission credits under the proposed Tier 3 hot soak 
plus diurnal standards would be calculated differently in the 2017 
model year and the 2018 and later model years. For 2017 calculations 
would be based on sales in the U.S. excluding California and the 
section 177 states which have adopted the LEV III/ZEV programs. For 
2018 and later model years it would be based on all 50 states. 
Calculations would use the following equation: Credits = (fleet average 
standard - fleet average FEL) x ``U.S. sales''. The ``fleet average 
standard'' term here is the applicable Tier 3 hot soak plus diurnal 
standard for the vehicle category from Table IV-18. The sales number 
used in the 2018 and later MY calculation would be the number of 
vehicles of the evaporative emission families in that category sold in 
the U.S. which are subject to the Tier 3 evaporative emission 
standards.\284\ Emission credits banked under the proposed evaporative 
emission ABT program would have a five year credit life and would not 
be discounted. This means the credits would maintain their full value 
through the fifth model year after the model year in which they are 
generated. At the beginning of the sixth model year after they are 
generated, the credits would expire and could not be used by the 
manufacturer. We are proposing to limit credit life so there is a 
reasonable overlap between credit generating and credit using vehicles. 
As mentioned above, for purposes of the compliance calculation, 
allowance vehicles would have an FEL equivalent to the EPA emission 
standard (Table IV-18) for their respective vehicle category.
---------------------------------------------------------------------------

    \284\ If EPA ultimately decided to continue the disaggregated 
approach to fleet compliance calculations, we could potentially base 
compliance with the proposed Tier 3 evaporative emission 
requirements on U.S. sales (i.e., non-California and non-section 177 
states).
---------------------------------------------------------------------------

    We request comment on all aspects of the ABT program. In 
particular, we request comment on the structure of the proposed 
evaporative emission ABT program and how the various provisions may 
affect manufacturers' ability to utilize ABT to achieve the desired 
evaporative emission-reductions in the most efficient and economical 
way. We also ask for comment on basing ABT calculations on nationwide 
sales in 2018 and later model years, even if there is a separate 
calculation for California and the section 177 states.
d. Compliance Demonstration
    Demonstration of compliance with the evaporative emissions 
standards would be done after the end of each model year. There are two 
steps. In the first step, manufacturers would have to show compliance 
with the phase-in percentages whether they used the primary phase-in 
scheme or an alternative phase-in scheme. It is sales from these 
families together with their respective FELs which would be used to 
make the demonstration of compliance with the emission standard on 
average within each vehicle averaging set. Compliant vehicles types for 
these purposes would be the same as described in Section IV.C.2.a above 
for projected sales. If the required sales percentages are not met by 
direct sales or allowances, non-Tier 3 vehicles would have to be 
identified to make up the shortfall. In the second step, using

[[Page 29890]]

the family emission limits, manufacturers would calculate the sales-
weighted average emission levels within each of the four vehicle 
categories using U.S. sales.\285\ Manufacturers would be allowed to use 
credits only within a defined averaging set. The averaging sets are: 
(1) LDVs and LDT1s, (2) LDT2s, (3) LDT3s, LDT4s, and MDPVs, and (4) 
HDGVs. These sales-weighted calculated values would have to be at or 
below the emission standard for that vehicle category as proposed in 
Table IV-18, unless credits from ABT are used. If the difference 
between the standard and the sales-weighted average FEL is a positive 
value this could be a banked credit available for future use. If the 
difference between the standard and the sales-weighted average FEL is a 
negative value this would be a credit deficit. Credit deficits would be 
allowed to be carried forward. However, manufacturers would be required 
to make up the deficit within the next three model years with credits 
from vehicles in the same averaging set except as described below. As 
discussed above, manufacturers would be required to identify and 
include in the calculations vehicle families from each and any covered 
category (see Table IV-18) whose total annual nationwide sales in the 
given model year equals or exceeds the prescribed percentages. If the 
inclusion of non-Tier 3 vehicles results in an exceedance of the hot 
soak plus diurnal emission standard for that category of vehicles, the 
credit deficit would have to be made up in a subsequent model year.
---------------------------------------------------------------------------

    \285\ The only exception here would be for vehicles not meeting 
Tier 3 evaporative emission requirements in the 2022 MY as a result 
of the use of previously earned allowances.
---------------------------------------------------------------------------

    Allowances could also be used to demonstrate compliance with the 
percentage phase-in requirements and the vehicle category average 
emission standard. For purposes of the percentage phase-in requirements 
vehicles which have earned allowances are counted as compliant in the 
percentage calculation. For purposes of the calculations for compliance 
with the emission standard, allowance vehicles enters into the 
evaporative emissions ABT calculation as having an emission rate 
equivalent to the standard for that category of vehicle. Thus, 
allowance vehicles would help in demonstrating compliance with the 
percentage phase-in requirement (up to ten percentage points per model 
year) and would help in reducing deficits since their calculation value 
would be equivalent to the level of the standard. EPA asks for comment 
on whether allowances should be permitted to be used across vehicle 
categories during the transition years.
    As was discussed above, during the 2017-2019 model years EPA is 
allowing manufacturers to meet the percentage phase-in requirements 
using carryover certification data from vehicles certified to CARBs 
Option 1 standards in the 2015 or 2016 model years. These vehicles may 
have CARB Option 1 certification values slightly higher than those 
proposed for EPA's Tier 3 program for the given vehicle and vehicle 
category. Since the emission standard values in Tables IV-18 and IV-19 
are very similar for any given vehicle category, for purposes of 
simplification during the phase in, EPA proposes that any CARB Option 1 
vehicles used in the 2017-2019 MY emission standard compliance 
determination be entered into the calculation with the emission level 
equivalent to the Tier 3 vehicle category in which the vehicle model 
would otherwise fit. Furthermore, we are proposing not allowing 
manufacturers to generate emission credits for families certified with 
EPA based on carryover CARB PZEV evaporative emissions data using CARB 
Option 1 as in Table IV-19. We are proposing not to include these 
vehicles in the ABT program since the programs are not directly 
comparable, and the structure of the current CARB ZEV program, which is 
the genesis of most PZEV offerings, allows for a different number of 
PZEV sales as a function of manufacturer size.
    As mentioned above, we are proposing to limit use of credits only 
within a defined averaging set. Cost effective technology is available 
to meet the proposed hot soak plus diurnal emission standards on 
average within each of the vehicle categories in the averaging sets, 
especially since the proposed standards are designed to accommodate 
nonfuel hydrocarbon background emissions. Thus, further flexibility is 
not needed. Moreover, we are proposing to constrain averaging to within 
these sets because of equity issues for the manufacturers. We are 
concerned that the four or five manufacturers with a wide variety of 
product offerings in most or all of these categories would have a 
competitive advantage over the majority of manufacturers which have 
more limited product lines. This effect could be even more pronounced 
if the number of evaporative families was considered, since larger more 
diverse manufacturers have more models and thus more evaporative 
families. EPA asks for comment on issues related to averaging sets.
    Manufacturer use of credits from different averaging sets to 
demonstrate compliance would be permitted in limited cases. As noted 
above, if a manufacturer has a credit deficit at the end of a model 
year in a given averaging set, they would have to use credits from the 
same averaging set during the next three years to make up the deficit. 
However, if a deficit still exists at the end of the third year, we 
propose that the manufacturer could use credits from a different 
averaging set to cover the remaining deficit with the following 
limitations. Manufacturers would be able to use credits from the LDV 
and LDT1 averaging set to address remaining deficits in the LDT2 
averaging set, and vice versa. We also are proposing that manufacturers 
be permitted to use credits from the LDT3, LDT4, and MDPV averaging set 
to address remaining deficits in the HDGV averaging set, and vice 
versa. No other use of credit exchanges across different averaging sets 
would be allowed. These restrictions are being proposed because of 
equity concerns caused by the different nature and size of various 
manufacturer product lines.
    During the program phase in there will be a declining percentage of 
vehicles not yet covered by the proposed Tier 3 evaporative emission 
requirements and thus covered by the current EPA requirements in 40 CFR 
86.1811-09 and 86.008-10. These vehicles would need to be certified to 
current EPA requirements or seek EPA certificates based on LEV II or 
LEVIII emission data, subject to the certification fuel requirements 
discussed below.
    For both the percentage phase-in and sales-weighted average 
calculation steps above, we are proposing to base the calculation on 
nationwide sales (excluding California and the section 177 states in 
the 2017 MY) and annual nationwide sales beginning in the 2018 MY. We 
believe this approach is consistent with the manufacturers' plans for 
50-state vehicles. A program design which would enable a nationwide 
program has been an important premise of this proposal. Furthermore, 
this is simpler for the manufacturers and for EPA since it relieves the 
need to project future model year sales or track past model year sales 
at a disaggregated level. We recognize that decisions by manufacturers 
on a national fleet versus a bifurcated approach such as exists today 
(California and section 177-states separate from the rest of U.S. 
sales) have

[[Page 29891]]

not yet been made.\286\ The CARB LEV III and EPA phase-in requirements 
are identical beginning in 2018, so EPA sees little need for concern 
that a nationwide-based accounting approach could lead to 
disproportionate state by state impacts or the encouragement of 
practices which would lead to any particular state or area not 
receiving the anticipated emission reductions with this nationwide 
approach to the calculation. However, for evaporative emissions for the 
2017 MY we are proposing that percentage phase-in and sales be done on 
a disaggregated level (i.e., California and section 177 states and the 
remainder of the country) since at the present time the anti-
backsliding provisions of the LEV III evaporative emissions program 
stays in place through the 2017 MY. This is being done differently for 
the calculations for the early allowance program because these ``zero 
evap'' vehicles are already counted in the pre-existing ARB program.
---------------------------------------------------------------------------

    \286\ If the decision is ultimately made to continue the 
disaggregated approach to fleet compliance calculations, the 
compliance with the proposed Tier 3 requirements would be based on 
U.S. sales (non-California, non-section 177 states).
---------------------------------------------------------------------------

    As was discussed above, manufacturers not meeting the percentage 
phase-in requirements would need to include non-Tier 3 vehicles in the 
count and include their emissions in the overall calculation of 
compliance with the hot soak plus diurnal standard and resolve 
shortfalls in compliance with the emission standard with future 
reductions, earned allowances, or credits. Resolving this sales 
percentage shortfall problem becomes a bit more complicated for the 
2017 MY 20 percent option upon which EPA is seeking comment, because it 
would require that 20 percent of vehicles meet the proposed Tier 3 
evaporative emission requirements and that 20 percent meet the proposed 
leak emission standard. These may or may not be the same vehicles, 
(e.g., non-Tier 3 vehicles could end up in the end of year calculation 
and we are seeking comment on whether to allow the two 20 percent 
requirements to be allowed to be met on different vehicles). As a means 
to resolve this potential problem, EPA asks comment on a provision 
which would require that any shortfall of either of the 20 percent 
values (Tier 3 evaporative or leak emission standard) for the 2017 MY 
be covered by future sales of vehicles meeting the Tier 3 evaporative 
emission requirements in excess of the evaporative emission percentage 
sales requirement for that MY or some combination of MYs. For example, 
if a manufacturer were 5 percentage points short in the 2017 MY, then 
it would have to accelerate sales of vehicles meeting Tier 3 
evaporative emission requirements in the 2018-2021 MYs to cover the 5 
percentage points (e.g., 65 percent in 2018 instead of 60 percent or 63 
percent in 2018 MY and 62 percent in the 2019 MY, etc.).
e. Small Volume Manufacturers
    As another flexibility, we are proposing that small volume 
manufacturers, those with average annual nationwide sales of 5,000 
units or less, be permitted to delay meeting the proposed Tier 3 
evaporative emission standards, including the requirement to use EPA 
certification test fuel, until the 2022 MY (see Section IV.E.5 below 
for a discussion of our proposed 5,000 vehicle threshold). This would 
include the hot soak plus diurnal standards, the canister bleed 
emission standard, and the leak emission standard. In the interim, 
these vehicles would have to meet the current evaporative and refueling 
emission standards. The initial determination of whether a manufacturer 
is under the 5,000 unit threshold would be based on the three year 
average of actual nationwide sales for MYs 2012-2014. This allowance 
would not be affected if a qualifying manufacturer's nationwide sales 
later exceeded that value before 2022. Similarly, new market entrants 
(not in the market in the 2012 MY) with projected sales of less than 
5,000 units could be covered by the small volume manufacturer 
provisions. However, in this case if actual running average nationwide 
sales exceeded 5,000 units per year in any three consecutive model 
years they would have to meet the Tier 3 evaporative requirements in 
the third model year thereafter. For example, if a new market entrant 
in 2015 projected nationwide production of 4,000 units per year and the 
average of actual values in 2015-2017 exceeded 5,000 units per year 
they would have to meet Tier 3 evaporative requirements by the 2020 MY.
f. High-Altitude Requirements
    We adopted the most recent vehicle evaporative emission standards 
in 2007.\287\ These newest standards apply only to testing under low-
altitude conditions.\288\ In that rule, we decided to continue to apply 
the previous ``Tier 2'' standards for testing under high-altitude 
conditions. This was necessary to achieve an equivalent level of 
overall stringency for high-altitude testing. This was intended to 
account for the various effects of altitude and lower atmospheric 
pressure on vapor generation rates, canister loading and purging 
dynamics, and other aspects of controlling evaporative emissions due 
primarily to lower air and vapor concentrations in air. While it is 
important for vehicles to have effective emission controls at high 
altitudes, we do not want the high-altitude standards and test 
procedures to dictate the fundamental design of the Tier 3 evaporative 
emission control systems since the high altitude vehicle population is 
only about five percent of the national total. Therefore, we believe it 
is appropriate to address this goal by applying the current EPA 2-day 
low altitude evaporative emission standards and requirements for high-
altitude testing. The vehicle categories for the high altitude 
standards in this proposed rule are the same as for the low altitude 
standards. The proposed standards are presented below in Table IV-20. 
This would both reduce emissions at high altitude and again create a 
requirement to confirm that emission controls function effectively at 
high altitude without forcing manufacturers to apply altitude-specific 
technologies. Furthermore, the leak emission standard proposed in 
Section IV.C.5.b below would apply equally at low and high altitude 
testing.
---------------------------------------------------------------------------

    \287\ 72 FR 8428 (February 26, 2007).
    \288\ High-altitude conditions means a test altitude of 1,620 
meters (5,315 feet). Low altitude conditions means a test altitude 
less than 549 meters (1,800 feet).

    Table IV-20 Proposed High-Altitude Evaporative Emission Standards
                                [g/test]
------------------------------------------------------------------------
                                                    Highest hot soak +
                                                   diurnal level (over
                Vehicle category                   both 2-day and 3-day
                                                     tests) (g/test)
------------------------------------------------------------------------
LDV, LDT1......................................                     0.65
LDT2...........................................                     0.85
LDT3, LDT4.....................................                     1.15
MDPV...........................................                     1.25
HDGVs <= 14,000 lbs GVWR.......................                     1.75
HDGVs > 14,000 lbs GVWR........................                      2.3
------------------------------------------------------------------------

    A few additional points should be noted about our proposed Tier 3 
high altitude evaporative emissions control program. First, by 
proposing to apply the current low altitude evaporative emission 
standards and requirements by category for high-altitude, we are 
proposing not to include the canister bleed test and emission standard. 
These vehicles would have to meet the canister bleed emission standard 
at low altitude and any adjustment to meet the

[[Page 29892]]

standard at high altitude to account for canister adsorption and 
desorption effects of higher altitudes would result in fundamentally 
the same technology and increase the testing burden, but not 
necessarily lead to more emissions control. Therefore, we believe the 
low-altitude canister bleed test is sufficient for achieving the 
proposed level of emission control for operation in both low-altitude 
and high-altitude conditions. Second, for vehicles certified with FELs 
above or below the applicable standard for testing at low altitude, we 
propose that the same differential apply to the FELs for high-altitude. 
For example, if an LDV was certified with an FEL of 0.400 g instead of 
the 0.300 g standard, the high-altitude FEL would be 0.75 g (0.65g + 
0.10g). This high-altitude FEL would not be used for any emission-
credit calculations, but it would be used as the emission standard for 
compliance purposes. Third, gasoline RVP for certification test fuel 
would be set at 7.8 RVP with 15 percent ethanol, as specified in 
Section IV.D. Finally, we are proposing a minor adjustment to the high 
altitude test procedures. Today, the 2- and 3-day test procedures apply 
equally at low and high altitude. We are proposing to keep that 
requirement but to allow for an adjustment of 5[emsp14][deg]F in the 
temperatures related to the running loss test within the 3-day test 
cycle. Thus, the applicable fuel and ambient temperatures at Sec.  
86.134-96 (f) and (g) would 90  5[emsp14][deg]F instead of 
95  5[emsp14][deg]F for high altitude testing. EPA believes 
this is appropriate given the differences in atmospheric conditions at 
low versus high altitude and will still result in equivalent control of 
running loss emissions at higher altitudes. We request comment on the 
alternative approach of keeping test temperatures the same, but 
omitting the 3-day test cycle for testing at high altitude. This would 
effectively establish the 2-day test cycle as a sufficient means of 
demonstrating that emission control systems continue to operate 
properly at high altitude.
    As mentioned above, emission data from vehicles meeting the current 
CARB zero evap and useful life requirements could be used to qualify 
that vehicle to meet the Tier 3 evaporative emission regulations for 
the 2017-2019 MYs. To qualify for a federal certificate, the vehicle 
would also have to meet the Tier 3 high altitude evaporative emission 
requirements. While CARB requires vehicles to meet EPA high altitude 
requirements, we ask for comment on the need for and value of an 
interim option which would permit manufacturers to gain such 
certification by an engineering demonstration that the vehicle would 
comply at any altitude rather than by performing additional testing.
g. Technological Feasibility
    The basic technology for controlling evaporative emissions was 
first introduced in the 1970s. Manufacturers routed fuel tank and 
carburetor vapors to a canister filled with activated carbon, where 
vapors were stored until engine operation allowed for purge air to be 
drawn through the canister to extract the vapors for delivery to the 
engine intake. Over the past 30 years, evaporative emission standards 
have changed several times, most notably in the mid-1990s when enhanced 
evaporative controls were required to address 2- and 3-day diurnal 
emissions and running losses. Refueling emission controls were added 
with phase-in beginning in the 1998 MY. Almost universally 
manufacturers elected to integrate evaporative and refueling emission 
control systems. In the mid-2000s more stringent evaporative emission 
standards with E10 durability gasoline led to the development and 
adoption of technology to identify and eliminate permeation of fuel 
through fuel tanks, fuel lines, and other fuel-system components.
i. Hot Soak Plus Diurnal
    The current baseline technology for LDVs, LDTs, and MDPVs is a 
properly designed and assembled fuel/evaporative system for controlling 
emissions over the 2- and 3-day test sequences to meet the current 
standard of 0.650 grams/test. This involves activated carbon canisters 
which capture gasoline vapors, with engine calibrations designed to 
maximize canister purge over the test sequence. Fuel systems generally 
include widespread use of various grades of permeation-resistant 
materials.
    The anticipated control technologies to comply with the proposed 
hot soak plus diurnal evaporative emission standards include an 
improved carbon canister designs to even better capture vapor emissions 
from the canister, air intake designs to prevent the escape of unburned 
fuel from the engine's crankcase, various upgrades to further limit 
potential micro-sized leaks, and further steps to reduce permeation 
rates. Applying these new or improved technologies will allow 
manufacturers to meet the proposed 300 mg standard for LDVs/LDT1s. The 
proposed evaporative emission standards are slightly higher for larger 
vehicles to account for potentially higher background emissions and in 
some cases larger surface area components, but the baseline and 
anticipated control technologies follow a very similar path. These 
baseline and control technologies are described further in the rest of 
this section.
    Current evaporative canisters use high working-capacity activated 
carbon, usually with multiple compartments, to optimize vapor loading 
and purging behavior. These canisters sometimes employ carbons of 
different working capacities within each chamber. Testing indicates 
that the total canister adsorption capacity in grams of gasoline vapor 
is generally dictated by the requirements of the refueling emission 
test and standard rather than the evaporative emission test (either the 
2- or 3-day sequence).
    Manufacturers have identified the engine's intake system as another 
source of evaporative emissions. These result from crankcase vapors and 
from unburned fuel from injectors, or sometimes from an injection event 
that occurred shortly before engine shutdown. We estimate a typical 
emission rate of about 40 mg associated with each engine shutdown 
event; however, since the actual emission rates depend on timing of 
individual injection events and cylinder position at shutdown, baseline 
emission rates can vary significantly. These vapors must follow a 
contorted path before reaching the ambient air, which would generally 
cause these emissions to show up during the first day of the diurnal 
test rather than the hot soak test. One way to prevent these emissions 
is to add activated carbon to the air intake downstream of the air 
filter, typically in the form of reticulated foam coated with activated 
carbon. This device would have only a few grams of working capacity and 
would be designed to purge easily to ensure that the vapor storage is 
available at engine shutdown. This carbon insert would almost 
completely eliminate any vapor emissions from the air intake system.
    Manufacturers wanting to avoid adding any specialized emission 
control component to control evaporative emissions from the air intake 
could pursue alternative approaches. First, it is possible to allow the 
engine to continue rotating for 2-3 revolutions after engine shutdown 
to sweep any hydrocarbon vapors from the intake system into or through 
the cylinder. These vapors could be burned in the cylinder, oxidized at 
the catalyst, or stored until the engine starts again. This may still 
allow for a small amount of residual vapor release, but this should be 
a very small quantity. Vehicle owners

[[Page 29893]]

would be unlikely to notice this amount of engine operation after 
shutdown. Second, to the extent that manufacturers use direct 
injection, there should be no fuel vapor coming from the intake system. 
Any unburned fuel coming from the injectors would be preserved in the 
cylinder or released to the exhaust system and the catalyst. A small 
amount of crankcase vapor might remain, but this would likely not be 
enough to justify adding carbon to the intake system.
    Fuel tanks are designed to limit permeation emissions. Fuel tanks 
are typically made of high-density polyethylene with an embedded 
barrier layer of ethyl vinyl alcohol (EvOH) representing about 1.8 
percent of the average wall thickness. The EvOH layer is effective for 
reducing permeation emissions. Recent developments in production 
processes have led to improved barrier coverage around the ends of the 
tank where the molded plastic is pinch-welded to form a closed vessel. 
We are expecting manufacturers to increase the EvOH barrier thickness 
to about 3 percent of the average wall thickness to provide a more 
uniform barrier layer, to provide better protection with ethanol-based 
fuels, and to improve permeation resistance generally. These changes 
are expected to decrease emission rates over the diurnal test from 
about 40 mg per day to 15 mg per day from the fuel tank assembly or 
less.
    Fuel lines are also already designed for low permeation rates. The 
biggest portion of fuel and vapor lines are made of metal, but that may 
still leave several feet of nonmetal fuel line. There may be 
development of new materials to further reduce permeation rates, but it 
is more likely that manufacturers will adjust the mix of existing types 
of plastic fuel lines to achieve the desired performance at the lowest 
possible price.
    The bigger area of expected development with respect to fuel lines 
is to re-engineer fuel systems to further reduce the number of 
connections between fuel-system components and other fuel-line 
segments. Today these systems may involve more than the optimum number 
of connections and segments due to assembly and production 
considerations or other factors. Designing the fuel system more 
carefully to minimize connection points will limit possible paths for 
fuel vapors to escape. This would reduce emission rates and it should 
also improve system durability by eliminating potential failure points. 
A broader approach to addressing this source of emissions is to 
integrate designs and to move fuel-system components inside the fuel 
tank, which eliminates the concern for vapor emissions and permeation 
from those components and connections.
    A remaining area of potential evaporative emissions is the 
connection between the fill neck and the fuel tank. Manufacturers can 
reduce emissions by perhaps 10 mg per day by making this connection 
permeation-resistant. The challenge is to design a low-cost solution 
that is easily assembled and works for the demanding performance needs 
related to stiffness/flexibility. The best approach is likely either to 
use mating parts made from low-permeation materials, or to use 
conventional materials but cover this joint with material that acts as 
a barrier layer.
    Purge rates are currently designed to flow relatively large volumes 
of outside air through the canister when the purge solenoid is 
activated. This involves using available manifold vacuum to create 
purge flow, with limits in place to avoid drawing too much unmetered 
fuel vapor from the canister. Tightening the evaporative emission 
standard would lead manufacturers to address remaining emission sources 
from micro-size leak points, permeation, and diffusion, as noted above. 
Since the amount of additional vapor being captured by the carbon 
canister is small and the test procedure is not changing, we do not 
expect the change in standards to drive changes in purge strategy, 
rates, or canister capacity. Nonetheless, vehicle system and engine 
changes to improve fuel economy could impact future purge strategies. 
Thus, as part of this approach, manufacturers may incorporate designs 
to reduce vapor volume/mass directed to the canister and thus 
potentially reduce the purge air volume requirements. In addition, 
canister designs can be optimized to increase the effectiveness of a 
given volume of purge air. This could involve selecting different 
combinations of carbon characteristics and canister architecture types 
and by adding features to add heat (or preserve heat) in the canister 
during a purge event. It is also possible that fuel economy strategies 
which impact purge volume may lead some manufacturers to add vacuum 
pumps to supplement engine-based purge on some vehicle models in the 
future.
    It is worth noting that there may be some models where 
manufacturers incorporate hardware or another control technique that 
may not be widely used across by all manufacturers or across all 
models. This is especially true for this set of proposed emission 
control requirements since we are considering such a wide array of 
basic vehicle and engine designs. Also, future vehicle/engine systems 
such as hybrids may have more unique challenges in areas such as the 
diurnal fuel tank vapor load sent to the activated carbon canister and 
subsequent purging of those vapors. In response to this challenge, 
manufacturers may employ techniques to reduce fuel tank vapor 
generation and/or to enhance purge efficiency. Hardware such as a vapor 
blocking valve or other techniques to enhance purge efficiency from the 
canister through heating may be employed to a limited degree.
    The technologies discussed above are in use to varying degrees on 
many of the CARB PZEV zero evap vehicles mentioned above. Taken 
together, we believe these technologies provide manufacturers with 
effective tools for reducing emissions sufficiently to meet the 
proposed evaporative emission standards.
ii. Canister Bleed Emission Standard
    More stringent evaporative emission standards have led to more 
careful measurements, which led manufacturers to discover that 80 mg or 
more of fuel vapor would diffuse from the canister vent as a result of 
the normal redistribution of vapors within the activated carbon while 
the vehicle is at rest. The emission rate depends on the tank volume, 
its fill quantity, and the size and architecture of the canister and 
the characteristics of the carbon itself. While the biggest effect of 
this vapor distribution is a uniform concentration within the canister, 
it can also cause vapors to escape through the canister vent even 
without continued canister loading that would result from fuel tank 
heating. These are referred to as canister bleed emissions. These 
emissions occur to some degree during the 2- and 3-day evaporative 
emissions test, but a separate standard is needed if the goal of near 
zero fuel vapor emissions is to be achieved.
    The design to address this concern is a supplemental ``scrubber'' 
canister (or canister compartment) with a very low working capacity 
carbon. Adding 100 or 200 ml of this type of carbon near the canister 
vent provides a margin of ``reserve capacity'' to capture diffusion 
losses from the canister. Since this extra carbon has low working 
capacity and it purges readily, it is typically cleared of hydrocarbon 
vapors and ready to perform its function after any amount of engine 
operation or even with natural back purge which occurs when the fuel in 
the tank cools. This scrubber element is expected to eliminate all but 
5-10 mg of emissions from the evaporative canister over the measurement 
procedure.

[[Page 29894]]

iii. Leak Emission Standard
    Vapor leaks in the vehicle fuel/evaporative system can arise from 
micro-cracks or other flaws in various fuel/evaporative system 
component structures or welds, problems with component installations, 
and more generally from connections between components and fuel lines 
and vapor lines. Because these emissions from these areas would occur 
in the 2-3 day evaporative emissions test if the problems were present, 
manufacturers have taken steps to address these potential problem areas 
as part of their overall evaporative emissions control strategy. Since 
the 2- and 3-day hot soak plus diurnal standards are proposed to become 
more stringent and leak emissions occur during the evaporative 
emissions test, we expect manufacturers to take the measures described 
above in Section IV.C.2.g.i. These include reducing connections, 
improving the quality of fuel and vapor line connections, use of 
improved component materials and revised installation practices. 
Manufacturers could also review their OBD leak warranty data and 
related information from OBD queries to help inform their strategies. 
One of the key reasons for proposing a leak emission standard is to 
promote the continuing development of designs, part production 
techniques, and assembly practices which will yield less in-use 
emissions deterioration and improved in-use emissions performance. EPA 
believes this focus on in-use durability is important because a vehicle 
with even a small leak, e.g., the size of the 0.020-0.040 inch orifice 
diameter monitored by OBD systems would likely emit above the proposed 
hot soak plus diurnal evaporative emission standard in use.
3. Heavy-Duty Gasoline Vehicle (HDGV) Requirements
a. Overview of the Proposal for HDGVs
    As presented above, EPA is proposing to include HDGVs within the 
Tier 3 evaporative emissions program. The proposed hot soak plus 
diurnal and canister bleed test emission standards that would apply to 
these HDGVs are as presented in Table IV-18 and the high altitude 
standard is presented in Table IV-20. These vehicles would be included 
in the averaging calculation beginning in the 2018 MY and would be 
eligible for creating and using allowances and credits as discussed 
above. Furthermore, for the reasons discussed below, EPA is proposing 
that HDGVs equal to or less than 14,000 lbs GVWR be required to meet 
the refueling emission standard by the 2018 MY.
b. Background on the HDGV Sector
    HDGVs are generally gasoline-powered vehicles with either a GVWR of 
greater than 8,500 lbs, or a vehicle curb weight of more than 6,000 
lbs, or a basic vehicle frontal area in excess of 45 square feet.\289\ 
HDGVs are predominantly but not exclusively commercial vehicles, mostly 
trucks and other work type vehicles built on truck chassis. EPA often 
discusses HDGVs in three basic categories for regulatory purposes 
according to their GVWR class. These include Class 2b (8,501-10,000 lbs 
GVWR), Class 3 (10,001-14,000 lbs GVWR), and Class 4 and above (over 
14,000 lbs GVWR). These are further sub-categorized into complete and 
incomplete vehicles.\290\ Class 2b HDGVs are mostly produced by the 
manufacturers as complete vehicles and are very similar to lower GVWR 
LDTs of the same basic model sold by the manufacturers. Class 3 HDGVs 
are also built from LDT chassis with fuel system designs that are 
similar to their Class 2b and LDT counterparts, but these are on some 
occasions sent to secondary manufacturers as incomplete vehicles to 
attach a load carrying device or container. EPA estimates that more 
than 95 percent of Class 2b/3 vehicles are complete when they leave the 
original equipment manufacturer (OEM). Class 4 and above HDGVs are 
built on a more traditional heavy-truck chassis and in most cases leave 
the OEM as an incomplete vehicle. For Class 2b/3 vehicles, it is common 
to certify the vehicle for emissions purposes (exhaust, evaporative, 
etc) as a full chassis, while for Class 4 and above the vehicle is 
certified as a chassis for evaporative emissions while the engine is 
dynamometer certified for exhaust emissions.
---------------------------------------------------------------------------

    \289\ MDPVs also meet the definition of HDVs, but they are 
classified separately for evaporative and refueling emission 
purposes. See 40 CFR 86.1803-01.
    \290\ Vehicles may be complete or incomplete vehicles. A 
complete HDGV is one that has the primary load carrying device or 
container (or equivalent equipment) attached, normally by the 
vehicle OEM. An incomplete vehicle is one that does not have the 
primary load carrying device or container (or equivalent equipment) 
attached when it is first sold. This may include vehicles sold to 
secondary vehicle manufacturers.
---------------------------------------------------------------------------

    For LDVs and LDTs, the current EPA evaporative and refueling 
emission test procedures are the same for all vehicle categories and 
the emission standards are of a similar but not always identical 
stringency, within the subclasses. However, this is not true for HDGVs. 
For HDGVs, the level of the evaporative emission standards and the test 
procedures vary by category and the refueling emission control 
requirements are also different. There are several reasons for these 
differences, including variations in the size, design, and other 
properties of the basic fuel system, the dimensions of the vehicles, 
and the potential for actions of secondary manufacturers to impact the 
fuel system. There are many fuel system similarities between Class 2b/3 
HDGVs and heavy LDTs, but fewer similarities between heavy LDTs and 
HDGVs in Class 4 and above.
    Over the past 15 to 20 years, there have been several notable 
changes in HDGV products and market that have influenced the 
application of evaporative and refueling emission control requirements 
and may impact potential new or revised requirements going forward. 
Most noteworthy among these are the increased use of diesel engines 
across all weight classes and the emergence of better defined market 
segments for primary OEMs and secondary manufacturers.
    The increased use of diesel engines has reduced overall HDGV sales 
and brought about a consolidation of manufacturer HDGV product 
offerings. For Class 2b/3 HDGVs, these are now all derived from LDT 
chassis and have the same basic fuel system and engine characteristics. 
This has led EPA to extend the light-duty evaporative and refueling 
test procedures and emission standards to the Class 2b/3 HDGVs, when 
applicable. In a rule promulgated in 2000, EPA required manufacturers 
to certify these HDGVs using light-duty test procedures. Also, in this 
same rule, EPA extended the vehicle refueling emission standards to 
complete Class 2b vehicles. These actions were technically appropriate 
because of the similarities between the LDT and Class 2b HDGVs and fuel 
systems and the large fraction of complete Class 2b HDGVs produced by 
the vehicle manufacturers. Today, fuel systems for Class 3 HDGVs are 
comparable those for Class 2b HDGVs, so it is reasonable and 
technically feasible to extend the Class 2b refueling emission 
requirements to Class 3 HDGVs.
    Class 4 and heavier HDGVs still play a small but important role in 
the traditional truck and heavy-duty vehicle markets. These vehicles 
are sometimes distinctly different from Class 2b/3 vehicles in terms of 
testing, chassis designs, and fuel system characteristics; secondary 
manufacturers also play a larger role in the overall completion of the 
vehicle. For these vehicles, the engines are certified for emissions on 
an engine dynamometer while the evaporative emissions are certified 
separately on the vehicle chassis. Furthermore, these vehicles are 
larger

[[Page 29895]]

dimensionally (which often means longer fuel and vapor lines) and have 
larger volume fuel tanks (sometimes two), which may be mounted on the 
underbody or side-rail. It is common for a secondary manufacturer to 
complete the vehicle by adding the cargo container or other working 
equipment box or package (e.g., small cargo truck or tow truck) and in 
some cases to reconfigure components. While the extrapolation of 
refueling emission control technology is conceptually straightforward, 
in some cases there may be unique technical issues related to 
implementing refueling emission controls for these heavier HDGVs 
relative to Class 2b/3 HDGVs and LDTs.
    Based on these considerations, EPA is proposing that the refueling 
emission standards in Sec.  86.1816-05 to apply to Class 3 HDGVs as 
well. This is appropriate because the fuel and evaporative control 
systems on these vehicles are very similar to those on their slightly 
lighter-weight Class 2b counterparts, and in some cases Class 3 HDGVs 
are already designed to meet this proposed requirement. EPA is 
proposing that this requirement be met beginning in the 2018 MY. EPA is 
also proposing that manufacturers be permitted to comply as early as 
the 2015 MY to earn on a one-to-one basis allowances which could be 
used to phase-in the Class 3 refueling emission control requirement or 
as an allowance under the Tier 3 evaporative emission program. EPA 
believes this is appropriate since the expected daily average reduction 
in vehicle refueling emissions for this class of vehicles is large 
relative to the reduction in evaporative emissions expected under Tier 
3. Any certifications, including those done early, must use EPA Tier 3 
test procedures and certification test fuels.
c. Other Potential Program Elements for HDGVs
    EPA is seeking comments on several other programmatic elements 
related to the Tier 3 evaporative and refueling emission control 
proposal.
    First, even if we do not revise the current evaporative emission 
standards for these vehicles and they are not required to control 
refueling emissions, we are seeking comment on requiring manufacturers 
to certify their evaporative emissions using Tier 3 certification test 
fuel. Tier 3 certification test fuel would provide equivalent or better 
emissions control as compared to current certification test fuel in 
terms of the fuel quality impact on emission control system designs to 
meet the existing evaporative emission standards and would provide 
equivalent or better in-use performance. Requiring this new 
certification test fuel has the potential to add efficiency to the 
certification process since manufacturers could certify one system for 
EPA and CARB for each evaporative family. Since incomplete vehicles and 
those over 14,000 lbs GVWR often do not use the same test vehicle/
engine for evaporative and exhaust emission testing, we seek comment on 
whether a requirement for vehicle evaporative and/or refueling emission 
certification on Tier 3 test fuel would technically necessitate engine 
exhaust emission certification on Tier 3 test fuel.
    Second, as mentioned in Section IV. B., EPA is also seeking comment 
on requiring the use of Tier 3 certification test fuel for HDGVs which 
are engine-dynamometer certified, not chassis-certified, for exhaust 
emissions. This would potentially include all engine families certified 
for use in HDGVs above 8,500 lbs. GVWR. We are seeking comment on this 
change because we believe it may be the best and most representative 
technical approach for the future in the context of the engine/emission 
control system/fuel system design and performance and fuel quality. 
Overall, we believe this change to the certification test fuel for 
HDGVs would provide equivalent or better emissions control for the 
regulated pollutants as compared to current certification test fuel, in 
terms of the impact of fuel quality on emission control system designs 
and in-use performance, and may also simplify manufacturers' testing 
operations by providing for a single test fuel. We are also seeking 
comment on putting this requirement in place in the 2020-2022 MY time 
frame. Consistent with the approach proposed in Section IV.D.4 for 
light- and heavy-duty vehicles, we are committed to the principle of 
ensuring that any change in test fuel for heavy-duty engines would not 
affect the stringency of either the fuel consumption or GHG emissions 
standards. As part of the separate rulemaking discussed in Section 
IV.D.4, we would expect to establish the appropriate test procedure 
adjustment for HD engine fuel consumption standards and to determine 
the need for any test procedure adjustment for GHG emissions standards 
based on the change in certification test fuels.
    Third, to simplify the evaporative emission regulations for HDGVs 
and to bring them more in line with the current structure of the 
product offerings in this sector, we are proposing to permit 
evaporative emissions certification by engineering analysis for 
vehicles above 14,000 lbs GVWR (instead of above 26,000 lbs GVWR as is 
permitted in the current regulations). These HDGVs would remain subject 
to the emission standards when tested using the specified procedures. 
This is the same cut point allowed by CARB and would allow for one 
certification method. Furthermore, for HDGVs over 14,000 lbs GVWR, we 
request comment on taking an additional step to rely even further on 
design parameters and engineering analysis. Under this approach, 
manufacturers would need to demonstrate that the design of their purge 
strategy, canister capacity, and overall control system would control 
emissions to the same degree as similar (or comparable) Class 2b or 
Class 3 vehicles that meet emission standards when tested over the 
established measurement procedures. The standard would be a performance 
standard in that the manufacturer could use any design that met the 
criteria of controlling emissions to the same degree that occurs in 
vehicles that meet the emissions standard. However, unlike the proposed 
approach, compliance with the standard would be based solely on an 
engineering review of the design. Compliance would not be determined by 
measuring performance on the emissions test. This would take into 
account the limitations in managing any significant degree of testing 
with these over-size vehicles. In particular, we request comment on the 
enforceability of taking the approach of a design standard.
    Fourth, we are proposing a revised description of evaporative 
emission families that does not reference sealing methods for 
carburetors or air cleaners as this technology is now obsolete for 
heavy-duty gasoline engines.
    Fifth, we also seek comment on the implications on these 
evaporative emission standards were we to require the certification 
test fuel to be 10 psi RVP E10 as discussed below in Section IV.D.1.
    Sixth, we are proposing to clarify how evaporative emission 
standards affect engine manufacturers and proposing more descriptive 
provisions related to certifying vehicles above 26,000 lbs GVWR using 
engineering analysis. These improved descriptive provisions would apply 
to vehicles above 14,000 GVWR lbs if the proposed change in GVWR cut 
point for engineering analysis certification is finalized.
    Finally, EPA is asking for comment on several other provisions 
related to the heavier HDGVs (over 14,000 lbs GVWR). First, if we do 
not include these heavier HDGVs in the Tier 3 final rule requirements, 
we are asking comment on whether manufacturers should be

[[Page 29896]]

able to voluntarily certify any HDGVs not covered by the rule to the 
same requirements as being proposed for Class 2b/3 HDGVs, and through 
this action earn allowances and credits for use within the Tier 3 
program as discussed above for other vehicles. This would include both 
evaporative and refueling emissions standards. Second, EPA also asks 
comment on whether there should be a provision to permit HDGVs over 
14,000 lbs GVWR to be grouped with those between 10,001 and 14,000 lbs 
GVWR for purposes of complying with evaporative and refueling emission 
control standards and related provisions. In these cases, we would 
expect these HDGVs to meet all the requirements applicable to the group 
in which they are being included (e.g., useful life, OBD, etc.).
4. Test Procedures and Certification Test Fuel
a. Review and Update of Testing Requirements
    EPA adopted the current test requirements for controlling 
evaporative emissions in 1993.\291\ Those changes included: (1) Diurnal 
testing based on heating and cooling the ambient air in the SHED \292\ 
instead of forcing fuel temperatures through a specified temperature 
excursion; (2) repeated 24-hour diurnal measurements to capture both 
permeation and diurnal emissions; (3) high-temperature hot soak 
testing; (4) high-temperature running-loss measurements with a separate 
standard, including controlled fuel temperatures according to a fuel-
temperature profile developed for the vehicle; and (5) canister 
preconditioning to ensure that vehicles could effectively create 
canister capacity to prepare for several days of non-driving.
---------------------------------------------------------------------------

    \291\ 58 FR 16002 (March 24, 1993).
    \292\ SHED is the Federal Register acronym for sealed housing 
for evaporative determination. The SHED is the enclosure in which 
the evaporative emissions are captured before measurement.
---------------------------------------------------------------------------

    These test procedures are generally referred to as ``enhanced 
evap'' testing. EPA adopted these ``enhanced evap'' test procedures in 
coordination with CARB. The test requirements include two separate test 
sequences to demonstrate the effectiveness of evaporative emission 
controls. The ``two-diurnal sequence'' involves canister loading to 
two-gram breakthrough, followed by driving for the exhaust test (about 
31 minutes), a hot soak test, and two days of cycled ambient 
temperatures. The ``three-day sequence'' involves canister loading with 
50 percent more vapor than needed to reach breakthrough, followed by 
driving for the exhaust test, driving for the running loss test (about 
97 minutes total), a high-temperature hot-soak test, and three days of 
cycled ambient temperature.
    The 2-day sequence was intended primarily to insure a purge 
strategy which would create enough canister capacity to capture two 
days of diurnal emissions after limited driving. The two-day 
measurement period was effective for requiring control of permeation 
and other fugitive emissions. The 3-day sequence was intended to 
establish a design benchmark for achieving adequate canister storage 
capacity to allow for several days of parking on hot summer days, in 
addition to requiring vehicle designs that prevent emissions during 
high-temperature driving and shutdown conditions.
    After adopting these evaporative test procedures, we set new 
standards for refueling emissions control which called for onboard 
refueling vapor recovery (ORVR).\293\ Manufacturers have typically 
designed their ORVR systems to be integrated with their evaporative 
controls, using a single canister and purge strategy to manage all fuel 
vapors vented from the fuel tank. Due to the magnitude of the refueling 
emission load and the manner in which the load rates affect activated 
carbon capture efficiency, it has become clear that ORVR testing with 
these integrated systems serves as the benchmark for achieving adequate 
canister storage capacity.
---------------------------------------------------------------------------

    \293\ 59 FR 16262 (April 6, 1994).
---------------------------------------------------------------------------

    In the nearly 20 years since adopting these test procedures, 
manufacturers have made great strides in developing designs and 
technologies to manage canister loading and purging and to reduce 
permeation emissions. Except as discussed below, we are not proposing 
to change the test procedures for demonstrating compliance with the 
proposed Tier 3 emission standards.
    As described above, we are proposing to adopt a new standard based 
on measured values over a ``canister bleed test,'' which is intended to 
measure only fuel vapors which diffuse from the evaporative canister. 
CARB developed this procedure as a means of setting a standard that 
would not be affected by nonfuel background emissions. This procedure 
is a variation of the established two-day test sequence. The canister 
is preconditioned by purging and loading to breakthrough, then attached 
to an appropriate test vehicle for driving over the duty cycle for the 
exhaust test. The canister is then attached to a fuel tank for 
measurement. After a stabilization period, the tank and canister 
undergo two days of temperature cycling. Canister emissions are 
measured using a flame ionization detector (FID), either using a 
conventional SHED approach or by collecting emissions in a bag and 
measuring the mass. Rather than repeating CARB's regulations, we are 
proposing to incorporate those regulations by reference into the CFR. 
This will avoid the possibility of complications related to minor 
differences that may occur with separate test procedures.
    CARB also adopted a fuel system ``rig test'' as an optional 
approach to demonstrate control of evaporative emissions without the 
effects of the nonfuel hydrocarbon emissions that are seen in testing 
the whole vehicle in the SHED. We generally expect manufacturers to 
comply with the proposed EPA requirements which include the canister 
bleed test and emission standard instead of CARB Option 1 which 
includes the rig test and emission standard. However, since we are 
proposing to accept CARB Option 1 certifications for the 2017 through 
2019 model years, we are also proposing to incorporate by reference 
CARB's rig test into the CFR to accommodate those manufacturers that do 
in fact rely on this approach.
    Also, as discussed further below, we are proposing to adopt a new 
leak test procedure which would be used to measure leak rates for the 
proposed leak emission standard. The leak test standard test procedure 
is contained in the proposed regulatory text. Further detail can be 
found in the draft Regulatory Impact Analysis (Appendix to Chapter 1).
    Manufacturers have raised a pair of related concerns regarding the 
current test procedures. First, hybrid vehicles and new engine designs 
for meeting fuel economy standards and CO2 emission 
standards increase the challenge of maintaining an adequate purge 
volume to prepare vehicles for the diurnal test. For hybrid vehicles 
this is related to the amount of time the engine is running. For other 
technologies this is related to the trend toward decreasing available 
vacuum in the intake manifold, which is the principal means of drawing 
purge air through the canister. Second, preconditioning the canister by 
loading to breakthrough serves as a disincentive for some control 
strategies that might otherwise be effective at reducing emissions, 
such as designs involving greater canister capacity or better 
containment of fuel vapors inside the fuel tank. In addition, we have 
learned from studying in-use emissions and in-

[[Page 29897]]

use driving behaviors and usage patterns that it is not uncommon for 
vehicles to go for an extended period with little or no opportunity to 
purge the canister.
    We request comment on an optional adjustment to the test procedure 
intended to address these three concerns. In this alternative, for 
designs involving pressurized tanks, manufacturers would determine an 
alternative vapor load to precondition the canister before the exhaust 
test. If, for example, a fuel system is designed to stay sealed up to 1 
psi and to vent vapors to the canister if rising temperatures trigger a 
pressure-relief valve, the manufacturer could quantify the actual vapor 
load to the canister during three consecutive days of cycling through 
diurnal test temperatures. This three-day vapor load would be the 
amount of fuel vapor used to precondition the canister (loaded at the 
established rate of 15 grams per hour). This canister loading may also 
involve butane instead of fuel vapor, but we would likely require a 
greater mass of butane to account for the fact that it is easier to 
remove the butane from the activated carbon in the canister. This 
approach would be flexible to accommodate any design target for 
pressurizing fuel tanks. Canister preconditioning for the ORVR test 
(for integrated and nonintegrated systems) would remain unchanged.
b. Test Fuel
    EPA is proposing to change the certification test fuel 
specifications as described in Section IV.D. Here we discuss some 
implications for evaporative and refueling emissions testing. We are 
proposing to revise the certification test fuel specification 
(including durability fuel) in conjunction with the proposed Tier 3 
standards, principally to include ethanol and reduce sulfur such that 
the test fuel better aligns with the current and projected in-use fuel. 
Any Tier 3 evaporative emission certification would have to use Tier 3 
certification test fuel and test procedures. This could be done as 
early as the 2015 MY and would be required for all vehicle models by 
the 2020 MY. We are further proposing to apply the new test fuel at the 
same time to ORVR testing. Therefore, beginning in the 2017 MY if 
manufacturers do any new testing to demonstrate compliance with the 
proposed Tier 3 evaporative emission standards, they would need to 
submit test data to demonstrate compliance with the refueling emission 
standards using the new certification test fuel as well as the leak 
(when applicable), refueling, canister bleed, and high altitude testing 
requirements and emission standards. We are also proposing that any 
family that is not yet captured within the Tier 3 phase-in percentage 
may remain on current certification fuel or, as discussed below, 
California certification test fuel and test procedures through the 2019 
MY. By the 2020 MY all evaporative and refueling emission 
certifications would have to be on EPA test procedures and 
certification fuels. It is useful to clarify that any confirmatory or 
in-use testing for these families would be done on the fuel on which 
they were originally certified. However, by the 2020 MY all vehicles 
must be certified with Tier 3 certification test fuel and that test 
fuel would have to be used in confirmatory and in-use testing.
    Finally, we are proposing that any vehicle certified to the 
refueling spit back standard separately (mostly incomplete HDGVs) may 
continue to do so using current certification fuel until the 2022 MY 
even if it's evaporative and/or refueling emissions are certified on 
Tier 3 certification fuel. This is reasonable since the fill quality of 
the vehicle and eliminating spit back are not necessarily related to 
the ethanol or sulfur content of the gasoline.
    There are two main fuel properties that influence evaporative 
emissions: Ethanol content and vapor pressure. Current requirements 
specify an emission test fuel with no ethanol for emissions testing; 
however, the current regulation specifies that manufacturers must 
perform service accumulation (durability) using fuel with, at a 
minimum, the highest concentration of ethanol permissible under federal 
law for in-use gasoline and that is commercially available in at least 
one state. In this case, this provision has the effect of insuring that 
manufacturers would design their fuel systems to account for the effect 
of ethanol on permeation emissions. Even without ethanol in the test 
fuel, the extended operation with gasoline-ethanol blends for service 
accumulation would effectively force the manufacturers to design 
systems which effectively control emissions from the blended fuel. By 
regulation manufacturers must use a 10 percent ethanol fuel in current 
evaporative emissions durability work. As a result, adding ethanol to 
the test fuel for Tier 3 evaporative and refueling emission testing 
should pose no new or greater challenge for manufacturers. A second 
issue related to adding ethanol to the certification test fuel relates 
to the emission measurement in the SHED. Emissions are detected by 
flame ionization detectors (FID), which are less responsive to ethanol 
than gasoline. This effect causes under-reporting from the ethanol 
portion of the fuel vapor. Fuel-related emissions from the vehicle may 
be slightly more weighted toward ethanol than gasoline, depending on 
how the different fuel constituents permeate through various fuel-
system materials, how they evaporate from the bulk fuel in the tank at 
varying temperatures, and how they adsorb onto and desorb from the 
activated carbon in the canister. We are proposing to address this 
issue by the use of a prescribed scaling factor. Under this approach 
manufacturers would simply multiply their SHED measurement results by a 
fixed value to adjust upward for the difference in the FID response to 
ethanol. Data available to EPA suggest that a scaling value of 
approximately 1.1 would be appropriate for E15.\294\ This means that 
the value measured in the SHED would be multiplied by 1.10 to account 
for a difference in the FID response. This was determined using data 
which indicates that from a near worst case perspective the term within 
the bracket { {time}  below equals 1.1.

    \294\ Moulis, C. (2012, January). SHED FID Responses for 
Ethanol. Memorandum to the docket.
---------------------------------------------------------------------------

MHC adj = [(PBVn/T)-
(.000297)(ppmCfid)*{1 + ((1-ra) 
(reth))/ 1 + ((reth)(ra)){time} ]

    This adjustment would apply to hot soak plus diurnal, refueling, 
canister bleed, and spitback emission standards testing. For higher 
ethanol blends (such as E85), the regulation already specifies 
measurement and calculation procedures to adjust for this effect. We 
are not proposing any changes to these procedures.
c. Vehicle Preconditioning for Nonfuel Hydrocarbon Emissions for the 
Tier 3 Evaporative Emission Standards
    The proposed Tier 3 hot soak plus diurnal, leak, and canister bleed 
emission standards taken together are expected to bring about the 
widespread use of technology which effectively eliminates fuel vapor 
emissions. The canister bleed and leak emission standards are not 
influenced by non fuel hydrocarbon emissions from the vehicle. Nonfuel 
hydrocarbon emissions from the vehicle are measured as part of SHED 
emission testing, and are indistinguishable for fuel hydrocarbons when 
a FID is used to measure the concentration. The level of these nonfuel 
hydrocarbon emissions vary by vehicle and component design and 
material. These emissions arise from paint, adhesives, plastics, fuel/
vapor lines, tires, and other rubber or polymer components and are 
generally greater

[[Page 29898]]

with larger size vehicles. These nonfuel hydrocarbon emissions are 
usually highest with newly manufactured vehicles and decrease 
relatively quickly over time.
    Currently, manufacturers often conduct some preconditioning to 
reduce or eliminate the effects of these nonfuel hydrocarbon emissions 
on evaporative emissions measurements in the SHED. In the past, this 
practice has not been addressed through regulatory provisions. However, 
given the stringent level of the proposed Tier 3 hot soak plus diurnal 
evaporative emission standards, and that nonfuel hydrocarbon emissions 
are expected to be a significant portion of the hydrocarbon emissions 
measured in the SHED, EPA believes that some sort of preconditioning 
before certification testing is appropriate and that a regulatory 
provision addressing this practice may be warranted. Providing some 
recognition of and allowance for this practice would help to create the 
proper balance between necessary and proper preconditioning to address 
high nonfuel hydrocarbon emissions and excessive preconditioning which 
could undermine the intent of the proposed hot soak plus diurnal 
emission standard (~ 50 mg or less of fuel evaporative emissions). EPA 
believes the goal of evaporative emissions preconditioning should be to 
get nonfuel hydrocarbon emissions to what we call vehicle background 
levels. A working definition of vehicle background level might be the 
level which would occur naturally twelve months after production. A 
provision in the regulations which addresses preconditioning reduces 
ambiguity for the manufacturers and could reduce or eliminate any 
uncertainty in the true meaning of certification test results.
    Manufacturer activity with regard to preconditioning often involves 
two practices. First, manufacturers in some cases ``bake'' their test 
vehicles at temperatures of 50 [deg]C or higher for periods of up to 
ten or more days to accelerate the off-gassing of these nonfuel 
hydrocarbon emissions before testing is conducted. While this practice 
is common, there is no standardized method or protocol for this 
preconditioning prior to new vehicle certification testing. For 
example, some manufacturers bake for a set period of time in a climate 
chamber while others bake in the climate chamber and periodically 
measure nonfuel background in a SHED until an acceptable or stable 
level of nonfuel hydrocarbon emissions is achieved. Second, 
manufacturers often remove, modify, or clean certain components which 
are the largest source of nonfuel hydrocarbon emissions. 
Preconditioning could also include measures to eliminate minor fuel 
drips, spills, or other fuel remnants which occur as a result of 
vehicle preparation for testing.
    We are not proposing to specify standardized preconditioning 
practices or protocols with regard to addressing nonfuel hydrocarbon 
emissions before evaporative emission certification testing. However, 
we are proposing general provisions in four areas. First, we would 
specify in the regulations that preconditioning for the purpose of 
addressing nonfuel hydrocarbon emissions is permitted. Second, we would 
specify that any preconditioning is voluntary. Third, we would specify 
that if preconditioning is conducted, the details must be specified to 
EPA before certification testing, (i.e., at the time of the pre-
certification planning meeting). The goal of this preconditioning 
should be to get nonfuel hydrocarbon emissions to what we would term 
vehicle background levels as discussed above. The specifics to be 
discussed with EPA could include details on vehicle baking practices 
such the temperature and time duration in the climate chamber and 
practices conducted as an alternative or complement to vehicle baking 
such as installing used tires (drive and spare) on certification 
vehicles, and allowing the windshield washer tank to be filled only 
with water. In seeking to understand this issue, we ask for comment on 
which components are the largest sources of these nonfuel hydrocarbons 
and of these which are practical to modify or remove for the 
evaporative emissions test.
    Fourth, as part of these considerations we would specifically 
propose that no preconditioning be permitted for testing of any vehicle 
aged more than twelve months from its date of manufacture. The only 
exception we would consider is the use of an aged spare tire in lieu of 
the spare tire on the test vehicle. For these vehicles, nonfuel 
hydrocarbon emissions would presumably be reduced to a stable level due 
to natural off gassing which begins after the vehicle is manufactured. 
Emissions from any replacement parts or other vehicle maintenance would 
presumably be encompassed within the margin below the standard created 
by this natural off-gassing. EPA asks comment on how to address testing 
of vehicles with relatively new drive tires and whether used drive 
tires should be allowed in these circumstances. Data available to EPA 
indicates that the background emission rate stabilizes to about two-
thirds of the level of the standard after about twelve months. These 
levels are adequately below the proposed Tier 3 evaporative emission 
standards so that nonfuel background would not unduly influence test 
pass/fail outcomes and are within the range of values EPA expects to be 
accommodated within the proposed evaporative emission standard. This 
proposed restriction for vehicles older than 12 months would include 
certification, confirmatory and in-use testing for any vehicle 
certified to the proposed Tier 3 evaporative emission standards. We 
request manufacturer data related to the change in nonfuel hydrocarbon 
emission rates over time and on the best method to consider these 
emissions as part of preconditioning before evaporative emission 
testing.
d. Reciprocity With CARB
    Over the past 15 years EPA's ``enhanced evap'' test procedures have 
been based on testing with 9 pound per square inch (psi) RVP gasoline 
with test temperatures representing a summer day with peak temperatures 
of about 96[emsp14][deg]F. CARB adopted the same basic procedures, but 
specified that testing should occur with 7 psi RVP gasoline at 
temperatures of up to 105[emsp14][deg]F. EPA and CARB agreed that 
certification could be based on testing with either EPA or CARB 
conditions and that these provided equivalent stringency for purposes 
of evaporative control system design. However, the provision allowing 
for this equivalence of test data preserved EPA's ability to also test 
with either EPA or CARB temperature conditions. CARB always specified 
EPA test conditions for refueling as they were deemed worst case. CARB 
recently moved to change their certification test fuel to a 7 RVP 
gasoline with 10 percent ethanol and as discussed in Section IV.D, we 
are now proposing to change the Federal certification test fuel 
specification to a 9 RVP gasoline with 15 percent ethanol.
    During the development of this proposal we carefully considered the 
practice of CARB/EPA reciprocity with regard to certification test 
fuels, hot soak plus diurnal test procedures, and emission test results 
when it comes to evaporative emissions certification. With this notice 
we are proposing a revised approach to the CARB/EPA reciprocity with 
regard to evaporative and refueling emissions. A uniform national 
certification test fuel is important to the design of fuel/evaporative 
systems which will operate effectively across the U.S. Consistent with 
our desire to have a national program with vehicles designed for E15 as 
discussed in Section IV.D, and

[[Page 29899]]

consistent with our treatment of exhaust emission standards, we are 
proposing a 9 RVP test fuel with 15 percent ethanol for all evaporative 
(hot soak plus diurnal, canister bleed, and leak emission standards) 
and refueling emissions testing. Thus, after the evaporative emissions 
fuel phase-in discussed above (ending after the 2019 MY), EPA will no 
longer accept test data on CARB test fuel and diurnal test 
temperatures. However, CARB has agreed to accept emission test data on 
EPA test fuel and temperature conditions for certification such that a 
uniform national program could still exist. This approach applies to 
all evaporative and refueling emission standards.
    Generally, any vehicle family counted in the Tier 3 evaporative 
emission standards phase-in must be certified on Tier 3 certification 
test fuel using EPA test procedures. However, EPA recognizes that the 
California and federal evaporative emission standard programs would be 
starting from different bases and that the transition provisions are 
different in some ways. For example, the proposed EPA program starts in 
the 2017 MY but after that has the same basic program construct as CARB 
in 2018. However, prior to the 2017 MY, CARB has a ZEV program 
provision which will continue to bring zero evap technology into the 
fleet before 2017. To capitalize on this technology and to facilitate 
transition, we are proposing that any CARB evaporative emission test 
data from MYs 2015 and 2016 certifications could be used in federal 
certification for those evaporative/refueling families through the 2019 
MY. Assuming these vehicle families meet Tier 3 evaporative emission 
standards and they are sold nationwide they could be included in the 
percentage phase-in calculations as Tier 3 vehicles. A good example of 
these would be vehicles meeting CARB Option 1 standards discussed 
above. If the vehicles do not meet the Tier 3 evaporative emission 
requirements manufacturers could potentially sell them nationwide, but 
they would not be included as compliant vehicles in the percentage 
phase-in calculation. EPA proposes a similar provision for a 
manufacturer which elects to use the CARB test procedures and test 
fuels to meet the refueling emission standard. That is, if a 
manufacturer uses evaporative emission test data from 2015 or 2016 
model year CARB certifications to meet the Federal requirements in 
2017-2019 model years, it may also use CARB refueling emission test 
data from model year 2015 and 2016 certifications for federal 
certification for the refueling requirements for those evaporative/
refueling families through the 2019 MY. Any in-use testing on vehicle 
families certified on this data would be conducted using the CARB 
temperature conditions and test fuel and the CARB ethanol SHED 
adjustment value of 1.08 for 10 percent ethanol. However, by the 2020 
MY all vehicles would have to be certified using EPA certification test 
fuel and test procedures. In the interim, the equivalency and 
acceptance by EPA of certification on California test fuels is 
dependent on our proposed 9 psi RVP level for the certification test 
fuel. Were we to require the more stringent level of 10 psi RVP more 
typical of E10 as discussed in section IV.D.1, testing using California 
test fuels and conditions would no longer be equivalent.
e. Evaporative and Refueling Emission Standards for Various Fuels
    The evaporative and refueling emission standards today apply in 
different ways to different fuels. In the case of gasoline, all the 
standards apply and testing is required for certifying all vehicles. 
Evaporative emission standards do not apply for diesel-fueled vehicles; 
the refueling standards apply to diesel-fueled vehicles, but 
manufacturers can get EPA approval to omit testing for certification. 
For other fuels, there is a mix of standards applying or not applying, 
and if standards apply, testing is either required or not required. The 
statutory provisions in this regard are straightforward: Clean Air Act 
section 202(k) specifies that gasoline-fueled vehicles must be 
certified to evaporative emission standards, and section 202(a)(6) 
specifies that all motor vehicles be certified to refueling emission 
standards. This raises two questions. First, we request comment on 
using this rulemaking as the proper context for applying the refueling 
standards to vehicles powered by every kind of fuel. Where standards do 
not apply today (natural gas, fuel cells, electric, etc.), we would 
expect to waive test requirements for certification, so this would not 
be any substantial burden. Dedicated ethanol-fueled vehicles would face 
a new requirement, but we are not aware that there are any such 
vehicles today.
    Second, we have the discretion to apply evaporative emission 
standards to vehicles powered by fuels other than gasoline. The 
standards expressly do not apply for diesel fuel. By omission, the 
standards do not apply for dedicated ethanol-fueled vehicles, fuel-cell 
vehicles, and electric vehicles. The standards apply for natural gas 
and liquefied petroleum gas even though these are sealed systems with 
no emission control systems for controlling evaporative emissions. We 
request comment on adjusting the regulations such that evaporative 
emission standards apply only to volatile liquid fuels, which is the 
approach we have taken for nonroad applications (see, for example, 40 
CFR 1060.801). Under this approach, diesel fuel would continue to be 
excluded from standards because it is nonvolatile. This approach would 
also exclude natural gas and liquefied petroleum gas because they are 
not liquid fuels at atmospheric pressure.
5. Improvements to In-Use Performance of Fuel Vapor Control Systems
a. Background on Data Related to In-Use Performance
    As part of the Compliance Assistance Program (CAP 2000) in-use 
verification program (IUVP) \295\ the manufacturers began testing the 
evaporative emissions performance of small samples of in-use vehicles 
owned and used by the public. These regulations can be found at 40 CFR 
86 1845-01, and 1845-04. In 2000, EPA extended this requirement to 
cover chassis-certified HDVs, which for these purposes are basically 
all HDGVs up to 14,000 lbs GVWR.\296\ The in-use testing for 
evaporative emissions started in 2004 for 2001 MY LDVs, LDTs, and MDPVs 
and in 2008 for 2007 MY chassis certified HDGVs. Current IUVP data for 
evaporative emissions covers about 1800 vehicle tests. This data shows 
that when evaluated in the laboratory using certification test 
procedures, the vast majority (over 95 percent) of the vehicles pass 
the evaporative emission standards to which they were certified. While 
this information is indicative of good in-use performance, it has 
limitations. First, the test results are for small sample sizes. For 
the approximately 150 million LDVs, LDTs, MDPVs, and chassis-certified 
HDGVs produced between 2001 (the start of the IUVP program) and 2010 
(latest available data), only about 0.001 percent of vehicles were 
tested. Second, the IUVP regulations place limits on the age/mileage 
for vehicle testing. Each model year is tested in two ``batches,'' 
nominally at the one and four year age points. One year old vehicles 
must have at least 10,000 miles and four year old vehicles must have at 
least 50,000 miles with at least one within the higher mileage group 
having

[[Page 29900]]

an odometer reading of at least 75 percent of useful life (90,000 miles 
for most Tier 2 vehicles). The useful life period for LDVs and LDT1s/
LDT2s is 10 years/120,000 miles, for LDT3s/LDT4s/MDPVs and complete 
HDGVs it is 11 years/120,000 miles. Thus, few firm conclusions can be 
drawn about full useful life emissions performance.
---------------------------------------------------------------------------

    \295\ 64 FR 23906 (May 4, 1999).
    \296\ 65 FR 59922-59924 (October 6, 2000).
---------------------------------------------------------------------------

    Recent evaporative emission testing conducted by EPA and others 
evaluated in-use LDVs and LDTs certified to meet the enhanced 
evaporative emission standards implemented for 1996 and later model 
years \297\ as well as Tier 2 standards implemented for 2004 and later 
model year vehicles. Three Coordinating Research Council (CRC) programs 
(E-77-2/2b/2c), tested evaporative emission levels of vehicles with 
varying amounts of ethanol and levels of RVP in the gasoline test 
fuel.\298\ These programs were unique in that a subset of the vehicle 
SHED tests were of vehicles with implanted leaks at the nominal minimal 
level of detection for OBD systems (0.020 inch) in three different 
locations in the fuel/evaporative control system. These tests showed 
hydrocarbon emission rates 2-10 times greater than for the same 
vehicles tested in the SHED without the leaks and showed an order of 
magnitude of difference depending on where the leak was introduced.
---------------------------------------------------------------------------

    \297\ 58 FR 16002 (March 24, 1993).
    \298\ CRC E-77 reports: Haskew, H., Liberty, T. (2008). Vehicle 
Evaporative Emission Mechanisms: A Pilot Study, CRC Project E-77; 
Haskew, H., Liberty, T. (2010). Enhanced Evaporative Emission 
Vehicles (CRC E-77-2); Haskew, H., Liberty, T. (2010). Evaporative 
Emissions from In-Use Vehicles: Test Fleet Expansion (CRC E-77-2b); 
Haskew, H., Liberty, T. (2010). Study to Determine Evaporative 
Emission Breakdown, Including Permeation Effects and Diurnal 
Emissions Using E20 Fuels on Aging Enhanced Evaporative Emissions 
Certified Vehicles, CRC E-77-2c.
---------------------------------------------------------------------------

    Furthermore, the CRC E-77-2 evaporative emissions test programs 
which looked at permeation in aged vehicles meeting EPA's enhanced 
evaporative emission control standards, introduced a new Static Test 
Procedure which pressurized the vapor space and activated the fuel pump 
during different portions of the SHED test, while the vent from the 
vehicle canister was routed to a trap canister outside of the SHED. By 
pressurizing the vapor space it was possible to determine if there was 
a vapor leak in the system by looking for a slope change in the vapor 
concentration in the SHED over time relative to permeation alone. 
Similarly, by activating the fuel pump it was possible to determine if 
there was a liquid leak in the system by looking for a slope change in 
the vapor concentration in the SHED over time relative to permeation 
alone. Out of the 15 randomly recruited vehicles in the program, seven 
of them displayed vapor and/or liquid leaks on one or more fuel 
ethanol/RVP combination (4 of these 7 were Tier 2 vehicles). A closer 
look at the data indicates that over the course of the study, which 
covered a two to four year period depending on the vehicle, the 
magnitude of the leaks increased with time.
    These studies taken together were of concern to EPA with regard to 
the in-use performance of evaporative emission control systems because 
they indicated that leaks could be a large portion of the evaporative 
emissions inventory if they occurred in even a relatively small 
fraction of the in-use fleet. The key missing piece of information was 
how often the leaks of 0.020 inches or larger occur in the fleet.
    To help us better understand this concern, EPA partnered with the 
Colorado Department of Public Health and Environment (CDPHE) and with 
CRC as an advisor for a pilot field study in Denver in the summer of 
2008 to assess the frequency of high evaporative emissions vehicles in 
the fleet. The project identified high evaporative emission emitters 
through an innovative screening tool known as a remote sensing device 
(RSD). The vehicles were identified at the entrance to the Inspection 
and Maintenance (I/M) station as high evaporative emission emitters. 
The operators of these vehicles were asked to participate in further 
evaluation using a Portable Sealed Housing for Evaporative 
Determination (PSHED) in addition to a modified California method test 
procedure to locate the source of the high emissions indicated by the 
PSHED level.\299\ The CDPHE continued to collect the same type of data 
in different locations in the Denver area for the next two summers.
---------------------------------------------------------------------------

    \299\ DeFries, T., Lindner, J., Kishan, S., Palacios, C. (2011). 
Investigation of Techniques for High Evaporative Emissions Vehicle 
Detection: Denver Summer 2008 Pilot Study at Lipan Street Station.
---------------------------------------------------------------------------

    Of the 5,830 vehicles which came through the Ken Caryl I/M station 
in 2009, 601 were identified as potentially high evaporative emitters 
using the RSD tool.\300\ Of these, 84 vehicle owners agreed to be 
included in the PSHED evaluation that summer. Furthermore, 110 
additional vehicles were recruited which were potentially low to 
marginally high evaporative emitters.\301\ The study was structured to 
recruit higher evaporative emitting vehicles more heavily than lower 
emitting vehicles. Afterwards the percentages were adjusted to 
represent the actual mix in the fleet of light duty vehicles. Thus, it 
was determined that 10 percent of the fleet had evaporative emissions 
which exceeded a cut point reflecting an in-use evaporative emission 
rate of about 1 gram of total HC over 15 minutes (see Table 5-9 in the 
2012 DeFries report referenced above). This value is approximately the 
emission rate that would be expected from a leak of 0.020 inches which 
is the detection standard for OBD II systems.\302\
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    \300\ DeFries, T; Palacios, C., Kishan, S. (2012), Estimated 
Summer Hot Soak Distributions for the Denver's Ken Caryl I/M Station 
Fleet.
    \301\ A selection bin structure was used based on indicated 
evaporative emissions levels recruitment heavier at the higher 
emission end. Thus, there was a gradation even in the lower level 
bins where many of the vehicles would be considered marginal and not 
passing the evaporative emission standard even if they were not 
considered higher than the 1 g/15 minutes which our study found to 
be the lower range detectable by the RSD from the 2010 Ken Caryl 
report cited above.
    \302\ Compare the first 15 minutes of hot soak data from the 
field studies with implanted leaks in E-77-2 studies.
---------------------------------------------------------------------------

    An examination of the test data reveals two additional significant 
points. First, the data indicates a trend for greater frequency of 
leaks in older vehicles. This is not unexpected given the manner in 
which factors such as vibration, fuel quality, weather elements, 
corrosion, maintenance, and other operating conditions affect the 
durability of system components, fittings, and connections over time. 
Second, there were relatively few newer model year vehicles in the 
population surveyed. This is expected and almost unavoidable since the 
Colorado I/M program generally exempts vehicles which are four years 
old or newer. While it is reasonable to expect there to be a lower 
prevalence of leaks in newer vehicles, the lack of data for newer 
vehicles does not necessarily indicate that no problems exist in newer 
model year vehicles or that problems will not occur in the future with 
Tier 3 vehicles.
    Since many of the vehicles in the sample group met OBD requirements 
for evaporative system leak monitoring, it was deemed useful to examine 
whether the OBD system identified the leak. As mentioned above, 
approximately 10 percent of the vehicles in the ``adjusted fleet'' had 
vapor leaks which were of the magnitude expected from a 0.020 inch or 
larger leak. Over the three years of study, there were a total of 180 
SHED tests (either PSHED or laboratory SHED) on vehicles with OBD data 
collected in the I/M program. Of these 180 vehicles, 171 had the 
evaporative OBD monitors ready. Of these, 171 vehicles, 20 were found 
to have emission rates of 1 g/15 min in the PSHED (the emission rate 
linked to a 0.020'' leak). Of these 20 vehicles only 3 came into the I/
M test

[[Page 29901]]

with an OBD diagnostic trouble code (DTC) set indicating an evaporative 
system problem.303 304 A closer look, including field 
inspection comments, of the 20 vehicles shows that half were not 
expected to diagnose the problem because it was outside of the OBD 
system design capabilities. Of the vehicles which potentially should 
have set an evaporative DTC, at least 50 percent and perhaps as much as 
70 percent of codes were not set on high evap emissions vehicles. The 
lack of codes being set for these vehicles may reflect OBD performance 
issues or allowances (known as enable criteria) in the OBD regulations 
regarding when the OBD evaporative emission leak monitoring system is 
not required to operate or situations when the monitor is otherwise not 
ready for what may be allowable reasons such as an allowable 
deficiency.
---------------------------------------------------------------------------

    \303\ In the E-77-2 programs the 0.02 inch leaks implanted near 
the top of the tank and at the canister connection had hot soak 
measurements which averaged approximately 1 g/15 minutes PSHED 
measurement. This also happens to be the lower end of the detectable 
range of evaporative emissions by the RSD. Since the OBD monitor is 
expected to detect a .020'' leak wherever it is located, the DTC 
should be set.
    \304\ Palacios, C., Weatherby, M., DeFries, T., Lindner, J., 
Kishan, S. (2012). Evaluation of the Effectiveness of On-Board 
Diagnostic (OBD) Systems in Identifying Fuel Vapor Losses from 
Light-Duty Vehicles.
---------------------------------------------------------------------------

    To better understand this issue EPA has examined evaporative 
emission system DTC and monitor ready information from I/M programs 
from Texas and California.\305\ Since the data was gathered by the 
states under different protocols and time periods, the content of the 
data sets are not identical. To provide some degree of uniformity in 
our analysis, we examined the data for five MY (2000-2004) but within 
each state we only looked at calendar years of data beginning after the 
initial state I/M exemption period (2-4 calendar years depending on the 
state) had passed. Thus the analysis focused on I/M OBD information for 
calendar years 2004-2010. Examined together, the data generally 
indicates the following:
---------------------------------------------------------------------------

    \305\ Fulper, C. (2013, February). Preliminary Analysis of OBD 
Evaporative System Information from I/M Stations--California and 
Texas, Memorandum to the docket.
---------------------------------------------------------------------------

     Depending on age, 0.3-2.5 percent of vehicles with 
evaporative monitors ready came into the I/M stations with evaporative 
related MIL or DTCs set.
     The percent of vehicles with evaporative emission related 
MILs set increased by a factor of 2-4 over about 5 years.
     Evaporative emission monitors were not ready for 3-16 
percent of vehicles when arriving at the I/M station.
     The percent of vehicles with monitors ready at the I/M 
station generally decreased by 3 to 7 percentage points over about 5-6 
years; decrease was less for model year vehicles less than five years 
old.
     While it varies by age, 60-80 percent of evaporative 
system DTCs are leak related.
    There is no question of the value of OBD leak monitoring for 
evaporative systems, especially when owners complete needed repairs. 
Undoubtedly these percentages and thus in-use leak values would be 
higher without OBD evaporative system leak monitoring. However, this 
data suggests that EPA OBD regulations in place for 2000-2004 MY 
vehicles would not alone be sufficient to address concerns regarding 
the emission effects of vapor leaks from the fuel and evaporative 
control systems.\306\
---------------------------------------------------------------------------

    \306\ For further information see CARB reports ``Technical 
Status and Proposed Revisions to Malfunction and Diagnostic System 
Requirements for 1994 and Subsequent Model-Year Passenger Cars, 
Light-Duty Trucks, and Medium-Duty Vehicles and Engines (OBD II)'' 
October, 1994 and ``Technical Status and Revisions to Malfunction 
and Diagnostic System Requirements for 2004 and Subsequent Model 
Year Passenger Cars, Light-Duty Trucks, and Medium-Duty Vehicles and 
Engines (OBD II) March 2002.
---------------------------------------------------------------------------

    In summary, information gathered from evaporative emissions testing 
conducted in the IUVP program indicates that relatively low mileage/
newer vehicles perform well when evaluated under laboratory conditions. 
However, data gathered from in-use testing conducted by EPA, Colorado, 
and others indicates that as vehicles age some vehicles have a 
propensity to develop leaks in the fuel/evaporative system and that 
these leaks increase in size as the vehicles age. Beyond this, a review 
of OBD evaporative system leak monitor data from the I/M programs of 
two states revealed four important trends: (1) even when the OBD system 
identifies leaks owners do not always respond by getting the needed 
repair completed, (2) the fraction of vehicles with leaks identified by 
OBD increases as vehicles age, (3) vehicles sometimes are operating in 
conditions in which the OBD leak monitor is not ready to identify a 
potential problem, and (4) evaporative system leaks are the dominant 
DTC for vehicles with monitors ready and evaporative system DTC set.
    The propensity for leaks in the vehicle fleet has the potential to 
reduce the benefits of the Tier 3 evaporative emission standards 
substantially. If on any given day, as few as five percent of Tier 3 
vehicles had a leak(s) of 0.020 inches or greater this would cause in-
use emissions equivalent to all of the projected emission reductions 
from the proposed Tier 3 evaporative emission standards on that 
day.\307\ Thus, EPA is proposing three measures to address this issue: 
(1) An emission standard focused on reducing fuel/evaporative system 
vapor leaks over the vehicle useful life, (2) an upgrade to OBD 
emissions monitoring requirements to improve their role in identifying 
problems and improving in-use emissions performance, and (3) additions 
to the IUVP program focused on testing a broader sample of fuel/
evaporative system leaks in IUVP than is done for evaporative emission 
standards alone.
---------------------------------------------------------------------------

    \307\ This is based on five percent of vehicles and 4-5 trips 
(hot soaks) per day at 1 g/hot soak. Five percent is a reasonable 
value for this illustration since as mentioned above 0.3-2.5 percent 
of vehicles come in to I/M stations with evaporative system MILs or 
DTCs and 60-80 percent of these were leak-related DTCs. Thus, it is 
reasonable to project that the fleet average is higher since vehicle 
repair just before I/M is common, evaporative emission monitors were 
not ready on 3-16 percent of vehicles, and 18 states do not have any 
form of I/M at all and repair rates in response to a MIL may be 
lower.
---------------------------------------------------------------------------

b. Proposed Leak Emission Standard
    The evaporative emission standards in this proposal will help to 
promote widespread use of improved technology and materials which will 
reduce evaporative emissions in-use. The proposed new requirement for a 
leak emission standard and procedure will help to ensure the durability 
of Tier 3 evaporative emission control systems nationwide.
    Based on the information described above concerning evaporative 
emissions in-use, we believe a leak emission standard is necessary to 
meet our goal that vehicles meeting Tier 3 evaporative emission 
requirements not have fuel/evaporative system vapor leaks. Toward that 
end, we are proposing a leak emission standard that would have to be 
met both at new vehicle certification and in use. The leak emission 
standard would apply beginning in the 2018 MY to any vehicle certified 
to the Tier 3 evaporative emission standards or a CARB carryover 
vehicle counted toward the sales percentage phase-in requirements, 
including LDVs, LDTs, MDPVs, and complete HDGVs up to 14,000 lbs GVWR. 
The emission standard would be applicable for the same useful life 
period as for the evaporative emission standards that apply to the 
vehicle. The standard would apply to vehicles using volatile fuel 
(e.g., gasoline, FFV, and methanol

[[Page 29902]]

fuel vehicles, but not diesel or CNG vehicles).
    To be compatible with CARB OBD requirements being met by most 
manufacturers and the OBD requirements included in this notice, we are 
proposing that the leak emission standard be expressed in the form of a 
cumulative equivalent orifice diameter. We are proposing a value of 
0.02 inches.\308\ The standard basically requires that the cumulative 
equivalent diameter of any orifices or ``leaks'' in the system not 
exceed 0.02 inches. This is consistent with California OBD requirements 
(and those being proposed in this rule as well) that the OBD system be 
capable of identifying leaks in the fuel/evaporative system of a 
cumulative equivalent diameter of 0.020 inches EPA believes an emission 
standard at this level is feasible since earlier testing programs 
identified vehicles with essentially no leaks and it is essentially 
equivalent to that required for CARB OBD evaporative system leak 
monitoring. As discussed in the technological feasibility section 
above, the actions manufacturers will have to take to meet the proposed 
Tier 3 evaporative emission standards are expected to do more to 
address potential leak points and thus in a broader sense to improve 
in-use durability for evaporative control systems compared to vehicles 
meeting earlier or current evaporative emission standards.
---------------------------------------------------------------------------

    \308\ Current OBD regulations specify that if the fuel tank 
volume exceeds 25 gallons then the manufacturer may seek a larger 
leak detection orifice value. If a manufacturer seeks and is granted 
a larger value for OBD leak detection purposes, then that same 
numerical value becomes the leak emission standard value. We would 
not expect this value to exceed 0.040 inches.
---------------------------------------------------------------------------

    The proposed leak emission standard would provide added assurance 
that as the manufacturers design for ``zero evap'' standards they also 
design the systems to avoid leaks over the full useful life. We are 
proposing a leak emission standard of 0.02 inches which with rounding 
is a bit less stringent than the 0.020 inch OBD fuel/evaporative system 
leak monitoring requirement. EPA believes this level of precision is 
sufficient to accomplish the air quality objective and yet provides 
some compliance margin between the emission standard and the monitor 
requirement which is reflected through multipliers for the exhaust 
emission standards monitored through OBD. EPA asks for comment and 
rationale on setting the standard at 0.02 inches equivalent diameter or 
the more stringent 0.020 inch equivalent diameter specified for OBD 
evaporative system leak monitoring. If finalized as proposed, the 
emission standard would be specified to one significant digit (e.g., 
0.02 inches) but would have to be measured and reported to at least two 
significant digits.
    The proposed leak emission standard would apply at the time of 
certification as well as during confirmatory and in-use verification 
program testing. We do not expect that new vehicles being certified 
would have a leak problem, and since a vehicle with a leak would likely 
fail the evaporative emissions SHED test, there is little value in 
mandating a leak test at certification. Thus, EPA proposes to allow 
manufacturers to attest to compliance with the leak emission standard 
at certification.
    To implement the proposed leak emission standard within the current 
regulatory structure a few minor changes are needed. First, current EPA 
regulations such as those at Sec.  86.098-24, specify criteria for 
evaporative/refueling emission families. EPA believes this basic 
structure is appropriate for the leak emission standard, with the 
additional criteria that vehicles in the same evaporative/refueling 
family must use the same basic approach to OBD leak detection. 
Significantly different volume fuel tanks would likely also be a family 
determinant, but we believe this is already covered by the evaporative/
refueling family criteria. Second, since the leak emission standard is 
a pass/fail requirement and not an emission rate, there is no 
requirement for the application of a deterioration factor. Third, EPA 
proposes to require that the manufacturers recommend one or more leak 
entry test points for each family. This point should be outside of the 
gas cap/fillpipe area, since our experience indicates that testing 
could always be done through that point of entry to the fuel/
evaporative system.
    EPA asks for comment on the timing, form and level of the proposed 
emission standard. EPA believes that linking the timing of the proposed 
leak emission standard to the implementation of proposed Tier 3 
evaporative emission standards in 2018 provides adequate lead time and 
is consistent with the technical rationale supporting the feasibility 
of the Tier 3 evaporative emission standard.
c. Proposed Leak Emission Standard Test Procedure
    In order to implement a new leak emission standard, a leak test 
procedure is required. The fundamental concepts underlying fuel/
evaporative system leak test are not new to the manufacturers. There is 
already a simple leak check in 40 CFR 86.608-98(a)(xii)(A) and in the 
past at least three states included a fuel/evaporative system pressure 
leak test in I/M programs. More importantly, all LDVs, LDTs, MDPVs and 
HDGVs manufactured today have the onboard capability to run a pressure 
or vacuum leak based check on the vehicle's evaporative emission system 
as part of OBD evaporative system leak monitoring. These systems employ 
either positive or negative pressure leak detection pumps or operate 
based on natural vacuum for negative pressure leak detection. EPA is 
proposing a test based on a similar concept of placing the system under 
a slight positive pressure (but from an external source), measuring the 
flow needed to maintain that pressure in the fuel/evaporative control 
system, and converting that flow rate to an equivalent orifice 
diameter. With regards to the test procedure we will first discuss 
where the leak test could occur in the FTP test sequence. We will then 
discuss how the test is proposed to be conducted.
    First with regard to when the test would be conducted within the 
current FTP sequence we are proposing that it be inserted immediately 
following the first two preconditioning steps within the FTP sequence 
(see Figure B96-10 in 40 CFR 86.130-96). Thus, the vehicle 
preconditioning steps for the leak test would be: (1) fill the vehicle 
fuel tank to 40 percent of capacity using the appropriate certification 
test fuel and then (2) let the vehicle soak for a minimum of a six hour 
period at a temperature in the range of 68-86[emsp14][deg]F. EPA 
proposes that the test be conducted with 9 RVP E15 test fuel for both 
certification and IUVP. This is the same preconditioning that is called 
for today in 40 CFR part 86 subpart B for exhaust, evaporative, and 
refueling emissions testing. After preconditioning is complete, the 
leak test would be conducted and the test sequence could then proceed 
as prescribed in subpart B or testing terminated if the purpose was 
only to conduct leak testing. EPA believes this modest level of 
preconditioning is sufficient to create standard conditions which 
enable repeatable and reliable measurement results. Preconditioning 
could not include any prescreening for leaks nor would any tightening 
of fittings or connections be permitted.
    After preconditioning is complete, manufacturers would then run the 
leak test. Each complete test would involve running the test procedure 
at one entry point in the system. Presumably this would be either near 
the back of the fuel system (perhaps near the gas cap) or near the 
front of the fuel system on the

[[Page 29903]]

pressure side of the locations near where the system is sealed (perhaps 
at the canister vent). If the fuel/evaporative system has an imbedded 
evaporative system test port then that point could be used. 
Alternatively, manufacturers could also develop a test rig such as a 
``fill pipe extension'' which would screw into the fill pipe opening 
using cap threads at one end and on the other end have threads to screw 
the fill pipe vehicle cap in place. Within this extension there would 
be an access port for the leak test equipment to be attached. Thus, the 
full system could be tested without any direct intrusion or the need 
for a separate gas cap assessment. The manufacturer would have to 
specify the test point at the time of the pre-certification meeting. If 
the manufacturer selected an entry point which required the fuel cap to 
be removed, then the cap would have to undergo a separate test as is 
now done in many I/M stations.\309\ In this case, tests from both 
points combined must pass the proposed emission standard.
---------------------------------------------------------------------------

    \309\ For related information see ``IM240 & Evap Technical 
Guidance'', EPA 420-R-00-007, April, 2000.
---------------------------------------------------------------------------

    The procedure would be conducted as follows:
     Calibrate the testing apparatus and otherwise verify 
testing apparatus is ready and able to complete the procedure
     Seal fuel system so as to pressure test entire system 
(purge valve, cap, etc.)
     Attach test apparatus to vehicle's fuel system at selected 
test point
     Pressurize fuel system with nitrogen or another inert gas 
to at least 2.4 kilopascals (kPa)
     Allow flow and pressure to stabilize in accordance with 
specification provided in the proposed regulatory text
     Calculate effective leak orifice diameter from measured 
output flow rate and temperature and pressure data or use apparatus 
with built in computer providing an equivalent digital readout. 
Calculate to the nearest 0.01 inch.
     Calculated effective orifice diameter must be less than or 
equal to the standard
     If leak test is conducted at the fuel cap then 
manufacturer must also show evidence that the vehicle's fuel cap is 
performing properly.\310\
---------------------------------------------------------------------------

    \310\ Such tests are done routinely in I/M stations using a 
commercially available apparatus. The gas cap leak rate may be 
determined by pressure loss measurement, direct flow measurement, or 
flow comparison methods and shall be compared to a pass/fail flow 
rate standard of 60 cubic centimeters per minute of air at 30 inches 
of water column. The flow rate methods are referenced to standard 
conditions of 70[emsp14][deg]F and 1 atm.
---------------------------------------------------------------------------

     EPA is seeking comment on requiring two separate test 
points one near the evaporative canister and the other near the fuel 
cap. Furthermore, we are specifically proposing that in some cases two 
separate test points in the locations mentioned above would be 
required. This would especially be important if the fuel cap/fill neck 
area is isolated from the rest of the fuel/evaporative system as a 
result of the 40 percent fill or if dual tanks are not otherwise 
connected through vapor lines. Of course, dual tank, dual canister 
systems would have to be evaluated as separate systems. Tests could be 
void if the test apparatus fails, becomes disconnected, fails to 
maintain a stable flow rate or pressure, or the test was stopped before 
completion due to safety considerations or some other relevant vehicle 
issue.
    The test procedure presented above is based on current fuel system 
designs. In the future, it is reasonable to expect changes in designs 
of the fuel systems such that the procedure above may need adjustment. 
EPA would, of course, monitor these fuel system changes and modify the 
test procedure provisions as needed. Furthermore, current EPA 
regulations (see Sec.  1065.10(c)) contain provisions which provide the 
opportunity for manufacturers to seek approval for special or alternate 
test procedures if from a practical perspective their systems cannot be 
evaluated under EPA requirements or they have an approach deemed 
equivalent or better. EPA would make such provisions for the leak 
emission standard testing requirement. Any such special or alternative 
procedures would have to be reported under Sec.  86.004-21(b)(9).\311\
---------------------------------------------------------------------------

    \311\ For example, MAHLE Powertrain has piece of equipment known 
as a Mahle Leak Tester which is now used in assembly plants and may 
be adaptable to this requirement.
---------------------------------------------------------------------------

d. Proposed Onboard Diagnostic (OBD) System Regulation Changes
    EPA has its own OBD regulations which are similar but not identical 
to CARB's. EPA first adopted OBD requirements for 1994 and later model 
year LDVs and LDTs. While EPA has extended its requirements from LDVs 
and LDTs to larger and heavier vehicles,\312\ EPA's last broad upgrade 
to its basic OBD regulation was in the 2005 timeframe. Since that time, 
CARB has adopted and the manufacturers have implemented a number of 
provisions to enhance the effectiveness of their OBD programs. These 
provisions include new requirements for OBD evaporative system leak 
detection as well as provisions to help insure that systems are built 
and operate as designed over their full useful life, give reliable 
results (find and signal only true deficiencies), and operate 
frequently during in use operation. It is permitted in current EPA 
regulations and common practice for the industry to certify their OBD 
systems with CARB and for EPA to accept CARB OBD certifications as 
satisfying EPA requirements. EPA is proposing to continue that practice 
but to upgrade our regulations to be consistent with the latest CARB 
regulations.
---------------------------------------------------------------------------

    \312\ EPA's OBD regulations for LDVs, LDTs, and MDPVs, are found 
at 40 CFR 86.1806-05. EPA has also adopted OBD requirements for 
incompletes and heavier vehicles (greater than 14,000 lbs GVWR) (see 
74 FR 8324, February 24, 2009 and 40 CFR 86.010-18).
---------------------------------------------------------------------------

    EPA has reviewed the current CARB regulatory requirements related 
to OBD (see California Code of Regulations (CCR) Sec.  1968.2 dated May 
18, 2010) and, as discussed below we are proposing to adopt most of 
these provisions with the Tier 3 program. We are proposing this for two 
basic reasons. First, this is consistent with the goal of a national 
program and one vehicle technology for all 50 states. Second, 
implementation of these requirements is now demonstrated technology and 
compliance with these requirements is common within the industry today. 
Thus, the added burden is minimal. Furthermore, OBD has the advantage 
of running frequently on in-use vehicles to identify potential exhaust 
and evaporative system performance problems, so adopting these 
provisions would create the opportunity for OBD to serve a more 
prominent role in ensuring the proposed Tier 3 emission standards are 
met in-use.
    There is an important link between OBD provisions related to 
evaporative emission control system leak monitoring and the proposed 
leak test emission standard. They each provide an important incentive 
to design fuel/evaporative systems with fewer propensities to develop 
leaks in use but each addresses the issue from a different perspective. 
The distinction is that the proposed leak emission standards prohibits 
leaks of greater than 0.02 inches cumulative equivalent diameter, while 
the proposed OBD evaporative system leak monitoring provision would 
require that the OBD system find leaks larger than 0.020 inches 
cumulative equivalent orifice diameter and notify the owner, but with 
no inherent obligation to repair the problem. Thus adopting a 0.020 
inch cumulative equivalent orifice diameter would align these two 
programs and, as will be discussed below, creates the potential for an 
optional leak detection test procedure for in-use testing.
    To be more specific, we are proposing to update our OBD regulations 
to be

[[Page 29904]]

consistent with current California OBD requirements add two new 
requirements and retain three minor exceptions. These changes would be 
fully effective in the 2017MY, but EPA asks comment on whether the 
requirement should be linked to be effective with certification to any 
of the Tier 3 emission standards (either exhaust or evaporative) or 
phased in for the 2017 model year for LDVs and LLDTs and the 2018 MY 
for the HLDTs, MDPVs, and HDGVs up to 14,000 lbs GVWR.\313\ EPA would 
continue to accept certifications with CARB OBD requirements as 
satisfying EPA OBD requirements. We are proposing to incorporate by 
reference section 1968.2 of the California Code of Regulations as 
discussed below. This would include paragraphs (c) through (j) in their 
entirety. These paragraphs are entitled: (c) Definitions, (d) General 
requirements, (e) Monitoring requirements for gasoline/spark ignited 
engines, (f) Monitoring requirements for diesel/compression ignition 
engines, (g) Standardization requirements, (h) Monitoring system 
demonstration requirements for certification, (i) Certification 
documentation, (j) Production vehicle evaluation testing. The substance 
of many of these provisions is already contained in current EPA OBD 
requirements for LDVs, LDTs, MDPVs, and complete HDGVs less than 14,000 
lbs GVWR.\314\
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    \313\ We are not proposing to change the requirement for 
incompletes and vehicles with a GVWR above 14,000 lbs.
    \314\ MDVs in the CARB regulations basically incorporate MDPVs 
and complete HDGV less than 14,000 lbs GVWR as defined by EPA.
---------------------------------------------------------------------------

    The most noteworthy changes we are proposing are summarized below. 
The CCR below is the California Code of Regulations cite for each 
pertinent provision.
     EPA proposes to add a 0.020 inches leak detection 
monitoring threshold upstream of the purge valve for all 4 vehicle 
categories LDV, LDT, MDPV, and complete HDGVs up to 14,000 lbs GVWR 
except for those with fuel tanks larger than 25 gallons capacity (see 
CCR 1968.2(e)). OBD leak monitoring systems would have to identify, 
store, and if required signal any leak(s) equal to or greater than 
0.020 inches cumulative equivalent diameter. This would thus include 
diagnostic trouble codes (DTC) P0440, P0442, P0446, P0455, P0456, and 
P0457.
     EPA proposes to incorporate by reference the full array of 
rate based monitoring requirements (see CCR1968.2 (d)). Meeting the 
rate based monitoring requirements will help to insure that, even with 
enable criteria, the exhaust and evaporative system monitors run 
frequently enough that on average a problem would be identified and 
signaled to the owner in operation within two weeks. This will help to 
improve the fraction of time monitors are ready to find a potential 
problem.
     EPA proposes to incorporate by reference provisions 
regarding monitoring system demonstration requirements for 
certification. We are proposing to incorporate by reference CARB 
provisions in this area and to accept submissions to CARB for purposes 
of compliance demonstration (see CCR 1968.2(h)). Adopting current CARB 
monitoring system demonstration requirements assures that monitoring 
systems operate as designed when installed on certification vehicles.
    We also propose that this certification include a requirement for 
manufacturers to demonstrate the ability of the OBD leak monitoring 
system to detect a 0.020 inch leak. Current CARB protocols do not 
require that manufacturers demonstrate that the certification vehicle 
can find a vapor leak in the fuel/evaporative system. We are proposing 
to add a requirement that manufacturers must demonstrate for 
certification that the OBD system can find and report the implanted 
leak would help to ensure the OBD system's capability to function as 
designed and for the OBD-based leak based evaporative system leak to be 
used as an optional test procedure for in-use testing for the proposed 
leak emission standard. We are proposing that this be added for the 
same vehicles now required for monitoring system demonstration 
requirements for certification under CARB OBD regulations. Since the 
CARB regulation requires only a relative few vehicle models each year 
per manufacturer, we propose that manufacturers be given the option to 
either test the remainder for an implanted leak in the fuel/evaporative 
system or certify by attestation that each of their remaining families 
meets the requirement based on development and other information.
     EPA proposes to incorporate by reference the CARB 
production vehicle evaluation data program. This program requires 
manufacturers to demonstrate that the OBD system functions as designed 
and certified when installed on production vehicles. (see CCR 
1968.2(j))
     For the OBD evaporative system leak monitoring 
requirement, EPA proposes a scan readable function (a new PID in 
Service $01 of SAE J1979) which could be used to indicate or ascertain 
the distance traveled since the OBD leak monitoring diagnostic was last 
completed successfully and if the system passed or failed (identified 
any leak above 0.020 inches) during that monitoring event (unless it is 
otherwise already required in other OBD system modes). Updating this 
PID this would be based on SAE J1979 mode 6 ($06) test results: 
``Request On-board Monitoring Test Results for Specific Monitored 
Systems.'' With this proposed requirement, the PID distance would be 
initialized to maximum range of NV RAM initialization (such as battery 
disconnect or controller reprogramming) and code clear. As a result, in 
the event that a vehicle had a memory clear event in the past, but has 
not had sufficient operation for the evaporative system to be 
evaluated, the scan readable mileage function would indicate that the 
system had not completed a full leak detection of the evaporative 
control system within the last 750 miles (1200km). OBD systems already 
maintain information for active, pending, historic and permanent codes. 
This would be a modest upgrade to this requirement which would enable 
the use of the OBD-based evaporative system leak monitor with the IUVP 
program as discussed below. See CCR 1968.2 (g) for information related 
to code storage. EPA seeks comment on alternative equivalent approaches 
(e.g., a scan readable mileage stamp or flag traceable to mileage 
indicating when the full OBD leak monitoring protocol was last 
completed successfully and the result (p/f)) which accomplish the same 
objective and whether this capability should be optional for the 2017 
MY since this requirement is designed to enable the use of OBD in leak 
emission standard testing and that standard is proposed to begin in the 
2018 MY.
     The minor exceptions which are contained in EPA's current 
OBD regulations are proposed to be continued. Compliance with 13 CCR 
1968.2(d)(1.4), pertaining to tampering protection is not required. 
Also, the deficiency provisions of 13 CCR 1968.2(k) would not be 
adopted. In addition, demonstration of compliance with 13 CCR 
1968.2(e)(15.2.1)(C), to the extent it applies to the verification of 
proper alignment between the camshaft and crankshaft, would apply only 
to vehicles equipped with variable valve timing. For all model years, 
the deficiency provisions of paragraph (i) of the current regulations 
apply only to alternative fuel vehicle/engine manufacturers selecting 
this paragraph for demonstrating compliance.
    If adopted, these proposed changes, taken together would improve 
the performance, reliability, general utility, and effectiveness of OBD 
systems for Tier 3 exhaust and evaporative emission controls. 
Furthermore, if adopted, these

[[Page 29905]]

changes create the opportunity for OBD evaporative system leak 
monitoring systems to serve a more prominent role in ensuring 
compliance with the leak emission standard. EPA believes that they 
could be implemented for minimal cost since most manufacturers are 
meeting them today and will have to for LEV III vehicles. However, EPA 
requests comment on applying the proposed new OBD requirements to small 
business vehicle manufacturers and independent commercial importers.
    As discussed below, the proposed OBD requirements would apply to 
small entities and independent commercial importers (ICI) in the 2022 
MY. Small alternative fuel converters would still be able to meet the 
OBD requirements using the provisions of 40 CFR part 85 subpart F. 
Finally, it should be noted that as CARB updates its OBD regulations in 
the future EPA would consider these changes and propose to adopt them 
or incorporate them by reference, if appropriate. In fact, CARB is 
currently proposing some changes to its OBD program in response to the 
LEV III program exhaust emission standards.\315\ We request comment on 
incorporating these changes into this rule or other rules in the 
future. We also would generally expect to continue the current practice 
allowed by EPA regulations which is for EPA to accept CARB OBD 
certifications as satisfying EPA requirements provided that they 
include at least all of the requirements covered by the EPA 
regulations.
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    \315\ CARB has recently proposed some minor OBD program 
modifications in their recent LEVIII ISOR, and EPA asks for comment 
on including those provisions within the proposed EPA OBD program. 
See pages 61-72 of the CARB Staff Report at http://www.arb.ca.gov/regact/2012/leviiighg2012/levisor.pdf and pages A11-A125 of the 
regulatory text at http://www.arb.ca.gov/regact/2012/leviiighg2012/levappa.pdf.
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e. In-Use Verification Program (IUVP) Requirements for the Leak 
Emission Standard
i. Introduction
    We believe it is important to identify leaks since vehicles with 
leaks would be expected to have daily emission rates above the proposed 
Tier 3 evaporative emissions standards and the Colorado data suggests a 
propensity for the diameter of vehicle leak orifice to get larger over 
time and thus to have even higher emissions. This is also important 
because evaporative leak emissions occur virtually every day whether 
the vehicle is driven or not. Thus identifying potential leak problems 
will be important to capturing the emission benefits of the proposed 
evaporative emission requirements.
    Toward that end, EPA is proposing to include assessment of 
compliance with the leak emission standard within the IUVP program. We 
considered expanding the evaporative emission testing portion of the 
IUVP program as a means to assess leaks, but we decided to focus on the 
leak emission standard because it is less burdensome and is cost 
effective for accomplishing the objective. EPA believes adding a leak 
test requirement does not create an unreasonable burden. The draft test 
procedure described above is simple to run, inexpensive to conduct in 
terms of equipment and labor, and can be completed relatively quickly 
compared to an evaporative emissions test. However, we are retaining 
the evaporative emissions testing requirements currently in IUVP to 
monitor broader evaporative control system effectiveness (e.g., purge, 
canister control efficiency, permeation).
ii. IUVP Test Requirements
    We are proposing that the leak emission test be conducted for each 
and every vehicle assessed in IUVP for exhaust emissions under 40 CFR 
86.1845.04. This would begin for 2018 MY certifications for vehicle 
families meeting the proposed new leak emission standard. This would 
include the low and high mileage tests for any exhaust vehicle 
evaluated for exhaust emissions plus a requirement that there be at 
least one representative of each evaporative/refueling/leak family 
evaluated at each year point. We are proposing this approach to 
implementing IUVP for the leak emission standard in lieu of creating a 
new set of requirements which would require yet another set of vehicles 
to be procured for testing. We are not proposing to include the leak 
test with any evaporative emissions test in IUVP, since a leak would be 
evident in the results of the evaporative emissions test.
    The current IUVP regulations at Sec.  86.1845-04, Table S04-07, 
call for test sample sizes on a sliding scale based on annual vehicle 
sales by test group. This can vary from zero for very small sales test 
groups to six vehicles for test groups with sales exceeding 250,000. 
There are more exhaust emission test groups than there are evaporative/
refueling/leak test families and exhaust emission test groups may cover 
one or more of the same evaporative/refueling/leak families, so we 
would expect to receive multiple leak emission test results for most 
evaporative/refueling/leak families. This will expand the amount of 
IUVP data we receive in this important area and improve our ability to 
assess the overall leak performance for a given evaporative/refueling/
leak family and the fleet as a whole.
    As discussed above, EPA believes that the fuel and evaporative 
control system leaks are heavily influenced by age as well as design 
and other factors. EPA would consider extending the age point for leak 
emission testing for IUVP beyond the four year point to better assess 
this effect. However, in the past, manufacturers have expressed concern 
about the implications of testing older vehicles and about finding 
vehicles still within their warranty and recall liability periods. EPA 
asks comment on the viability of extending leak emission IUVP testing 
beyond the nominal four year point (e.g., six to eight years). We 
recognize that there are cost and vehicle procurement issues, but the 
Colorado data strongly suggests a relationship between vehicle age and 
the propensity for the development of leaks.
iii. Assessment of IUVP Leak Emission Standard Test Results
    The current regulations contain provisions addressing follow-on 
testing requirements for exhaust emissions for vehicles which fail to 
meet various performance thresholds within IUVP (see 40 CFR 86.1846-
01). As mentioned above, we expect that it will be common to get more 
than one leak emission test result over the course of each model year's 
mileage testing point for each evaporative/refueling/leak family as a 
result of the requirement to assess leaks with each exhaust IUVP test. 
However, the proposed leak emission standard is basically pass/fail at 
0.02 inches and it is difficult to establish a threshold criteria for a 
pass/fail standard such as has been done for exhaust emissions where 
there is a multiplier applied to the level of the individual exhaust 
emission standard.
    Given the importance of the leak emission standard in assuring in-
use evaporative emissions control, we are proposing a set of criteria 
for assessing leak emission standard results from IUVP. These criteria 
can be summarized as follows for each low and high mileage test point 
for each model year tested:
     lf 50 percent or more of all vehicles evaluated in an 
evaporative/refueling/leak emission family for any given model year 
pass the leak emission standard, testing is complete. This applies to 
cumulative testing for that family throughout the model year for that 
mileage group. This is consistent with the exhaust emission 
requirements for IUVP and EPA believes it is reasonable since vehicles 
are tested in the ``as received'' condition from consumers.

[[Page 29906]]

     If only one representative of the evaporative/refueling/
leak family is tested in a mileage group for that model year's vehicles 
and it passes the leak emission standard testing is complete. If that 
vehicle does not pass the leak emission standard a manufacturer may 
test an additional vehicle to achieve the 50 percent rate.
     If an evaporative/refueling/leak emission family fails to 
achieve the 50 percent rate, it is presumed that the family will enter 
into In-Use Confirmatory Testing Program (IUCP).
    Before IUCP begins, the manufacturer may ask for engineering 
analysis discussions with EPA to evaluate and understand the technical 
reasons for the testing outcomes and the implications for the broader 
fleet. Technical information for these discussions could include but 
would not be limited to detailed system design, calibration, and 
operating information, technical explanations as to why the individual 
vehicles tested failed the leak emission standard, and comparisons to 
other similar families from the same manufacturer. Relevant information 
from the manufacturer such as data or other information on owner 
complaints, technical service bulletins, service campaigns, special 
policy warranty programs, warranty repair data, state I/M data, and 
data available from other manufacturer specific programs or initiatives 
could help inform understanding of implications for the broader fleet. 
As part of this process a manufacturer could elect to provide 
evaporative emissions SHED test data on the individual vehicle(s) that 
did not pass the leak emission standard during IUVP. With an adequate 
technical basis, the outcome of this engineering analysis discussion 
could result in an EPA decision not to require IUCP testing.
    We would propose to operate within the basic structure of the IUCP 
program in the current regulations. Prior to commencing IUCP testing 
the manufacturer, after consultation with EPA submits a written plan 
describing the details of the vehicle procurement, maintenance, and 
testing procedures. This plan could include inclusion of a hot soak 
plus diurnal SHED test to supplement leak emission test results. We 
propose that EPA must approve this plan before testing begins. As 
prescribed now in the IUCP regulations for exhaust, if five vehicles 
were tested and all passed the leak emission standard then testing 
would be complete. If all five vehicles did not pass, then five more 
would be tested. More vehicles could be tested at the manufacturer's 
discretion but all testing would have to be completed within the time 
period specified in the regulations today. EPA and the manufacturer 
would then enter into discussions regarding interpretation, technical 
understanding, and compliance/enforcement implications of the test 
results, if any.
iv. Proposed Optional Test Procedure Approach for IUVP/IUCP
    Assuming implementation of the OBD regulation changes proposed in 
Section IV.C.5.d, above, EPA is proposing an optional approach to a 
portion of the leak emission test procedure discussed in Section 
IV.C.5.c. This optional testing approach would be included in the 
proposed IUVP/IUCP testing program for the leak emission standard, but 
would not be used for certification testing for the leak emission 
standard. It would be considered an approach which could be used by the 
manufacturers to assess compliance with the leak emission standard. EPA 
could also use this procedure for conducting assessments and asks for 
comment on using this procedure for compliance purposes with a 0.02 
inch cumulative equivalent diameter orifice standard.
    Under this optional approach manufacturers would be able to rely 
upon the operation of their OBD evaporative system leak detection 
hardware and operating protocols in lieu of running the stand alone in-
use leak test to check for the presence of a 0.02 inch leak in the 
fuel/evaporative system. This approach relies on the leak emission 
standard equivalent orifice diameter being established at the same 
level as proposed for OBD (0.020 inches). Thus, the IUVP/IUCP protocol 
would be modified and simplified to expedite completion of testing and 
reduce costs.
    Quite simply, if a vehicle is brought in for IUVP or IUCP testing 
and a scan tool query of the onboard computer indicates that the 
vehicle had successfully completed a full OBD-based evaporative system 
leak monitoring check within the last 750 miles and no evaporative 
system leak problems for any diameter above 0.020 inches was indicated 
(diagnostic trouble codes P0440, P0442, P0446, P0455, P0456, and 
P0457), the vehicle would be been deemed to have met and passed the 
leak emission standard test requirement. However, if the system had not 
successfully completed a full OBD-based evaporative system leak check 
within 750 miles with no problem indicated then the manufacturer would 
have the option to run its OBD-based evaporative system leak check in 
the laboratory after prescribed preconditioning. This OBD-based 
approach is sometimes used in auto manufacturer dealerships and repair 
facilities to diagnose and fix evaporative system leaks found by the 
OBD system. If the vehicle completes the full OBD-based leak test in 
the laboratory then the vehicle's pass/fail results for the 0.02 inch 
cumulative equivalent diameter orifice would be based on the OBD test 
result. This optional protocol could apply to every leak emission 
standard test after certification unless not approved by EPA for IUCP 
under 40 CFR 1846.01(i). Replicate tests would not be required or 
allowed but void tests could be repeated.
    Furthermore, EPA proposes to allow the manufacturer to run the 
stand alone EPA leak test in several situations. First, manufacturers 
could conduct the stand alone test to confirm that a problem identified 
by the OBD-based evaporative system monitoring leak check was a leak 
and not a problem with the OBD leak monitor itself. Second, a 
manufacturer could run the stand alone EPA leak test to confirm that 
the leak value identified by the OBD system was truly above the level 
of the proposed leak emission standard. Third, it could be used for 
vehicles which had not successfully completed a full OBD-based 
evaporative system leak monitoring check within the last 750 miles. 
Fourth, it could be used to confirm that a DTC set within the last 750 
miles actually indicated the presence of a leak(s) greater than the 
proposed standard. However, if a manufacturer elected to use only OBD-
based evaporative system leak based monitoring in its IUVP testing; 
these results would be the basis for decisions regarding IUCP. As is 
required in the current IUVP regulations, all test data whether OBD 
based or based on EPA's stand alone test procedure would have to be 
reported to EPA.
    There could be some advantages to this option since it employs a 
pressure/vacuum approach manufacturers understand and creates positive/
negative pressures manufacturers have accommodated within their fuel/
evaporative system. One potential downside is that under current 
designs vehicle engines would have to be operating to create the 
pressure or vacuum and because the engine is operating this would 
require the OBD-based leak test to be stand alone after the 
preconditioning sequence is complete. This would be more challenging 
for natural vacuum leak detection systems unless extended driving was 
involved to create the fuel system heat needed for a natural vacuum 
event or this was done through a climate chamber or SHED based diurnal 
heat build.

[[Page 29907]]

    Allowing for this approach raises at least two implementation 
questions. The first is related to the value of conducting the OBD-
based test for a vehicle with an active or pending leak DTC already set 
in the computer and/or an MIL indicated. In this case, EPA would permit 
the manufacturer to run the OBD-based leak test and/or the stand alone 
EPA leak test or concede that the vehicle would not pass the leak 
emission standard and count the result. Second is the question of gas 
caps. This is among the most common codes found in OBD records and is 
often related to operator error such as not tightening the gas cap 
properly. Codes of this nature have no value in this leak emission 
assessment, so a manufacturer would be permitted to correct the problem 
before testing and clear this OBD code before testing or run the stand 
alone EPA leak test.
6. Other Initiatives
    This proposal includes consideration of several amendments or 
clarifications to existing requirements related to evaporative 
emissions. As part of this process, the following provisions warrant 
adjustment, clarification, or correction:
     Even though the evaporative emission standards in 40 CFR 
part 86 apply to the same engines and vehicles that must meet exhaust 
emission standards, we require a separate certificate for complying 
with evaporative and refueling emission standards. An important related 
point to note is that the evaporative and refueling emission standards 
always apply to the vehicle, while the exhaust emission standards may 
apply to either the engine or the vehicle. Since we plan to apply 
evaporative/refueling/leak emission standards and the recently adopted 
greenhouse gas standards to vehicle manufacturers, we believe it would 
be advantageous to have the regulations related to their certification 
requirements written together as much as possible to reduce burden and 
increase efficiency. We are therefore proposing to move the emission 
standards and certification requirements from 40 CFR part 86 to the new 
40 CFR part 1037, which was originally used for greenhouse gas 
standards for heavy-duty highway vehicles. This is not intended to 
change the requirements that apply to these vehicles, except as noted 
in this section. We propose to make the provisions in part 1037 
effective with model year 2014.
     As described in Section VI.C.3, we are proposing to allow 
for certifying vehicles above 14,000 lbs GVWR based on an engineering 
analysis instead of new testing (as is currently allowed for vehicles 
at or above 26,000 lbs GVWR). We are also proposing to clarify the 
provisions describing how the certification process plays out for these 
vehicles.
     Section 86.1810-01 contains specifications addressing 
whether diesel fuel vehicles can be waived from demonstrating 
compliance with the refueling emission standard through testing. In the 
current regulation the potential for a waiver from testing depends on 
the diesel fuel having an RVP equal to or less than 1 psi and the fuel 
tank having a temperature which does not exceed 130[emsp14][deg]F. We 
have examined this provision and are proposing to withdraw the fuel 
temperature limit specification. Short of fuel spillage in the SHED, 
EPA sees no likelihood that a diesel fueled vehicle with RVP less than 
1 psi could fail the refueling emission standard even at fuel tank 
temperatures above 130[emsp14][deg]F. This is due to the inherently low 
vapor pressure of diesel at these temperatures and the likelihood that 
vapor shrinkage conditions will occur in the fuel tank during refueling 
since the dispensed fuel will be cooler than the tank fuel.
     When adopting the most recent evaporative emission change 
we did not carry through the changes to the regulatory text applying 
evaporative emission standards for methanol-fueled compression-ignition 
engines. The proposed regulations correct this oversight.
     We are proposing provisions to address which standards 
apply when an auxiliary (nonroad) engine is installed in a motor 
vehicle, which is currently not directly addressed in the highway 
regulation. The proposed approach would require testing complete 
vehicles with any auxiliary engines (and the corresponding fuel-system 
components). Incomplete vehicles would be tested without the auxiliary 
engines, but any such engines and the corresponding fuel-system 
components would need to meet the standards that apply under our 
nonroad program as specified in 40 CFR part 1060.
     We are proposing to remove the option for secondary 
vehicle manufacturers to use a larger fuel tank capacity than is 
specified by the certifying manufacturer without re-certifying the 
vehicle. Secondary vehicle manufacturers needing a greater fuel tank 
capacity would need to either work with the certifying manufacturer to 
include the larger tank, or go through the effort to re-certify the 
vehicle itself. Our understanding is that this provision has not been 
used and would be better handled as part of certification rather than 
managing a separate process. We are proposing corresponding changes to 
the emission control information label.
     Since we adopted evaporative emission standards for 
gaseous-fuel vehicles, we have developed new approaches for design-
based certification (see, for example, 40 CFR 1060.240). We request 
comment on changing the requirements related to certifying gaseous-fuel 
vehicles to design-based certification. This would allow for a simpler 
assessment for certifying these vehicles without changing the standards 
that apply.
     With regard to OBD, we note also that under Sec.  86.1806-
01(b)(4) OBD systems must have the ability to detect absence of purge 
air flow from a complete evaporative emission control system. This is 
clearly important because the proper operation of an integrated 
evaporative/refueling emission control system depends on purge. 
Similarly, evaporative/refueling system operation depends on the 
presence, proper adsorption/desorption performance, and sustained 
working capacity of the activated carbon canister. It is thus curious 
to observe that the current OBD provisions do not directly address the 
activated carbon canister in any way. The absence of the canister would 
likely be noted as a gross leak and/or a problem with purge. 
Nonetheless, we are seeking comment on a provision which would require 
the OBD system to sense for evidence of ongoing adsorption and 
desorption of hydrocarbon vapors. These could both be sensed by changes 
in canister carbon bed temperature or perhaps for the presence of vapor 
in the fuel going to the intake manifold after a cold start or 
refueling event. In some cases, EPA believes these parameters could be 
monitored by hardware and sensors now on most vehicles and thus this 
might be primarily an OBD software change. Similarly, we are seeking 
comment on whether the operation of a vacuum pump or similar device 
used to assist or supplement vehicle engine vacuum purge or any device 
otherwise used to enhance or control purge flows, rates, or schedules 
should be required to be monitored as part of OBD.
     With future technology, we anticipate a trend toward the 
implementation of fuel tanks with higher operating pressures and in 
some cases fuel tanks which are sealed to the atmosphere during normal 
operation. Data available to EPA indicates that a leak in such a system 
will result in substantial emissions relative to very low pressure 
systems which employ running loss control strategies and an activated 
carbon canister as part of the

[[Page 29908]]

methodology to control vapor emissions.\316\ Based on this concern, we 
are seeking comment on the feasibility and cost of requiring the OBD 
leak detection monitoring system to detect and signal the presence of a 
smaller diameter orifice than proposed for non-pressurized systems (~ 
0.010 inch) upstream of the purge valve for all 4 vehicle categories 
LDV, LDT, MDPV, and complete HDGVs up to 14,000 lbs GVWR. This would 
apply to any vehicle with a designed in-use operating pressure in 
excess of 0.36 psi (10 inches water). As a means to prevent a sealed 
fuel tank from venting leaks directly to atmosphere, we ask for comment 
on an added requirement that the fuel vapor vent valve be set to the 
open position at key off (and vent to the canister) if the OBD system 
detected a leak and triggered an MIL related to any leak greater than a 
pre-established threshold. The vent open at key off concept for 
pressurized fuel systems would not be intended to disenable the OBD 
system from conducting its normal evaporative system check during 
operation. Furthermore, as discussed above, we are proposing a 0.020'' 
leak detection threshold for all systems. However, we are asking for 
comment on setting the threshold in the 0.010''-0.015'' range for 
pressurized systems. In the context of this request for comment, we ask 
for input regarding the feasibility of the smaller threshold, the 
effects of the vent valve open requirement on ORVR, and the 
repairability of leaks of less than 0.020''.
---------------------------------------------------------------------------

    \316\ Passavant, G. (February 2013). Presentation on Evaporative 
Emission System Leaks for a Fuel Tank Under Pressure. Memorandum to 
the docket.
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D. Emissions Test Fuel

1. Proposed Changes to Gasoline Emissions Test Fuel
    In-use gasoline has changed considerably since EPA's fuel 
specifications for emissions testing of light- and heavy-duty gasoline 
vehicles were first set and last revised. Gasoline sulfur and benzene 
have been reduced and, perhaps most importantly, gasoline containing 10 
percent ethanol by volume (E10) has replaced clear gasoline (E0) across 
the country. This has had second-order effects on other gasoline 
properties. In-use fuel is projected to continue to change with the 
implementation of the RFS2 program (e.g., the expansion of the number 
of retailers that offer E15) as well as today's proposed Tier 3 
gasoline sulfur program. As a result, we are proposing to update our 
federal emission test fuel specifications not only to better match 
today's in-use fuel but also to be forward looking with respect to 
future ethanol and sulfur content.\317\ The revised test fuel 
specifications would apply for exhaust emissions testing, fuel economy/
greenhouse gas testing, and emissions testing for non-exhaust emissions 
(evaporative, refueling, and leak detection testing). The proposed 
gasoline specifications, found at Sec.  1065.710, would apply to 
emissions testing of light-duty cars and trucks as well as heavy-duty 
gasoline vehicles certified on the chassis test, those subject to the 
proposed Tier 3 standards.\318\
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    \317\ EPA's motor vehicle emissions standards typically require 
a level of performance over a specified test procedure, with 
emissions measured while the engine or the vehicle is operated using 
the specified test fuel and operated in a specified manner. The test 
fuel specifications typically apply for all emissions testing used 
to determine compliance with the standard, including emissions 
testing to obtain a certificate of conformity, as well as compliance 
testing for newly produced or in-use engines or vehicles. While this 
test fuel is commonly referred to as ``certification fuel,'' the 
test fuel specifications proposed today are not limited to 
certification related emissions testing, but also apply to 
compliance related emissions testing after the certificate of 
conformity has been issued. The certification process also typically 
involves a process to ensure that the emissions controls system is 
durable over the regulatory useful life of the vehicle or engine. 
This can involve long-term or accelerated aging of a vehicle or 
engine prior to emissions testing. The fuel used for such aging is 
commonly referred to as service accumulation or durability fuel, and 
in many cases is specified as commercial gasoline that will be 
generally available through retail outlets (Sec.  86.113-04(a)(3)), 
or in some cases may be specified as gasoline which contains ethanol 
in, at least, the highest concentration permissible in gasoline 
under federal law and that is commercially available in any state in 
the United States, such as for durability aging of evaporative 
emissions system (Sec.  86.1824-08(f)). EPA is not proposing changes 
to the specifications for fuel used during durability related aging 
that is part of the certification process. The proposed changes only 
apply to the test fuel used during emissions testing, both for 
purposes of certification and for later compliance related testing.
    \318\ As discussed in Section IV.C, we are also seeking comment 
on requiring the proposed Tier 3 test fuel in conducting exhaust, 
evaporative, and refueling emissions testing of heavy-duty gasoline 
engines certified on an engine dynamometer. These could include 
engines installed in incomplete Class 2b and Class 3 vehicles and 
engines used in vehicles above 14,000 lb GVWR.
---------------------------------------------------------------------------

    We are not proposing changes to the exhaust or evaporative 
durability fuel requirements outlined in the provisions of Sec.  
86.113-04(a)(3), except to remove the minimum sulfur content (15 ppm) 
currently specified at Sec.  86.113-04(a)(3)(i). Those provisions 
require that ``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.'' We would expect that manufacturers would use service 
accumulation fuels which are generally representative of the national 
average in-use fuels (or worst case for durability) during the model 
year which is being certified, including, for example, the ethanol 
content (for exhaust emissions), sulfur level, and fuel additive 
package. For exhaust emission bench aging durability programs as 
allowed under the provisions of Sec.  86.1823-08(d) and (e), the bench 
aging program should be designed using good engineering judgment to 
account for the effects of in-use fuels on exhaust emissions, including 
the effects of future in-use fuels on catalytic converters, oxygen 
sensors, fuel injectors, and other emission-related components.
    For evaporative emissions, durability fuel requirements are the 
same as for exhaust emissions (as outlined above), plus an additional 
requirement in the provisions of Sec.  86.1824-08(f), that the service 
accumulation fuel ``contains ethanol in, at least, the highest 
concentration permissible in gasoline under federal law and that is 
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 mileage 
accumulation.'' Thus, as E15 in-use fuel becomes progressively more 
available, we would expect that E15 service accumulation fuel would be 
used for whole vehicle evaporative durability programs. Similarly, 
evaporative bench aging durability programs allowed under the 
provisions of Sec.  86.1824-08(d) and (e), should be designed using 
good engineering judgment to account for the durability effects of in-
use fuels on evaporative emissions, bleed emissions, and leakage 
emissions.
    Where possible, we are proposing changes consistent with the CARB's 
planned LEV III gasoline test fuel specifications.\319\ Below is an 
overview of some of the key changes. A summary of the proposed test 
fuel specifications is provided in Table IV-21. For more information on 
how we arrived at the proposed test fuel property ranges and ASTM test 
methods, refer to Chapter 3 of the draft RIA.
---------------------------------------------------------------------------

    \319\ The LEV III program as approved by the California Air 
Resources Board, January 2012.
---------------------------------------------------------------------------

     Ethanol--adding a 15 volume percent ethanol specification 
to be forward-looking with respect to the maximum gasoline ethanol 
concentration Tier 3 vehicles could expect to encounter. EPA recently 
issued a waiver under section 211(f)(4) of the CAA permitting E15 to be

[[Page 29909]]

introduced into commerce for use in MY2001 and newer light-duty motor 
vehicles.\320\ While E15 is only commercially available at a limited 
number of fuel retailers, EPA believes it could become a major gasoline 
blend over the next 10-15 years given instability in crude oil pricing 
and growing RFS2 renewable fuel requirements. The use of E15 as the 
emission test fuel will help ensure that all future vehicles are 
capable of meeting Tier 3 emission standards while operating on E15.
---------------------------------------------------------------------------

    \320\ On Nov. 4, 2010, EPA issued a partial waiver for MY2007 
and newer light-duty motor vehicles (75 FR 68094). On January 26, 
2011, EPA extended the waiver to MY 2001-2006 light-duty motor 
vehicles (76 FR 4662).
---------------------------------------------------------------------------

     Octane--lowering gasoline octane to around 87 (R+M)/2 to 
be representative of in-use fuel, i.e., regular-grade gasoline. 
Manufacturers could continue to use high-octane gasoline for testing of 
premium-required \321\ vehicles and engines as well as for testing 
unrelated to exhaust emissions. Historically, the high octane rating of 
test fuel has not had any real emissions implications. However, as 
manufacturers begin introducing new advanced vehicle technologies 
(e.g., turbocharged downsized), this may no longer be the case. For 
those vehicles where operation on high-octane gasoline is required by 
the manufacturer, we would allow the manufacturer to test on a fuel 
with a minimum octane rating of 91 (R+M)/2 (in lieu of the proposed 87 
(R+M)/2 general test fuel). According to the proposed regulations found 
at Sec.  1065.710(d), vehicles or engines are considered to require 
premium fuel if they are designed specifically for operation on high-
octane fuel and the manufacturer requires the use of premium gasoline 
as part of their warranty as indicated in the owner's manual. Cases 
where premium gasoline is not required but is recommended to improve 
performance would not qualify as a vehicle or engine that requires the 
use of premium fuel. For qualifying vehicles and engines, all emission 
tests must use the specified high-octane fuel. For vehicles and engines 
certified on high-octane gasoline, all EPA confirmatory and in-use 
testing would also be conducted on high-octane gasoline. All other test 
fuel specifications would be the same as those proposed in Table IV-21. 
We seek comment on the need for limiting the maximum octane of gasoline 
used in the certification of premium-required engines and vehicles.
---------------------------------------------------------------------------

    \321\ Premium-required defined at Sec.  1065.710(d).
---------------------------------------------------------------------------

     Distillation Temperatures--adjusting gasoline distillation 
temperatures to better reflect today's in-use gasoline/E10. This 
includes minor T10, T90 and FBP adjustments based on AAM in-use fuel 
surveys and refinery batch test data, with additional adjustments to 
reflect future E15 performance (significantly lower T50 range). We seek 
comment on the appropriateness of the proposed distillation 
temperatures including the proposed 170-190[emsp14][deg]F T50 range for 
an E15 fuel. For more information on how we arrived at the proposed 
distillation temperatures in Table IV-21, refer to Chapter 3 of the 
draft RIA.
     Sulfur--lowering the sulfur content of test fuel to 8-11 
ppm to be consistent with our proposed Tier 3 gasoline sulfur 
standards. The proposed 10-ppm annual average sulfur standard is 
expected to result in two-thirds less sulfur nationwide so it is 
appropriate to lower the gasoline test fuel specification in concert.
     Benzene--setting a benzene test fuel specification of 0.6-
0.8 volume percent to represent in-use fuel under our new MSAT2 
regulations.\322\ The MSAT2 standards, which took effect January 1, 
2011, limit the gasoline pool to 0.62 volume percent benzene on 
average. Beginning July 1, 2012, no refinery may produce gasoline above 
1.3 volume percent benzene on average.
---------------------------------------------------------------------------

    \322\ 72 FR 8434 (February 26, 2007).
---------------------------------------------------------------------------

     Total Aromatics--lowering the aromatics content of test 
fuel to better match today's in-use gasoline/E10 and accommodate E15. 
According to AAM fuel surveys, the average aromatics content in 
gasoline has dropped 16 percent over the past decade due to ethanol 
blending.\323\ Additional ethanol blending to produce E15 is expected 
to result in even greater aromatics reductions. Accordingly, we believe 
the proposed 19.5-24.5 volume percent test fuel specification is 
appropriate.
---------------------------------------------------------------------------

    \323\ For more information on current aromatics levels, refer to 
Chapter 3 of the draft RIA.
---------------------------------------------------------------------------

     Distribution of Aromatics--in addition to total aromatics 
and benzene, we are proposing regulations that would require a 
distribution of aromatics (i.e., a certain amount of C7, C8, C9, and 
C10+ hydrocarbons) to ensure that test fuel is more representative of 
in-use gasoline. Heavier aromatics in gasoline are believed to 
contribute to vehicle PM emissions, so it is important that vehicles 
are designed to meet the proposed Tier 3 emission standards on fuel 
with a distribution of aromatic compounds representative of in-use 
gasoline. We also seek comment on the need for a multi-substituted 
alkyl aromatics (MSAA) specification, as has been proposed by CARB. For 
more information on our proposed aromatics specifications, refer to 
Chapter 3 of the draft RIA.
     Olefins--adjusting the olefins specification to better 
match today's in-use gasoline/E10 according to AAM fuel surveys. Not 
only is the proposed 4.5-11.5 mass percent range (approximately 4-6 
volume percent) more representative of in-use fuel, the narrower test 
fuel range would result in more consistent vehicle test results.
     Other Specifications--adding distillation residue, total 
content of oxygenates other than ethanol, copper corrosion, solvent-
washed gum, and oxidation stability specifications to better control 
other performance properties of test fuel. These proposed 
specifications are consistent with ASTM's D4814 gasoline specifications 
and CARB's LEV III test fuel requirements.
     Updates to Gasoline Test Methods--updating some of the 
gasoline test methods currently specified in Sec.  86.113 with more 
appropriate, easier to use, or more precise test methods for ethanol-
blended gasoline. Key changes include replacement of ASTM D323 with 
ASTM D5191 for measuring vapor pressure; replacement of ASTM D1319 with 
ASTM D5769 for measuring aromatics and benzene; and replacement of ASTM 
D1266 with three alternative ASTM test methods (D2622, D5453 or D7039) 
for measuring sulfur. We request comment on the use of three different 
test methods for the measurement of sulfur content.
     Consolidation of Test Fuels--consolidation of all gasoline 
exhaust and evaporative emission test fuels into a single general test 
fuel. This would be used for all on-highway vehicle testing with the 
exception of cold CO vehicle testing (which would use higher volatility 
test fuel) and high-altitude testing (which would be permitted to use 
lower volatility fuel). As discussed above, commercial gasoline would 
continue to be used for service accumulation (durability fuel). This is 
consistent with CARB's LEV III approach and should help limit the total 
number of test fuels that automakers need to manage.

[[Page 29910]]



                                                   Table IV-21--Proposed Gasoline Emissions Test Fuel
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Specification
                                                      -------------------------------------------------------------
            Property                      Unit                            Low-temperature                                 ASTM reference procedure
                                                        General testing       testing       High altitude testing
--------------------------------------------------------------------------------------------------------------------------------------------------------
Antiknock Index (R+M)/2.........  ...................              87.0--88.4              87.0 Minimum...........  D2699-11 and D2700-11.
--------------------------------------------------------------------------------------------------------------------------------------------------------
,nSensitivity (R-M).............  ...................                          7.5 Minimum
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dry Vapor Pressure Equivalent     kPa (psi)..........         60.0-63.4         77.2-81.4  52.4-55.2..............  D5191-10b.
 (DVPE).                                                      (8.7-9.2)       (11.2-11.8)  (7.6-8.0)..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Distillation
    10% evaporated..............  [deg]C ([deg]F)....             49-60             43-54  49-60..................  D86-10a.
                                                              (120-140)         (110-130)  (120-140)..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
    ,n50% evaporated............  [deg]C ([deg]F)....                        77-88 (170-190)
    90% evaporated..............  [deg]C ([deg]F)....                       154-166 (310-330)
    Evaporated final boiling      [deg]C ([deg]F)....                       193-216 (380-420)
     point.
Residue.........................  Milliliter.........                          2.0 Maximum
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Aromatic Hydrocarbons.....  vol. %.............                           19.5-24.5                           D5769-10.
--------------------------------------------------------------------------------------------------------------------------------------------------------
    ,nC6 Aromatics (benzene)....  vol. %.............                            0.6-0.8
    C7 Aromatics (toluene)......  vol. %.............                            4.4-5.5
    C8 Aromatics................  vol. %.............                            5.5-6.9
    C9 Aromatics................  vol. %.............                            5.0-6.2
    C10+ Aromatics..............  vol. %.............                            4.0-5.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Olefins.........................  mass %.............                            4.5-11.5                           D6550-10.
Ethanol.........................  vol. %.............                           14.6-15.0                           D5599-00 (Reapproved 2010).
--------------------------------------------------------------------------------------------------------------------------------------------------------
,nTotal Content of Oxygenates     vol. %.............                          0.1 Maximum
 Other than Ethanol.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sulfur..........................  mg/kg..............                            8.0-11.0                           D2622-10, D5453-09 or D7039-07.
Lead............................  g/liter............                         0.0026 Maximum                        D3237-06.
Phosphorus......................  g/liter............                         0.0013 Maximum                        D3231-11.
Copper Corrosion................  ...................                         No. 1 Maximum                         D130-10.
Solvent-Washed Gum Content......  mg/100 ml..........                          3.0 Maximum                          D381-09.
Oxidation Stability.............  Minute.............                         1,000 Minimum                         D525-05.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    EPA seeks comment on the appropriateness of the proposed forward-
looking E15 test fuel for light- and heavy-duty gasoline vehicles. 
While we believe we have discretion under the statute to transition 
from E0 to E15 test fuel, we acknowledge that vehicle manufacturers 
will need to calibrate their vehicles to meet the proposed Tier 3 
standards on fuel containing 15 percent ethanol by volume. Our analysis 
of the proposed Tier 3 standards (emission control technology, 
feasibility, cost, etc.) assumes the use of the proposed E15 test fuel. 
We anticipate that vehicle electronic control systems will be fully 
capable of adjusting to maintain emission performance when operating on 
E10 (or any remaining E0), but if E15 were not to enter the gasoline 
pool in significant quantities, it may be more appropriate to require 
that vehicles be calibrated for and tested on E10.
    We are seeking comment on various alternative approaches, e.g., 
starting with E10 as the test fuel and transitioning to E15 as the 
market further transitions to E15 in use. This could include a market 
review in 2014 or 2015 followed by regulatory action to implement the 
change from E10 to E15 test fuel, if warranted. Or, it could include 
the establishment of a ``trigger point'' (e.g., 30 percent of gasoline 
is E15) in the Tier 3 final rule to prompt an automatic move to E15 
after a certain period of time, e.g., two or three years. Or, we could 
simply set a future date (e.g., 2020) with sufficient time for 
transitioning to E15 test fuel. These transition approaches would give 
vehicle manufacturers additional lead time to prepare for higher 
ethanol concentrations in test fuel. We seek comment on the various 
transition approaches, their timing, and the appropriate specifications 
for an E10 test fuel to be used in the interim.
    While the volatility (i.e., RVP) of CARB's E10 test fuel is 7.0 psi 
to be representative of in-use gasoline in California during summer 
months, conventional E10 in the rest of the country is currently around 
10 psi. Thus, should we finalize E10 instead of E15, in the absence of 
any standard to reduce the in-use RVP of E10 to 9.0 psi or lower, we 
would also have to consider raising the RVP of certification test fuel 
to 10 psi to reflect the RVP level of the current in-use fuel. Were we 
to raise the volatility to 10 psi RVP, EPA believes that the proposed 
evaporative emission standards would be feasible, but this would 
increase the stringency of the proposed evaporative emission standards 
(see Section IV.C). Changing certification test fuel to 10 psi RVP 
would increase vapor generation rates during the refueling test by 
about 10 percent and during the hot soak, diurnal, canister bleed, and 
running loss tests by as much as 25 percent in total. To the extent 
that the refueling test dictates the size of the canister, the 
increased vapor generation would necessitate increases in the volume of

[[Page 29911]]

activated carbon used in the vehicle's onboard canister by about 10 
percent. Perhaps more importantly, manufacturer's vehicle purge 
strategies and technologies would likely have to be modified to 
removing the larger vapor loads from the canister during vehicle 
operation. Some vehicles have adequate engine vacuum available to 
provide the increased purge, while others may require new or innovative 
approaches to increase purge volume or canister purge efficiency as 
discussed in the evaporative emissions technology discussion. While we 
have not performed a detailed analysis, EPA estimates that on average 
the evaporative standard compliance costs could be about $10-15 per 
vehicle higher at 10 psi RVP compared to 9 psi RVP for canister and 
purge upgrades. With respect to lead time, EPA's current proposal calls 
for either 40 percent of light-duty vehicles to meet the Tier 3 
evaporative emission standards in 2017 MY (percentage option) or for a 
manufacturer to sell only zero evap PZEVs nationwide (PZEV only 
option). This basic approach for 2017 could still be feasible depending 
on the resolution of the test procedure issues and proposed 
flexibilities in phase-in schemes.
    Raising the certification test fuel to 10 psi RVP would also impact 
the equivalency of CARB and EPA refueling and hot soak plus diurnal 
evaporative emission test procedures. These potential impacts would 
have to be addressed to maintain CARB/EPA evaporative emissions test 
reciprocity. Furthermore, there may be test procedure options for 
minimizing the burden of changing certification test fuel RVP while 
maintaining the needed in-use control.
    EPA does not believe that a 10 psi certification test fuel would 
impact the feasibility or cost of the proposed leak emission standard 
or the proposed change in the OBD evaporative system leak detection 
requirements, since these are based on orifice diameter. Nor, do we 
believe that it would have any negative impact on permeation emissions 
or exhaust emissions.
    As mentioned above, EPA issued a waiver allowing E15 to be 
introduced into commerce for use in MY 2001 and newer light-duty motor 
vehicles. On July 25, 2011, EPA finalized regulations to mitigate the 
potential for misfueling of vehicles, engines, and equipment not 
covered by the E15 waiver, i.e., MY 2000 and older light-duty motor 
vehicles, all heavy-duty gasoline vehicles and engines, motorcycles, 
and all gasoline-powered nonroad products (which includes boats).\324\ 
Two of the required mitigation measures are a label for fuel pumps that 
dispense E15 to alert consumers to the appropriate and lawful use of 
the fuel and a prohibition on the use of E15 by consumers in vehicles 
not covered by the waiver, excluding flexible fuel vehicles (FFVs). If, 
as discussed in this proposed rule, any class of new heavy-duty 
gasoline vehicles or engines begin testing on E15 for certification, 
EPA would not need to issue a waiver under section 211(f)(4) to allow 
introduction of E15 into commerce for use in these vehicles certified 
on E15 test fuel. However, EPA acknowledges that changes to the 
gasoline pump label and prohibitions finalized in the E15 Misfueling 
Mitigation Measures Rule would have to be made before E15 could 
lawfully be sold for use in these heavy-duty vehicles. This would be 
addressed in a future action.
---------------------------------------------------------------------------

    \324\ 76 FR 44406 (July 25, 2011).
---------------------------------------------------------------------------

    As discussed above in Sections IV.A.7.c (tailpipe emission testing) 
and IV.C.4.b (evaporative emission testing), we are proposing to 
require certification of all Tier 3 light-duty and chassis-certified 
heavy-duty gasoline vehicles on E15 test fuel. As described in those 
sections, we are proposing that EPA still accept testing for 
certification on CARB's E10 test fuel during the phase-in periods for 
the respective proposed Tier 3 vehicle tailpipe and evaporative 
emissions standards and, if certified on CARB's E10 test fuel, that EPA 
would not perform or require in-use exhaust or evaporative testing on 
E15 test fuel.
    As mentioned earlier, we plan to continue to allow manufacturers to 
test vehicles on premium-grade gasoline should the vehicles require it. 
Since we cannot predict all future changes in gasoline vehicle 
technologies and in-use fuels, we are proposing to allow vehicle 
manufacturers to specify an alternative test fuel under certain 
situations. Under this proposal, if manufacturers were to design 
vehicles that required operation on a higher octane, higher ethanol 
content gasoline (e.g., dedicated E30 vehicles or FFVs optimized to run 
on E30 or higher ethanol blends), under 40 CFR 1065.701(c), they could 
petition the Administrator for approval of a higher octane, higher 
ethanol content test fuel if they could demonstrate that such a fuel 
would be used by the operator and would be readily available 
nationwide, vehicles would not operate appropriately on other available 
fuels, and such a fuel would result in equivalent emissions 
performance. For vehicles certified on high-octane, high-ethanol 
gasoline, all EPA confirmatory and in-use testing would also be 
conducted on high-octane, high-ethanol gasoline. This could help 
manufacturers who wish to raise compression ratios to improve vehicle 
efficiency as a step toward complying with the 2017 and later light-
duty greenhouse gas and CAFE standards. This in turn could help provide 
a market incentive to increase ethanol use beyond E10 and enhance the 
environmental performance of ethanol as a transportation fuel by using 
it to enable more fuel efficient engines. We seek comment on the 
appropriateness of the alternative test fuel provisions at Sec.  
1065.701(c) and the need to specify more precisely the makeup of such a 
fuel (ethanol content, as well as other fuel parameters) in the 
regulations at this time. We are also seeking comment on whether there 
are other aspects of today's proposed standards that might need to be 
modified to provide an incentive for, or remove obstacles to, the 
development of highly efficient vehicles optimized for use on higher 
level ethanol blends.
2. Proposed Flexible Fuel Vehicle Test Fuel
    While the Agency has for some time had testing requirements for 
flexible fuel vehicles (FFVs) on E85 fuel blends, EPA currently has no 
regulatory specifications for the test fuel itself. Historically, our 
laboratory practice has been to blend indolene (E0) with neat ethanol 
and normal butane to produce an FFV test fuel with 83 volume percent 
ethanol and an RVP from 6.0 to 6.5 psi. However, the lack of E85 test 
fuel specifications has caused confusion and inconsistency among FFV 
manufacturers in carrying out their certification requirements.
    Similar to the previous discussion regarding gasoline test fuels, 
we believe it is important that the fuel used to test FFVs reflect the 
composition of actual in-use E85. This may become increasingly 
important if E85 usage in FFVs increases to help satisfy the growing 
RFS2 renewable fuel requirements.
    The term ``E85'' has historically been used to describe an ethanol 
blend with a maximum ethanol content of 83 volume percent and specified 
minimum ethanol content for use in FFVs. In the recently updated ASTM 
International specification, the minimum ethanol concentration was 
reduced from 68 to 51 volume percent.\325\ As part of the updated 
specification, ASTM retired the name E85 because it has caused

[[Page 29912]]

confusion regarding the necessary variability in the ethanol content of 
the blend depending upon seasonal climactic conditions. The official 
name in the new ASTM specification is ``ethanol fuel blends for 
flexible-fuel automotive spark-ignition engines.'' For the sake of 
brevity, we shall refer to this fuel as E51-83.
---------------------------------------------------------------------------

    \325\ ASTM International D5798-11, ``Standard Specification for 
Ethanol Fuel Blends for Flexible-Fuel Automotive Spark-Ignition 
Engines''.
---------------------------------------------------------------------------

    Consistent with our current policy regarding the formulation of FFV 
test fuel, we believe that the ethanol content should be at or near the 
maximum ethanol level on which the vehicles were designed to operate to 
ensure that the testing reflects the full range of in-use formulations 
and emissions performance. To provide adequate flexibility for test 
fuel manufacturers, we are proposing that the ethanol content must be 
from 80 to 83 volume percent. Rather than specify ranges for the other 
fuel parameters as we have done for gasoline test fuel in Table IV-21, 
we are proposing that the FFV test fuel would be defined based on the 
results from blending the proposed E15 standard gasoline test fuel with 
ethanol. We propose that denatured fuel ethanol (DFE) that meets the 
proposed specifications would be used to increase the ethanol content 
to 80 to 83 volume percent.\326\
---------------------------------------------------------------------------

    \326\ The proposed requirements for DFE are contained in Section 
V.C of today's preamble.
---------------------------------------------------------------------------

    It is important to ensure that the volatility of FFV test fuel 
meets minimum volatility specifications to provide adequate 
startability and for safety reasons. The ASTM minimum RVP specification 
that conforms to the specified temperature at which FFV emission 
testing takes place (68 to 86[emsp14][deg]F) is 5.5 psi. EPA conducted 
discussions with vehicle and test fuel manufacturers to arrive at the 
current guidance that the RVP of the finished test fuel should be 
between 6.0 and 6.5 psi. We propose to formalize the current guidance 
in the regulatory requirements for FFV test fuel. We propose that 
commercial grade normal butane could be added to trim the RVP of the 
finished test fuel to meet the proposed specifications.\327\ A 6.0 to 
6.5 range in RVP has historically provided test fuel manufacturers 
adequate flexibility in formulating test fuels. Limiting the amount of 
butane that is added to formulate FFV test fuels is important because 
if excessive volumes of butane were used it could inappropriately 
reduce the stringency of emissions testing.
---------------------------------------------------------------------------

    \327\ The specifications for commercial grade butane are 
contained in 40 CFR 80.82.
---------------------------------------------------------------------------

    As an alternative to the use of DFE to manufacture FFV test fuel, 
we propose that neat (undenatured) fuel grade ethanol could be used. We 
also propose that as an alternative to using a finished E15 standard 
gasoline test fuel in the manufacture of FFV test fuel that the 
gasoline blendstock used to produce a compliant E15 test fuel could be 
used to manufacture the FFV test fuel. This would allow ethanol to be 
blended only once to produce FFV test fuel. The test fuel manufacturer 
would be required to test a sample of the subject gasoline blendstock 
after the addition of ethanol to produce a finished standard E15 
gasoline test fuel and demonstrate that the blend meets all of the 
proposed requirements for standard gasoline test fuel described in 
Section IV.D.1.
    We propose that the above FFV emissions test fuel specifications 
would become applicable on the same schedule as the proposed E15 
standard gasoline test fuel specifications become applicable for light- 
and heavy-duty gasoline vehicles (described below in Section IV.D.3). 
We believe that the proposed requirements would ensure that FFV test 
fuel reflects the composition of in-use ethanol fuel blends for 
flexible-fuel automotive spark-ignition engines while minimizing the 
burden on the industry with respect to test fuel formulation and the 
number of test fuel blend components that must be stored.
    Under the Tier 2 program, FFVs utilize a test fuel containing 10 
percent ethanol with an RVP of approximately 10 psi for evaporative 
emission testing. The proposed E15 certification fuel for non-FFVs is a 
9 psi E15 fuel. We seek comment on whether the new E15 evaporative 
emissions test fuel for FFVs should continue to have an RVP of 10 psi 
to maintain the level of performance established under the Tier 2 
program.
3. Proposed Implementation Schedule
    As described earlier in Section IV.C, we are proposing Tier 3 
exhaust and evaporative emission standards with today's notice. The 
proposed changes in the specifications for test fuel would apply to 
vehicles certified to these new standards. We are proposing to 
transition to the new test fuel during the first few years that the 
Tier 3 standards are phasing in. As described in Sections IV.A and 
IV.B, testing with the new fuel would start with light-duty vehicles 
certified to Tier 3 bin standards at or below Bin 70, and heavy-duty 
vehicles certified to Tier 3 bin standards at or below Bin 250 (for 
Class 2b) and Bin 300 (for Class 3). Starting with model years 2020 for 
light-duty and 2022 for heavy-duty, we would require that all 
manufacturers use the new test fuel for all exhaust emission testing 
(with the exception of Small Volume Manufacturers and small businesses, 
which could delay using the new test fuel until model year 2022). 
Manufacturers would also need to comply with cold temperature CO and 
NMHC standards using the new test fuel for any models that use E15 test 
fuel for meeting the light-duty Tier 3 exhaust emission standards. 
These same tests would also provide the basis for meeting GHG 
requirements under 40 CFR part 86 and fuel economy requirements under 
40 CFR part 600, as described in the following section.
    We are proposing to require evaporative emission testing with the 
new test fuel for any models that are certified to the Tier 3 
evaporative emission standards. To the extent that these models are 
different than those used for exhaust emission testing with the new 
test fuel, manufacturers would need to do additional testing to 
demonstrate compliance with all applicable standards. They may 
alternatively use the new test fuel earlier than the regulations 
specify to avoid additional testing. We further propose to require that 
manufacturers submit certification data based on the new test fuel to 
demonstrate compliance with refueling emission standards for any 
vehicles that are certified to the Tier 3 evaporative emission 
standards.
4. Potential Implications on CAFE Standards, GHG Standards, and Fuel 
Economy Labels
    EPA and the National Highway Traffic Safety Administration (NHTSA) 
recently finalized a joint greenhouse gas (GHG) emissions and corporate 
average fuel economy (CAFE) standards for MY 2017-2025 light-duty 
vehicles, light-duty trucks, and medium-duty passenger vehicles.\328\ 
These GHG and CAFE standards build upon the National Program that was 
first announced by the President in May 2009 and which allows 
manufacturers to build a single fleet of light vehicles that can 
satisfy all federal and state requirements for GHG emissions and fuel 
economy. The first round of standards by EPA and NHTSA under the 
National Program cover MY 2012-2016.\329\
---------------------------------------------------------------------------

    \328\ 77 FR 62623 (October 15, 2012).
    \329\ 75 FR 25324 (May 7, 2010).
---------------------------------------------------------------------------

    The recently finalized MY 2017-2025 GHG and CAFE standards affect 
essentially the same vehicle classes over the same timeframe as this 
proposal for non-GHG emissions standards and gasoline fuel quality. 
Accordingly, EPA believes it is important for the two rulemakings to be 
coordinated so that manufacturers can develop future

[[Page 29913]]

product development plans with a full understanding of the major 
regulatory requirements they would be facing over the MY 2017-2025 time 
frame.
    The Agency would like to highlight two important issues of overlap 
between these two rulemakings: Test fuel and useful life. As explained 
above, today's action proposes to update EPA's test fuel to better 
match in-use fuels, with the change in test fuel phased-in from MY 
2017-2020 for light-duty exhaust emission compliance. The proposal 
involves several changes to the emissions test fuel specifications, 
including, notably, a 15 percent by volume ethanol content. The current 
emissions test fuel contains zero ethanol. Regarding useful life, we 
are proposing a longer useful life for some vehicles, as described in 
Section IV.A.7.b, from the current 120,000 miles to 150,000 miles.
a. Test Fuel
    The proposed change in test fuel, if finalized, could have 
implications for both the CAFE and GHG emissions compliance programs, 
as well as the fuel economy labeling program. EPA is committed to the 
principle of ensuring that the proposed change in test fuel would not 
affect the stringency of either the CAFE or GHG emissions standards, 
and that the labeling calculations would be updated to reflect the 
change in test fuel.
    While NHTSA establishes the fuel economy standards for the CAFE 
program, EPA is responsible for vehicle testing and calculation of fuel 
economy values used by manufacturer for compliance with the CAFE 
standards. Under the Energy Policy and Conservation Act (EPCA), 
limitations are placed on the test procedures used to measure fuel 
economy for passenger cars. For passenger automobiles, EPA has to use 
the same procedures used for model year 1975 automobiles, or procedures 
that give comparable results.\330\ When EPA has made changes to the FTP 
or HFET, we have evaluated whether it is appropriate to provide for an 
adjustment to the measured fuel economy results, to comply with the 
EPCA requirement for passenger cars that the test procedures produce 
results comparable to the 1975 test procedures. These adjustments are 
typically referred to as a CAFE or fuel economy test procedure 
adjustment or adjustment factor.
---------------------------------------------------------------------------

    \330\ 49 U.S.C. 32904(c).
---------------------------------------------------------------------------

    Because ethanol has a lower energy content than gasoline, i.e., 
fewer British thermal units (Btus) or joules per gallon,\331\ and fuel 
economy is defined in terms of miles per gallon of fuel, it is almost 
certain that the same vehicle tested on a test fuel with 15 percent 
ethanol content will yield a lower fuel economy value relative to the 
value if it were tested on the current test fuel with zero ethanol 
content. For CAFE purposes, the existing fuel economy equation for 
gasoline that has been in use for many years already contains an 
adjustment for the energy content of the test fuel to calculate fuel 
economy equivalent to what would have been determined using the 1975 
baseline test fuel.\332\ Therefore, it is not clear that any further 
action is necessary to account for the proposed change in certification 
test fuel. Within this equation, however, is a so-called ``R-factor'' 
to account for the fact that the change in fuel economy is not directly 
proportional to the change in energy content of the test fuel. Although 
an R-factor of 0.6 has been used since 1988, manufacturers have 
suggested that a higher value may be more appropriate. We discuss this 
issue in a memo to the docket.\333\ This is a technical issue with the 
fuel economy equation that has been raised in the context of the 
proposed certification test fuel change, but technically it is distinct 
from the proposed change in test fuel. EPA will continue to investigate 
this issue and if necessary address it as part of a future action.
---------------------------------------------------------------------------

    \331\ EPA estimates that, on average, E85 fuel contains 25-30 
percent less energy per gallon than gasoline with zero ethanol.
    \332\ 40 CFR 600.113-12(h)(1).
    \333\ Butler, A. (February 2013) Analysis of the Effects of 
Changing Fuel Properties on the EPA Fuel Economy Equation and R-
Factor. Memorandum to the docket.
---------------------------------------------------------------------------

    EPA is also committed to retaining equivalent stringency for GHG 
emissions compliance associated with the proposed test fuel change. The 
proposed changes in test fuel properties in this rule do not have any 
appreciable impact on carbon dioxide grams per mile levels. This is 
supported by data from the EPAct study, which show that the change in 
the test fuel have both positive and negative impacts that offset each 
other and that there is no net impact on carbon dioxide grams per mile 
levels. This is discussed in a memo to the docket.\334\ We seek comment 
on the impact of this proposal on CO2 emissions. Should 
action to adjust the compliance calculation for the light-duty GHG 
standards become warranted, we would include such changes as a part of 
a future action.
---------------------------------------------------------------------------

    \334\ Butler, A. (February 2013) Analysis of the Effects of 
Changing Fuel Properties on the EPA Fuel Economy Equation and R-
Factor. Memorandum to the docket.
---------------------------------------------------------------------------

    EPA expects that there may be a potential impact on manufacturer's 
fuel economy and greenhouse gas testing burden during the Tier 3 phase-
in years. Currently, for example, manufacturers carry over a 
considerable amount of previous model year data in support of their 
Fuel Economy Labeling and CAFE/Greenhouse Gas programs. We are 
proposing that Tier 3 compliant vehicles would be required to test on 
E15 test fuel, and thus, manufacturers would normally not be allowed to 
carry over previous model year data from vehicles tested on E0 test 
fuel. EPA anticipates that such carryover requests could be handled 
during the Tier 3 phase-in years with modifications to EPA's current 
policy for the use of analytically derived data (see EPA's fuel 
economy, CO2, and carbon-related exhaust emissions testing 
regulations at 40 CFR 600.006-08(e) and EPA guidance letter CD-12-03 
(February 27, 2012) and CCD-04-06, (March 11, 2004 \335\)). EPA 
requests comments on whether there is a need for further reductions in 
fuel economy/greenhouse gas testing burden beyond that allowed by the 
above EPA guidance letters. Any comments supporting the need to reduce 
fuel economy/greenhouse gas testing burden (beyond that allowed by 
EPA's policy for the use of analytically derived data) should describe 
one or more specific methods of reducing such testing burden.
---------------------------------------------------------------------------

    \335\ EPA Guidance Letters CD-12-03 (Analytically Derived 
CO2 and Carbon-Related Exhaust Emissions (CREE) for 
Light-Duty Vehicles) and CCD-04-06 (Updated Analytically Derived 
Fuel Economy (ADFE) Policy for 2005 MY and Later), March 11, 2004, 
is available through the EPA Transportation and Air Quality Document 
Index System at: http://iaspub.epa.gov/otaqpub/.
---------------------------------------------------------------------------

    Finally, EPA will need to update the fuel economy labeling 
calculations in 40 CFR Part 600 to reflect the proposed E15 test fuel. 
The current methodology, which took effect with the 2008 model year, 
contains equations that, when applied to test results using current 
fuel (zero alcohol), adjust for an average national impact of ethanol 
in fuel on fuel economy. These equations would need to be revised such 
that the adjustment remains consistent with the actual national use of 
ethanol in fuel.
b. Useful Life for GHG Standards
    As stated above, EPA is committed to retaining equivalent 
stringency for GHG emissions compliance beginning in MY 2017. In 
contrast to the proposed Tier 3 test fuel, for which we are uncertain 
as to the effects on GHG emissions, we believe that certifying a 
vehicle to a longer useful life for any emission constituent would have 
only a

[[Page 29914]]

beneficial effect on emissions. To address potential concerns about 
changes in the stringency of the GHG standards resulting from a longer 
useful life, we are not proposing to require a longer useful life for 
GHG emission standards. As this approach may result in additional 
testing burden, we are proposing that manufacturers could optionally 
certify GHG emissions to a 150,000 mile, 15 year useful life.
5. Consideration of Nonroad, Motorcycle, and Heavy-Duty Engine 
Emissions Test Fuel
    As described earlier in Section IV.D.1., we are proposing new 
specifications for the gasoline emissions test fuel used for testing 
highway vehicles subject to the proposed Tier 3 standards. In 
developing today's proposal, EPA also considered proposing the change 
in test fuel specifications for other categories of engines, vehicles, 
equipment, and fuel system components that use gasoline. This would 
include a wide range of applications, including small nonroad engines 
used in lawn and garden applications, recreational vehicles such as 
ATVs and snowmobiles, recreational marine applications, on-highway 
motorcycles, and larger heavy-duty gasoline engines. While engines in 
some of these categories employ advanced technologies similar to light-
duty vehicles and trucks, the vast majority of these engines employ 
much simpler designs, with many of the engines being carbureted with no 
electronic controls. Because of lower level of technology, emissions 
from these engines are potentially much more sensitive to changes in 
fuel quality.
    EPA is not proposing to apply the new emissions test fuel 
specifications to these other categories of engines, vehicles, 
equipment, and fuel system components. In discussing the potential 
change in test fuel specifications with the large number of businesses 
potentially impacted by such a change, many companies supported such a 
change. However, a number of manufacturers raised concerns about the 
level of ethanol in the new fuel, the cost of recertifying emission 
families on the new fuel, the impact on nationwide product offerings, 
and the cost impact of complying with the existing standards on the new 
test fuel. EPA believes it is important that the emissions test fuel 
for these other categories reflect real-world fuel qualities but has 
elected to defer moving forward now pending additional analysis of the 
impacts of changing the test fuel specifications for the wide range of 
engines, vehicles, equipment and fuel system components that could be 
impacted. These impacts include the impact on the emissions standards, 
as well as the other issues raised by the manufacturers. EPA plans to 
explore such a change in a separate future action. EPA requests comment 
on the implications of changing the test fuel for these other 
categories and whether a different test fuel would be more appropriate 
for these other categories.
6. Consideration of CNG and LPG Emissions Test Fuel
    There are currently no sulfur specifications for the test fuel used 
for certifying natural gas vehicles. There is also no sulfur 
specification in Sec.  86.113 for the test fuel used for certifying 
liquefied petroleum gas (LPG) vehicles. The corresponding LPG test fuel 
for heavy-duty highway engines and for nonroad engines in Sec.  
1065.720 includes an 80 ppm maximum sulfur specification.
    We request comment on the appropriateness of changing Sec.  86.113 
to reference 40 CFR part 1065 for both natural gas and LPG test fuels. 
We further request comment on amending these specifications to better 
reflect in-use fuel characteristics, and in particular on the 
appropriateness of aligning the sulfur specifications with those that 
apply for gasoline test fuel. Changing the sulfur specifications would 
depend on establishing that the new specification is consistent with 
the range of properties expected from in-use fuels.

E. Small-Business Provisions

    As in previous vehicle rulemakings, our justification for including 
provisions specific to small businesses is that these entities 
generally have a greater degree of difficulty in complying with the 
standards compared to other entities.
    In developing the proposed Tier 3 vehicle program, we evaluated the 
environmental need as well as the technical and financial ability of 
manufacturers and others to meet the standards as expeditiously as 
possible. We believe it is feasible and necessary for the vast majority 
of the program to be implemented in the established time frame to 
achieve the air quality benefits as soon as possible. Based on 
information available from small manufacturers and others, we believe 
that entities classified as small generally face unique circumstances 
with regard to compliance with environmental programs, compared to 
larger entities. Thus, as discussed below, we are proposing several 
flexibility provisions for small businesses in the vehicle industry to 
reduce the burden that this program could have on them. These proposed 
provisions are based on the recommendations of the Small Business 
Advocacy Review (SBAR) Panel described in Section XIII.C of today's 
proposal and include a few additional provisions.
    Small entities generally lack the resources that are available to 
larger companies to carry out necessary research and development and to 
raise capital for investing in a new regulatory program. Small entities 
are also likely to have more difficulty in competing for any needed 
engineering and construction resources and lower production volume over 
which to spread their compliance costs. Small entities also tend to 
have limited product lines, which limits their ability to take 
advantage of the phase-in and ABT flexibility provisions in the 
proposal. As such, we are proposing regulatory flexibility provisions 
that would provide additional lead time and reduced testing burden for 
small entities in meeting the proposed Tier 3 standards. This proposed 
approach would allow the overall program to begin as early as possible; 
achieving the air quality benefits of the program as soon as possible, 
while helping to ensure that small entities have adequate time to make 
any necessary modifications to their product lines. We believe that 
small business regulatory flexibilities could provide these entities 
with additional help and/or time to take advantage of technological 
developments by other parties and to accumulate capital internally or 
to secure capital financing from lenders, and could spread out the 
availability of any needed engineering resources. We believe these 
provisions will also reduce their overall compliance burden and allow 
them to more easily transition to the new standards in a way that 
matches their business practices.
    The provisions described below would be available to all small 
businesses subject to the Tier 3 emission standards. The types of 
companies subject to the Tier 3 emission standards include vehicle 
manufacturers, and two additional categories of businesses that are 
generally referred to as independent commercial importers (ICIs) and 
alternative fuel vehicle converters. As discussed below, the proposed 
set of flexibilities would also be available to manufacturers in these 
three business categories that sell less than 5,000 vehicles per year 
that are subject to the Tier 3 emission standards.

[[Page 29915]]

1. Lead Time for Exhaust and Evaporative Emission Standards
    As noted above, small businesses have limited resources available 
for developing new designs to comply with new emission standards. In 
addition, it is often necessary for these businesses to rely on vendor 
companies for technology. Moreover, percentage phase-in requirements 
and declining fleet average standards pose a dilemma for a small 
manufacturer that has a limited product line (e.g., the manufacturer 
certifies vehicles in only one or two test groups). Thus, similar to 
the flexibility provisions implemented in previous vehicle rules, the 
Panel recommended that EPA allow small businesses the following 
flexibility option for meeting the proposed Tier 3 emissions standards.
    EPA is proposing that small businesses (and small volume 
manufacturers, as discussed below) be given additional lead time to 
comply with the proposed Tier 3 exhaust and evaporative emission 
standards. Specifically, we propose to allow small manufacturers to 
postpone compliance with the standards and other Tier 3 requirements, 
including use of the proposed new certification test fuel, until model 
year 2022. For model year 2022 and later, small manufacturers would be 
subject to the same Tier 3 exhaust and evaporative requirements as 
other manufacturers, including moving to the declining FTP fleet 
average NMOG+NOX curve and complying with the fully phased-
in standard of 30 mg/mi, as well as certifying on E15 test fuel. (This 
approach is similar to that in the Tier 2 rule where EPA allowed small 
manufacturers to wait until the end of the phase-in to comply with the 
Tier 2 standards.) As described earlier in this section, the proposed 
Tier 3 rule has several different phase-in schedules; with the final 
dates varying from model year 2021 for the new light-duty exhaust PM 
standards to model year 2025 for the new light-duty exhaust gaseous 
pollutant standards. Requiring all small businesses to comply with the 
full slate of Tier 3 requirements in model year 2022 should provide 
sufficient lead time for manufacturers to plan for and implement the 
technology changes needed to comply with the Tier 3 standards.
    During the SBAR Panel process, one small entity representative 
(SER) recommended that EPA adopt relaxed exhaust standards for small 
manufacturers. The SER noted that the exhaust emission averaging 
program being proposed by EPA would allow large manufacturers that have 
many engine families to certify their small, niche products at emission 
levels numerically higher than the standards. Small manufacturers that 
typically do not have more than one or two emission families generally 
cannot use averaging to the same extent because of their limited 
product offerings. The SER was concerned that the high-performance 
vehicles produced by large manufacturers which they compete against 
would be able to certify at numerically higher levels at less cost than 
the SER would incur. The SER-recommended relaxed NMOG+NOX 
standards over the Federal Test Procedure (FTP) are 125 mg/mi in model 
year 2020 and 70 mg/mi in model year 2025. This is the same general 
approach that the CARB Board approved for small volume manufacturers in 
LEV III (a relaxed standard NMOG+NOX of 125 mg/mi followed 
by a fully phased-in standard of 70 mg/mi in model year 2025), except 
that the CARB program introduces the relaxed standard and the change in 
test fuel in model year 2022.
    As described above, although we are proposing a delay in the Tier 3 
requirements, EPA is not proposing to relax the fully phased-in 
standards for the small entities. We believe that these standards are 
technologically feasible and can be readily achieved with the 
additional lead time we are proposing as the technology would have 
already been demonstrated by other manufacturers, in some cases on the 
very same engines used by the small manufacturers. In addition, the 
compliance costs for many of these vehicles, even if higher on an 
absolute basis, may still be lower on a relative basis given the higher 
average cost of the vehicles. Furthermore, EPA is proposing to allow 
manufacturers to apply for hardship relief (discussed below) on a case-
by-case basis. EPA requests comment on our proposed approach and 
whether there is an additional need for the final rule to allow small 
manufacturers to meet relaxed NMOG+NOX exhaust emission 
standards on the FTP over the long term, as suggested by the SER and as 
reflected in action by CARB.
    In light of the CARB Board-approved implementation schedule for 
small manufacturers described above, we also request comment on an 
option that would not provide a permanent relaxed standard for small 
manufacturers, but would provide a temporary relaxed standard matching 
the California standard from model year 2022 through 2024. This option 
would apply to the Tier 3 exhaust emission standards starting in 2022, 
except that a relaxed NMOG+NOX standard of 125 mg/mi would 
apply in model years 2020-2024 for FTP testing. For model years 2025 
and later, the standard would be the same as for all other 
manufacturers, or 30 mg/mi. Under this option, small manufacturers 
would have to take some action to reduce emissions in 2022 and could 
postpone meeting fully phased-in Tier 3 standards until 2025.
2. Assigned Deterioration Factors
    Under EPA's regulations, manufacturers must demonstrate that their 
vehicles comply with the emission standards throughout the ``useful 
life'' period. This is generally done by testing vehicles at low-
mileage and then applying a deterioration factor to these emission 
levels. The deterioration factors are determined by aging new emission 
control systems and then testing the aged systems again to determine 
how much deterioration in emissions has occurred. In order to reduce 
the testing burden in previous rulemaking, EPA has allowed small 
manufacturers to use deterioration factor values assigned by EPA 
instead of performing the extended testing. A manufacturer would apply 
the assigned deterioration factors to its low-mileage emission level to 
demonstrate whether it complied with the Tier 3 emission standards.
    With today's proposal, EPA proposes that small businesses be 
allowed the option to use EPA-developed assigned deterioration factors 
in demonstrating compliance with the Tier 3 exhaust and evaporative 
emission standards. In the past, EPA has relied on deterioration factor 
data from large manufacturers to develop the assigned deterioration 
factors for small manufacturers. EPA would expect to follow a similar 
procedure to determine the assigned deterioration factors for the Tier 
3 standards once large manufacturers start certifying their Tier 3 
designs. Given that larger manufacturers would begin phasing in to the 
Tier 3 standards in model year 2017, EPA should have a significant set 
of emissions deterioration data upon which to base the assigned 
deterioration factors for small businesses within the first few years 
of the Tier 3 program. EPA recognizes that assigned deterioration 
factors need to be determined well in advance of model year 2022 in 
order to provide sufficient time for small businesses to decide whether 
or not to use the assigned deterioration factors for certification 
purposes.
3. Reduced Testing Burden
    Under EPA's regulations, manufacturers must perform in-use

[[Page 29916]]

testing on their vehicles and demonstrate their in-use vehicles comply 
with the emission standards. The current in-use testing regulations 
provide for reduced levels of testing for small manufacturers, 
including no testing in some cases. EPA is proposing to continue the 
reduced levels of testing for small businesses under the Tier 3 
program. Under the reduced testing provisions, manufacturers that sell 
less than 5,000 units per year would not be required to do any testing 
under the in-use program. Manufacturers that sell between 5,001 and 
15,000 units per year would be required to test two vehicles per test 
group, but only under the high-mileage conditions specified in the in-
use program.
    Under current regulations, manufacturers may waive testing for PM 
emissions for light-duty vehicles and trucks, except for diesel-fueled 
vehicles. Manufacturers are still subject to the standards and must 
make a statement of compliance with the PM standards. As described in 
Section IV.A, EPA is proposing new PM standards and will require 
manufacturers to test for PM emissions for all fuels. Because PM 
testing requires additional test equipment and facilities, the costs 
incurred for PM testing can be substantial, especially for a company 
selling small numbers of vehicles. Therefore, EPA is proposing to 
continue the waiver for PM testing in the Tier 3 timeframe for small 
businesses. Small businesses will not be required to measure PM 
emissions when they certify to the Tier 3 emission standards. In lieu 
of testing, small businesses will be required to make a statement of 
compliance with the Tier 3 p.m. standards. We would retain the ability 
to determine the PM emissions results in confirmatory or in-use 
testing.
    As described in Section IV.C, EPA is proposing new OBD requirements 
for vehicles certifying to the Tier 3 standards. The proposed OBD 
requirements are the same as CARB's existing OBD requirements. The 
proposed OBD provisions require additional amounts of testing and 
information that can add significant cost for manufacturers if they are 
not already meeting the CARB OBD requirements. Small business vehicle 
manufacturers tend to comply with the CARB OBD requirements because 
they want to sell in the California market. On the other hand, 
alternative-fuel converters do not generally certify with CARB because 
of the significant cost burden of complying with the CARB OBD 
requirements. We are therefore proposing that small business 
alternative-fuel converters may continue to comply with EPA's existing 
OBD requirements (see 40 CFR 86.1806-05) when the Tier 3 standards 
become effective. However, the proposed upgraded OBD requirements would 
have to be met by small entities and ICI's by the 2022 MY.
    Alternative-fueled vehicles, MDPVs, FFVs, and HDVs do not have SFTP 
emissions requirements under the current regulations. As described in 
Section IV.A, EPA is proposing to apply the Tier 3 SFTP standards to 
all vehicles, including alternative-fueled vehicles, MDPVs, FFVs, and 
HDVs. Because SFTP testing includes emission measurement over the SC03 
test cycle, which requires additional test facilities beyond those 
needed to run the FTP, the costs incurred for SC03 testing can be 
substantial, especially for companies like alternative fuel converters 
that sell very low numbers of converted vehicles. We are proposing that 
for the categories of vehicles newly subject to the SFTP standards, 
including alternative-fueled vehicles, manufacturers have the option to 
substitute the FTP emissions levels for the SC03 emissions results for 
purposes of compliance when calculating the SFTP emissions. However, we 
would retain the ability to determine the composite emissions using 
SC03 test results in confirmatory or in-use testing. Because the 
vehicles being converted to an alternative fuel will likely have been 
tested for SFTP compliance, we expect the SFTP emissions should be 
similarly low, and therefore the added SC03 testing burden is 
unnecessary.
    During the SBAR process, one SER requested that EPA eliminate some 
of the evaporative emission testing requirements for small businesses 
based on its belief that some of the tests may be duplicative. While 
EPA understands the reasons behind the SER's suggestion, we believe it 
may be premature to consider such an option in the Tier 3 rule given 
the potential impact of the CO2 emission standards on engine 
and fuel system development. Currently, it is generally understood that 
the 2-day diurnal test drives the purge characteristics of evaporative 
control systems, while the refueling test, and to a lesser degree the 
3-day test, drive the capacity requirement of evaporative canisters. 
Prospectively, due to expected changes in engine and fuel system 
designs in response to upcoming CO2 emission standard 
requirements, this may not be the case. Therefore, EPA believes it is 
appropriate to retain all of the evaporative test procedures. It can be 
noted that under current regulations, EPA does allow manufacturers to 
waive 2-day diurnal testing for certification purposes (see 40 CFR 
86.1829-01(b)(2)(iii)) and perform only the 2-day diurnal test as part 
of the in-use testing program (see 40 CFR 86.1845-04(c)(5)(ii)). These 
provisions would continue in the Tier 3 program. In general, EPA is 
open to changes that reduce test burden while maintaining the 
environmental effectiveness of its programs and could consider changes 
like those suggested by the SER in the future as the impacts of the 
future regulations on engine and vehicle design become clearer. 
Therefore, EPA requests comment on streamlining the current test 
procedures for small businesses in ways that would still maintain the 
overall effectiveness of the tests.
4. Hardship
    EPA is proposing hardship provisions for small businesses subject 
to the Tier 3 exhaust and evaporative emission standards. Under the 
hardship provisions, small businesses would be allowed to apply for 
additional time to meet the 100 percent phase-in requirements for 
exhaust and evaporative emissions. All hardship requests would be 
subject to EPA review and approval. Appeals for such hardship relief 
would need to be made in writing and must be submitted well before the 
earliest date of potential noncompliance. The request would need to 
identify how much time is being requested. It must also include 
evidence that the noncompliance would occur despite the manufacturer's 
best efforts to comply, and must contain evidence that severe economic 
hardship would be faced by the company if the relief is not granted. 
The hardship provision should effectively provide the opportunity for 
small businesses to obtain more time to comply with the new Tier 3 
standards. The existing hardship provisions limit the extra time that 
can be requested to 1 year, but we are proposing that such a limit is 
not needed as part of the Tier 3 hardship provisions.
5. Applicability of Flexibilities
    Under EPA's Tier 2 regulations, EPA provides a number of 
flexibilities for small volume manufacturers (SVMs). The criteria for 
determining if a company is a ``small volume manufacturer'' is based on 
the annual production level of vehicles and is based on whether the 
company produces less than 15,000 vehicles per year. Unlike EPA's 
current small volume manufacturer criteria, the Small Business 
Administration (SBA) defines which manufacturers are small businesses 
based on the number of employees for vehicle manufacturers and annual 
revenues for ICIs and

[[Page 29917]]

alternative fuel converters. For example, SBA defines a small business 
vehicle manufacturer as those who have less than 1,000 employees.
    With today's notice, EPA proposes that all small businesses that 
are subject to the Tier 3 standards and that meet the SBA criteria be 
eligible for the flexibilities described above. Unless otherwise noted, 
the proposed flexibilities would be available to all small business 
vehicle manufacturers, ICIs, and alternative fuel converters subject to 
the Tier 3 standards. In addition, EPA is proposing that manufacturers 
subject to the Tier 3 standards which meet a specified sales-based 
criterion be eligible for the flexibilities described above. It is 
relatively easy for a manufacturer to project and ultimately determine 
sales. Determining the annual revenues or number of employees is less 
straightforward. In the recent rule setting the first light-duty 
vehicle and truck CO2 emission standards, EPA adopted 
provisions for small manufacturers based on a sales cutoff of 5,000 
vehicles per year as opposed to the 15,000 level noted earlier that is 
used in the Tier 2 program. EPA proposes that the small volume 
manufacturer definition be based on the 5,000 vehicle per year level 
for the Tier 3 program. For purposes of the Tier 3 rule, the 5,000 
limit would be based on a running three-year average of the number of 
light-duty vehicles, light-duty trucks, medium-duty passenger vehicles, 
and complete heavy-duty trucks below 14,000 lbs GVWR. EPA believes the 
5,000 unit cut-off for small volume manufacturers would include all of 
the vehicle manufacturers, ICIs, and alternative fuel converters that 
currently meet the applicable SBA definition as well as a few 
additional companies that have similar concerns to small businesses.
    EPA requests comment on the issue of extending eligibility for the 
Tier 3 small volume manufacturer provisions to very small manufacturers 
that are owned by large manufacturers but are able to establish that 
they are operationally independent. EPA has established such a 
provision in the light-duty greenhouse gas (GHG) program.\336\ EPA 
requests comment specifically on whether a manufacturer who meets the 
criteria for establishing operational independence under 86.1838-01(d) 
for eligibility for SVM provisions under the GHG program should be 
considered to be operationally independent and similarly eligible for 
SVM provisions under the Tier 3 program.
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    \336\ See 77 FR 62793-62794 and 40 CFR 86.1838-01(d)
---------------------------------------------------------------------------

F. Compliance Provisions

1. Exhaust Emission Test Procedures
    We are proposing technical amendments to 40 CFR part 1066 as part 
of the effort to migrate test requirements from 40 CFR part 86 for 
light-duty vehicles and measurement of criteria pollutants. The 
proposed procedures in part 1066 reference large portions of part 1065 
to align test specifications that apply equally to engine-based and 
vehicle-based testing, such as CVS and analyzer specifications, 
calibrations, test fuels, calculations, and definitions of many terms. 
The proposed part 1066, as amended, also incorporates most of the 
detailed part 86 procedures.
    Current testing requirements related to chassis dynamometers rely 
on a combination of regulatory provisions, EPA guidance documents, and 
extensive learning from industry experience that has led to a good 
understanding of best practices for operating a vehicle in the 
laboratory to measure emissions. This proposal attempts to capture this 
range of material, integrating and organizing these specifications and 
procedures to include a complete set of provisions to ensure that 
emission measurements are accurate and repeatable. We request comment 
on the range of proposed requirements related to these chassis test 
procedures.
    Proposed revisions to part 1066, and adjustments from part 86, 
include the following:
     Clarification of regulatory requirements.
     Correction of typographical errors.
     Migration of mass-based emission calculations from part 86 
to part 1066.
     Introduction of a new NMOG calculation.
     Revision of 40 CFR part 1066, subpart B, to increase the 
specificity with which part 1065 references are made as they pertain to 
testing equipment, test fluids, test gases, and calibration standards.
     Addition of coastdown procedures for light-duty vehicles.
     Reordering of the test sequence with respect to vehicle 
preparation and running a test.
     Specifying part 1065 procedures for PM measurement, 
including certain deviations from part 1065 for chassis testing.
     Insertion of detailed test specifications for vehicles 
certified under 40 CFR part 86, subpart S.
    We are proposing the use of part 1065 for PM measurement with 
slight adjustments to the dilution air temperature, minimum dilution 
ratio, and background measurement requirements. By controlling the 
parameters that affect PM formation (dilution air temperature, dilution 
factor, sample residence time, filter face temperature, and filter face 
velocity), the proposed procedures include improvements that will 
reduce lab-to-lab and test-to-test variability.
    We are proposing to eliminate separate sampling of Bag 2 of the FTP 
test cycle to allow for an increase in sampled PM mass. The proposed 
alternative approach is to sample Bags 1 and 2 of the FTP on a single 
filter, and sample Bags 2 and 3 of the FTP onto a second filter. This 
will generally involve simultaneous sampling of Phase 2 onto two 
separate filters. As an additional alternative, manufacturers may run 
cold and hot UDDSs without simultaneous sampling of the cold UDDS Phase 
2, or to sample Bag 1, Bag 2, and Bag 3 on a single filter. 
Manufacturers choosing any of these options must still run a separate 
three-bag test for evaporative emission testing. We request comment on 
continuing to allow sampling under the traditional FTP methodology of a 
bag or filter per test phase (3 phases in total) instead of these 
proposed new methods. We also request comment on the appropriate 
transition to using the new sampling and calculation methods.
    We are proposing to revise the chassis dynamometer specifications 
in part 1066 by removing the maximum roll diameter and by requiring 
speed and force measurements at a minimum frequency of 10 hertz (Hz). 
Some manufacturers may be interested in testing with nonstandard 
dynamometer configurations, such as new flat-track dynamometers or old 
twin-roll dynamometers. We may approve the use of these and other 
nonstandard dynamometer configurations as alternative procedures under 
40 CFR 1065.10(c)(7).
    Part 1066 relies extensively on calculations involving physical 
parameters to calculate emission rates and perform various calibrations 
and verifications. As reflected in the current version of part 1066, 
manufacturers have used a variety of units to perform these 
calculations. We would expect that dynamometers and other laboratory 
equipment are all capable of operating in SI units even if current 
practice in some laboratories is to use other units. Moving toward 
standardized units for calculations would allow us to more carefully 
and appropriately specify precision values for various measured and 
calculated parameters. This would also simplify calculations, 
facilitate review of results from different

[[Page 29918]]

laboratories, and help with communications regarding any round-robin 
testing that might occur. Note that we are not contemplating converting 
emission standards to SI units. We request comment on completing the 
migration toward SI units in part 1066. In particular, we request 
comment on adding vehicle speed specifications in meters per second in 
addition to the current specification in miles per hour (or kilometers 
per hour for motorcycles). Specifying vehicle speeds to the nearest 
0.01 m/s would allow for equivalent vehicle operation relative to 
current drive schedules. The cycle validation criteria would be based 
on a speed tolerance of 1.0 m/s rather than 2 
mph (or rather than the proposed change to a 2.0 mph 
tolerance). This is not a direct unit conversion, but is calculated 
based on the stated precision and rounding allowance to provide a 
comparable degree of variability in vehicle speeds.
    We are proposing to phase in the requirements to use part 1066 test 
procedures for certifying all sizes of chassis-tested vehicles. For 
this phase-in approach, all aspects of part 1066 related to PM testing 
must be met at the start of MY 2017 for vehicles certifying to the PM 
standards. All other aspects of part 1066 must be met starting with the 
certification of all MY 2022 vehicles.
    As described in Section IV.D, we are proposing new test fuel 
specifications for E15 gasoline test fuel in 40 CFR part 1065. The test 
fuels specified for natural gas and liquefied petroleum gas, while not 
used for very many engine families, are currently following different 
specifications under 40 CFR part 86 and part 1065. We request comment 
on further revising 40 CFR part 86 to refer to the test fuel 
specifications in part 1065 for natural gas and liquefied petroleum 
gas.
    The proposal also includes various technical amendments to 40 CFR 
part 1065. The proposed technical amendments have no effect on the 
stringency of the regulations. These revisions include several minor 
changes to clarify regulatory requirements, align with chassis-testing 
procedures where appropriate, and correct typographical errors.
2. Reduced Test Burden
    We are proposing to update the regulatory provisions that allow 
manufacturers to omit testing for certification, in-use testing, and 
selective enforcement audits in certain circumstances. Sections IV.A.3, 
IV.B.6, and IV.E.3 describe how this applies for demonstrating that 
vehicles meet the Tier 3 p.m. standards. We are also proposing to allow 
manufacturers to omit PM measurements for fuel economy and GHG 
emissions testing that goes beyond the testing needed for certifying 
vehicles to the Tier 3 standards. Requiring such measurement would add 
a significant burden with very limited additional assurance that 
vehicles adequately control PM. We are also proposing to allow 
manufacturers to ask us to omit PM and formaldehyde measurement for 
selective enforcement audits. If there is a concern that any type of 
vehicle would not meet the Tier 3 p.m. or formaldehyde standards, we 
would not approve a manufacturer's request to omit measurement of these 
emissions during a selective enforcement audit.
    The regulations currently allow for waived formaldehyde testing for 
gasoline- and diesel-fueled vehicles. The Tier 3 NMOG+NOX 
emission standards are stringent enough that it is unlikely that 
vehicles would comply with the NMOG+NOX standards while 
exceeding the formaldehyde standards. We are therefore proposing to 
continue this waiver practice, such that manufacturers of Tier 3 
vehicles do not need to submit formaldehyde data for certification.
    We are also requesting comment on rearranging the default testing 
specification for certifying vehicles to evaporative emission 
standards, as described in Section IV.C. This would involve requiring 
manufacturers to perform testing with the two-day test sequence, while 
making the three-day test sequence optional.
3. Miscellaneous Provisions
    The following additional certification and compliance provisions 
are included in the proposed rule:
     The certification practice for assigned deterioration 
factors which are available for both small volume manufacturers and 
small volume test groups has matured significantly since it was first 
adopted. We are proposing to revise Sec.  86.1826 to more carefully 
reflect the current practice. For example, the regulations specify that 
manufacturers with sales volumes between 300 and 15,000 units per year 
should propose their own deterioration factors based on engineering 
analysis of emission data from other families. We believe it is best 
for EPA to develop a set of assigned deterioration factors that can 
apply to all small volume manufacturers and small volume test groups.
     The regulations in 40 CFR part 86 rely on rounding 
procedures specified in ASTM E29. This standard is revised 
periodically. The newer versions are not likely to change in a way that 
affects the regulation, but the updates make it difficult to maintain a 
coordinated reference to the current protocol. We are proposing to 
address this by specifying that the rounding protocol described in 40 
CFR 1065.20(e) applies, unless specified otherwise. We are not 
proposing to change all the references in part 86; rather, we are 
proposing to define ``round'' in subparts A and S to have the meaning 
given in 40 CFR part 1065 so that all new regulatory text would rely on 
this new description. The rounding specifications in 40 CFR part 1065 
are intended to be identical to those in the latest versions of ASTM 
E29 and NIST SP811. For example, this now includes procedures for 
nonstandard rounding, such as rounding to the nearest 25 units, or the 
nearest 0.05, where that is appropriate.
     Independent Commercial Importers (ICIs) are companies that 
import specialized vehicles into the U.S. and are subject to EPA 
requirements specified in Part 85, Subpart P. The standards which apply 
to the vehicles imported depend, in part, on the model year of the 
vehicle being imported. Therefore, vehicles imported by ICIs in the 
future could be subject to the proposed Tier 3 standards and the 
proposed regulations reflect the application of the Tier 3 standards to 
ICIs. Because all existing ICIs are small-volume manufacturers, the 
Tier 3 standards would not apply until 2022 at the earliest. In 
addition, the certification practices for ICIs have matured 
significantly since they were first adopted. EPA is proposing two 
changes to update the regulations affecting ICIs. First, the proposed 
provisions would require ICIs to use electric dynamometers when running 
exhaust emission tests. Electric dynamometers have been required for 
many years for vehicle manufacturers and EPA believes it is time to 
require such test equipment for ICIs in the future. In cases where an 
ICI can demonstrate that they will incur a substantial increase in 
compliance costs, the proposed regulations include a provision that 
allows EPA to approve requests, on a case-by-case basis, to allow 
testing on other types of dynamometers until the ICI is able to comply 
with the proposed electric dynamometer requirements. Second, we are 
proposing to incorporate into regulation that ICIs be allowed to use a 
specific set of reduced testing requirements for up to 300 units each 
year that have been modified to a U.S.-certified configuration. This 
has been allowed for ICIs since 1999 and was approved under EPA's 
authority to establish equivalent alternate test

[[Page 29919]]

procedures.\337\ Instead of running a full set of emission tests, the 
reduced testing requirements would allow ICIs to run an FTP for exhaust 
emissions, a highway fuel economy test, and a shortened one-hour 
evaporative emission tests for hot-soak and diurnal emissions that 
applied prior to the current enhanced evaporative emission test 
procedures. We do not believe the proposed changes should have any 
significant cost impacts on ICIs. Most of the ICIs have electric 
dynamometers or can upgrade them for a relatively small cost. The 
reduced testing burden provisions keep the cost of testing low, 
compared to the cost of running a full set of emission tests that 
otherwise could be required.
---------------------------------------------------------------------------

    \337\ See 40 CFR 86.106-96(a) and Enclosure 2 to EPA Guidance 
letter CCD-02-04, February 6, 2002.
---------------------------------------------------------------------------

     We are proposing to adopt CARB's onboard diagnostic 
requirements for all light-duty vehicles, light-duty trucks, and heavy-
duty vehicles, as described in Section IV.C.5.d. We currently allow for 
this as an option, but almost all manufacturers do this already to 
avoid certifying multiple systems. Now that we are adopting evaporative 
provisions that depend on California's regulatory specifications and we 
are making efforts to adopt a single, national regulatory program, we 
believe this is an appropriate step. This proposal includes heavy-duty 
vehicles above 14,000 lbs GVWR, though these vehicles would not need to 
meet the new requirements related to leak testing. These changes would 
apply starting in model year 2017 for vehicles subject to Tier 3 
standards. The changes apply directly for heavy-duty vehicles above 
14,000 lbs GVWR, since all those vehicles are already certified based 
on CARB's regulations. In the case of alternative fuel conversions, we 
are proposing to continue to apply the requirements of 40 CFR 86.1806-
05.
4. Manufacturer In-Use Verification Testing (IUVP) Requirements
    The fuel on which a vehicle will be operated in-use and tested is 
considered an integral part of the vehicle emission control system 
design. The Tier 2 program recognized that to achieve the desired 
emission reductions, vehicles must operate on the same fuel that the 
emission control system was originally designed to encounter in-use and 
during testing. In the Tier 2 program, we acknowledged that during the 
transition of the in-use fuel from sulfur levels of 300 ppm to the 
required 30 ppm average level, vehicles designed for 30 ppm could 
encounter in-use sulfur levels well above the level for which their 
emission control systems were designed. To address this issue, we 
allowed manufacturers, with agency approval, to perform specific 
preconditioning test procedures during the IUVP testing to ensure that 
potential exposure to high sulfur fuel in-use would not impact the 
emission test results. These procedures included specific drive cycles 
or maneuvers not regularly encountered during normal in-use operation 
that would result in removal of sulfur contamination from the emission 
control system.
    Consistent with the Tier 2 program, EPA continues to recognize the 
importance of the fuel to the emission control system design, 
particularly on Tier 3 vehicles designed to meet the most stringent 
emission levels of the program (i.e., Bin 70 and cleaner). Under EPA's 
proposal, in-use fuel would transition from an average sulfur level of 
30 ppm required by Tier 2 to a new average level of 10 ppm under Tier 
3. The proposed sulfur requirements would be average standards. Thus, 
even after the transition to the 10 p.m. average sulfur level, vehicles 
might still encounter sulfur levels during in-use operation above 10 
ppm and as high as the 95 ppm cap, which could adversely impact the 
emission control system. Tier 3 vehicles tested by manufacturers in 
IUVP that have been exposed to such sulfur levels could experience 
sulfur-related impacts, which in turn could cause the vehicle to 
temporarily exceed emission standards.
    To address the potential emission impact on Tier 3 vehicles from 
exposure to higher sulfur levels, we are proposing some modifications 
to the IUVP testing process based in part on what was allowed under the 
Tier 2 program. Tier 3 vehicles tested in the IUVP would be tested 
initially without allowing any sulfur cleanout procedure, such as a 
US06 test run prior to the FTP or Highway Fuel Economy (HFET) tests. If 
a vehicle failed the NMOG+NOX standard for the FTP or HFET 
cycle during the initial round of testing, manufacturers would be 
allowed to perform a sulfur cleanout procedure before repeating the FTP 
or HFET. For the sulfur cleanout, manufacturers would be allowed to 
perform up to two US06 cycles. The measured US06 cycle and a 
preconditioning US06 cycle, if performed as part of the initial 
measured tests would serve as the cleanout procedure and therefore no 
additional US06 cycles would be allowed. Alternative sulfur cleanout 
procedures would require approval by EPA. Following the sulfur cleanout 
procedure, the manufacturer would prep and soak the vehicles and then 
repeat the FTP and HFET tests. If a manufacturer chose to perform the 
sulfur cleanout procedure, it would be required to submit evidence that 
the vehicle encountered high sulfur levels in the fuel just prior to 
emission testing. This would include an analysis of a fuel sample from 
the vehicle fuel system as received from in-use operation just prior to 
testing. If the fuel sample indicated that the vehicle was operating on 
fuel containing 15 ppm or higher sulfur levels in the recent past, only 
the emission results of the tests following the cleanout procedure 
would be used for purposes of determining emission compliance and 
whether to enter the in-use compliance program (IUCP).
    The proposed rule includes the changes to the IUVP testing 
described above for light-duty vehicles and MDPVs. The changes to IUVP 
testing are not applicable to heavy-duty vehicles tested in the IUVP 
program. Also, as described in Section IV.D, we are proposing to 
incorporate leak testing into the IUVP test protocol. We are not 
proposing additional changes to the overall IUVP test program.

V. Proposed Fuel Program

    Under today's Tier 3 program, we are proposing reductions in 
gasoline sulfur levels nationwide. These standards would help prevent 
the significant impairment of the emission control systems expected to 
be used in Tier 3 technology, significantly improve the efficiency of 
emissions control systems currently in use, and continue prevention of 
the substantial adverse effects of sulfur levels on the performance of 
vehicle emissions control systems. Section V.A provides an overview of 
the fuel program and how we arrived at the proposed gasoline sulfur 
standards. Section V.B presents our assessment of the impacts the 
proposed fuel program would have on stationary source permitting and 
our conclusion that the proposed refinery lead time is adequate. 
Section V.C contains our proposed standards for denatured fuel ethanol. 
In Section V.D, we introduce and seek comment on possible options for 
regulating gasoline-ethanol blends intended for flexible fuel vehicles. 
Section V.E presents the proposed program flexibilities including the 
averaging, banking, and trading (ABT) program as well as small refiner 
and small volume refinery provisions. Section V.F lays out the 
compliance provisions for the proposed Tier 3 gasoline program. 
Finally, Section V.G presents our statutory authorities for lowering 
gasoline sulfur. As a result of these proposals, we have to amend 
certain existing provisions in the current Tier 2 requirements at 40 
CFR

[[Page 29920]]

part 80. We are not reopening Tier 2 and our proposed amendments should 
not be construed as a reopener.

A. Proposed Tier 3 Gasoline Sulfur Standards

1. Overview
a. History of Sulfur Control
    Sulfur is naturally occurring in crude oil. Crude oil containing 
higher concentrations of sulfur (i.e., greater than 0.5 percent) is 
called ``sour'' and crude containing lower sulfur concentrations (e.g., 
West Texas Intermediate) is referred to as ``sweet.'' Regardless of the 
concentration, because sulfur is naturally occurring in crude oil, it 
is also naturally occurring in gasoline. As discussed in Section 
IV.A.6, sulfur impairs the performance of today's vehicle emission 
control technologies (i.e., precious metal catalytic converters), 
reducing the emission benefits of current and advanced vehicles. As 
explained below, in 2000 EPA took action to reduce gasoline sulfur 
levels under what is known as the Tier 2 Program \338\ and is proposing 
to take further action under the proposed Tier 3 Program.
---------------------------------------------------------------------------

    \338\ 67 FR 6698 (February 10, 2000).
---------------------------------------------------------------------------

    Tier 2 was a major, comprehensive program designed to reduce 
emissions from passenger cars, light trucks, and large passenger 
vehicles (including sport utility vehicles, minivans, vans, and pick-up 
trucks) and the sulfur content of gasoline. Under this program, 
automakers were required to manufacture low-emission vehicles when 
operated on low-sulfur gasoline, and refiners were required to produce 
low-sulfur gasoline nationwide.
    Required reductions in gasoline sulfur began in 2004 with refinery 
and importer caps of 300 ppm and a corporate average cap of 120 ppm. 
For most refiners and importers, compliance with the final sulfur 
standards (30-ppm annual average and 80-ppm per gallon cap) was 
required beginning in 2006. Due to extensions provided for some 
refineries under the ultra-low sulfur diesel program, final compliance 
for all U.S. refineries was January 1, 2011. The Tier 2 gasoline sulfur 
program also had an ABT program that allowed companies to generate 
credits for implementing the required changes earlier than required and 
allowed ongoing flexibility to meet the 30-ppm average sulfur standard.
    At full implementation, the Tier 2 program (treating vehicles and 
fuels as a system) required passenger vehicles to be over 77 percent 
cleaner and gasoline sulfur to be reduced by up to 90 percent from pre-
program levels.
b. Need for Additional Gasoline Sulfur Control
    We are proposing to lower today's gasoline sulfur standards under 
Clean Air Act section 211(c)(1). This is because emission products of 
gasoline with current levels of sulfur cause or contribute to air 
pollution which may reasonably be anticipated to endanger public health 
or welfare and impair to a significant degree the emissions control 
device or systems on the vehicles subject to the proposed Tier 3 
standards. For more on our legal authority to set gasoline sulfur 
standards, refer to Section V.G.
    As explained in Section IV.A.6, robust data from many sources shows 
that gasoline sulfur at current levels (i.e., around 30 ppm on average) 
continues to degrade vehicle catalytic converter performance during 
normal operation. The most significant problem is for NOX. 
Today's proposed NMOG+NOX vehicle emission standards, an 80 
percent reduction from current Tier 2 standards, would not be possible 
without the gasoline sulfur controls we are proposing today. Tier 3 
vehicles must achieve essentially zero warmed-up NOX 
emissions to comply and maintain this performance for up to 150,000 
miles. An increase in emissions of only a few milligrams per mile due 
to sulfur could make compliance impossible for some vehicles. The 
standards are projected to be especially challenging for larger SUVs 
and pick-up trucks.
    Reducing gasoline sulfur would also help reduce emissions of 
pollutants that endanger public health and welfare from vehicles 
already on the road today. For the Tier 2 rule, we had data that showed 
benefits of reducing gasoline sulfur, but little to no data existed for 
sulfur levels below 30 ppm that we could use to project continued 
emission reductions. Since then, we have tested a wide range of Tier 2 
vehicles to better understand the impact that even lower gasoline 
sulfur could have on emissions. Our test data showed significant 
NOX and VOC reductions when vehicles were tested on ultra-
low sulfur gasoline. As explained in more detail in Section III.B, 
lowering average gasoline sulfur from 30 to 10 ppm would result in 
approximately 280,000 less tons of NOX and 40,000 less tons 
of VOC. The projected in-use emission benefits would occur almost 
immediately in 2017 when the Tier 3 gasoline sulfur standards take 
effect.
c. Summary of Proposed Tier 3 Fuel Program
    Under today's Tier 3 fuel program, we are proposing that gasoline 
and any ethanol-gasoline blend contain no more than 10 ppm sulfur on an 
annual average basis beginning January 1, 2017. Similar to the Tier 2 
gasoline program, the proposed Tier 3 program would apply to gasoline 
in the United States and the U.S. territories of Puerto Rico and the 
Virgin Islands, excluding California. The program, when finalized, 
would result in gasoline that contains an average of two-thirds less 
sulfur than it does today. We are proposing a three-year delay for 
small refiners and small volume refineries. Eligible small refining 
entities, described in more detail in Section V.E.2, would have until 
January 1, 2020 to comply with the new sulfur standards.
    We are proposing an ABT program that would allow refiners to 
optimize their investment strategies to enable reduction in capital and 
compliance costs. Refiners and importers overcomplying with the 10-ppm 
standard beginning January 1, 2017 could generate standard credits that 
could be used internally, banked, or traded to other companies. We are 
also proposing an early credit program that would allow refiners and 
importers to spread out their investments over time to allow for an 
orderly transition. Starting January 1, 2014, refiners and importers 
taking steps to reduce gasoline sulfur below the current 30-ppm 
standard could generate early credits that could be used to postpone 
final investments for up to three years. For a more detailed discussion 
of the proposed ABT program, refer to Section V.E.1. As a result of the 
early credit program and notwithstanding the proposed delay offered to 
small refiners and small volume refineries, we anticipate considerable 
reductions in gasoline sulfur levels prior to 2017, with final refinery 
steps to get to 10 ppm occurring on or before January 1, 2020.
    We are proposing to either maintain the current 80-ppm refinery 
gate per-gallon cap and 95-ppm downstream per-gallon cap or lower them 
to 50 and 65 ppm, respectively. We also evaluated and are seeking 
comment on the potential of lowering these caps to 20 ppm and 25 ppm, 
respectively. There are advantages and disadvantages associated with 
the various sulfur cap options (explained in more detail in Section 
V.A.3), but under all the proposed options, we believe that the 
stringency of the 10-ppm annual average

[[Page 29921]]

standard would result in reduced gasoline sulfur levels nationwide.
    A summary of the proposed Tier 3 gasoline sulfur standards is 
presented below in Table V-1. Domestic refiners and gasoline importers 
would be subject to both the 10-ppm annual average sulfur standard and 
the refinery gate per-gallon cap, when finalized. Gasoline in the 
distribution system (i.e., at terminals, retail stations, etc.) would 
be subject to the downstream per-gallon cap. For more information on 
how we arrived at the proposed sulfur standards, refer to Sections 
V.A.2 and V.A.3.

                                                  Table V-1--Proposed Tier 3 Gasoline Sulfur Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Cap Option 1                                              Cap Option 2
                                     -------------------------------------------------------------------------------------------------------------------
                                                  Limit                    Effective                    Limit                        Effective
--------------------------------------------------------------------------------------------------------------------------------------------------------
Refinery annual average standard....  10 ppm......................  January 1, 2017 \a\....  10 ppm.....................  January 1, 2017.\a\
Refinery gate per-gallon cap........  80 ppm......................  Already................  50 ppm.....................  January 1, 2020.
Downstream per-gallon cap...........  95 ppm......................  Already................  65 ppm.....................  March 1, 2020.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Effective January 1, 2020 for eligible small refiners and small volume refineries.

d. Refinery Feasibility
    While evaluating the merits of a national gasoline sulfur program 
to reduce emissions and enable future vehicle technologies, we also 
considered the refining industry's ability to reduce sulfur to 10 ppm 
on average by January 1, 2017 and the associated costs (for more on 
fuel costs, refer to Section VII.A). Based on information gathered from 
numerous stakeholder meetings, discussions with vendor companies that 
provide the gasoline desulfurization technologies, as well as the 
results from our refinery-by-refinery modeling, we believe it is 
technologically feasible at a reasonable cost for refiners to meet the 
proposed sulfur standards in the lead time provided. A summary of our 
feasibility analysis is presented below. For more on our fuels 
feasibility assessment and refinery modeling, refer to Chapters 4 and 5 
of the draft RIA.
    Gasoline desulfurization technologies are well known and readily 
available. Many technologies were demonstrated under Tier 2 and have 
been further demonstrated by current fuel programs in California, 
Japan, and Europe. Under California's Phase 3 Reformulated Gasoline 
program (CaRFG3), gasoline sulfur is limited to 15 ppm on average with 
a 20-ppm per-gallon cap.\339\ California reduced their per-gallon cap 
in phases from 60 ppm effective December 31, 2003, to 30 ppm effective 
December 31, 2005, to 20 ppm effective December 31, 2011. Actual in-use 
gasoline sulfur levels, however, have been largely constrained by the 
Predictive Model that California refiners are using to demonstrate 
compliance. As a result, gasoline sulfur levels are lower than the 
CaRFG3 limits. Based on the Predictive Model, California gasoline 
contained approximately 10 ppm sulfur on average in 2010 (9 ppm in the 
summer and 11 ppm in the winter).
---------------------------------------------------------------------------

    \339\ California Air Resources Board. (2008, August 29). The 
California Reformulated Gasoline Regulations, Title 13, California 
Code of Regulations, Sections 2250-2273.5. Retrieved from http://www.arb.ca.gov/fuels/gasoline/082908CaRFG_regs.pdf.
---------------------------------------------------------------------------

    Japan currently has a 10-ppm gasoline sulfur cap that took effect 
in January 2008. Europe also has a 10-ppm sulfur cap that has been 
adopted by the 30 Member States that comprise the European Union (EU) 
and the European Free Trade Association (EFTA) as well as Albania and 
Bosnia-Herzegovina.\340\ Beijing, China also recently introduced a 10-
ppm sulfur limit for gasoline.\341\ We note, however, that many oil 
refineries outside of the United States operate differently from their 
U.S. counterparts. U.S. refiners have invested more heavily in 
fluidized catalytic cracker (FCC) units than the rest of the world in 
order to maximize gasoline production. Because the FCC unit is 
responsible for nearly all the sulfur that ends up in gasoline, many 
U.S. refineries face a bigger challenge in achieving 10-ppm gasoline 
sulfur levels. Nevertheless, these international fuel programs (along 
with California) provide evidence that advanced gasoline 
desulfurization technologies have been deployed and are readily 
available to comply with the proposed Tier 3 fuel program.
---------------------------------------------------------------------------

    \340\ Hart Energy Consulting. (2011). International Fuel Quality 
Center: 2011 Worldwide Fuel Specifications
    \341\ Article from China.org.cn entitled ``Beijing to implement 
stricter fuel standards'', May 19, 2012, retrieved from http://www.china.org.cn/environment/2012-05/19/content_25422404.htm
---------------------------------------------------------------------------

    When considering the proposed Tier 3 sulfur standards, refineries 
can be grouped into three general categories based on their current 
post-Tier 2 refinery configurations: those without an FCC unit, those 
hydrotreating the gasoline stream coming from their FCC unit (i.e., 
postreating) \342\, and those hydrotreating their FCC feed (i.e., 
pretreating). Most refineries without FCC units would not need to do 
anything to meet the proposed Tier 3 sulfur standards. Refineries 
equipped with FCC units that invested in an FCC postreater under Tier 2 
would likely just need to revamp (i.e., renovate) their existing unit 
for a modest cost. Refineries that only have an FCC pretreater would 
meet the Tier 3 sulfur standards by either revamping their existing 
pretreaters (perhaps also cutting the heavy portion of FCC naphtha into 
the diesel pool) or invest in a grassroots FCC postreater. Our 
refinery-by-refinery modeling suggests that 29 refineries would not 
need to make any capital changes, 66 would need to revamp their 
existing FCC postreaters, and 16 would need to add grassroots 
postreaters (we did not model any undercutting of heavy FCC naphtha 
into the distillate pool).\343\ Refiners that need to install a new 
postreater would have to make the largest desulfurization investments 
under Tier 3, typical of many of the refinery investments made under 
Tier 2. For more on our estimated sulfur control costs, refer to 
Section VII.B.
---------------------------------------------------------------------------

    \342\ Some of them may also have an FCC pretreater.
    \343\ Our in-house refinery modeling considers 111 operational 
refineries producing non-California gasoline.
---------------------------------------------------------------------------

    We believe that the choice of technology for each refinery is 
fairly insensitive to capital cost assumptions. Revamping an existing 
FCC postreater will almost always be the preferred compliance path if 
it is available. The majority of refineries only have an existing FCC 
postreater, so revamping it will be the preferred choice, given the 
much higher capital costs associated with adding grassroots FCC pre or 
postreaters. The 16 refineries we project would add grassroots 
postreaters do not have existing postreaters that could be revamped. As 
a result, their choices are limited to revamping their existing 
pretreater or installing a grassroots postreater. We believe based on 
conversations with industry technology vendors and engineering firms 
that

[[Page 29922]]

installing a grassroots postreater would be more likely for these 
refineries, because revamping their pretreater would still incur a 
significant capital cost and would reduce compliance flexibility. Thus, 
in the refinery-by-refinery analysis performed by EPA for this 
proposal, higher capital costs (either directly or thru a higher ROI) 
would be unlikely to alter the selection of pretreater versus 
postreater control technology. Higher capital costs would likely impact 
both technology options proportionally with no overall effect.
    We have built in a number of flexibilities that will reduce the 
compliance burden for refiners. In particular, coupling the proposed 
10-ppm annual average sulfur standard with refinery gate and downstream 
per-gallon caps should continue to allow for batch-to-batch 
variability, refinery upsets, and turnarounds while still maintaining 
the overall air quality benefits of the program. For more information 
on the applicable per-gallon sulfur caps, refer to Section V.A.3.
    We are also proposing an ABT program that would allow refiners to 
spread out their investments over time and achieve compliance in the 
most cost-effective manner. If some refineries either comply with the 
10-ppm standard earlier than required, or reduce sulfur partway toward 
10 ppm early, this would allow other refineries to delay compliance for 
a finite period through the use of early credits. The ABT program would 
also allow for ongoing company averaging. This would allow some 
refineries to stay slightly above the standard at the expense of other 
refineries over complying, resulting in the most cost-effective 
mechanism for meeting the 10-ppm annual average standard. For more 
information on the proposed ABT program, refer to Section V.E.1. 
Finally, our Tier 3 gasoline sulfur program, when final, would allow 
three years of additional lead time for small refiners and small volume 
refineries (i.e., refineries processing less than or equal to 75,000 
net barrels per day of crude oil). As a group, we believe that these 
refineries are disproportionally impacted when it comes to their cost 
of compliance and ability to rationalize investment costs in today's 
gasoline market. Giving these refineries additional lead time would 
allow them more time to invest in desulfurization technology, take 
advantage of advancements in technology, develop confidence in a Tier 3 
credit market as a means of compliance, and avoid competition for 
capital, engineering, and construction resources with the larger 
refineries. For more on the proposed provisions for small refiners and 
small volume refineries, refer to Section V.E.2.
    The proposed Tier 3 rulemaking should not adversely affect the 
supply of gasoline in the U.S. This judgment is based on a review of 
both gasoline and diesel fuel supply when the Tier 2 gasoline sulfur 
and ultra-low sulfur highway and nonroad diesel rules were phasing in 
between 2003 and 2011. At the end of this time period, the U.S. 
gasoline and diesel fuel markets were increasingly being supplied by 
U.S. refiners, instead of by imports, compared to the beginning of this 
time period. Most striking is that the more stringent ultra-low sulfur 
diesel fuel standards showed the largest shift as U.S. refiners not 
only began to supply more of the U.S. diesel fuel market, but became 
net exporters of diesel fuel. For more on our fuel supply assessment, 
refer to Section 5.3 of the draft RIA.
2. Proposed Annual Average Sulfur Standard
    In the subsections that follow, we lay out our rationale for 
proposing a 10-ppm average standard, our assessment of how the proposed 
ABT program would help with compliance, and our conclusion that the 
proposed lead time is adequate. In the following section, we explain 
our rationale behind the proposed sulfur caps and seek comment on 
potential alternatives.
a. Appropriateness of Proposed 10-ppm Sulfur Standard
    As explained in Section IV.A.6, sulfur in fuel oxidizes in the 
exhaust and coats the sites where chemical reactions can take place on 
the precious metal catalysts used in vehicles to reduce emissions of 
VOC, NOX, PM, CO, and toxics. Accordingly, any sulfur in 
gasoline causes vehicle emissions to increase. Sulfur can be burned off 
the catalyst during high-temperature, rich operation of the vehicle 
(i.e., aggressive driving conditions), but as long as there is any 
sulfur in the fuel, exhaust emissions will increase. Because any amount 
of sulfur in the fuel can have this effect, the lower the sulfur the 
better.
    Refiners experience the same phenomenon with precious metal 
catalysts used in the reformer and isomerization units at their 
refineries.\344\ To protect the precious metal catalysts in these 
units, refiners reduce the sulfur in the feed to these units to 1 ppm 
or below. Thus, it is technically possible for refiners to reduce their 
gasoline sulfur levels to virtually zero. While refiners did not have 
reason to reduce the sulfur in FCC gasoline until Tier 2 required such 
reductions, some refiners have achieved reductions in this stream at 
some of their refineries for other reasons such as (1) Protecting the 
FCC catalyst from the contaminants in the gas oil feed, (2) reducing 
stack emissions from the regenerator of the FCC unit, and most 
importantly (3) increasing gasoline yields from the FCC unit. For most 
refineries, FCC gasoline accounts for about one-third of gasoline and 
before Tier 2 was the source of over 95 percent of the sulfur in 
gasoline. Under Tier 2, most refiners significantly desulfurized FCC 
gasoline to around 70 to 80 ppm, yet FCC gasoline continues to 
contribute the majority of sulfur in gasoline today.
---------------------------------------------------------------------------

    \344\ Together, the streams from the reformer and isomerization 
units account for approximately one-third of gasoline.
---------------------------------------------------------------------------

    While further reducing sulfur in gasoline will continue to reduce 
vehicle emissions, our emissions analysis shows that a 10-ppm annual 
average is sufficient to enable vehicles to reach the proposed Tier 3 
standards. Moreover, for the following reasons, reducing sulfur further 
below 10 ppm becomes increasingly difficult and costly. First, FCC 
naphtha is very rich in high-octane olefins. As the severity of 
desulfurization increases, more olefins are saturated, further 
sacrificing the octane value of this stream and further increasing 
hydrogen consumption. Making up for this lost octane represents a 
significant portion of the sulfur control costs. Second, as 
desulfurization severity increases, there is an increase in the amount 
of sulfur removed (in the form of hydrogen sulfide) which recombines 
with the olefins in the FCC naphtha, thus offsetting the principal 
desulfurization reactions. There are means to deal with the 
recombination reactions, but they result in even greater capital 
investments. Third, while FCC gasoline contributes the majority of 
sulfur to the finished gasoline, as the sulfur level drops below 10 
ppm, the sulfur level of the various other gasoline streams within the 
refinery also become important. Any necessary treatment of these 
additional streams increases both capital and operating costs.
    U.S. refineries are currently in different positions, both 
technically and financially. In general, they are configured to handle 
the different crude oils they process and turn it into a widely varying 
product slate to match available markets. Those processing heavier, 
sour crudes would have a more challenging time reducing gasoline sulfur 
under the proposed Tier 3 program. As explained earlier, refineries 
have different sulfur levels in their non-

[[Page 29923]]

FCC streams based on their feedstocks and configurations. Those with 
higher sulfur levels in other refinery streams would have a more 
difficult time desulfurizing gasoline. Perhaps most important, U.S. 
refineries vary greatly in size (atmospheric crude capacities range 
from less than 5,000 to more than 500,000 barrels per day) and thus 
have different economies of scale for adding capital to their 
refineries. As such, it can be less costly per gallon for some larger 
refineries to get down to 10 ppm than for smaller refineries, as 
discussed in Chapter 5 of the draft RIA. As a result, under a 10-ppm 
average standard, the flexibility afforded by the ABT program helps 
those refineries with very high costs. They have the option of staying 
above 10 ppm if they can acquire credits from other refineries that 
were able to lower their sulfur level below 10 ppm. However, if the 
gasoline sulfur standard were to be 5 ppm, this would essentially end 
the ability of refiners to average sulfur reductions across their 
refineries. There simply would not be enough opportunity to generate 
credits below 5 ppm. As discussed in Chapter 5 of the draft RIA, to 
estimate the costs for a 10-ppm annual average standard where some 
refineries stay above 10 ppm, we also estimated the costs for 
refineries to get down to 5 ppm. To do so, we estimated that sulfur 
control costs would increase by at least 50 percent compared to the 
proposed 10-ppm standard, which is over two times more costly per ppm-
gallon of gasoline sulfur reduced. This 5-ppm cost assessment is 
reasonable for those refineries that would likely generate credits 
under a 10-ppm average standard as these refineries are most likely in 
the best position for achieving such low sulfur levels. However, were 
we to actually assess the costs of a 5-ppm standard, at least some of 
these refineries would likely have additional costs for controlling the 
sulfur in other gasoline blendstocks, and we would likely apply a 
higher overdesign factor to account for industry-wide compliance at 5 
ppm. More detailed refinery information may be needed for such an 
analysis but, for the more challenged refineries, a 5-ppm standard 
could potentially be cost prohibitive. A 5-ppm standard would also 
introduce further costs to address the contribution to gasoline sulfur 
from gasoline additives, transmix, ethanol denaturants, and 
contamination in the distribution system. Therefore, a 10-ppm annual 
average standard appears to be the point which properly balances 
feasibility with costs. Also, for these reasons, EPA believes that a 
viable ABT program is important to the success of the proposed Tier 3 
fuels program (explained in more detail in Section V.A.2.b).
    Finally, as discussed in Section IV.A.6, reducing sulfur below 10 
ppm would further reduce vehicle emissions and allow the proposed Tier 
3 vehicle standards to be achieved more easily. However, we believe 
that a 10-ppm average standard will be sufficient to allow vehicles to 
meet the proposed Tier 3 standards. The level of the Tier 3 standards 
was considered in light of a 10-ppm average sulfur level for gasoline. 
If we were to consider lowering sulfur further, we would then also have 
to consider reducing the vehicle standards further. Given the 
challenges associated with sulfur reductions below 10 ppm as discussed 
above, we do not believe this would be appropriate.
b. How Would the Proposed ABT Program Assist With Compliance?
    As described more fully in Section V.E.1, we are proposing an ABT 
program that would reduce the average compliance burden for gasoline 
producers and importers. This program would permit the generation of 
credits by refineries that reduce their annual average sulfur level 
below 10 ppm, and transfer of these credits to other refineries to 
reduce or eliminate their need to make capital investments to meet the 
10-ppm standard. The ABT program would thus provide refiners with 
multiple approaches to compliance, and each could choose the approach 
that minimizes their costs.
    We modeled an ABT program to estimate how it would affect 
compliance. As described in more detail in Section VII.B.4, our 
modeling determined the lowest cost approach on a refinery-by-refinery 
basis under two scenarios: an idealized scenario in which every 
refinery has the opportunity to make credit transfers with every other 
refinery in the nation, and a more limited scenario in which credit 
transfers would only occur within companies that own more than one 
refinery. Today a significant fraction of Tier 2 sulfur credits are 
transferred within companies, but there is still a considerable amount 
of inter-company trading occurring.\345\ Thus, assuming no trading 
between companies is a conservative assumption and the real impact is 
likely to be somewhere in between the two scenarios. Table V-2 
describes how compliance would be affected under these two scenarios.
---------------------------------------------------------------------------

    \345\ Based on Tier 2 sulfur compliance data, of the 26 
companies that obtained sulfur credits in 2010, eight obtained 
credits only from their own company, and another five obtained 
credits both from their own company and from other companies. The 
remainder obtained credits only from other companies.

                           Table V-2--Impacts of Nationwide ABT Program on Compliance
----------------------------------------------------------------------------------------------------------------
                                                                  ABT with nationwide     ABT with intra-company
                                                                    credit transfers         credit transfers
----------------------------------------------------------------------------------------------------------------
Number of refineries that generate credits....................                       46                       18
Number of refineries that consume credits.....................                       25                        8
Number of refineries that neither generate nor consume credits                       40                       85
                                                               -------------------------------------------------
    Total modeled refineries..................................                      111                      111
----------------------------------------------------------------------------------------------------------------

    Based on our ABT modeling, we believe that a significant number of 
refineries would take advantage of the opportunity to generate or use 
credits, thus lowering their compliance burden under the proposed 10-
ppm annual average standard. For a more complete discussion of our 
analysis of the proposed ABT program, refer to Chapter 5 of the draft 
RIA.
c. Adequacy of Proposed Refinery Lead Time
    Given the complexity of gasoline refining, numerous planning and 
action steps would be required for refiners to complete the refinery 
changes needed to comply with the proposed Tier 3 sulfur standards. The 
steps required to implement these changes include: the completion of 
scoping studies, financing, process design for new or revamped refinery 
units or subunits, permitting, detailed engineering based

[[Page 29924]]

upon the process design, field construction of the gasoline sulfur 
reduction facilities, and start-up and shakedown of the newly installed 
desulfurization equipment.
    We conducted a thorough lead time analysis in which we sequenced 
the estimated time to complete scoping studies, process design, 
permitting, detailed engineering, field construction, and start-up and 
shakedown in advance of production based upon the methodology used in 
our recent gasoline and diesel rules.
    For the proposed Tier 3 gasoline sulfur program, we estimated 
refinery lead times step-by-step for the construction of new grassroots 
FCC postreaters and the revamp of existing pre and postreaters. For 
each refinery project type, we estimated lead times for scoping 
studies, process design, permitting, detailed engineering, field 
construction, and start-up and shakedown. Estimated required lead times 
for scoping studies are six months. Process design ranged from six 
months for desulfurization equipment revamping to nine months for a 
grassroots postreater. It is during the process of performing their 
scoping studies and process design analysis that refiners would 
complete their permit applications.
    Based on discussions with refiners, a review of the permitting 
experience for Tier 2 and our current analysis, we estimated that 
permitting for desulfurization equipment revamping and the construction 
of a grassroots postreater would take 9 months. However, we estimated 
the overall lead-times for Tier-3-related revamps to be considerably 
shorter, as described below. The estimates for permitting time are 
consistent with those of EPA's Office of Air Quality Planning and 
Standards (OAQPS) and our regional offices, both of which have engaged 
in extensive dialog with potentially affected parties. A discussion of 
the permitting implications of Tier 3 is contained in Section V.B of 
the preamble. Detailed engineering efforts were estimated to require 
six months for desulfurization equipment revamping and nine months for 
grassroots postreaters. Field construction was estimated to require six 
months for revamped pre-and postreaters and 12 months for grassroots 
postreaters. Start-up and shakedown processes were estimated to require 
six months for revamped FCC treaters and 9 months for grassroots 
postreaters. There is some degree of overlap among each of these steps 
as shown in Table V-3.
    To allow refiners to complete all these different steps and comply 
with the 10 ppm average gasoline sulfur standard, assuming the Tier 3 
proposal were to be finalized by the end of 2013, we would be providing 
three years of lead time. In addition to the three years of lead time, 
the proposed rulemaking also provides additional flexibility provided 
by the ABT program, small refinery delays, and hardship provisions. To 
support this timeline, we conducted several analyses of the expected 
refinery lead time requirements associated with the proposed Tier 3 
standards and found that refinery operators would have more than 
adequate time to implement the required refinery charges. A 
justification for proposed timeline appears below.
    Complying with Tier 3 is expected to involve some grassroots FCC 
postreaters, but mostly we believe that refiners will revamp existing 
FCC postreaters. Revamping of existing FCC postreaters can be 
accomplished in approximately 2 years, or less (See Table V-3). 
Grassroots FCC postreaters are expected to require on average about 
three-years to install and start-up (See Table V-3). In comparision to 
FCC pretreaters, hydrocrackers and distillate hydrotreaters, FCC 
postreaters are much less costly, low pressure units that take less 
time to scope out, require shorter lead times for ordering the 
equipment, and less time to install. Furthermore, the grassroots FCC 
postreaters to be installed for Tier 3 are expected to be in a moderate 
to light desulfurization service because the refineries they will be 
installed in will already be complying with Tier 2 using an FCC 
pretreater. FCC naphtha from a refinery with an FCC pretreater is 
expected to only contain about 100 ppm sulfur. To comply with Tier 3, 
refiners installing these grassroots FCC postreaters would only need to 
desulfurize the FCC naphtha down to 25 ppm (about a 75% reduction). In 
comparison, a single-stage FCC postreaters would have to desulfurize 
FCC naphtha from as high as 2400 ppm sulfur down to 25 ppm, a 99% 
sulfur reduction. The more moderate desulfurization service of the 
grassroots FCC postreaters needed to comply with Tier 3 would be 
expected to streamline the scoping and design work.

[[Page 29925]]

[GRAPHIC] [TIFF OMITTED] TP21MY13.002

    It is useful to compare the proposed lead time for Tier 3 to what 
was provided for Tier 2. In the case of the Tier 2 standard, we 
provided a three-year lead time along with an ABT program and other 
flexibilities to ease compliance. Refiners, though, commented that the 
three year timeline that we provided was not enough time. For the Tier 
2 analysis, we assumed that refiners would solely install low-pressure 
FCC postreaters, which we believe could be scoped out, designed, 
installed and started up within a 3 year time period. However, many 
refiners complied with Tier 2 by installing high-pressure FCC 
pretreaters which require long lead times for the procurement of the 
required equipment. Furthermore, those refiners that did not install 
high-pressure FCC pretreaters instead installed grassroots FCC 
postreaters, many of which were designed for severe desulfurization 
service. An additional difference between Tier 3 and Tier 2 is that for 
Tier 3 we expect the installation of only 16 grassroots units, along 
with many revamps, but for Tier 2 virtually all refiners installed both 
grassroots FCC pretreaters and postreaters. The demands on the 
desulfurization vendors for scoping studies, and on the E & C industry 
for design and construction, and on the refiners to train their 
operations staff and start up the new units, was a lot greater for Tier 
2 than what we would expect for Tier 3. The total estimated investment 
cost for Tier 2 versus Tier 3 also highlights the difference in 
investment demands.
    The total investment for Tier-2 desulfurization processing units 
was estimated to be about $6.1 billion, while the total investment for 
Tier-3 desulfurization processing units is estimated to be about $2.1 
billion. This simple comparison helps to illustrate that the proposed 
Tier 3 would be easier for refineries to obtain necessary permits, 
secure engineering and construction (E&C) resources, install new 
desulfurization equipment and make all necessary retrofits to meet the 
proposed sulfur standards.
    We assessed the permitting situation in more detail working in 
conjunction with the Office of Air Quality, Planning and Standards 
(OAQPS). Since the permitting process has little impact on the overall 
cost of compliance with Tier 3, it is an issue primarily in terms of 
its potential impact on the time needed to complete the necessary 
refinery modifications. On a refinery-by-refinery basis, we provided 
OAQPS estimates of the additional heating demands for the new and 
revamped units per the desulfurization vendor submissions. OAQPS was 
able to project which refineries would likely trigger NOX, 
particulate matter and greenhouse gas emission permitting limits, which 
would likely lengthen the permitting process as refiners would need to 
offset the projected emission increases. As it turns out, only 2 of the 
16 refineries which are projected to install grassroots units were 
projected to exceed particular permitting limits, and these solely did 
so based on the most conservative assumption that each would produce 
all the additional hydrogen on site using hydrogen plants (as opposed 
to using existing reforming capacity) and produce the electricity on 
site, to satisfy the needs of the new desulfurization equipment. When 
we provided a second heat demand estimate to OAQPS which assumes that 
refiners purchase their hydrogen and electricity from third parties, 
none of the refineries which we projected would install grassroots 
units was projected to have emission increases which would require 
offsets. Thus, many of the grassroots units that we project would be 
installed may end up with a streamlined permitting process. We seek 
comment on our estimates of the number of refineries that may trigger 
the need for new permits and the length of time necessary to obtain the 
various

[[Page 29926]]

types of permits that may be required once the refiner applies for 
them.
    The various flexibilities that the proposed Tier 3 rule provides to 
refiners provide refiners additional time for complying. These 
flexibilities include the ABT program, the small refiner delay 
provisions and the hardship provisions. The ABT program allows a 
refiner, either within its own company or by purchasing credits on the 
open market, to delay higher investment cost investments, such as the 
investments in grassroots FCC postreaters, which would provide 
additional lead time for installing these units. This would occur if 
refiners would reduce the sulfur levels of their gasoline through 
operational changes or revamps of their existing FCC pretreaters and 
postreaters when the ABT Program begins in 2014. Potentially every 
refinery with either an FCC pretreater or an FCC postreater may be 
capable of generating early credits. Furthermore, we project that 66 
refineries would revamp their existing FCC postreaters to comply with 
Tier 3. Since revamps can be completed within two years or less, these 
refiners could potentially begin generating early credits during 2016, 
or before if refiners begin each of these revamps in early 2014. During 
the period between 2014 and 2017, these refineries which reduce their 
gasoline sulfur levels below that required by Tier 2 would generate 
credits. Refineries with higher cost capital investments, such as the 
grassroots FCC postreaters, could then delay making those investments 
through the purchase of credits. We estimate that sufficient credits 
could be genereated early to allow many of these refineries to delay 
compliance until as late as 2020. The quantitative early credit 
analysis that we conducted showed that if refiners with an existing 
pretreater or postreater would generate early credits by lowering their 
gasoline sulfur down to 20 ppm starting in 2014 and if revamps were 
started up in 2016, one year before the program start date, that almost 
6 times more credits would be available to offset the early credit 
demand by the refiners installing grassroots postreater units, assuming 
that they start up those units in 2018. Even if all grassroots 
postreaters were assumed to not start up until 2020, there would be 
almost 4 times more early credits available to those refiners 
installing grassroots postreaters assuming that the same early credit 
generation scenario would occur.
    Additional flexibility is also provided by the small refineries 
provisions which delays compliance by the refineries that refiner less 
than a net of 75,000 barrels of crude oil per day until 2020. Three of 
the 16 FCC postreater grassroots units that we project will be 
installed would be by small refineries. However, small refineries could 
also decide to comply early and generate credits starting as early as 
2014.
    As in previous fuel programs, we are proposing hardship provisions 
to accommodate a refiner's inability to comply with the proposed 
standard at the start of the Tier 3 program, and to deal with 
unforeseen circumstances that may occur at any point during the 
program. These provisions would be available to all refiners, small and 
non-small, though relief would be granted on a case-by-case basis 
following a showing of certain requirements; primarily that compliance 
through the use of credits was not feasible. We are proposing that any 
hardship waiver would not be a total waiver of compliance; rather, a 
hardship waiver would be short-term relief that would allow a refiner 
facing a hardship situation to, for example, receive additional time to 
comply. This hardship provision would allow a refiner to seek a delay 
in the case that there was insufficient time to comply.
    Finally, we believe that in reality, less leadtime than shown in 
Table V-3 would actually be necessary. We held discussions with many 
refiners during 2011, and so they have been well aware of Tier 3 and 
are familiar with the likely requirements. During our subsequent 
discussions with technology vendors and engineering firms, they 
explained to us that many refiners have already initiated, and by now, 
likely completed their scoping studies. Thus, actual time needed for 
designing, installing and starting of new desulfurization equipment for 
Tier 3 times would be even less than what we projected because many 
refineries may have already completed required scoping studies in 
anticipation of the Tier-3 standards. Moreover, lead times for those 
refineries that have yet to start the scoping process can also be 
expected to decrease, since fewer refineries will be competing for the 
services of the desulfurization vendors. We request comment on the 
amount of lead time that we are providing refiners to scope, design, 
permit, construct and start-up a grassroots desulfurization unit, 
considering all the proposed flexibilities which allow refiners to 
stagger their capital investments and ease compliance.
    As in prior rules, we also evaluated the capability of E&C 
industries to design and build gasoline hydrotreaters as well as 
performing routine maintenance. Two areas where it is important to 
consider the impact of the fuel proposed sulfur standards are: (1) 
Refiners' ability to procure design and construction services and (2) 
refiners' ability to obtain the capital necessary for the construction 
of new equipment required to meet the new gasoline quality 
specification. We evaluated the requirement for engineering design and 
construction personnel in a manner consistent with the Tier 2 analysis, 
particularly for three types of workers needed to implement the 
refinery changes: front-end designers, detailed designers, and 
construction workers. We developed estimates of the maximum number of 
each of these types of workers needed throughout the design and 
construction process and compared those figures to the number of 
personnel currently employed in these areas.
    The number of job hours necessary to design and build individual 
pieces of refinery equipment and the job hours per piece of equipment 
were taken from Moncrief and Ragsdale.\346\ Their paper summarizes 
analyses performed in support of a National Petroleum Council study of 
gasoline desulfurization, as well as other potential fuel quality 
changes. The design and construction factors for desulfurization 
equipment are summarized in Table V-4.
---------------------------------------------------------------------------

    \346\ Moncrief, Philip & Ragsdale, Ralph. (2000). Can the U.S. 
E&C Industry Meet the EPA's Low Sulfur Timetable? Paper presented at 
NPRA Annual Meeting, March 26-28, 2000. Paper No. AM-00-57.

               Table V-4--Design and Construction Factors
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Gasoline Refiners:
  Number of New Pieces of Equipment per Refinery...............       60
  Number of Revamped Pieces of Equipment per Refinery..........       15
Job Hours Per Piece of New Equipment: \a\
  Front End Design.............................................      300
  Detailed Design..............................................    1,200
  Direct and Indirect Construction.............................    9,150
------------------------------------------------------------------------
\a\ Revamped equipment estimated to require half as many hours per piece
  of equipment.

    Refinery projects will differ in complexity and scope. Even if all 
refiners desired to complete their project by the same date, their 
projects would inevitably begin over a range of months. Thus, two 
projects scheduled to start up at exactly the same time are not likely 
to proceed through each step of the design and construction process at 
the same time. Second, the design and construction industries will 
likely provide refiners with economic incentives to avoid temporary 
peaks in the demand for personnel.
    Applying the above factors, we projected the maximum number of 
personnel needed in any given month

[[Page 29927]]

for each type of job. The results are shown in Table V-5. In addition 
to total personnel required, the percentage of the U.S. workforce in 
these areas is also shown, assuming that half of all projects occur in 
the Gulf Coast

                                 Table V-5--Maximum Monthly Demand for Personnel
----------------------------------------------------------------------------------------------------------------
                                                                                  Detailed
                                                            Front-end design     engineering      Construction
----------------------------------------------------------------------------------------------------------------
Tier 3 Gasoline Sulfur Program:
Number of Workers.........................................               202               809             6,012
Percentage of Current Workforce \a\.......................               11%                9%                4%
----------------------------------------------------------------------------------------------------------------
\a\ Based on current employment in the U.S. Gulf Coast assuming half of all projects occur in the Gulf Coast.

    To meet the proposed Tier 3 sulfur standards, refiners are expected 
to invest $2.2 billion between 2014 and 2019 and utilize approximately 
1,000 front-end design and engineering jobs and 6,000 construction 
jobs. The number of estimated jobs required is small relative to 
overall number available in the U.S. job market. As such, we believe 
that three years, plus the additional flexibilities provided, is 
adequate lead time for refineries to obtain necessary permits, secure 
E&C resources, install new desulfurization equipment, and make all 
necessary retrofits to meet the proposed sulfur standards. For an in 
depth assessment of stationary source implications, refer to Section 
V.B. For more on our E&C assessment, refer to Section 4.5 of the draft 
RIA.
3. Per-Gallon Sulfur Caps
    In much of Europe and Japan, the gasoline sulfur level is capped at 
10 ppm. We, however, are not considering a 10-ppm cap for the U.S. The 
U.S. gasoline distribution system poses contamination challenges that 
make it difficult to set and enforce such a tight downstream per-gallon 
sulfur standard. In Europe, Japan, and California, finished petroleum 
products are generally shipped short distances directly from the 
refinery to the terminal with limited susceptibility to contamination. 
The U.S. has the longest and most complex gasoline distribution system 
in the world, making it harder to control sulfur contamination than in 
other countries. Petroleum products are shipped long distances through 
multi-product pipelines. Further, gasoline goes through the same 
pipelines and terminals back-to-back with jet fuel (containing up to 
3,000 ppm sulfur). Products are often in the custody of a number of 
separate companies before reaching the terminal. This system is very 
effective at delivering petroleum products to the bulk of the country, 
but pipeline transport inevitably introduces the potential for sulfur 
contamination of the gasoline being shipped through pipelines. 
Additionally, gasoline additives needed to provide critical fuel 
performance characteristics (e.g., corrosion control, demulsifiers) 
also contain varying levels of sulfur which contribute to the overall 
sulfur content of gasoline. Therefore, we are proposing a 10-ppm 
refinery average sulfur standard (discussed in Section V.A.2) with 
higher per gallon caps at both the refinery gate and at all points 
downstream, which is similar to what currently exists under the Tier 2 
program. We believe this is the most prudent approach for lowering in-
use sulfur while maintaining flexibility considering cost and other 
factors. These per-gallon caps are important in the context of an 
average sulfur standard to provide an upper limit on the sulfur 
concentration that vehicles must be designed to tolerate. Since there 
are many opportunities for sulfur to be introduced into gasoline 
downstream of the refinery, these caps also limit downstream sulfur 
contamination and enable the enforcement of the gasoline sulfur 
standard in-use.
    We are proposing two options for the per-gallon sulfur caps. Under 
the first option, we are proposing to maintain both the current 80-ppm 
refinery gate sulfur cap and 95-ppm downstream sulfur cap.\347\ Because 
this represents no change from current requirements, we believe there 
would be no additional costs to refiners and downstream parties 
associated with satisfying these caps on gasoline sulfur content beyond 
those that were already incurred under the Tier 2 program. Compliance 
for downstream parties could be even easier given that the average 
refinery gate level would be lower. However, the high level of the caps 
means that vehicles still have to be designed to operate on high sulfur 
fuel, and there will be less attention paid to limiting contamination 
downstream of the refinery gate.
---------------------------------------------------------------------------

    \347\ This approach is reflected in the draft regulatory text.
---------------------------------------------------------------------------

    Under the second approach, we are proposing that the refinery gate 
cap would be reduced to 50 ppm and the downstream cap would be reduced 
to 65 ppm, in other words, a 30-ppm reduction in the caps to go along 
with a 20-ppm drop in the average standard. We are proposing that the 
50-ppm refinery gate cap would take effect on January 1, 2020 when the 
small refiner, small volume refinery, and early credit use provisions 
would expire. The reason for the delay in the more stringent cap until 
2020 is to avoid forcing additional refinery investments during the 
early credit usage period. A more stringent per-gallon cap would also 
be very difficult to enforce prior to the small refiner and small 
volume refinery provisions taking effect. Until that time, the current 
80-ppm refinery gate sulfur cap would apply. Additional time beyond 
when the 50-ppm refinery gate sulfur cap is implemented would be 
allowed for gasoline produced to an 80-ppm sulfur cap to clear the 
distribution system before the 65-ppm downstream sulfur cap would 
replace the current 95-ppm downstream sulfur cap. Beginning February 1, 
2020, a 65-ppm downstream sulfur cap would apply at all locations 
downstream of the refinery and importer gate with the exception of 
retail and wholesale-purchaser-consumer facilities. Beginning March 1, 
2020, a 65-ppm downstream sulfur cap would apply at all locations in 
the gasoline distribution system downstream of the refinery and 
importer gate. We note that the additional time for parties to comply 
with a more stringent downstream sulfur cap mirrors the schedule for 
compliance under the Tier 2 program.
    As discussed previously in Sections III and IV of today's preamble, 
the vehicle emissions benefits associated with today's proposal are 
driven by the proposed reduction in the average sulfur content of 
gasoline from 30 to 10 ppm. However, vehicle manufacturers have 
expressed concerns about the potential impacts on emissions performance 
if individual vehicles are exposed to gasoline above the proposed 10-
ppm

[[Page 29928]]

refinery average.\348\ As discussed in Section V.A.2.b, our analysis of 
the potential response to the proposed ABT provisions assessed three 
options for refineries: remaining at their current sulfur levels and 
using credits, reducing sulfur levels to 10 ppm and neither generating 
or using credits, or reducing sulfur levels to 5 ppm and generating 
credits. We did not have available information that would enable us to 
assess refineries that might stay above 10 ppm and reduce their sulfur 
levels part way (e.g., reduce sulfur from 50 ppm today to 20 ppm under 
Tier 3). Nevertheless, we anticipate that in most cases refineries 
would respond by making operational changes and/or minor investments in 
order to reduce their credit burden and reduce their compliance costs. 
This anticipation, along with the fact that a 10-ppm average standard 
by definition limits the amount of gasoline that can remain at higher 
sulfur levels, means that we anticipate most credit-using refineries 
would still average less than 20 ppm in their physical gasoline 
production, and either all or virtually all gasoline would be expected 
to average at or below 30 ppm. Therefore, we believe that a 50-ppm per-
gallon cap at the refinery gate would not impose any additional cost or 
burden beyond the current 80-ppm per-gallon cap. Our discussions with 
refiners indicate that a 50-ppm sulfur cap would provide refiners with 
sufficient flexibility to produce gasoline during temporary upsets and 
turnarounds through the use of credits without necessitating the 
installation of additional desulfurization equipment.\349\ However, it 
would provide some additional assurance of in-use gasoline quality and 
help to address vehicle manufacturer concerns.
---------------------------------------------------------------------------

    \348\ Alliance of Automobile Manufacturers (2011, October 6). 
Letter to EPA Administrator, Lisa Jackson.
    \349\ Refer to Section 4.2.4.1 of the draft RIA for a more 
detailed discussion of the impacts of lowering the refinery gate 
sulfur cap.
---------------------------------------------------------------------------

    We also believe that implementing a 65-ppm downstream sulfur cap 
would provide essentially the same flexibilities to downstream parties 
as the existing sulfur caps. We believe that maintaining a 15-ppm 
differential between the proposed refinery gate sulfur cap of 50 ppm 
and the proposed 65-ppm downstream sulfur cap would provide pipeline 
operators, transmix processors, and gasoline additive users the same 
flexibility as provided under the current 80/95 ppm sulfur caps.
    Pipeline operators are currently allowed to blend limited volumes 
of transmix into gasoline in their systems provided that the resulting 
gasoline meets all fuel quality specifications and the endpoint of the 
blended gasoline does not exceed 437 [deg]F.\350\ This enables pipeline 
operators to avoid the installation of additional transmix storage and 
loading equipment at a number of remote locations to facilitate 
shipping small volumes of transmix to processing facilities by truck. 
We believe that a 65-ppm sulfur cap would provide sufficient 
flexibility to allow pipeline operators to continue this practice.
---------------------------------------------------------------------------

    \350\ The requirements for transmix blenders are contained in 40 
CFR 80.84(d). 437 [deg]F is the maximum endpoint allowed for 
gasoline in ASTM D4814.
---------------------------------------------------------------------------

    Currently transmix processors must produce gasoline sufficiently 
below the 95-ppm downstream sulfur cap to accommodate any downstream 
sulfur increases from the use of gasoline additives and contamination 
from further distribution. The sulfur content of the gasoline produced 
by transmix processors is determined by the sulfur content of the 
transmix they receive, which in turn is primarily a function of the 
sulfur content of gasoline and jet fuel components in the 
transmix.\351\ Transmix processors do not handle sufficient volumes to 
support the installation of currently available desulfurization 
units.\352\ Data provided by the largest operator of transmix 
processing facilities indicates that relatively few batches of the 
gasoline they currently produce approach 80 ppm sulfur. Most batches 
are approximately 10 ppm above the current 30-ppm refinery sulfur 
average. Therefore, we believe that under a 10-ppm refinery average 
standard and 50-ppm refinery sulfur cap, transmix processors would be 
able to produce gasoline sufficiently under the proposed 65-ppm 
downstream sulfur cap to accommodate the additional sulfur contribution 
from the use of additives and contamination during further 
distribution. Since the 65-ppm downstream cap would not take effect 
until 2020, while the 10-ppm average standard would take effect in 
2017, we would have three years of experience with which to verify this 
and take corrective action if necessary.
---------------------------------------------------------------------------

    \351\ Transmix is a by-product of the multi-product pipeline 
distribution system. 40 CFR 80.84(a) defines transmix pipeline 
interface that does not meet the specifications for a fuel that can 
be used or sold, and that is composed solely of any combination of: 
previously certified gasoline (including previously certified 
gasoline blendstocks that become gasoline solely upon the addition 
of an oxygenate); distillate fuel; or gasoline blendstocks that are 
suitable for use as a blendstock without further processing.
    \352\ Transmix processors produce ~0.1 percent of the gasoline 
consumed in the U.S.
---------------------------------------------------------------------------

    In addition to proposing refinery gate and downstream per gallon 
sulfur caps of either 80 ppm and 95 ppm or 50 ppm and 65 ppm, we are 
also requesting comment on the potential implementation of a refinery 
gate sulfur cap as low as 20 ppm and a downstream sulfur cap as low as 
25 ppm. This would further constrain downstream contamination and limit 
the temporary exposure of vehicles in-use to sulfur levels that would 
significantly degrade their emission performance. This would serve to 
provide added assurance that all parts of the country would receive the 
full emission benefits of gasoline sulfur control. However, we are only 
seeking comment on it and not proposing it due to the potential cost 
increases resulting from further constraints on refinery and 
distribution system operations. While a 50-ppm refinery gate cap may 
not impact refinery costs, in order to meet a 20-ppm refinery gate cap 
and downstream standard of 25 ppm we expect that essentially all 
refineries would need to invest to meet the 10-ppm annual average 
standard. Our modeling of a non-ABT scenario, discussed in Section 
VII.B, shows that the sulfur control costs would increase by almost 10 
percent, with no net change in average in-use sulfur levels. Similarly, 
while a 65-ppm downstream cap may have little or no impact on 
downstream operations, a 25-ppm downstream sulfur cap would likely 
require changes in pipeline operations, treatment of gasoline transmix, 
and formulation and use of sulfur containing gasoline additives (e.g., 
corrosion inhibitors, and demulsifiers) that could further increase the 
costs of the standard. The extent of such impacts and associated costs, 
however, are difficult to quantify. Consequently we seek comment on the 
appropriateness, impacts, and costs of lowering the per-gallon caps to 
20 ppm at the refinery gate, and 25 ppm downstream.
    Further, in order to facilitate the enforcement of the downstream 
cap and prevent the potential dumping of high sulfur materials into 
gasoline under the guise of adding gasoline additives, we are proposing 
additional requirements to clarify the treatment of gasoline additives. 
Parties that introduce additives to gasoline at over 1.0 volume percent 
are required to satisfy all of the obligations of a fuel manufacturer 
including demonstration that the finished blend meets the applicable 
sulfur specification. A party other than a fuel refiner or importer who 
adds a quantity of additive(s) amounting to less than 1.0 percent by 
volume of the

[[Page 29929]]

resultant additive(s)/fuel mixture is not considered a fuel 
manufacturer.\353\ Thus, the addition of sulfur to finished gasoline 
from additives used at less than 1.0 volume percent is simply limited 
by the current 95-ppm downstream sulfur cap. We are proposing to limit 
the sulfur contribution from the use of a gasoline additive added 
downstream of the refinery at less than 1.0 volume percent to 3 ppm 
when added at the maximum recommended treatment rate. We believe that 
this limitation would not constrain the use of gasoline additives or 
result in significant additional costs to gasoline additive 
manufacturers. This is because information received from additive 
producers indicates that all current gasoline additives contribute less 
than 3 ppm to the sulfur content of the finished fuel when used at the 
maximum recommended treatment rate. The maximum treatment rate is 
already stated on product transfer document or packaging for the 
additive. We are proposing a requirement that additive manufacturers 
maintain records of their additive production quality control 
activities, which demonstrate that the sulfur content of additive 
production batches complies with the proposed sulfur requirement, for 
five years and to make these available to EPA upon request.
---------------------------------------------------------------------------

    \353\ 40 CFR 79.2(d)(1).
---------------------------------------------------------------------------

B. Refinery Air Permitting Interactions

    It is important to the success of the proposed Tier 3 fuel program 
that refineries are able to obtain air permits, if needed, in time to 
complete the modifications necessary to comply with the proposed 
gasoline sulfur program. Accordingly, we have considered the 
implications of permitting requirements with respect to the 
implementation of the proposed gasoline sulfur program. This section 
provides information on this topic. In summary, we believe that only a 
small percentage of refineries would likely need to make modifications 
that will trigger a requirement to apply for air permits, and we 
anticipate that these permit applications would be processed quickly 
enough that air permitting will not be a significant obstacle to timely 
compliance with the gasoline sulfur program. In contrast to the Tier 2 
program, where EPA expected the need for NAAQS-related New Source 
Review (NSR) permits might be widespread among refineries, we believe 
that under the proposed Tier 3 gasoline sulfur standard at most only 
about 19 refineries would need NSR or Prevention of Significant 
Deterioration (PSD) permits. This number--which equates to 
approximately 17 percent of the 111 refineries projected to be affected 
by the proposed Tier 3 standards--could be even lower if refineries 
apply emission controls to reduce emissions increases below the 
significance level or if they ``net out'' of NSR.
    If our final assessment of permitting prospects following analysis 
of comments indicates it would be appropriate, we would form a special 
team to monitor for permitting delays and assist in resolving 
associated problems. We also anticipate that other new requirements 
applicable to refineries that are being proposed for implementation in 
approximately the same period as the gasoline sulfur program would not 
interfere with the modifications needed to meet the new sulfur limits 
and would not create a competition for air permitting agency resources.
    We invite public comment on air permitting issues, and on possible 
actions we might be able to take to help make sure refineries can 
obtain needed permits expeditiously. As described in further detail in 
Sections V.B.4 and V.B.6, a number of mechanisms and resources are 
already available to help mitigate and streamline NSR permitting 
requirements associated with the proposed Tier 3 fuel program. For 
example, EPA has issued guidance on Best Available Control Technology 
(BACT) analysis for GHG emissions, including a white paper that 
identifies specific technologies available for refinery process units. 
As explained in greater detail below, we expect that the types of 
equipment and process technologies that refiners would select to meet 
the proposed Tier 3 standards would generally be consistent with BACT 
for GHG emissions in terms of achievable, cost-effective, and energy-
efficient design even absent the requirement to obtain a permit, 
meaning that such a requirement would not necessitate a shift in 
project design or increase costs.
1. Background on New Source Review Programs
    The New Source Review (NSR) program, as it applies to existing 
major sources of air pollution, requires that a permit be issued before 
a source begins construction of any project to modify the source that 
would result in a significant emissions increase and a significant net 
emissions increase of a pollutant regulated under this program.\354\ 
The physical modifications and operational changes that we expect 
refineries would make to comply with the proposed gasoline sulfur 
standards (described in Section V.A.1.d) could result in emissions 
increases in one or more pollutants that may trigger NSR requirements 
for preconstruction air permits. NSR permits specify what emission 
limits must be met by the new and modified equipment that is part of 
the proposed project. They may contain conditions to make sure that the 
modifications being made match parameters in the application that the 
permit-issuing agency relied on in its analysis. Permits contain 
emission limitations for new and modified units and also typically 
specify some aspects of how, consistent with the permit application, 
the project elements must be constructed and operated. For example, the 
permit may identify important design and operational parameters that 
are consistent with the established control technology determination(s) 
and help assure compliance with associated emission limitations. To 
assure that sources follow the permit requirements, permits also 
contain monitoring, recordkeeping, and reporting requirements. NSR 
permits are issued by a state or local air pollution control agency if 
it has its own permit program that has been approved by EPA in the 
State Implementation Plan (SIP) or if it has been delegated the 
authority to issue federal Prevention of Significant Deterioration 
(PSD) permits on behalf of EPA. An EPA Regional Office issues the 
permit in other cases.
---------------------------------------------------------------------------

    \354\ Generally, a source is a major source if its ``potential 
to emit'' a regulated NSR pollutant is greater than either 100 or 
250 tons/year depending on the industrial type of the source and 
whether the area is designated nonattainment for the particular 
pollutant. All refineries in the U.S. are major sources for purposes 
of NSR. A major modification is a physical change or a change in the 
method of operation that causes a significant emissions increase and 
a significant net emissions increase of any pollutant regulated 
under the NSR program. (A net emissions increase differs from an 
emissions increase in that a net increase takes into account 
contemporaneous emissions changes from other projects at the 
source.) Significant emission rates vary depending on the pollutant 
and range from 0.6 to 100 tons/year for criteria (NAAQS) pollutants 
and their precursors. See 40 CFR 52.21(b)(23). For GHGs, 
modifications of existing sources trigger NSR permitting 
requirements when there is an increase of GHG emissions of at least 
75,000 tons/year of CO2 equivalent, as well as any 
increase of GHG emissions on a mass basis. At the time refineries 
are required to comply with the proposed fuel sulfur program, the 
GHG threshold may be different, but will not be lower than 50,000 
tons/year.
---------------------------------------------------------------------------

    There are two separate sets of major source permit requirements 
that may apply to modifications at a refinery depending on the 
attainment status of the area in which a refinery is located. Each set 
of requirements is applied on a pollutant-specific basis, so that in 
some cases both permit programs may

[[Page 29930]]

apply to the same modification project. The PSD permit program applies 
to any major modification at a source located in a designated 
attainment or unclassifiable area for any NAAQS pollutant.\355\ PSD 
requires compliance with emission limitations achievable through 
installation of BACT, an air quality analysis to show that the 
modification will not cause or contribute to a violation of any NAAQS 
or applicable PSD increment,\356\ an assessment of impact on visibility 
and other conditions in national parks and similar federal lands, an 
additional impacts analysis, and an opportunity for public involvement. 
The second set of requirements is known as the Nonattainment NSR 
program because it applies to major modifications at sources located in 
areas designated as nonattainment for a specific NAAQS pollutant.\357\ 
The Nonattainment NSR requirements include, among other things, that a 
proposed major modification meet the lowest achievable emission rate 
(LAER) for each triggering nonattainment pollutant for which the source 
is major and for which there will be a significant emissions increase, 
obtain emission offsets for those nonattainment pollutants, and provide 
an opportunity for public involvement. LAER is generally a more 
stringent emission limitation than BACT. LAER is derived from either 
the most stringent emission limitation contained in the implementation 
plan of any state for the same type of source or the most stringent 
emission limitation achieved in practice. Emission offsets are 
emissions reductions, generally obtained from other existing stationary 
sources located in the vicinity of a proposed source. Such offsets must 
be equal to or larger than the emissions increase resulting from the 
modification to ensure that the growth being allowed to occur does not 
interfere with the ability of an area to continue making reasonable 
further progress towards attainment of the NAAQS.
---------------------------------------------------------------------------

    \355\ The PSD program stems from part C of Title I of the Clean 
Air Act. The implementing regulations are contained in 40 CFR 51.166 
and 52.21.
    \356\ A system of ``increments'' is the mechanism used in the 
PSD program to define significant deterioration of ambient air 
quality for a pollutant. An increment is the maximum allowable 
increase in ambient concentrations of a pollutant in an area 
relative to a specified baseline. Increases above that level are 
considered to significantly deteriorate air quality and cannot be 
allowed.
    \357\ The Nonattainment NSR program stems from part D of Title I 
of the Clean Air Act. The implementing regulations are contained in 
40 CFR 51.165 and 50 CFR part 51 appendix S. Under Nonattainment 
NSR, a major source is generally any source with a potential to emit 
of 100 tons/year or more of the nonattainment pollutant, regardless 
of industrial type (lower thresholds apply for some pollutants/
classifications). The thresholds for a significant emissions 
increase under Nonattainment NSR are generally the same as under PSD 
but lower for certain pollutants/classifications.
---------------------------------------------------------------------------

    As described previously in Section V.A.1.d, there are several types 
of process changes refineries could make to meet the proposed gasoline 
sulfur levels. To different degrees, all these technologies involve 
process heat from fuel combustion and, thus, have the potential to 
increase emissions of pollutants associated with combustion that are 
regulated under NSR,\358\ such as NOX, VOCs, 
PM2.5, PM10, CO, SO2, and GHGs. The 
addition of certain technologies could also result in equipment leaks 
of petroleum compounds, which could increase emissions of VOCs and 
other pollutants. It is also possible that the removal of more sulfur 
from the gasoline stream could require increased capacity or increased 
utilization of other refinery processes, such as hydrogen plants and 
sulfur recovery units (SRUs), which are sources of air emissions. The 
emissions increases associated with a desulfurization project would 
vary from refinery to refinery, depending on a number of refinery-
specific factors, such as the refinery output volume, refinery 
configuration, feedstocks, choice of desulfurization technology, and 
type of fuel used to operate affected process heaters.
---------------------------------------------------------------------------

    \358\ Toxic air pollutants are excluded from the PSD program. 42 
U.S.C. 7412(b)(6); 40 CFR 52.21(b)(50)(v).
---------------------------------------------------------------------------

    As described in more detail in Section V.B.4, we anticipate that 
the types of changes that would occur at most refineries would not 
result in sufficient emissions increases to require major NSR permits 
as a prerequisite for completing the needed changes. The major NSR 
permitting requirements would not be triggered for several reasons: 
because the emissions increase or the net emissions increase is 
naturally less than the significant level, because the refinery 
installs control technologies on project-affected units to further 
limit the emissions increase, and/or because the refinery ``nets out'' 
all or part of the emissions increase.
    However, we anticipate that some refineries have the potential to 
experience significant emissions increases and significant net 
emissions increases as a result of process changes necessary to meet 
the proposed gasoline sulfur standard and, therefore, may trigger major 
NSR (Nonattainment NSR and/or PSD). These facilities would have to 
obtain a major NSR preconstruction permit prior to making these 
necessary process changes. For any required major NSR permits, the 
associated control technology requirements (BACT and/or LAER) would 
apply only to new or modified units associated with the project and not 
to units at the refinery that are not affected by the project. We do 
not anticipate that the time frames required for the small number of 
affected refineries to obtain any needed NSR and/or PSD permits will 
present an obstacle to timely compliance with the proposed Tier 3 
gasoline sulfur requirements. We are proposing approximately 3 years of 
lead time. However, as discussed in section V.E., this is extended to 
up to 6 years of lead time for all small refineries, as well as for all 
other refineries if they take advantage of the flexibility of the early 
credit provisions. In comparison, as discussed in section V.A.2.c, 95 
of the 111 refineries are anticipated to be able to comply within 2 
years, and the remaining 16 within 3 years. For the 16 that may require 
up to 3 years to comply due to the construction of grassroots 
hydrotreaters, only 2 of these are projected to potentially trigger the 
need for new permits, and even then only for PSD for greenhouse gases, 
and only if they choose to produce their own hydrogen. As a result, 
only two refineries may actually require the full 3 years to comply.
    For facilities subject to major NSR, the timing of permit issuance 
could vary depending on a number of factors, including the clarity and 
completeness of the application, the complexity of process changes, the 
type of permit required, air quality impact, control technology 
reviews, and the permitting agency's overall permit workload. The time 
spent preparing a permit application is under the control of the 
applicant. Once a permit application is complete, permitting 
authorities operating under approved SIPs should be able to issue a 
permit within 9 to 12 months if the permit applies to NAAQS pollutants. 
Because EPA-issued permits and permits issued by states operating under 
a delegation from EPA are subject to additional analysis and 
interagency consultation steps specified in federal law, it can take a 
few more months if, for example, there are endangered species or 
historical preservation issues.\359\ For permits that apply only to 
GHGs, we anticipate that less time will be necessary both to prepare 
the

[[Page 29931]]

application and for the permitting authority to approve the permit. The 
CAA requires that EPA take final action on a PSD permit within one year 
of the filing with the agency of a complete application. 42 U.S.C. 
7475(c). Refineries that are able to avoid major NSR may be required to 
obtain a state-issued minor NSR permit. Generally, minor NSR permits 
involve less extensive and/or stringent requirements and have shorter 
processing times than major NSR permits.
---------------------------------------------------------------------------

    \359\ These processing time periods assume that the refinery can 
successfully show that the emission increases associated with the 
modifications will not cause or contribute to a violation of any 
NAAQS or increment (under PSD) or can obtain needed emissions 
offsets for the emission increases (under Nonattainment NSR).
---------------------------------------------------------------------------

2. Background on NSR Experience Under the Tier 2 Fuel Program
    Many of the modifications that refineries are projected to make in 
order to comply with the proposed Tier 3 fuel program are similar in 
type, although not necessarily in number or magnitude, to the changes 
that were needed to comply with the Tier 2 fuel program finalized in 
2000. Therefore, information on the Tier 2 experience may assist the 
public in understanding the permitting issues for the Tier 3 fuel 
program and in providing comment on possible actions we might undertake 
to help refineries expeditiously obtain needed permits.
    The Tier 2 program was designed to reduce the average sulfur 
content of gasoline from about 300 ppm to 30 ppm, a reduction of about 
90 percent. Anticipating that many refineries would have to make 
modifications that might trigger the need for NSR permits, we addressed 
the permitting issue in the proposal for the Tier 2 program, in the 
final rule, and during implementation. At proposal, we provided 
background information on the NSR program and its relationship to the 
types of changes likely to be required at refineries. We had not 
estimated the number of refineries that might trigger NSR, but we 
stated that the number could be substantial. We invited comment on a 
number of actions that EPA, states, and/or refineries could pursue in 
order to help refineries avoid the need for NSR permits or to obtain 
permits more expeditiously than might otherwise be the case. These 
actions included the following:
     Use of plantwide applicability limits, possibly 
facilitated by new EPA guidance or rules addressing issues specific to 
refineries.
     Issuance of new federal guidance on streamlining certain 
major NSR permitting requirements such as control technology and 
compliance parameters.
     Use of emissions reductions resulting from vehicles 
operating on lower sulfur gasoline as offsets for refineries seeking 
Nonattainment NSR permits.
     Use of model permits and permit applications.
     EPA refinery permitting teams.
    The Tier 2 proposal also addressed issues related to the Title V 
permitting program,\360\ and requested comments on possible approaches 
by which refineries might satisfy some NSR and Title V requirements at 
the same time.
---------------------------------------------------------------------------

    \360\ Title V of the 1990 CAA Amendments requires all major 
sources and some minor sources of air pollution to obtain an 
operating permit. A Title V permit contains all air pollution 
requirements that apply to the source, including emissions limits 
and monitoring, record keeping, and reporting requirements. It also 
requires that the source report its compliance status to the 
permitting authority annually. All existing refineries potentially 
affected by the proposed Tier 3 fuel standards have Title V permits 
and, because Title V permits by themselves generally do not 
establish new applicable requirements, the only implication of the 
proposed Tier 3 fuel standards would be the ``roll-in'' of any new 
NSR permit requirements into existing refinery Title V permits. 
Permitting agencies have efficient processes to accomplish this that 
do not delay construction of proposed projects.
---------------------------------------------------------------------------

    We received comments on refinery permitting issues from the 
refining industry, the automobile manufacturing industry, state and 
local agencies that administer air permitting programs, and 
environmental and community groups. Based on these comments and 
statutory constraints, we decided that it was not necessary or 
appropriate to exempt Tier 2 projects from the normally applicable 
preconstruction review process. We also decided not to pursue the 
development of guidance on plantwide applicability limits for 
refineries based on comments suggesting this would be an unproductive 
effort because of the complexity of refineries. Nonetheless, we 
concluded that it was useful to add certainty to the anticipated 
permitting actions and schedules, and to minimize the possibility of 
delay. Accordingly, EPA took two types of actions to promote these 
objectives. First, as we are now proposing for Tier 3 (see proposed 
program flexibilities discussion in V.E.1.-3.), we structured the Tier 
2 gasoline sulfur program to allow additional lead time for many 
refineries (i.e., certain refineries would be able to make 
desulfurization changes later than the otherwise applicable compliance 
date to meet Tier 2 requirements). This approach was expected to help 
address the concerns over the availability of necessary new equipment 
and permitting backlogs caused by many refineries acting to obtain 
permits and order equipment within the same time period.Second, we 
stated our intention to take several actions during implementation of 
the Tier 2 rule to expedite and impart greater certainty in obtaining 
necessary major NSR permits (described in more detail below). We also 
stated our intention to assist states and refiners on a case-by-case 
basis in their efforts to address any unique permitting problems that 
might arise and, thus, remedy potential problems that could cause 
unanticipated delays. We committed to work with refiners and the state/
local permitting agencies on a case-by-case basis, where a refinery had 
unique circumstances that necessitated unique treatment. We clarified 
that, in our efforts to provide greater certainty and to facilitate 
more expeditious permitting, we were in no way shortcutting existing 
opportunities for public participation in making permitting decisions. 
We encouraged refineries to begin discussions with permitting 
authorities and to submit permit applications as early as possible.
    The final Tier 2 rule identified three key actions that we intended 
to take (and subsequently took) to provide assistance that would be 
useful toward helping states issue timely permits to refineries. The 
first such action was to organize a special EPA team, comprised of 
Headquarters and Regional Office experts, to track the overall progress 
in permit issuance and to be available to assist state and local 
permitting authorities, refineries, and the public upon request to 
resolve site-specific permitting issues. The team made special efforts 
to be aware of state and local permitting actions that were underway 
during the time between the finalization of the Tier 2 program and the 
compliance time frame. Experience during this period suggested that 
state and local permitting agencies, as predicted in their comments on 
the proposed Tier 2 program, were able to process permit applications 
in a timely manner, without much need for special troubleshooting help 
from the EPA team. In many cases, the modifications to allow compliance 
with Tier 2 requirements were subject to only minor NSR permitting 
requirements rather than major NSR, or those modifications were rolled 
into another permitting action that was needed for other modifications 
or expansions due to other technical or market developments. We believe 
it is reasonable to expect that similar outcomes (refineries not 
needing major NSR permits) would result in connection with air 
permitting for the modifications refineries would need to make under 
the proposed Tier 3 gasoline sulfur program.
    The second action we took was to develop new guidance on emission 
control technology requirements to meet BACT and LAER. We issued this 
guidance in 2001. It addressed the levels of control that could be 
reasonably

[[Page 29932]]

anticipated to represent BACT or LAER under the major NSR requirements. 
Our general experience following the release of this BACT/LAER guidance 
was that it did not play a substantial role in the permitting of 
refinery projects for Tier 2. That is, due to their own expertise and 
the need to consider refinery-specific factors, state and local 
permitting authorities generally did not find it necessary to rely on 
our guidance in their own permitting processes for refineries making 
changes to meet the Tier 2 requirements. In addition, many of the 
refinery projects were able to avoid major NSR, so BACT and LAER were 
not requirements that had to be met. Again, we believe it is reasonable 
to expect that similar outcomes (refineries not needing major NSR 
permits) would result in connection with air permitting for the 
modifications refineries would need to make to meet the proposed 
gasoline sulfur standard.
    The third action we took was a fast-track effort to develop new 
guidance on the use of emissions reductions resulting from vehicles 
operating on lower sulfur gasoline as emission offsets for refineries 
seeking Nonattainment NSR permits. We invited comment on a draft 
version of this guidance five months after the final Tier 2 rule. The 
draft guidance discussed in depth how the use of such offsets could be 
made consistent with seven criteria given in the CAA for such offsets. 
We received many comments from state and local air agencies and 
community groups opposing the proposed offset guidance on legal, 
fairness, and environmental justice grounds. One refiner recommended 
that EPA set aside a portion of the Tier 2 reductions in each state as 
offsets, rather than leaving this decision to each state. We did not 
finalize the draft guidance, and no state further pursued a system 
under which vehicle emissions reductions were made available to 
refineries as offsets for Nonattainment NSR permits.
3. Changes in the NSR Permitting Program Since Tier 2 Final Rule
    The Tier 2 fuel program was promulgated in early 2000, and most 
refiners were required to comply with those requirements by 2006. 
During and since that period, there have been a number of changes to 
the major NSR programs. These changes are summarized here to facilitate 
public comment as to how these changes may affect whether refinery 
modifications undertaken as a result of the proposed Tier 3 fuel 
program would trigger NSR and/or the requirements that refiners and 
permitting authorities would have to meet.
    In 2002, we issued a final rule known as the NSR Reform Rule.\361\ 
This rule revised the EPA-administered NSR programs and changed the 
minimum approvals required for SIP-approved NSR programs for NSR 
applicability. Some of the provisions of the 2002 final rule have been 
vacated by the Court, subsequently amended by EPA, or are currently 
under reconsideration. Two key components of the NSR Reform Rule that 
remain in place are a new applicability test for projects involving 
existing emissions units (the ``actual-to-projected-actual'' 
applicability test) and provisions that allow for the establishment of 
plantwide applicability limits (PALs). The change in the applicability 
test since the Tier 2 experience means that fewer modifications may be 
found to have emissions increases that are above the significant 
emission levels, in which case fewer major NSR permits may need to be 
issued. The PAL provisions offer a voluntary alternative for 
determining major NSR applicability that can provide sources with 
significant flexibility to manage facility-wide air emissions without 
triggering major NSR permitting. Refineries that have established PALs 
or will establish one or more PALs prior to or as part of permitting 
associated with the Tier 3 fuel program will be far less likely to 
trigger major NSR permitting requirements.
---------------------------------------------------------------------------

    \361\ 67 FR 80186 (December 31, 2002).
---------------------------------------------------------------------------

    We have also taken a series of actions that have had the effect of 
making emissions of GHGs a factor in determining whether a PSD permit 
is required for a refinery modification. Under the applicable PSD 
provisions in the CAA, GHGs became regulated under the PSD program on 
January 2, 2011 after EPA adopted tailpipe emissions standards for 
these pollutants under Title II of the CAA. Because the incorporation 
of GHGs into the PSD program had the potential to significantly expand 
the number of sources required to obtain PSD permits, EPA adopted the 
2010 Tailoring Rule to phase in the PSD permitting requirements 
according to a series of steps based on different GHG emission 
thresholds.\362\ At this time the Tailoring Rule requires that any 
modification at an existing refinery that increases GHG emissions by 
75,000 tons per year or more of CO2 equivalent and also 
produces any mass increase in GHG emissions would trigger the need for 
a PSD permit that addresses GHG emissions.\363\ Because there are no 
NAAQS for GHGs and, therefore no nonattainment areas, only PSD could 
potentially apply to a refinery modification with respect to increases 
in GHG emissions. The analysis (described in Section V.B.4) indicates 
that only a small number of large refineries would be affected. For the 
sources that would need a PSD permit for GHGs, the main substantive 
requirement for obtaining the permit is to apply BACT for GHG emissions 
from the new or modified unit(s) because an air quality analysis is not 
required.
---------------------------------------------------------------------------

    \362\ 75 FR 31514 (June 3, 2010).
    \363\ 77 FR 41051 (July 12, 2012).
---------------------------------------------------------------------------

    Another development since 2000 has been the establishment of 
several new and revised NAAQS and the designation of nonattainment 
areas under some of these NAAQS. At the time of the final Tier 2 rule, 
the NAAQS of most relevance to Nonattainment NSR permitting for 
refineries were the 1-hour ozone NAAQS, the PM10 NAAQS, and 
the SO2 NAAQS, because these NAAQS accounted for the vast 
majority of the existing nonattainment areas. The designation of new 
nonattainment areas under the 1997 NAAQS for 8-hour ozone became 
effective in 2004. Designations under the 1997 NAAQS for 
PM2.5 became effective in 2005. In 2008, we again revised 
the ozone NAAQS and designations under that standard became effective 
in July 2012.\364\ In 2006, we revised the 24-hour PM2.5 
NAAQS and in 2009 (2011 for a few areas) we designated areas under the 
2006 PM2.5 standard.\365\ In December 2012 we revised the 
primary annual PM2.5 NAAQS and designations associated with 
that revised standard are expected to become effective in 2015.\366\ 
One effect of this evolution of the NAAQS and associated attainment 
status for areas is that it has become more common over time for 
sources to be located in ozone or PM2.5 nonattainment areas 
and thus subject to Nonattainment NSR rather than to PSD for their VOC, 
NOX, and PM2.5 emissions increases. However, over 
the same time period, some areas currently designated as nonattainment 
for ozone and/or PM2.5 are expected to be redesignated to 
attainment. Therefore, we do not expect a dramatic shift on a national 
basis in one direction or the other.
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    \364\ 77 FR 30088 (May 21, 2012).
    \365\ Listings of areas currently designated nonattainment for 
all the NAAQS are available at http://www.epa.gov/oar/oaqps/greenbk/index.html.
    \366\ 78 FR 3086 (January 15, 2013).
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    In 2008, we issued a final rule specifying in detail how NSR 
applies to PM2.5.\367\ In addition, in 2010 we

[[Page 29933]]

supplemented this rule with additional provisions for the PSD program 
specifically.\368\ The latest rule, among other things, established 
PM2.5 increments, and as of October 20, 2011, sources that 
trigger PSD for PM2.5 are required to show compliance with 
the applicable increment, in addition to showing that they do not cause 
or contribute to a violation of any of the PM2.5 NAAQS.
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    \367\ 73 FR 28321 (May 18, 2008). On January 4, 2013, the U.S. 
Court of Appeals for the District of Columbia, in Natural Resources 
Defense Council v. EPA, No. 08-1250, 2013 WL 45653 (filed July 15, 
2008, consolidated with 09-1102, 11-1430), issued a judgment that 
remanded EPA's 2008 PM 2.5 NSR rule and ordered the EPA 
to repromulgate the rule ``pursuant to Subpart 4 consistent with 
this opinion.'' Id. at *8. Subpart 4 of Part D, Title 1 of the CAA 
establishes additional provisions for particulate matter 
nonattainment areas. EPA is evaluating the impact of the court 
decision on the provisions of the 2008 rule.
    \368\ 75 FR 64864 (October 20, 2010). On January 22, 2013, the 
U.S. Court of Appeals for the District of Columbia, in Sierra Club 
v. EPA, No. 10-1413 (filed Dec. 17. 2010), issued a judgment that 
vacated and remanded the provisions at 40 CFR 51.166(k)(2) and 
52.21(k)(2) (concerning implementation of the PM2.5 SILs) 
and vacated the provisions at 40 CFR 51.166(i)(5)(i)(c) and 
52.21(i)(5)(i)(c) (adding the PM2.5 SMC) that were 
promulgated as part of the rule.
---------------------------------------------------------------------------

    In 2010, EPA finalized new NAAQS for 1-hour NO2 and 1-
hour SO2.\369\ EPA has completed the initial round of 
mandatory designations for the 1-hour NO2 NAAQS and all 
areas have been designated unclassifiable/attainment.\370\ The first 
round of designations for the 1-hour SO2 NAAQS will be made 
in June 2013, thus we do expect there to be nonattainment areas for the 
1-hour SO2 NAAQS by the time that refineries might need to 
seek NSR permits to make the required facility modifications for the 
Tier 3 program. However, we expect that no refinery would have 
increases in SO2 emissions that are large enough to trigger 
major NSR, so any change in attainment status for the SO2 
NAAQS should have no effect on permitting issues.
---------------------------------------------------------------------------

    \369\ 75 FR 6474 (February 9, 2010) and 75 FR 35520 (June 22, 
2010).
    \370\ 77 FR 9532 (February 17, 2012).
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    In areas designated attainment or unclassifiable for the 1-hour 
NO2 or 1-hour SO2 NAAQS, the air quality impacts 
assessment required to obtain a PSD permit can present new challenges 
for permit applicants. This is because demonstrating that a 
modification will not cause or contribute to a violation of these 1-
hour standards may require more refined and data-intensive air quality 
modeling approaches than has previously been required to make this 
demonstration with respect to the pre-existing NAAQS for NO2 
and SO2. To assist permit applicants in performing the 
required analysis of 1-hour NO2 and SO2 air 
quality impacts, we have issued several guidance memos that describe 
available alternative approaches and flexibilities.\371\ In addition, 
EPA provides technical assistance with modeling issues upon request.
---------------------------------------------------------------------------

    \371\ These memos are available at http://www.epa.gov/ttn/scram/guidance_clarificationmemos.htm, http://www.epa.gov/region07/air/nsr/nsrmemos/appwso2.pdf, and http://www.epa.gov/nsr/documents/20100629no2guidance.pdf.
---------------------------------------------------------------------------

4. Assessment of Tier 3 Refinery Changes and Permitting Implications
    EPA has performed a refinery-by-refinery assessment of the physical 
and operational changes that are likely to be needed to allow each 
active refinery in the U.S. to produce gasoline that complies with the 
proposed Tier 3 fuel specifications. We have also assessed the likely 
effects of those changes on refinery emissions. This assessment is 
described in more detail in Section 5.4 of the draft RIA. Using this 
assessment, we were able to gain a reasonable understanding of the 
potential scope of NSR permitting requirements refiners might face 
under the proposed Tier 3 program. In general, our assessment indicates 
that only a small number of refineries will likely need to make 
modifications of a type and size that would trigger the need for a PSD 
or Nonattainment NSR permit. The assessment and this conclusion take 
into account the changes in the NSR program and its context since 2000 
described in Section V.B.3. A technical memorandum describing in detail 
our analysis and results is in the public docket for this 
proposal.\372\
---------------------------------------------------------------------------

    \372\ Keller, P. (February 2013). New Source Review Permitting 
Impact Analysis for Proposed Tier 3 Gasoline Program. Memorandum to 
the docket.
---------------------------------------------------------------------------

    In our analysis, we started with the estimates we have made 
regarding the physical and operational changes that would be required 
at each refinery (described in Section 5.4 of the draft RIA). The 
modifications at a given refinery could include revamps to existing FCC 
pre- or post-treatment unit(s) or the installation of a new grassroots 
post-treatment unit for sulfur reduction. Based on the projected 
refinery-specific changes, we estimated the increased demand for energy 
(i.e., fuel to generate process heat, steam and electricity), hydrogen, 
and sulfur recovery associated with meeting the proposed Tier 3 
standards. We selected representative industry emission factors for 
NAAQS pollutants, their precursors, and GHGs for each emitting process 
and combined them with estimates of incremental activity to estimate 
the emissions changes at each equipment unit (or group of similar 
units) at each refinery.
    To determine upper and lower bounds for emissions increases 
resulting from changes necessary to meet the proposed Tier 3 gasoline 
sulfur specification, we evaluated two scenarios, a no ABT scenario 
(assuming no trading of sulfur credits) and the primary ABT scenario 
described in Section 5.4 of the draft RIA. We did not have sufficient 
detailed information to predict which refineries would find it most 
profitable to generate additional electrical power, hydrogen and high 
octane blendstocks internally on site rather than purchasing these 
inputs from external suppliers. If a refinery generates these 
additional inputs internally on site, the additional emissions would 
count towards the significant emissions rates and could affect the need 
for a major NSR permit. To account for these variables, we evaluated a 
high and a low case for each identified scenario. Under the high case, 
we assumed 100 percent internal generation of the additional electrical 
power, hydrogen, and high octane blendstocks and under the low case, 
100 percent external generation of the same. We expect refineries to 
actually be somewhere between these two extreme cases in the future. 
For the identified scenarios and cases, we compared the emissions 
increase for each pollutant at each refinery to the significant 
emissions increase threshold for that pollutant, taking into 
consideration the current attainment status for each pollutant where 
the refinery is located. We found that the no ABT scenario, low case 
had the lowest number of refineries estimated to trigger major NSR and 
the primary ABT scenario, high case had the highest, although the 
overall numbers did not vary greatly.
    An important aspect of our analysis is that we assumed that 
refineries would not install new emission controls on affected units 
for the purpose of staying below the significant emissions increase 
threshold and thereby not triggering major NSR. In particular, we did 
not assume that selective catalytic reduction (SCR) to control 
NOX emissions would be applied to new or modified fuel 
combustion units. This is an important assumption that tends to result 
in overestimates of the number of major NSR permits needed for NAAQS-
related pollutants. In reality, applying new emission controls would be 
an option that refineries may employ to legally avoid major NSR 
permitting. We also did not assume that refineries would ``net out'' of 
NSR by taking credit for any emissions reductions occurring within a 
contemporaneous timeframe, including any new emissions reduction

[[Page 29934]]

projects initiated specifically for the purpose of ``netting out.'' 
This analysis resulted in a prediction of whether a PSD and/or a 
Nonattainment NSR permit would be needed for each refinery and the 
pollutants that would have to be addressed in those permits, under each 
of the two scenarios. Only the results for the primary ABT scenario, 
high case are presented here. The results for the no ABT scenario, 
which are not greatly different, are described in the previously 
referenced technical memo found in the docket for this rulemaking.
    We found that under the primary ABT scenario, high case, 19 
refineries appeared likely to have significant emissions increases for 
one or more pollutants and thus would trigger major NSR.\373\ This 
equates to approximately 17 percent of the 111 refineries projected to 
be affected by the proposed Tier 3 standards. Of these 19 refineries, 
we predicted that 13 refineries would need permits for NAAQS-related 
pollutants and their precursors (PSD and/or Nonattainment NSR) and for 
GHGs (results for GHG are discussed below). Thus, compared to the Tier 
2 program where EPA expected the need for NAAQS-related NSR permits 
might be widespread among refineries, we believe that under the 
proposed Tier 3 program only about 13 refineries would need major NSR 
air permits to address NAAQS pollutants. This number could be lower if 
those refineries apply pollution controls, such as SCR for 
NOX, to sufficiently reduce the emissions increases to 
levels that are below the applicable pollutant significance level, or 
if the refineries can achieve emissions reductions elsewhere at the 
facility to ``net out'' of major NSR. For refineries that are required 
to obtain a major NSR permit for NAAQS pollutants, the permitting 
process is expected to normally take about 9 to 12 months once the 
permitting authority has received a complete application.
---------------------------------------------------------------------------

    \373\ Because state requirements regarding minor NSR permitting 
vary and we do not expect minor NSR permitting programs to be a 
significant challenge for refinery modification projects, we did not 
attempt to estimate how many of the remaining refineries might need 
to obtain minor NSR permits.
---------------------------------------------------------------------------

    All 13 refineries just described as potentially needing NSR permits 
for NAAQS pollutants are also projected to need PSD permits for GHGs. 
In addition to these 13 refineries, we estimated that 6 other 
refineries may require a PSD permit addressing only GHG emissions from 
new or modified equipment that is part of the project. For these 
refineries, BACT must be applied for GHG emissions, which we expect in 
most cases would mean that new or modified fuel-burning equipment would 
have to be designed for good energy efficiency. We expect that the 
types of equipment and process technologies that refiners would modify 
or add to meet the proposed Tier 3 standards would generally be 
consistent with BACT for GHG emissions in terms of achievable, cost-
effective, and energy-efficient design even absent the requirement to 
obtain a permit, meaning that such a requirement would not necessitate 
any shift in project design or increase costs. This expectation is 
based on the fact that there are strong economic incentives for 
refiners to design and purchase the most energy-efficient process 
equipment to minimize the cost of production. For example, most of the 
new or modified units expected to be involved in refinery projects 
designed to meet the proposed Tier 3 standards are fuel combustion 
units (e.g., process heaters). Because fuel cost (direct cost in the 
case of purchased natural gas and opportunity cost in the case of 
refinery-generated fuel gas) represents a significant component of 
total operating cost for such units, refineries will strive to maximize 
energy efficiency based on available technologies as part of their 
project design. EPA requests comment on the likelihood that refineries' 
costs for equipment and process technology for compliance with Tier 3 
would include any associated costs of compliance with NSR.
    In 2010, EPA issued a white paper on available and emerging 
technologies for reducing GHGs from the petroleum refining 
industry.\374\ This white paper addresses the types of equipment 
expected to be involved in projects designed to meet the proposed Tier 
3 fuel standards, including process heaters/boilers, hydrogen plants, 
and sulfur recovery units. The identified GHG control technologies for 
these types of units predominately involve opportunities for energy 
efficiency. Consistent with the findings reported in the white paper, 
our experience to date with GHG permitting at refineries and other 
similar sources supports the application of energy efficient design and 
operation of affected units as BACT, and we do not expect that in the 
time frame associated with Tier 3-related projects, add-on controls 
would be required.
---------------------------------------------------------------------------

    \374\ See ``Available and Emerging Technologies for Reducing 
Greenhouse Gas Emissions from the Petroleum Refining Industry,'' 
October 2010, available at http://www.epa.gov/nsr/ghgpermitting.html.
---------------------------------------------------------------------------

    For EPA-issued permits and permits issued by state or local 
agencies under delegation, consultation with other federal agencies 
under the Endangered Species Act and consideration of environmental 
justice would also be required. Significantly, no air quality modeling 
of GHGs would be required, and thus there would be no need to obtain 
extensive input information on meteorology and emissions from other 
nearby sources. Given these differences, we expect that the timeline 
for obtaining a permit only for GHG emissions should be shorter by 
several months than the timeline for a permit that addresses NAAQS 
pollutants.
    We invite public comment on our analysis including ways in which we 
might improve the assessment between now and the final rule.
5. New Source Performance Standards and National Emission Standards for 
Hazardous Air Pollutants for Refineries
    In addition to the proposed Tier 3 rulemaking, we are also 
conducting other rulemakings to set new and revised limits for direct 
emissions from refineries of NAAQS-related pollutants and hazardous air 
pollutants (HAPs). This section provides summary information on these 
rulemaking efforts, so that comments on the proposed Tier 3 program can 
be more fully informed.
    We first regulated petroleum refineries in 1974 when the agency 
issued the New Source Performance Standards (NSPS) to control NAAQS-
related air pollutants. The NSPS applies to refinery process units that 
commenced construction, reconstruction, or modification after June 11, 
1973, but before May 14, 2007. On June 24, 2008, we amended the NSPS 
and issued new standards for most process units constructed, 
reconstructed, or modified after May 14, 2007 and for flares which 
commence construction, modification, or reconstruction after June 24, 
2008. We were petitioned to reconsider these final rules and on 
September 12, 2012, EPA finalized amendments and technical corrections 
to address issues related to flares and process heaters. There are two 
existing Maximum Achievable Control Technology (MACT) standards to 
control HAPs that apply specifically to petroleum refineries.\375\ 
These standards are referred to as MACT 1 and 2 and were issued in 1995 
and 2002, respectively. EPA is required to perform risk and technology 
reviews (RTR) to assess residual risk for MACT standards for HAPs 
within eight years of the

[[Page 29935]]

promulgation of the original MACT standards. In addition, EPA is 
required to perform a technology review of advancement in processes, 
practices and control requirements every eight years after promulgation 
of the MACT. EPA is planning to issue a single rulemaking that will 
address the RTR analyses for both MACT 1 and 2.
---------------------------------------------------------------------------

    \375\ These are codified in 40 CFR part 63, Subpart CC (National 
Emission Standards for Hazardous Air Pollutants From Petroleum 
refineries) and 40 CFR part 63, Subpart UUU (National Emission 
Standards for Hazardous Air Pollutants for Petroleum Refineries: 
Catalytic Cracking Units, Catalytic Reforming Units, and Sulfur 
Recovery Units).
---------------------------------------------------------------------------

    Finally, on March 21, 2011 EPA published MACT standards for 
Industrial, Commercial, and Institutional Boilers and Process Heaters 
and on January 31, 2013 EPA finalized revisions to those standards 
based on reconsideration.\376\ These standards apply to boilers and 
process heaters at refineries. Because any changes that are made to 
meet new requirements of these rulemakings would likely reduce rather 
than increase refinery emissions, we do not expect these modifications 
to trigger NSR unless a refinery chooses to increase the capacity of 
one or more of its units at the same time.\377\ This means that we 
expect the final rules would not themselves increase the major NSR 
workload for refinery environmental permitting staffs or for permitting 
agencies in the same period that these organizations need to prepare 
and process permit applications related to the proposed Tier 3 fuel 
program. (Minor NSR permitting workload may be affected.)
---------------------------------------------------------------------------

    \376\ 76 FR 15451 (March 21, 2011) and 78 FR 7138 (January 31, 
2013).
    \377\ Some approaches for controlling NAAQS-related pollutants 
do require additional electrical power or otherwise may increase GHG 
emissions. Conversely, some approaches to increasing energy 
efficiency (and thereby reducing GHG emissions) can increase 
emissions of NAAQS-related pollutants if compensating changes are 
not made in downstream emission control devices, for example 
increases in NOX emissions from higher combustion 
temperatures.
---------------------------------------------------------------------------

6. Steps for Streamlining the Permitting Process
    As we did for Tier 2, we could organize a Headquarters-Regional 
response team to monitor and address any delays in permitting by 
facilitating coordination among organizations where needed to resolve 
permitting issues. The mission of this team would also include tracking 
the overall progress in permit issuance and assisting state and local 
permitting authorities, refineries, and the public upon request to 
resolve site-specific permitting issues. The team would be comprised of 
EPA staff knowledgeable about permitting programs and refinery 
operations, so the team could provide expert assistance and 
troubleshoot permitting issues in a timely fashion. We invite comment 
from refineries, permitting authorities, and others regarding the 
usefulness of such a team.
    We will continue to maintain and refine the tools and resources 
that have proven useful to permit applicants and permitting 
authorities, such as the RACT/BACT/LAER clearinghouse, the Support 
Center for Regulatory Atmospheric Modeling, and our web-based resources 
on GHG permitting. These GHG permitting resources include various 
materials on the topic of BACT for GHG, including white papers and 
copies of our comments on recent draft permits proposed by state and 
local permitting agencies.\378\ One of the white papers, described 
previously in Section V.B.4, addresses petroleum refining, and provides 
information on control techniques and measures that are available to 
mitigate GHG emissions in order to assist states and local air 
pollution control agencies, tribal authorities, and regulated entities 
in implementing technologies or measures to reduce GHGs under the CAA, 
particularly in permitting under the PSD program and the assessment of 
BACT.
---------------------------------------------------------------------------

    \378\ See ``PSD and Title V Permitting Guidance for Greenhouse 
Gases,'' March 2011 and ``Available and Emerging Technologies for 
Reducing Greenhouse Gas Emissions from the Petroleum Refining 
Industry,'' October 2010, both available at http://www.epa.gov/nsr/ghgpermitting.html.
---------------------------------------------------------------------------

    We believe the guidance we provided on BACT and LAER for 
NOX and VOC shortly after the final Tier 2 rule was not 
widely utilized by either refineries or permitting authorities. 
Nevertheless, we invite comment on whether additional guidance on BACT 
and LAER for these and other NAAQS-related pollutants would be useful 
to support permitting for Tier 3-related modifications as well as the 
appropriate scope and substance of such guidance. We anticipate that if 
we do develop any new BACT/LAER guidance, we would provide an 
opportunity for public comment on the draft guidance before finalizing 
it.
    For Tier 3-related NSR permit applications submitted to EPA 
Regional Offices, we will assist members of the local communities in 
understanding the applications and our proposed permits, in offering 
comment, and participating in our decisions. We also encourage similar 
assistance efforts by the state and local permitting authorities, and 
we invite comment on the specific forms that our and their support 
should take.
    EPA received comments during the Tier 2 rulemaking that vehicle 
emissions reductions should be allowed to be used as part of ``netting 
out'' of NSR. This concept is now relevant to GHG emissions, in 
addition to the NAAQS-related pollutants to which it was relevant at 
the time of the Tier 2 rulemaking. At that time we responded to the 
comments by saying that the use of vehicle emissions reductions for 
netting purposes was not permitted by the NSR regulations, since the 
creditable emissions reductions used for netting purposes must result 
from reductions occurring at the modified source. We noted, for 
example, that the definition of net emissions increase in 40 CFR 
52.21(b)(3)(i) includes only increases and decreases occurring ``at the 
source''. We believe this provision in the NSR rules is well founded in 
the CAA. Setting aside the issue of whether we have authority to change 
this provision, the potential consequences of changing it to allow the 
use of non-source emissions reductions in ``netting out'' of NSR would 
be far reaching. We are not proposing such a change as part of this 
rulemaking, and we believe that any proposal for such a change should 
be based on a much better assessment of its possible implications than 
can be accomplished as part of this rulemaking. We also note that 
``netting out'' of NSR could be a complex and often time-consuming 
process because all contemporaneous emissions increases and decreases 
within the refinery must be properly accounted for, so the ability to 
use vehicle emissions reductions in the netting analysis would not 
automatically make ``netting out'' a time-saving shortcut around the 
permitting process that would otherwise apply. Nevertheless, we invite 
comment regarding how critical such a change may be to successful 
permitting of the modifications needed to comply with the proposed Tier 
3 program, possible legal rationales for such a change, and the 
possible implications beyond the Tier 3 rule including ways to limit 
such implications by making the change specific to vehicle emissions 
reductions that are closely linked to changes in fuel properties that 
result from the refinery modifications.
    Finally, we invite comment on issues related to state and local 
minor source NSR programs and how they may relate to implementation of 
the proposed Tier 3 fuel program. EPA rules give states wide latitude 
in the design and operation of their minor source programs, and we do 
not routinely require states to report their minor source permitting 
activity to us. Therefore, focused comments on this issue would be 
helpful.

C. Standards for Denatured Fuel Ethanol and Other Oxygenates

    Current gasoline requirements include the prohibition on blending 
gasoline with denatured fuel ethanol (DFE) that has sulfur content 
higher than 30

[[Page 29936]]

ppm.\379\ This requirement reflects the current 30-ppm refinery average 
sulfur requirement. Consistent with this requirement and our proposed 
introduction of a 10-ppm refinery average sulfur standard, we propose 
that manufacturers of DFE for use by oxygenate blenders would be 
required to meet a 10-ppm sulfur cap.
---------------------------------------------------------------------------

    \379\ 40 CFR 80.385(e).
---------------------------------------------------------------------------

    California's requirements for DFE, which became effective in 
December 2003, are as follows: maximum 10 ppm sulfur, maximum 0.06 
volume percent benzene, maximum 0.5 volume percent olefins, and maximum 
1.7 volume percent aromatics.\380\ Denaturants used to manufacture DFE 
must also meet maximum benzene, olefins, and aromatics specifications 
that are based on the anticipated dilution ratio when blended with 
ethanol.\381\ Additionally, in July 2002, the Renewable Fuel 
Association (RFA) recommended that all ethanol produced for use in the 
U.S. should be manufactured in accordance with the California 
specifications primarily because of logistical difficulties in 
segregating ethanol destined for California from other 
destinations.\382\ RFA recently indicated that all ethanol producers 
are adhering to this recommendation. Some DFE marketers have also 
adopted California's DFE requirements as part of their 
specifications.\383\ Consequently, we believe that the implementation 
of a 10-ppm sulfur cap for DFE would not result in increased burden to 
ethanol producers. We are proposing it to reduce emissions from motor 
vehicles, the same reason we are proposing a more stringent sulfur 
standard for gasoline into which it is blended.
---------------------------------------------------------------------------

    \380\ California Code of Regulations, Title 13, Section 2262.9, 
``Requirements Regarding Denatured Ethanol Intended For Use as a 
Blend Component in California Gasoline''.
    \381\ The current California requirements which are based on a 
maximum 5 percent denaturant level in DFE are as follows: maximum 
1.1 volume percent benzene, maximum 10 volume percent olefins, and 
maximum 35 volume percent aromatics. ASTM International Standard 
D4806-11(a), ``Standard Specification for Denatured Fuel Ethanol for 
Blending with Gasolines for Use as Automotive Spark-Ignition Engine 
Fuel'' requires that the maximum denaturant concentration in DFE is 
5 volume percent.
    \382\ RFA publication entitled ``Fuel Ethanol, Industry 
Guidelines, Specifications and Procedures,'' 2011.
    \383\ For example, Aventine Renewable Energy Fuel-Grade Ethanol 
specifications at http://www.aventinerei.com/pdfs/fuel_grade_spec.pdf.
---------------------------------------------------------------------------

    Further, the ASTM International specification for DFE allows only 
natural gasoline, gasoline blendstocks, and gasoline as 
denaturants.\384\ Similar to the ASTM specifications, we are proposing 
to require that only natural gasoline, gasoline, and gasoline 
blendstocks for oxygenate blending (BOB) be used as ethanol 
denaturants. We believe that this limitation is needed to prevent the 
use of other denaturants that might adversely impact vehicle emissions 
performance. We believe that the ASTM specifications are already in use 
by industry and, therefore, EPA's adoption of the same specifications 
would not result in an increased burden to DFE producers. We further 
believe that limiting the type of gasoline blendstocks that can be used 
as denaturant to BOBs would not impose a new burden on DFE producers 
since other gasoline blendstocks would not typically be available to 
DFE producers. We request comment on whether there should be an 
allowance for other gasoline blendstocks to be used as ethanol 
denaturants.
---------------------------------------------------------------------------

    \384\ ASTM International D4806-11(a), ``Standard Specification 
for Denatured Ethanol for Blending with Gasolines for Use as 
Automotive Spark-Ignition Engine Fuel''.
---------------------------------------------------------------------------

    With regard to benzene, olefins, and aromatics, we believe that 
these proposed requirements along with Internal Revenue Service ethanol 
denaturant requirements would limit benzene, olefins, and aromatics 
content of DFE to very low levels. Therefore, we are not proposing any 
limits on these parameters in DFE. Nevertheless, we are requesting 
comments on whether we should adopt the State of California's benzene, 
olefin, and aromatics specifications for DFE. We are also proposing to 
limit the maximum concentration of denaturant that can be used in DFE 
to 2 volume percent. Under the RFS2 regulations, if the denaturant 
level is 2 volume percent or less (effectively less than 2.5 volume 
percent considering rounding) the entire volume of denatured fuel 
ethanol can be used for determining compliance with the RFS2 renewable 
fuel volume requirements.\385\
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    \385\ See the definition of Renewable Fuel in 40 CFR 80.1401.
---------------------------------------------------------------------------

    We also request comment on whether to require manufacturers of 
denaturants for use in DFE to register with EPA, and demonstrate 
compliance with the maximum sulfur, benzene, olefins, and aromatics 
specifications enforced in the State of California based on the 
anticipated dilution with ethanol. We believe that such additional 
requirements on the denaturants used to manufacture DFE would not be 
necessary given that DFE producers would be required to meet the 
proposed specifications and the proposed requirement that denaturant 
concentration in DFE be limited to a maximum of 2 volume percent.
    We propose that producers of DFE would be required to meet the 
proposed fuel quality requirements for their product and provide batch 
reports to EPA. This is similar to the requirements for gasoline 
refiners. This approach would provide an appropriate level of assurance 
on the quality of DFE which has become such a large component in the 
gasoline fuel pool. We believe that this approach would not result in 
additional burden to ethanol producers beyond the annual batch reports 
that they would need to submit to EPA and the information they provide 
on product transfer documents (PTDs). Currently, under the fuel and 
fuel additives registration requirements at 40 CFR part 79, 
manufacturers of DFE are required to register their products with EPA 
prior to introducing DFE into commerce. Also, DFE producers currently 
test each batch of their product in order to provide assurance to 
blenders that it meets the current fuel quality requirements. This 
information is critical to ethanol blenders to avoid testing each batch 
of an ethanol blend that they manufacture. The proposed requirements 
would facilitate unfettered downstream ethanol blending.
    We are also proposing that the proposed fuel quality specifications 
and requirements for DFE (except those related to the use of 
denaturants) would apply to other oxygenates used in gasoline. We are 
proposing that the oxygenate quality requirements would become 
effective for oxygenate producers/importers on January 1, 2017. We are 
proposing that oxygenate producers and importers would be required to 
register by December 1, 2016, or 30 days prior to the date when they 
produce/import oxygenate (which ever date is later). Registration under 
the RFS program would be sufficient to fulfill this proposed 
requirement. We are proposing that oxygenate blenders be required to 
begin using oxygenates that comply with the proposed requirements 
beginning March 1, 2017. We also seek comment on the ability of these 
blenders to comply with the proposed requirements earlier, and 
appropriateness of such an earlier compliance date.

D. Standards for Fuel Used in Flexible Fueled Vehicles

    FFVs are vehicles that are capable of operating on both gasoline 
and gasoline blends containing up to 85 volume percent denatured 
ethanol. Whether FFVs are operating on clear gasoline (E0), E85, or any 
level of ethanol in between, to maintain emission

[[Page 29937]]

performance the vehicles still need the fuel to meet certain quality 
specifications, such as the 10-ppm average gasoline sulfur standard 
proposed today. We anticipate that the volume of higher level ethanol 
blends used in FFVs may increase substantially as the volume 
requirements of the RFS program increase. Significant public and 
private initiatives are also currently underway to expand the use of 
ethanol blender pumps that dispense a variety of ethanol blends for use 
in FFVs.\386\ Therefore it is becoming increasingly important that all 
fuels used in FFVs, not just gasoline, meet fuel quality standards. A 
lack of clarity regarding the standards that apply to fuels used in 
FFVs could act to impede the further expansion of ethanol blended 
fuels, which is important to satisfying the requirements of the RFS 
program. For these reasons, we believe it is important that our 
gasoline quality standards for not just sulfur, but also benzene, Reid 
Vapor Pressure (RVP), detergency, and compliance with the interpretive 
rule defining the phrase ``substantially similar'' in CAA section 
211(f)(1) \387\ (i.e., contain only carbon, hydrogen, oxygen, nitrogen, 
and sulfur) apply to any fuel used in an FFV. At the same time, it is 
not necessarily clear how we should implement such standards within the 
context of our existing regulations. For this reason we are seeking 
comment on appropriate regulatory mechanisms for doing so. The 
following sections discuss potential approaches for gasoline-ethanol 
blends both above and below 50 percent ethanol. We have also developed 
a possible approach, along with draft regulations, that are included in 
the docket on which we specifically seek comment.\388\
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    \386\ The U.S. Department of Agriculture (USDA) has a program to 
assist in the funding for the installation of as many as 10,000 
ethanol blender pumps over the next 15 years in rural areas. Growth 
Energy has a ``Blend Your Own Ethanol'' program to encourage the 
installation of ethanol blender pumps.
    \387\ 73 FR 22277, 22281 (April 25, 2008).
    \388\ Herzog, J. (January 2012). Possible Approach to Fuel 
Quality Standards for Fuel Used in Flexible-Fuel Automotive Spark-
Ignition Vehicles (FFVs), Memorandum to the docket.
---------------------------------------------------------------------------

1. Standards for E51-83
    Historically, ``E85'' has been used to describe fuel blends 
containing gasoline and ethanol with a minimum and maximum ethanol 
content of 68 volume percent and 83 volume percent, respectively. The 
recent update to the ASTM International specification for ``E85'' 
included a reduction in the minimum ethanol concentration to 51 volume 
percent.\389\ As part of the updated specification, ASTM retired the 
name ``E85'' in favor of ``ethanol fuel blends for flexible-fuel 
automotive spark-ignition engines.'' ASTM took this action because the 
term ``E85'' has caused confusion regarding the variability in the 
ethanol content depending upon seasonal climactic conditions and 
regional gasoline volatility specifications. For the purposes of this 
discussion, ``E51-83'' refers to the fuel which meets the new ASTM 
D5798-11 specifications.
---------------------------------------------------------------------------

    \389\ ASTM International D5798-11, ``Standard Specification for 
Flexible-Fuel Automotive Spark-Ignition Engines''.
---------------------------------------------------------------------------

    Currently, only reformulated gasoline blendstocks for oxygenate 
blending (RBOBs) and gasoline that has previously been demonstrated to 
comply with applicable EPA specifications (reformulated gasoline (RFG) 
and conventional gasoline (CG)) are used to manufacture E51-83.\390\ 
The Agency believes that the use of these blendstocks prevents 
inappropriate blending components (e.g., chemical wastes) from being 
used in the production of E51-83. Use of these blendstocks would also 
help ensure that E51-83 meets the necessary sulfur levels we are 
proposing today. We note, however, that use of only these blendstocks 
is interfering with expansion of E51-83 into the marketplace by 
preventing blends at the upper range of the allowed ethanol content. At 
higher ethanol concentrations, blenders often cannot meet the minimum 
volatility specifications set by ASTM for cold start performance when 
using only BOBs and gasoline. Prior to the recent update of the ASTM 
specifications, it was frequently not possible to manufacture ``E85'' 
that met both the ASTM minimum volatility specification and the EPA 
requirements regarding the blendstocks that can be used. As a result, 
some marketers discontinued distributing ``E85.'' Although the ASTM 
update provided a compliance method for manufacturing E51-83, the 
result is that less ethanol can be used in FFVs, because the ethanol 
concentration is forced down from 83 percent toward the 51 percent 
minimum.
---------------------------------------------------------------------------

    \390\ Letter to Robert Sydney, Division of Energy Resources, 
Boston, MA, from James Caldwell, U.S. EPA, February 15, 2006.
---------------------------------------------------------------------------

    To address this situation, we believe that we need to prescribe 
requirements for E51-83 that would enable the continued expansion into 
the marketplace. We believe that such requirements could focus more on 
the product and less on how it is made. We also believe that E51-83 
should meet the same sulfur, RVP, and benzene standards otherwise 
applicable to gasoline as well as the ``substantially similar'' 
requirements. We are therefore seeking comments on whether we could 
extend these requirements to E51-83. We note that establishing such 
requirements could allow the use of butane and natural gasoline liquids 
(NGL) to manufacture E51-83 with sufficient volatility to meet the ASTM 
specifications. Butane is commonly blended into gasoline and NGL is the 
denaturant specified by ASTM for the manufacture of DFE.\391\ 
Additionally, because NGL and butane are less expensive than gasoline 
or BOBs, we anticipate that such a change could help to reduce the 
price of E51-83 relative to finished gasoline.\392\
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    \391\ ASTM International D4806-11(a), ``Standard Specification 
for Denatured Ethanol for Blending with Gasolines for Use as 
Automotive Spark-Ignition Engine Fuel''.
    \392\ In August of 2011 the retail price of E85 was 
approximately 60 cents per gallon more than gasoline on an energy 
content adjusted basis.
---------------------------------------------------------------------------

    Further, we note that requiring E51-83 to meet the same standards 
as gasoline would subject E51-83 manufacturers to all the sampling, 
testing, and reporting obligations of refiners. While this would 
provide maximum blending flexibility, it could also limit the parties 
that might choose to blend E51-83. Currently oxygenate blenders are 
exempt from much of this regulatory burden. For this reason, we are 
also seeking comments on whether we could establish requirements that 
would allow producers of E51-83 to avoid the compliance burdens of a 
refiner. We are seeking comments on one such approach that would 
require the use of only blendstocks that meet certain specifications to 
produce E51-83. We believe that use of only blendstocks (including 
butane and NGL) that meet these specifications would ensure the final 
blend would always meet the standards. These approaches are discussed 
in greater detail in the docket for this rulemaking.\393\ We seek 
comment on these approaches, and any other approaches that could be 
used to remove hurdles for blending of E51-83 while still ensuring the 
product meets the fuel quality requirements needed to maintain vehicle 
emission performance.
---------------------------------------------------------------------------

    \393\ Herzog, J. (January 2012). Possible Approach to Fuel 
Quality Standards for Fuel Used in Flexible-Fuel Automotive Spark-
Ignition Vehicles (FFVs), Memorandum to the docket.
---------------------------------------------------------------------------

2. Standards for Mid-Level Ethanol Blends (E16-50)
    As discussed earlier, whether FFVs are operating on clear gasoline 
(E0), E85, or any level of ethanol in between, to maintain emission 
performance these

[[Page 29938]]

vehicles still need the fuel to meet certain quality specifications. 
For this reason, we believe it is important that higher ethanol blends 
also meet the same standards that apply to gasoline. Our various 
standards for gasoline already apply to any fuel sold for use in motor 
vehicles, which is commonly or commercially known or sold as gasoline. 
In the fuel and fuel additive registration program, the gasoline family 
includes fuels composed of at least 50 percent clear gasoline by 
volume.\394\ As a result, our gasoline standards already apply to E16-
50 ethanol blends. And yet, such fuels currently can only be used in 
FFVs. Therefore, in addition to seeking comment on the need to have 
E16-50 blends comply with the gasoline sulfur, benzene, and RVP 
standards, we also seek comment on the means of doing so. For example, 
can and should the Agency simply treat E16-50 as gasoline under our 
regulations and clarify that gasoline means any fuel that contains 50 
percent or more gasoline? Alternatively, should the Agency treat E16-50 
as an alternative fuel used in FFVs? In which case we seek comment on 
whether we should take the same approach for E16-50 as discussed above 
for E51-83 with respect to sulfur, benzene, RVP standards, and 
substantially similar requirements under section 211(f).
---------------------------------------------------------------------------

    \394\ 40 CFR 79.56(e)(1)(i).
---------------------------------------------------------------------------

    In the context of considering whether and how to apply gasoline 
standards and requirements to E16-50 we also seek comment on whether it 
might be an appropriate reading of our regulatory and statutory 
authority to allow E16 to E50 blends to have higher RVP levels than 
otherwise required by our regulations for gasoline. As the ethanol 
level increases, the volatility increase caused by blending ethanol 
with gasoline begins to decline, such that at E30 there is only about a 
0.5-psi RVP increase. While still an increase compared to the standards 
that apply to gasoline other than E9-10, it is considerably less than 
the full 1-psi RVP increase that results at E10. The evaporative 
emission increase caused by E30 would then be less than for E10. Thus, 
we seek comment on whether it would be an appropriate reading of our 
regulatory and statutory authority to allow higher RVP levels for such 
blends, at least in some limited situations and time frames (e.g., 
using existing regulatory research exemptions for demonstration 
programs) where new efforts are being made to introduce such blends 
into the market. We further seek comment on data that might help 
quantify both the evaporative and exhaust emission impacts necessary to 
support any such action.

E. Proposed Program Flexibilities

1. Averaging, Banking, and Trading Program
    As mentioned in Section V.A.2.b, we are proposing an ABT program 
which reduces the cost and promotes the feasibility of the program by 
allowing refiners and importers to choose the most economical 
compliance strategy (investment in technology, credits, or both) to 
meet the proposed Tier 3 average gasoline sulfur standard. The program 
allows refiners and importers to generate standard credits for 
overcompliance with the 10-ppm sulfur standard beginning in 2017. These 
credits could be generated indefinitely and banked or transferred to 
others for compliance with the average sulfur standard. The proposed 
program also permits refiners and importers to generate early credits 
for overcompliance with today's 30-ppm average sulfur standard from 
2014 to 2016. Early credits may be used towards compliance with the 10-
ppm standard beginning in 2017, banked for use through 2019, and/or 
transferred to other refiners or importers subject to the sulfur 
standard.
a. Eligibility
    Under the ABT program, we are proposing that U.S. refiners who 
produce gasoline by processing crude oil and/or intermediate feedstocks 
through refinery processing units are eligible to generate both early 
credits (2014-2016) and standard credits (2017 and later). As proposed, 
importers are also eligible to generate both early and standard sulfur 
credits on gasoline imported into the United States.
    We are proposing that sulfur credits may only be generated for 
gasoline that is subject to the proposed sulfur requirements as 
described at Sec.  80.1603. This excludes gasoline designated for 
export. It also excludes California gasoline (gasoline produced or 
imported for use in California) but includes gasoline produced by 
California refineries for use outside the state. Although California 
gasoline is not covered by our proposed sulfur program, we seek comment 
on whether to include California gasoline in the ongoing ABT program 
under Tier 3 (not the early credit program). The result would be a 
national 10-ppm average gasoline sulfur standard. This approach could 
provide some additional compliance flexibility to refiners, but it 
would also require reporting of batch data to EPA for California 
gasoline.
    We have received inquiries whether fuel ethanol producers or 
blenders should be eligible to generate credits under the proposed 
gasoline sulfur program. Denatured fuel ethanol currently contains 
around 9 ppm sulfur on average, ranging anywhere from 2 to almost 30 
ppm.\395\ While certain batches of ethanol could theoretically be low 
enough in sulfur to generate credits, it is our desire to limit credit 
generation to companies required to comply with the proposed Tier 3 
sulfur standards, i.e., refiners and importers. Experience in the 
unleaded gasoline program suggests widespread abuse and fraud when 
credits have been allowed to be generated or sold by non-obligated 
parties. Thus, in order to allow ethanol producers (or blenders) to 
generate sulfur credits under Tier 3, they would need to be treated as 
refiners and subject to our batch testing, reporting, and recordkeeping 
requirements for the finished gasoline they produce.\396\ Currently, 
downstream blenders are exempt from these regulations because the 
certification and compliance burden is being borne by the upstream 
refiners.\397\ Furthermore, since many refiners currently comply with 
our standards taking into consideration the fuel property changes 
expected as a result of downstream ethanol blending, providing ethanol 
blenders with sulfur credit would result in double counting the effects 
of ethanol. To avoid this, we would need to restructure our gasoline 
regulations to shift the point of compliance to the many terminals and 
bulk plants where ethanol is blended and finished gasoline is produced 
instead of the refinery gate. While possible, this would significantly 
expand the amount of sampling, testing, recordkeeping, and reporting 
required to demonstrate compliance with our gasoline standards. It 
would also considerably expand the amount of sampling, testing, 
recordkeeping, and reporting required of ethanol blenders. As discussed 
in Section V.C, we are proposing a cap of 10 ppm on the sulfur content 
of denatured fuel ethanol (DFE). Over compliance with the per-gallon 
cap would not be a valid basis for credit generation, as you would 
expect that in all cases the DFE would be below the

[[Page 29939]]

cap. To allow credit generation, we would need to propose an additional 
annual average sulfur standard for DFE at some level below 10 ppm, and 
allow credits to be generated for over compliance with that standard. 
Accordingly, we do not believe it is appropriate to allow ethanol 
producers or blenders to generate sulfur credits under the proposed 
gasoline sulfur program.
---------------------------------------------------------------------------

    \395\ Report on Ethanol Producers Survey, Presented at the 
California Phase 3 Reformulated Gasoline Regulation Workshop, June 
15, 2000, Carl Reeder, Archer Daniels Midland.
    \396\ 40 CFR 80.330, 80.335, 80.365, and 80.370.
    \397\ Under the proposed Tier 3 program, as explained in Section 
V.C, we are requiring fuel ethanol producers to comply with the 10-
ppm standard. However, for the reasons discussed above, we still do 
not believe it is appropriate to allow them to generate sulfur 
credits under the proposed ABT program.
---------------------------------------------------------------------------

b. Standard Credit Generation
    Under the Tier 3 ABT program, we are proposing standard credit 
generation provisions similar to those offered under Tier 2 as well as 
the MSAT2 gasoline benzene program. We are proposing an ongoing sulfur 
credit program that would allow refiners and importers to average 
within and across companies to meet the new 10-ppm average sulfur 
standard in the most cost-effective manner possible. Refiners and 
importers could generate standard credits for overcomplying with the 
10-ppm standard on a volume-weighted annual average basis beginning 
January 1, 2017. Standard credit generation periods would be 12 months 
long and synchronized with compliance demonstration periods.
    We are proposing that small refiners and small volume refineries 
could generate standard credits beginning with the start of their 
program on January 1, 2020. Eligible small refining entities could also 
generate standard credits for over compliance with the 10-ppm standard 
from January 1, 2017 through December 31, 2019 by voluntarily opting in 
to the Tier 3 sulfur program during a time period when it would 
otherwise not apply. Regardless of whether they were generated early or 
not, all standard credits generated by small refiners and small volume 
refineries would be subject to the credit life provisions described in 
Section V.E.1.d. For a summary of the small refiner and small volume 
refinery ABT provisions, refer to Section V.E.1.f.
c. Early Credit Generation
    To encourage early gasoline desulfurization and give the refining 
industry flexibility to stagger their investments over time, we are 
proposing that refiners and importers could also generate early credits 
for overcomplying with today's 30-ppm gasoline sulfur standard on a 
volume-weighted annual average basis from January 1, 2014 through 
December 31, 2016. Under the ABT program, we are proposing that 
refiners and importers would not need to establish a gasoline sulfur 
baseline or meet a trigger point in order to generate early credits. 
They would simply need to demonstrate that their average U.S. gasoline 
sulfur levels are below today's 30-ppm Tier 2 standard during the early 
credit generation period. We believe this simple early credit approach 
is possible because U.S. gasoline is currently averaging around 30 ppm 
today based on compliance data. Since during the proposed early credit 
generation period refiners and importers would need to continue to 
comply with the existing Tier 2 sulfur standards, absent Tier 3, they 
would need to maintain this level of performance on an industry average 
basis. Accordingly, any additional gasoline sulfur reductions beyond 30 
ppm could thus be attributed to the proposed Tier 3 program.
    Refiners and importers supplying gasoline containing less than 30 
ppm sulfur from January 1, 2014 through December 31, 2016 could choose 
from generating either standard credits under the existing Tier 2 
program or early credits under the proposed Tier 3 program, but not 
both (at least not for the same volume of gasoline). Sulfur credits 
would be generated on an annual average basis. Refiners and importers 
could make the decision at the end of the year whether credits 
generated in 2014, 2015 or 2016 would be more valuable used/traded to 
comply with the Tier 2 program or banked for the Tier 3 program. Some 
year-end credits could be designated as Tier 2 and some designated as 
Tier 3 provided the same volume of gasoline was only used to generate 
one type of credit. We believe that the proposed early credit program 
structure is the simplest approach to giving refiners and importers 
incentive for doing more sulfur control earlier than required and 
providing additional lead time to meet the Tier 3 annual average 
standard. We seek comments on alternative ways to structure the early 
credit program to help ease the transition from Tier 2 to Tier 3.
    Under past fuel programs (e.g., MSAT2), we precluded importers from 
generating early credits under the premise that they did not need 
additional lead time to comply with our fuel standards because, most 
likely, they would not be investing in new refining technologies. We 
also thought it would be difficult for them to establish representative 
baselines from which early credits could be generated. Since we are not 
proposing early credit baselines under Tier 3, as discussed above, we 
are proposing to allow importers to generate early credits for sending 
over-compliant gasoline to the United States prior to the start of the 
program, but seek comment on the appropriateness of doing so.
d. Credit Life Provisions
    Under the Tier 3 ABT program, we are proposing that early credits 
must be used towards compliance within three years from the start of 
the program; otherwise they would expire and become invalid. In other 
words, early credits must be applied towards the 2017, 2018 or 2019 
compliance years. After February 29, 2020, all early credits would 
expire and become invalid. The proposed three-year early credit life 
provision would offer considerable flexibility to refiners phasing in 
Tier 3 gasoline sulfur controls while still placing a 2020 end date at 
which point the intended sulfur program is fully implemented and 
enforceable. It would provide a date certain by when auto manufacturers 
could have confidence for the design of their vehicles that all 
vehicles in-use are running on 10 ppm average fuel. Otherwise, it is 
possible that the greater ease of generating early credits relative to 
30 ppm sulfur (as opposed to 10 ppm in 2017 and beyond) could allow 
higher sulfur levels to continue well beyond 2019. Refiners that are 
able to generate early credits may choose to hold onto them for later 
use, rather than trade them to other refiners who may need them sooner. 
The proposed three-year early credit life provision would also be 
consistent with the duration of the small volume refinery provisions 
described below. We seek comment on the lifetime of early credits and 
the implications on in-use sulfur levels beyond 2019 should we allow 
them to have a longer credit life.
    We are proposing that standard credits must be used within five 
years from the year they were generated (regardless of when/if they are 
traded); otherwise they would expire and become invalid. For example, 
standard credits generated in 2017 could be applied towards 2018-2022 
compliance, as well as 2017 compliance. After February 28, 2023, 
standard credits generated in 2017 would expire and become invalid. 
Similarly, standard credits generated in 2018 could be applied towards 
2019-2023 compliance, as well as 2018 compliance. After February 29, 
2024, standard credits generated in 2018 would expire, and so on and so 
forth.
    We believe the five-year standard credit life provision, when 
final, would give refiners and importers sufficient time to use credits 
generated in previous years while still placing limitations on credit 
life that would help with enforcement. Five years is consistent with 
the proposed recordkeeping and reporting requirements (described in 
more detail in Section V.F.1) as well as

[[Page 29940]]

the current Tier 2 and MSAT2 standard credit life provisions.
e. Credit Trading Provisions
    It is possible that sulfur credits could be generated by one party, 
subsequently transferred or used in good faith by another, and later 
found to have been calculated or created improperly or otherwise 
determined to be invalid. If this occurs, as in past fuel programs, we 
are proposing that both the seller and purchaser would have to adjust 
their sulfur calculations to reflect the proper credits and either 
party (or both) could be determined to be in violation of the standards 
and other requirements if the adjusted calculations demonstrate 
noncompliance with the 10-ppm standard.
    Under the proposed Tier 3 ABT program, sulfur credits must be 
transferred directly from the refiner or importer generating them to 
the party using them for compliance purposes. This ensures that the 
parties purchasing them are better able to assess the likelihood that 
the credits are valid. An exception exists where a credit generator 
transfers credits to a refiner or importer who inadvertently cannot use 
all the credits. In this case, the credits could be transferred a 
second time to another refiner or importer. After the second trade, the 
credits must be used or they would be terminated. Allowing a maximum of 
two trades is consistent with other recent fuel programs and we believe 
it is sufficiently flexible while still preserving adequate means for 
enforcement. Nonetheless, we seek comment on the need for allowing more 
than two trades for sulfur credits under the proposed Tier 3 program.
    There are currently no prohibitions against brokers facilitating 
the transfer of credits from one party to another. Any person can act 
as a credit broker, regardless of whether such person is a refiner or 
importer, as long as the title to the credits is transferred directly 
from the generating refiner or importer to the using refiner or 
importer. This prohibition on outside parties taking ownership of 
credits was promulgated in response to problems encountered during the 
unleaded gasoline program and has since appeared in subsequent fuels 
rulemakings. Maintaining this prohibition would allow for maximum 
program enforceability and consistency with all of our other ABT 
programs for mobile sources and their fuels. Nonetheless, we seek 
comment on the need for this restriction under the proposed Tier 3 
program.
f. Summary of ABT Provisions for Small Refiners and Small Volume 
Refineries
    We are proposing that small refiners and small volume refineries 
would have an additional three years to comply with the 10-ppm annual 
average standard, or until January 1, 2020. This is the primary form of 
relief offered to small refining entities under the proposed Tier 3 
gasoline sulfur program. The proposed credit provisions are similar to 
those offered to non-small refiners. Eligible small refiners and small 
volume refineries would be able to generate early credits for 
overcomplying with the 30-ppm Tier 2 standard from January 1, 2014 
through December 31, 2016. Like non-small refiners, they would need to 
make the decision whether these credits would be more valuable under 
the Tier 2 program or the proposed Tier 3 program. While early credits 
could help postpone investments by up to three years, they could not be 
used by small refiners or small refineries to postpone sulfur 
investments beyond their January 1, 2020 start date. However, early 
credits generated by small entities from 2014-2016 could be traded/sold 
to non-small refiners subject to the January 1, 2017 standard and the 
credit revenues could be used to help offset their Tier 3 investments.
    As explained above, small refiners and small volume refineries 
could generate standard credits relative to the 10-ppm standard 
beginning with the start of their program on January 1, 2020. Eligible 
small refining entities could also generate standard credits for over 
compliance with the 10-ppm standard from January 1, 2017 through 
December 31, 2019 by voluntarily opting in to the Tier 3 sulfur program 
earlier than required. Regulatory flexibility provisions offered to 
small refiners and small volume refineries are described in more detail 
below.
2. Regulatory Flexibility Provisions
a. Small Business Regulatory Flexibility Provisions
    As in previous fuel rulemakings, our justification for including 
provisions specific to small businesses is that these entities 
generally have a greater degree of difficulty in complying with the 
standards compared to other entities.
    In developing the proposed Tier 3 gasoline sulfur program, we 
evaluated the environmental need as well as the technical and financial 
ability of refiners and others in the fuel industry to meet the sulfur 
standards as expeditiously as possible. We believe it is feasible and 
necessary for the vast majority of the program to be implemented in the 
established time frame to achieve the air quality benefits as soon as 
possible. Based on information available from small refiners and 
others, we believe that entities classified as small generally face 
unique circumstances with regard to compliance with environmental 
programs, compared to larger entities. Thus, as discussed below, we are 
proposing several regulatory flexibility provisions for small entities 
in the fuels industry to reduce the burden that our proposed program 
could have on them.
    Small entities generally lack the resources that are available to 
larger companies, including those large companies that own small-
capacity refineries, to raise capital for investing in a new regulatory 
program, such as shifting of internal funds, securing of financing, or 
selling of assets. Small entities are also likely to have more 
difficulty in competing for any needed engineering and construction 
resources. As such, we are proposing provisions that would provide 
assistance for small entities in meeting the proposed Tier 3 standards. 
This proposed approach would allow the overall program to begin as 
early as possible; achieving the air quality benefits of the program as 
soon as possible, while helping to ensure that small entities have 
adequate time to raise capital for new fuel desulfurization equipment 
or to make any other needed changes. We believe that small business 
regulatory flexibilities could provide these entities with additional 
help and/or time to accumulate capital internally or to secure capital 
financing from lenders, and could spread out the availability of any 
needed engineering and construction resources.
i. Delayed Standards for Small Refiners
    As explained in Sections V.A.1.c and V.E.1.f, we are proposing an 
option that would allow small refiners to postpone compliance with the 
Tier 3 program for up to three years. This delayed compliance schedule 
for small refiners is not intended as an opportunity for those refiners 
to greatly expand their production of >10 ppm sulfur gasoline, but 
rather would help small refiners with compliance with the program. 
Since the compliance costs for their competitors would rise during 
these three years and since their gasoline would be sold into the same 
fungible market, this delay would not only provide them more lead time, 
but also financial support towards later compliance. Small refiners 
choosing this option would have from January 1, 2017 through December 
31, 2019 to continue production of gasoline with an average sulfur 
level of 30 ppm (per the

[[Page 29941]]

Tier 2 gasoline sulfur program). Compliance with the 10-ppm sulfur 
standard would begin on January 1, 2020. Any small refiner choosing 
this option would be allowed to continue using Tier 2 gasoline sulfur 
credits through December 31, 2019 to meet their refinery average 30-ppm 
sulfur standard (however, these credits may not be used for compliance 
with the proposed Tier 3 10-ppm average sulfur standard).
ii. Refinery Gate and Downstream Caps
    During the Small Business Regulatory Enforcement Fairness Act 
(SBREFA) Panel process, small refiners raised the concern that a 
refinery gate cap of 20 ppm could cause problems during a refinery 
turnaround or an upset because a cap of this level could result in a 
refiner not being able to produce saleable gasoline. The Panel likewise 
had concerns that a downstream cap of 25 ppm may cause problems for 
small downstream entities such as transmix processors because, as they 
noted in their comments during the Panel process, transmix processors 
may not be able to reprocess finished gasoline down to this level. 
Thus, the Panel recommended that EPA assess and request comment on 
retaining the current Tier 2 refinery gate and downstream caps of 80 
and 95 ppm, respectively, to help provide maximum flexibility and avoid 
system upsets for the entire refining and distribution system. Further, 
the Small Business Administration (SBA) and Office of Management and 
Budget (OMB) Panel members recommended that EPA propose retaining the 
80-ppm and 95-ppm caps. The Panel also recommended that, if EPA were to 
propose caps lower than 80 and 95 ppm, the Agency request comment on 
additional refinery gate and downstream caps that are above 20/25 ppm 
but below 80/95 ppm.
    As discussed in Section XI.C, we are proposing to either maintain 
the current 80/95 ppm caps or to lower them to 50/65 ppm. Should we 
lower the caps to 50/65 ppm, given the stringency of the 10-ppm average 
standard, we anticipate that they would provide the same level of 
flexibility for refiners, pipelines, terminals, transmix processors, 
and gasoline additive manufacturers as the current 80/95 ppm caps. 
Should we lower the caps to 50/65, we are proposing to allow the 
current Tier 2 80-ppm refinery gate cap to remain in place through 
December 31, 2019. Compliance with the 50-ppm refinery gate cap would 
begin on January 1, 2020, when the 10-ppm average sulfur standard is 
required for all refiners. Similarly, we are proposing to allow the 
Tier 2 95-ppm downstream cap to remain in effect through February 29, 
2020. Compliance with the 65-ppm downstream cap would begin on March 1, 
2020. For more information on the proposed cap provisions, refer to 
Section V.A.3.
iii. Credit-Related Flexibilities
    As described above in Section V.E.1, we are proposing an ABT 
program. Refiners and importers would be able to generate early sulfur 
credits from January 1, 2014 through December 31, 2016 relative to the 
current 30-ppm Tier 2 average sulfur standard (i.e., credits may be 
generated for any reductions below 30 ppm prior to the start of the 
general Tier 3 program). Beginning January 1, 2017 standard credits may 
be generated for overcompliance with the proposed 10-ppm Tier 3 sulfur 
standard. In addition, small refiners and small volume refineries would 
be able to generate standard credits from January 1, 2017 through 
December 31, 2019 for reductions below 10 ppm prior to their proposed 
program start date of January 1, 2020.
    During the SBREFA Panel process, one Small Entity Representative 
(SER) commented that importers should be allowed to participate in the 
credit program. In previous EPA fuel programs, importers have generally 
been treated as refiners, except for the purposes of early credit 
generation. Refiners have historically been required to establish a 
baseline in order to generate early credits. Importers generally do not 
have a specific baseline or amount of fuel that they import in a given 
year, so participation in the early credit market would not have been 
feasible under those programs. However, under the proposed Tier 3 
sulfur program, refiners and importers are not required to establish 
baselines; the existing 30-ppm Tier 2 standard serves as the 
``baseline.'' Therefore, as discussed above in Section V.E.1.c, we are 
proposing to allow importers to participate in the early credit program 
as well as the ongoing standard credit program.
iv. Gasoline Additive Manufacturers
    During the SBREFA Panel process, some gasoline additive 
manufacturing SERs raised the concern that they would have difficulty 
meeting a 25-ppm per-gallon sulfur cap, and the Panel recommended that 
EPA request comment on whether or not gasoline additives should be 
allowed to remain at levels above 25 ppm sulfur, and on potential 
methods for ensuring that bulk additives do not increase the sulfur 
level of the resultant fuel blend. However, as discussed above and in 
Section V.A.3, we are proposing to either retain the current 80/95 ppm 
caps or only go to 50/65 ppm. Both of these options would have the same 
15-ppm differential between the refinery gate and downstream caps, thus 
we are not proposing any additional provisions for gasoline additives 
beyond what already exists under the current Tier 2 program.
b. Small Volume Refinery Provisions
    During the development of this proposal and throughout the SBREFA 
process, it became evident that some refineries may experience higher 
compliance costs on a per-gallon basis than other refineries, and in 
some cases considerably higher. It also became apparent that in many of 
these cases it was not necessarily a refinery owned by a refiner/
company that would meet the SBA definition of a small business 
(however, these refineries tend to be small volume refineries). In an 
oversupplied gasoline market, these refineries may have difficulty 
justifying capital investments to comply with the proposed sulfur 
standard. In recognition of this concern under the RFS program, 
Congress granted all small refineries with a crude oil throughput of 
less than or equal to 75,000 barrels per calendar day (bpcd) additional 
time to comply. As such, we are also proposing delayed Tier 3 sulfur 
standards for approved small volume refineries. Overall, we believe 
that these small refineries are disproportionally impacted when it 
comes to their cost of compliance and ability to rationalize the 
investment costs in today's gasoline market. Giving these refineries 
additional lead time would allow them more time to invest in 
desulfurization technology, take advantage of advancements in 
technology, develop confidence in a Tier 3 credit market as a means of 
compliance, and avoid competition for capital, engineering, and 
construction resources with the larger refineries. We are proposing 
that approved small volume refineries would receive a three-year delay 
(January 1, 2017 through December 31, 2019) in meeting the 10-ppm 
average gasoline sulfur standard, similar to the small refiner delay. 
Credit generation opportunities for approved small volume refineries 
would be identical to those proposed for small refiners as described in 
Section V.E.1.f.
    A refiner would need to apply and be approved for small volume 
refinery status. We are proposing a small volume refinery net crude 
throughput of less than or equal to 75,000 bpcd, and we request comment 
on whether or not a different crude throughput would be more 
appropriate. To determine compliance with this threshold, we

[[Page 29942]]

propose to base the crude throughput on the highest crude throughput 
for either the 2010 or 2011 calendar years.
3. Provisions for Refiners Facing Hardship Situations
    As in previous fuel programs, we are proposing hardship provisions 
to accommodate a refiner's inability to comply with the proposed 
standard at the start of the Tier 3 program, and to deal with 
unforeseen circumstances that may occur at any point during the 
program. These provisions would be available to all refiners, small and 
non-small, though relief would be granted on a case-by-case basis 
following a showing of certain requirements; primarily that compliance 
through the use of credits was not feasible. We are proposing that any 
hardship waiver would not be a total waiver of compliance; rather, a 
hardship waiver would be short-term relief that would allow a refiner 
facing a hardship situation to, for example, receive additional time to 
comply. EPA would determine appropriate hardship relief based on the 
nature and degree of the hardship, as presented by the refiner in their 
hardship application, and on our assessment of the credit market.
    In addition to the unforeseen circumstances and extreme hardship 
circumstances waivers being proposed today and discussed in more detail 
below, the Panel also recommended that EPA request comment on the 
concept of long-term cap relief should we lower the sulfur caps below 
the current 80/95-ppm level if the circumstances both warrant it and 
can be structured in a way to allow for it. Such a provision may 
require segregation of their fuel through to the retail station in 
order for it not to preclude enforcement on the gasoline supplied by 
other refiners serving the area. Therefore, in providing comment on 
such a hardship provision, please also comment on potential compliance 
and enforcement mechanisms to account for such longer-term relief, 
e.g., fuel segregation, tracking, reporting and recordkeeping, etc.
a. Temporary Waivers Based on Unforeseen Circumstances
    We are proposing a provision which, at our discretion, would permit 
any refiner to seek a temporary waiver from the Tier 3 sulfur standards 
under certain rare circumstances. This waiver provision is similar to 
provisions in existing fuel regulations. It is intended to provide 
refiners relief in unanticipated circumstances--such as a refinery fire 
or a natural disaster (i.e., force majeure)--that cannot be reasonably 
foreseen now or in the near future. Under this provision, a refiner 
could seek a hardship waiver for relief if it could demonstrate that 
the magnitude of the impact was so severe as to require such an 
extension. We are proposing that the refiner would be required to show 
that: (1) The waiver would be in the public interest; (2) the 
nonconformity was unavoidable; (3) it would meet the proposed Tier 3 
standards as expeditiously as possible; (4) it would make up the air 
quality detriment associated with the nonconforming gasoline, where 
practicable; and (5) it would pay to the U.S. Treasury an amount equal 
to the economic benefit of the nonconformity less the amount expended 
to make up the air quality detriment. These conditions are similar to 
those in previous fuels regulations, and are necessary and appropriate 
to ensure that any waivers granted would be limited in scope.
    As discussed, such a request would be based on the refiner's 
inability to produce compliant gasoline at the affected facility due to 
extreme and unusual circumstances outside the refiner's control that 
could not have been avoided through the exercise of due diligence. The 
hardship request would also need to show that other avenues for 
mitigating the problem, such as the purchase of credits toward 
compliance under the proposed credit provisions, had been pursued and 
yet were insufficient or unavailable. In light of the proposed 
flexibilities including the ABT program, we expect that the need for 
such requests would be rare.
b. Temporary Waivers Based on Extreme Hardship Circumstances
    In addition to the provision for short-term relief in extreme 
unforeseen circumstances, we are also proposing a hardship provision 
where a refiner could receive a hardship waiver based on severe 
economic or physical lead time limitations of the refinery to comply 
with the Tier 3 standards at the start of the program. A refiner 
seeking such hardship relief under this proposed rule would have to 
demonstrate that these criteria were met. In addition to showing that 
unusual circumstances exist that impose extreme hardship in meeting the 
proposed standards, the refiner would have to show that: (1) It has 
made best efforts to comply, including through the purchase of credits; 
(2) the relief granted under this provision would be in the public 
interest; (3) the environmental impact would be acceptable; and (4) it 
has active plans to meet the requirements as expeditiously as possible. 
We expect that hardship relief requests under this provision would 
mostly be applicable at the beginning of the Tier 3 program, when 
refiners are making their investments to comply. If hardship relief 
under these circumstances was approved, we would expect to impose 
appropriate conditions to ensure that the refiner was making best 
efforts to achieve compliance offsetting any loss of emission control 
from the program. We believe that providing short-term relief to those 
refiners that need additional time due to hardship circumstances would 
help to facilitate the adoption of the overall Tier 3 program for the 
majority of the industry. However, we do not intend for hardship waiver 
provisions to encourage refiners to delay planning and investments they 
would otherwise make. Again, because of the flexibilities of the 
proposed overall program, we expect that the need for additional relief 
would be rare.

F. Compliance Provisions

    For the most part, the proposed Tier 3 sulfur standards simply 
reflect a lowering of the current Tier 2 sulfur standards. Thus, we are 
proposing to retain most of the same compliance provisions as the 
current Tier 2 program, with exceptions as noted. However, we are also 
proposing and seeking comment on several fuel program regulatory 
streamlining measures, including a broader program redesign to 
streamline the reformulated gasoline and anti-dumping regulations.\398\ 
Some of these streamlining measures, if adopted, may also impact the 
Tier 3 sulfur compliance provisions proposed below. FF

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

    \398\ For more information on Part 80 regulatory streamlining 
options, refer to Section VI.
---------------------------------------------------------------------------

1. Registration, Reporting, and Recordkeeping Requirements
    Registration, recordkeeping, and reporting are necessary to track 
compliance with the Tier 3 standards and the ABT program. This section 
describes the proposed compliance provisions of today's program.
a. Registration Requirements
    We are proposing that refiners, importers, and anyone acting as a 
refiner (e.g., a terminal with blending or other refining operations) 
who expects to produce or import gasoline would be required to register 
each of its facilities with EPA by June 1, 2016, or six months prior to 
producing gasoline meeting the Tier 3 standards and/or participating in 
the credit program. After the program begins on January 1, 2017, any 
non-

[[Page 29943]]

registered parties must register at least three months prior to 
producing gasoline or participating in the credit market under the Tier 
3 program. Most refiners, importers, and ethanol producers are 
currently registered with EPA under other 40 CFR part 80 fuels 
programs. We are proposing that those who are already registered would 
not have to register again.
    For registration, we are proposing to use the same basic forms that 
previous fuels programs have used. These forms are well known in the 
regulated community and are simple to fill out. Upon receipt of a 
completed registration form, EPA would issue a unique 4-digit company 
identification number and a unique 5-digit facility identification 
number. As with existing fuels programs, these numbers would be 
required for all reports sent to EPA and for PTDs.
    Registrations would not expire and would not have to be renewed; 
however, we are proposing that registered parties would be responsible 
for notifying us of any change to their company or facility 
information.
    An entity's registration must include a corporate name and address 
(including the name, telephone number, and email address of a corporate 
contact); and, for each facility operated by the entity:
     Type of facility (e.g., refinery, import facility, 
pipeline, terminal, transmix facility, etc.)
     Facility name.
     Physical location.
     Contact name, telephone number, and email address.
b. Reporting Requirements
    We are proposing to require refiners and importers to submit annual 
reports demonstrating their compliance with the Tier 3 standards and on 
the generation, use, and transfer of sulfur credits at each of its 
refineries or import facilities. Similar to our other sulfur programs, 
we are also proposing to require refiners and importers to submit data 
on individual batches of gasoline (including batch volume and sulfur 
content). Based on our experience with existing gasoline and sulfur-
based programs, we believe that requiring annual reports and individual 
sulfur batch data would provide an effective means of monitoring 
compliance with the standards and the credit program.
    We are proposing that manufacturers of DFE and other oxygenates 
would be required to submit an annual report that includes the total 
volume of DFE/oxygenate produced and an attestation that all batches 
met the proposed fuel quality requirements: sulfur content, composition 
(i.e., composed only of carbon, hydrogen, nitrogen, oxygen, and 
sulfur), and denaturant concentration as applicable.
    We are proposing that reports would be due annually on March 31.
c. Recordkeeping Requirements
    Similar to current EPA fuels programs, we are proposing that 
refiners and importers would be required to retain all records that 
demonstrate compliance with the Tier 3 program, including ABT program 
information.
    We are proposing that manufacturers of DFE and other oxygenates 
would be required to keep records on individual batches of DFE/
oxygenate (including batch volume, sulfur content, and denaturant 
concentration as applicable).
    All parties in the gasoline production and distribution system 
subject to today's proposed rule would also be required to keep records 
of all PTDs and records of any quality assurance programs. Records 
would need to be retained for five years. For credit transactions, 
records would need to be retained for five years from the usage date. 
Records would need to be made available to EPA on request. We are also 
proposing that if electronic records are kept, hard copies should be 
made available upon request.
    We are proposing to allow parties to claim information submitted to 
EPA as confidential business information (CBI). Parties making such a 
claim would be required to follow all reporting guidance and clearly 
mark the information being claimed as proprietary. EPA would treat 
information covered by such a claim in accordance with the regulations 
at 40 CFR part 2 and other Agency procedures for handling proprietary 
information.
2. Sampling and Testing Requirements
    Under the Tier 2 program, a sulfur concentration must be determined 
for every batch of gasoline. We are proposing to retain that 
requirement under Tier 3. As with the Tier 2 program, this every batch 
testing requirement would be required to occur prior to the batch 
leaving the refinery. We are proposing to retain the current sampling, 
testing, and sample retention requirements. However, as discussed below 
in Section VI.A.3, we are proposing performance based measurement 
standards that would allow refiners to use alternate test methods for 
measuring sulfur.
    We are proposing that manufacturers of DFE would be required to 
test each individual batch of DFE for its sulfur content.
    We request comment on these elements related to sampling and 
testing, as well as the sampling and testing requirements in the 
proposed regulations.
3. Small Refiner Compliance
    To qualify for small refiner status under the Tier 3 program, we 
are proposing that a refiner must apply by March 31, 2014. As with our 
other EPA fuels programs, we are proposing to continue using the Small 
Business Administration definition of a small refiner: 1,500 employees 
(company-wide). To qualify for small refiner status under Tier 3, we 
are also proposing that a small refiner must meet the following 
additional criteria:
     The refiner must have produced gasoline from crude oil 
during the 2011 calendar year.
     The refiner must have owned and operated the refinery 
during the period from January 1, 2011 through December 31, 2011. New 
owners that purchased a refinery after that date would do so with full 
knowledge of the proposed regulations, and should have planned to 
comply along with their purchase decisions. As with existing fuel 
programs, we are proposing that a refiner that restarts a refinery in 
the future may be eligible for small refiner status. Thus, a refiner 
restarting a refinery that was shut down or non-operational during 
calendar year 2011 could apply for small refiner status. In such cases, 
we would judge eligibility under the employment and crude oil capacity 
criteria based on the most recent 12 consecutive months prior to the 
application, unless we conclude from data provided by the refiner that 
another period of time is more appropriate. However, we propose to 
limit this to a company that owned the refinery at the time that it was 
shut down. New purchasers would not be eligible for small refiner 
status for the same reasons described above.
     The refiner must have had 1,500 employees or less based on 
the average number of employees for all pay periods from January 1, 
2011 through December 31, 2011 for all subsidiaries, parent companies 
(i.e., any company or companies with controlling interest), and joint 
ventures.
     The refiner must have had a crude oil capacity less than 
or equal to 155,000 bpcd during the 2011 calendar year.
    A refiner applying for status as a small refiner would be required 
to apply and provide EPA with several types of information, as 
specified in the regulations, by March 31, 2014. All refiners seeking 
small refiner status under this program would need to apply for small 
refiner status, regardless of

[[Page 29944]]

whether or not the refiner had been approved for small refiner status 
under another fuel program. As with applications for relief under other 
rules, applications for small refiner status under this proposed rule 
that are later found to contain false or inaccurate information would 
be void ab initio.
    Requirements for small refiner status applications:
     The total crude oil capacity as reported to the Energy 
Information Administration (EIA) of the U.S. Department of Energy (DOE) 
for the most recent 12 months of operation. This would include the 
capacity of all refineries controlled by a refiner and by all 
subsidiaries and parent companies and joint ventures. We would presume 
that the information submitted to EIA is correct. (In cases where a 
company disagreed with this information, the company could petition EPA 
with appropriate data to correct the record when the company submitted 
its application for small refiner status. EPA could accept such 
alternate data at its discretion.)
     The name and address of each location where employees 
worked during the 2011 calendar year; and the number of employees at 
each location during this time period. This would include the employees 
of the refiner and all subsidiaries and parent companies and joint 
ventures.
     In the case of a refiner who reactivates a refinery that 
was either shutdown or non-operational from January 1, 2011 through 
December 31, 2011, the name and address of each location where 
employees worked since the refiner reactivated the refinery and the 
average number of employees at each location for each calendar year 
since the refiner reactivated the refinery.
     The type of business activities carried out at each 
location.
     Contact information for a corporate contact person, 
including: name, mailing address, phone and fax numbers, email address.
     A letter signed by the president, chief operating officer, 
or chief executive officer of the company (or a designee) stating that 
the information contained in the application was true to the best of 
his/her knowledge and that the company owned the refinery as of January 
1, 2011.
    We are proposing that an approved small refiner that exceeds the 
employee count or crude capacity criteria due to merger with, 
acquisition by, or the acquisition of another entity will lose its 
small refiner status. In situations where a small refiner loses its 
small refiner status due to merger with a non-small refiner, 
acquisition of another refiner, or acquisition by another refiner, we 
are proposing provisions which are similar to those in our existing 
fuels programs to allow an additional 30 months of lead time to comply 
with the Tier 3 program after the disqualifying event.\399\ The 
proposed 30 months of additional lead time would only apply to 
refineries that had previously been subject to small refiner relief, as 
we believe there would be no adverse environmental impact because of 
the pre-existing relief provisions that applied to the small refiner. 
We are also proposing that a refiner would lose its small refiner 
status if it ceases to process crude oil.
---------------------------------------------------------------------------

    \399\ See, for example, 69 FR 39051 (June 29, 2004).
---------------------------------------------------------------------------

    Our intent has been, and continues to be, limiting the small 
refiner relief provisions to a small subset of refiners that are 
challenged, as discussed above. However, it is also our intent to avoid 
stifling normal business growth. Therefore, we are proposing that an 
approved small refiner who exceeds the employee count or crude oil 
capacity criteria through normal business practices, may retain its 
small refiner status. Further, in the sole case of a merger between two 
approved small refiners we are proposing to allow such refiners to 
retain their small refiner status. Additional financial resources would 
not typically be provided in the case of a merger between two small 
refiners. Small refiner status for the two entities of the merger would 
not be affected; hence the original compliance plans of the two 
refiners should not be impacted. Moreover, no environmental detriment 
would result from the two small refiners maintaining their small 
refiner status within the merged entity as they would have likely 
maintained their small refiner status had the merger not occurred.
    We request comment on whether or not these provisions remain 
appropriate.
4. Small Volume Refinery Compliance
    In the case of small volume refineries, the application process for 
qualification is similar to that of a small refiner. A refiner that is 
both a small refiner and owns a small volume refinery need not apply 
for small volume refinery status; the small refiner application is all 
that is needed. We are proposing a net crude throughput threshold of no 
more than 75,000 bpcd based on the highest throughput in calendar years 
2010 or 2011 as the basis for receiving small volume refinery status. 
We request comment on whether or not another threshold would be more 
appropriate.
    We are proposing that refiners would need to include the following 
in their applications:
     Proof that the refiner produced gasoline from crude oil 
during the 2011 calendar year.
     Proof that the refiner owned and operated the refinery 
during the period from January 1, 2011 through December 31, 2011.
     The refinery's total crude throughput as reported to EIA 
for each of calendar years 2010 and 2011. Again, we would presume that 
the information submitted to EIA is correct. In cases where a refiner 
disagrees with this information, the refiner could petition EPA with 
appropriate data to correct the record when the refiner submits its 
application for small volume refinery status. EPA could accept such 
alternate data at its discretion.
     Contact information for a corporate contact person, 
including: name, mailing address, phone and fax numbers, email address.
     A letter signed by the president, chief operating officer, 
or chief executive officer of the company (or a designee) stating that 
the information contained in the application was true to the best of 
his/her knowledge and that the company owned the refinery as of January 
1, 2011.
5. Attest Engagements, Violations, and Penalties
    We are proposing to retain the Tier 2 requirements for attest 
engagements for generation of both early and standard credits, use of 
credits, and compliance with the proposed program, using the procedures 
used in other EPA fuels programs for attest engagements. The violation 
and penalty provisions applicable to today's proposed program would be 
very similar to the provisions currently in effect in other gasoline 
programs as well. We request comment on the need for additional attest 
engagement, violation, penalty, or any other compliance and enforcement 
related provisions specific to the proposed Tier 3 program.
6. Special Fuel Provisions and Exemptions
    The following paragraphs discuss several provisions and exemptions 
for gasoline that we are proposing would apply in special 
circumstances.
a. Gasoline Used in Military Applications
    In our diesel fuel program, we provided an exemption for diesel 
fuel used in tactical military vehicles and nonroad engines and 
equipment with a national security exemption (NSE) from the vehicle and 
engine emissions standards. Due to national security considerations, 
some of EPA's existing

[[Page 29945]]

regulations allow the military to request and receive NSEs for 
vehicles, engines, and equipment from emissions regulations if the 
operational requirements for such vehicles, engines, or equipment 
warrant such an exemption. Fuel used in these applications would also 
be exempt if it is used in tactical military vehicles, engines, or 
equipment that are not covered by an NSE but, for national security 
reasons (such as the need to be ready for immediate deployment 
overseas), these applications need to be fueled on the same fuel as 
those with an NSE. We are proposing this exemption under the proposed 
Tier 3 gasoline program.
b. Gasoline Used in Research, Development, and Testing
    Similar to other EPA fuels programs, we are proposing to allow 
requests for an exemption from the Tier 3 standards for gasoline used 
for research, development, and testing purposes (``R & D exemption''). 
We recognize that there may be legitimate research programs that 
require the use of gasoline with sulfur levels greater than those 
allowed under the proposed Tier 3 program. Thus, we are proposing 
provisions for obtaining an exemption from the prohibition against 
persons producing, distributing, transporting, storing, selling, or 
dispensing gasoline that does not meet the Tier 3 gasoline sulfur 
standards, where such fuel is necessary to conduct a research, 
development, or testing program.
    Parties seeking an R & D exemption would be required to submit an 
application for exemption to EPA that describes the purpose and scope 
of the program, and the reasons why the noncompliant gasoline is 
necessary. Upon presentation of the required information, an exemption 
could be granted at the discretion of EPA, with the condition that EPA 
could withdraw the exemption in the event the Agency determines the 
exemption is not justified. In addition, an exemption based on false or 
inaccurate information would be considered void ab initio. Gasoline 
subject to an exemption would be exempt from certain provisions of this 
rule, including the sulfur standards, provided certain requirements are 
met. These requirements include the segregation of the exempt gasoline 
from non-exempt gasoline, identification of the exempt gasoline on 
PTDs, and pump labeling.
c. Gasoline for Export
    Gasoline produced for export, and that is actually exported for use 
in a foreign country, would be considered exempt from the fuel content 
standards and other requirements of this proposed rule. Such gasoline 
would be considered as intended for use in the U.S. and subject to the 
proposed standards unless it is designated by the refiner and the PTD 
states that the gasoline is for ``export only''. Gasoline intended for 
export would be required to be segregated from all gasoline intended 
for use in the U.S. Distributing or dispensing such fuel for domestic 
use would be illegal.
d. Other Special Provisions and Potential Exemptions
    We are proposing provisions for Alaska that would allow the 
refinery gate and downstream caps to remain at the current Tier 2 80-
ppm and 95-ppm levels, respectively, should the caps be lowered to 50 
and 65 ppm (per Section V.A.3).
    Additionally, in previous fuels programs we have included 
exemptions for racing fuel and for fuel used in the U.S. territories of 
Guam, American Samoa, and the Northern Mariana Islands. We request 
comment on whether or not such exemptions would be needed for this 
program.

G. Statutory Authority for Proposed Tier 3 Fuel Controls

    We are proposing gasoline sulfur controls under our authority in 
section 211(c)(1) of the Clean Air Act. This section gives us the 
authority to ``control or prohibit the manufacture, introduction into 
commerce, offering for sale, or sale'' of any fuel or fuel additive for 
use in a motor vehicle, motor vehicle engine, or nonroad engine or 
nonroad vehicle (1) whose emission products, in the judgment of the 
Administrator, cause or contribute to air pollution which may 
reasonably be anticipated to endanger the public health or welfare 
[section 211(c)(1)(A)] or (2) whose emission products will impair to a 
significant degree the performance of any emission control device or 
system which is in general use, or which the Administrator finds has 
been developed to a point where in a reasonable time it would be in 
general use were the fuel control or prohibition adopted [section 
211(c)(1)(B)]. We are proposing controls on gasoline sulfur levels 
based on both of the Clean Air Act criteria, as described in more 
detail below.
1. Section 211(c)(1)(A)
    Under the first criterion, we believe that emission products of 
gasoline with current levels of sulfur contribute to ambient levels of 
ozone, particulate matter (PM), nitrogen dioxide (NO2), 
sulfur dioxide (SO2) and carbon monoxide (CO), which are all 
pollutants for which EPA has established National Ambient Air Quality 
Standards (NAAQS). These pollutants are linked with respiratory and/or 
cardiovascular problems and other adverse health impacts leading to 
increased medication use, hospital admissions, emergency department 
visits, and premature mortality. Approximately 159 million people 
currently live in counties exceeding a NAAQS.\400\ Motor vehicles also 
emit air toxics, and the majority of Americans continue to be exposed 
to ambient concentrations of air toxics at levels which have the 
potential to cause adverse health effects, including cancer, immune 
system damage, and neurological, reproductive, developmental, 
respiratory, and other health problems.\401\ A more detailed discussion 
of the health and environmental effects of these pollutants is included 
in Section II.B. As discussed in this section, emissions of these 
pollutants cause or contribute to ambient levels of air pollution that 
are reasonably anticipated to endanger public health and welfare. 
Control of gasoline sulfur to 10 ppm will lead to significant, cost-
effective reductions in emissions of these pollutants, with the 
benefits to public health and welfare significantly outweighing the 
costs.
---------------------------------------------------------------------------

    \400\ Data come from Summary Nonattainment Area Population 
Exposure Report, current as of July 20, 2012 at: http://www.epa.gov/oar/oaqps/greenbk/popexp.html and contained in Docket EPA-HQ-OAR-
2011-0135.
    \401\ U.S. EPA. (2011) Summary of Results for the 2005 National-
Scale Assessment. www.epa.gov/ttn/atw/nata2005/05pdf/sum_results.pdf.
---------------------------------------------------------------------------

    EPA has evaluated the technical feasibility of achieving these 
sulfur levels, including the cost of the reductions and the impact on 
fuel supply. As discussed in Section V.A, we have concluded that these 
reductions are feasible in the lead time provided and should not have 
an adverse impact on the adequacy of gasoline fuel supply to meet 
demand. For more on the feasibility of the proposed fuel program, refer 
to Chapter 4 of the draft RIA.
    As discussed in Section III, EPA also evaluated the emissions 
reductions from pre-Tier 3 vehicles that would be achieved by 
controlling gasoline sulfur levels. These reductions are significant 
and contribute to the total monetized health benefits. EPA also 
evaluated the cost per ton of emissions reduced for the proposed 
program, of which the 10-ppm sulfur standard is a part. As can be seen 
in Section VII.D, the program is very cost-effective in 2030. Even in 
2017, when the emission reductions are almost entirely due to the 
sulfur standards (and the costs are attributed to

[[Page 29946]]

both the fuel and vehicle standards), the cost-effectiveness of the 
program is reasonable. In sum, EPA concludes that the entire body of 
evidence strongly supports the view that controlling gasoline sulfur to 
10 ppm is quite reasonable in light of the emissions reductions and 
benefits achieved, taking costs into consideration. For more detail on 
the costs and benefits of the proposed standards, refer to Chapter 8 of 
the draft RIA.
    The control of gasoline sulfur down to 10 ppm provides significant 
reductions in harmful emissions. The fuel program is cost-effective and 
produces benefits to public health and welfare whose value 
significantly outweighs the costs. These reductions can be achieved in 
a manner that is technologically feasible, and will not disrupt fuel 
supply.
    Section 211(c)(2)(A) requires that, prior to adopting a fuel 
control based on a finding that the fuel's emission products contribute 
to air pollution that can reasonably be anticipated to endanger public 
health or welfare, EPA must consider ``all relevant medical and 
scientific evidence available, including consideration of other 
technologically or economically feasible means of achieving emission 
standards under [section 202 of the Act].'' EPA's analysis of the 
medical and scientific evidence relating to the emissions impact from 
motor vehicle engines, which are impacted by gasoline sulfur, is 
described in more detail in Chapter 6 of the draft RIA. EPA has also 
satisfied the statutory requirement to consider ``other technologically 
or economically feasible means of achieving emission standards under 
section [202 of the Act].'' This provision has been interpreted as 
requiring consideration of establishing emission standards under 
section 202 prior to establishing controls or prohibitions on fuels or 
fuel additives under section 211(c)(1)(A). See Ethyl Corp. v. EPA, 541 
F.2d. 1, 31-32 (DC Cir. 1976). In Ethyl, the court stated that section 
211(c)(2)(A) calls for good faith consideration of the evidence and 
options, not for mandatory deference to regulation under section 202 
compared to fuel controls. Id. at 32, n.66. EPA is also proposing Tier 
3 emissions standards for motor vehicles under section 202. In order to 
meet these more stringent standards, the program requires a reduction 
in the sulfur content of gasoline to the 10-ppm annual average.
2. Section 211(c)(1)(B)
    Under the second criterion, we believe that sulfur in gasoline will 
significantly impair the emission-control systems expected to be in 
general use in motor vehicle engines designed to meet the Tier 3 
emission standards proposed in this rule. EPA is proposing to restrict 
gasoline sulfur content to an annual average of 10 ppm beginning in 
2017, to enable compliance with new emission standards based on the use 
of advanced emission control technology that will be available to Tier 
3 engines and California's Low Emission Vehicle (LEV III) program.
    Section IV describes the substantial adverse effect of high 
gasoline sulfur levels on the emission-control devices or systems for 
Tier 3 vehicles and engines meeting the proposed emission standards. As 
discussed in Section IV.A.6, modern three-way catalytic exhaust systems 
utilize platinum group metals (PGM), metal oxides, and other active 
materials to selectively oxidize organic compounds and carbon monoxide 
in the exhaust gases. These systems simultaneously reduce nitrogen 
oxides when air-to-fuel ratio control operates in a condition of 
relatively low amplitude/high frequency oscillation about the 
stoichiometric point. Sulfur is a well-known catalyst poison. There is 
a large body of work demonstrating sulfur inhibition of the emissions 
control performance of PGM three-way exhaust catalyst systems. The 
nature of sulfur interactions with washcoat materials, active catalytic 
materials and catalyst substrates is complex and varies with catalyst 
composition and exhaust gas composition and exhaust temperature. The 
variation of these interactions with exhaust gas composition and 
temperature means that the operational history of a vehicle is an 
important factor; continuous light-load operation, throttle tip-in 
events and enrichment under high-load conditions can all impact sulfur 
interactions with the catalyst.
    Operating the catalyst at a sufficiently high temperature under net 
reducing conditions (e.g., air-to-fuel equivalence that is net fuel-
rich of stoichiometry) can effectively release the sulfur oxides from 
the catalyst components. Thus, regular operation at sufficiently high 
temperatures at rich air-to-fuel ratios can minimize the effects of 
fuel sulfur levels on catalyst active materials and catalyst 
efficiency. However, it cannot completely eliminate the effects of 
sulfur poisoning. A study of Tier 2 vehicles in the in-use fleet 
recently completed by EPA shows that emission levels immediately 
following high speed/load operation is still a function of fuel sulfur 
level, suggesting that lower fuel sulfur levels will bring emission 
benefits unachievable by catalyst regeneration procedures alone. 
Furthermore, regular operation at these temperatures and at rich air-
to-fuel ratios is not desirable, for several reasons. The temperatures 
necessary to release sulfur oxides are high enough to lead to thermal 
degradation of the catalyst over time via thermal sintering of active 
materials. Sintering reduces the surface area available to participate 
in reactions. Additionally, it is not always possible to maintain these 
catalyst temperatures (because of cold weather, idle conditions, light 
load operation) and the rich air-to-fuel ratios necessary can result in 
increased PM, NMOG and CO emissions. Thus, reducing fuel sulfur levels 
has been the primary regulatory mechanism to minimize sulfur 
contamination of the catalyst and ensure optimum emissions performance 
over the useful life of a vehicle.
    The impact of gasoline sulfur has become even more important as 
vehicle emission standards have become more stringent. Some studies 
have suggested an increase in catalyst sensitivity to sulfur (in terms 
of percent conversion efficiency) when standards increase in stringency 
and emissions levels decrease. Emission standards under the programs 
that preceded the Tier 2 program (Tier 0, Tier 1 and National LEV, or 
NLEV) were high enough that the impact of sulfur was considered 
negligible. The Tier 2 program recognized the importance of sulfur and 
reduced the sulfur levels in the fuel from around 300 ppm to 30 ppm in 
conjunction with the new emission standards. At that time, very little 
work had been done to evaluate the effect of further reductions in fuel 
sulfur--especially on in-use vehicles that may have some degree of 
catalyst deterioration due to real-world operation.
    In 2005, EPA and several automakers jointly conducted a program 
that examined the effects of sulfur and other gasoline properties, 
benzene, and volatility on emissions from a fleet of nine Tier 2 
compliant vehicles. Subsequently, EPA conducted a much more extensive 
study of the effects of sulfur on emissions from Tier 2 vehicles. These 
studies demonstrate that emissions from Tier 2 vehicles continue to be 
very sensitive to gasoline sulfur levels below the current 30-ppm 
average standard. For more on the estimated emission impacts, refer to 
Section III.B.
    Furthermore, vehicles already capable of meeting the proposed Tier 
3 standards have been found to be extremely sensitive to the effects of 
sulfur. A Chevy Malibu was tested and found to be able to meet the 
proposed Tier 3 standards on low-sulfur gasoline, but following 
operation on higher-sulfur

[[Page 29947]]

gasoline, its emission levels exceeded the standard. As explained in 
Section IV.A, following operation over 2 FTP cycles on 33 ppm sulfur 
fuel, NOX emissions alone were more than double the proposed 
Tier 3 30 mg/mi NMOG+NOX standard.
    Overall, the Tier 3 Program would reduce fleet average 
NMOG+NOX emissions by over 80 percent. The feasibility of 
the proposed 30 mg/mi NMOG+NOX fleet average standard 
depends on a degree of emissions control from exhaust catalyst systems 
that will require gasoline at 10 ppm sulfur or lower. The most likely 
control strategies would involve using exhaust catalyst technologies 
and powertrain calibration primarily focused on reducing cold-start 
emissions of NMOG and on both cold-start and warmed-up (running) 
emissions of NOX. An important part of this strategy, 
particularly for larger vehicles having greater difficulty achieving 
cold-start NMOG emissions control, will be to reduce NOX 
emissions to near-zero levels. This would allow sufficient NMOG 
compliance margin to allow vehicles to meet the combined 
NMOG+NOX emissions standards for the full useful life.
    Achieving the proposed Tier 3 emission standards would require very 
careful control of the exhaust chemistry and exhaust temperatures to 
ensure high catalyst efficiency. The impact of sulfur on oxygen storage 
components in the catalyst makes this a challenge even at relatively 
low (10 ppm) gasoline sulfur levels.
    The negative impact of gasoline sulfur on NOX, NMOG and 
air toxic emissions occurs across all vehicle categories. However, the 
impact of gasoline sulfur on NOX emissions control of 
catalysts in the fully-warmed-up condition is particularly of concern 
for larger vehicles. Manufacturers face the most significant challenges 
in reducing cold-start NMOG emissions for these vehicles. Because of 
the need to reach near-zero NOX levels, any significant 
degradation in NOX emissions control over the useful life of 
the vehicle would likely prevent some if not most larger vehicles from 
reaching a combined NMOG+NOX low enough to comply with the 
30 mg/mi fleet-average standard. These vehicles represent a 
sufficiently large segment of light-duty vehicle sales now and in the 
foreseeable future that their emissions could not be offset (and thus 
the fleet-average standard achieved) by certifying vehicles to bins 
below the fleet average. Any degradation in catalyst performance due to 
gasoline sulfur would reduce or eliminate the margin necessary to 
ensure in-use compliance with the proposed Tier 3 emissions standards. 
Certifying to a useful life of 150,000 miles vs. the current 120,000 
miles would further add to manufacturers' compliance challenge for Tier 
3 large light trucks (refer to Section IV.7.b for more on the useful 
life requirements).
    The impact of gasoline sulfur poisoning on exhaust catalyst 
performance and the relative stringency of the Tier 3 standards, 
particularly for larger vehicles and trucks, when considered together 
make a compelling argument for the virtual elimination of sulfur from 
gasoline. As discussed in Section V.A.2, the proposed 10-ppm standard 
for sulfur in gasoline represents the lowest practical limit from a 
standpoint of fuel production, handling and transport. While lowering 
gasoline sulfur to levels below 10 ppm would help ensure in-use vehicle 
compliance with the Tier 3 standards, the Agency believes that a 
gasoline sulfur standard of 10 ppm would allow compliance with a 
national fleet average of 30 mg/mi NMOG+NOX. The level of 
the Tier 3 standards was considered in light of a 10-ppm average sulfur 
level for gasoline. Not only should a 10-ppm sulfur standard enable 
vehicle manufacturers to certify their entire product line of vehicles 
to the Tier 3 fleet average standards, but based on the results of 
testing both Tier 2 vehicles and SULEV vehicles as discussed above, 
reducing gasoline sulfur to 10 ppm should enable these vehicles to 
maintain their emission performance in-use over their full useful life.
    Section 211(c)(2)(B) requires that, prior to adopting a fuel 
control based on a significant impairment to vehicle emission-control 
systems, EPA consider available scientific and economic data, including 
a cost benefit analysis comparing emission-control devices or systems 
which are or will be in general use that require the proposed fuel 
control with such devices or systems which are or will be in general 
use that do not require the proposed fuel control. As described below, 
we conclude that the emissions control technology expected to be used 
to meet Tier 3 standards would be significantly impaired by operation 
on gasoline with annual average sulfur levels greater than 10 ppm. Our 
analysis of the available scientific and economic data can be found 
elsewhere in this document. The draft RIA includes a detailed analysis 
of the environmental benefits of the emission standards (Chapters 6 and 
8), an analysis of the technological feasibility and cost of 
controlling sulfur to the levels established in the final rule 
(Chapters 4 and 5), and a cost-effectiveness analysis of the sulfur 
control and motor vehicle and engine emission standards (Chapter 9). 
Under section 211(c)(2)(B), as just noted, EPA is also required to 
compare the costs and benefits of achieving emission standards through 
emission-control systems that would not be sulfur-sensitive, if any 
such systems are or will be in general use. We have determined that 
there are not (and will not be in the foreseeable future) emission 
control devices available for general use in motor vehicles that can 
meet the emission standards and would not be significantly impaired by 
gasoline with current gasoline sulfur levels. Emissions cannot be 
reduced anywhere near the magnitude contemplated by the proposed 
emission standards without the application of the kind of emissions 
control technology discussed in this proposal.
    Section 211(c)(2)(C) of the Clean Air Act requires that prior to 
prohibiting a fuel or fuel additive, EPA establish that such 
prohibition will not cause the use of another fuel or fuel additive 
``which will produce emissions which endanger the public health or 
welfare to the same or greater degree'' than the prohibited fuel or 
additive. This finding is required by the Act only prior to prohibiting 
a fuel or additive, not prior to controlling a fuel or additive. Since 
EPA is not prohibiting use of gasoline sulfur, but rather is 
controlling the level of sulfur in these fuels, this finding is not 
required for this rulemaking. However, EPA does not believe that the 
proposed gasoline sulfur controls will result in the use of any other 
fuel or additive that will produce emissions that will endanger public 
health or welfare to the same or greater degree as the emissions 
produced by gasoline with current sulfur levels. Unlike the case of 
unleaded gasoline in the past, where lead performed a primary function 
by providing the necessary octane for the vehicles to function 
properly, sulfur does not serve any useful function in gasoline. It is 
not added to gasoline, but occurs naturally in the crude oil into which 
gasoline is processed. Were it not for the expense of sulfur removal, 
it would likely have been removed from gasoline years ago in order to 
improve the maintenance and durability characteristics of motor vehicle 
engines.
    We are also adopting the various controls for DFE, other 
oxygenates, butane blended into gasoline, and gasoline additives, under 
our authority in section 211(c)(1). As explained above, these controls 
are necessary to prevent emissions products that may endanger the 
public health or welfare or impair to

[[Page 29948]]

a significant degree the performance of any emission control device or 
system. The proposal basically extends various controls on gasoline to 
DFE, other oxygenates, butane, and gasoline additives. The reasons for 
adopting the controls for gasoline apply as well to adopt the controls 
for DFE, other oxygenates, butane, and gasoline additives.

VI. Technical Amendments and Regulatory Streamlining

    In addition to proposing new Tier 3 vehicle standards and new 
gasoline sulfur standards, we are also proposing and seeking comment on 
a number of technical amendments and regulatory streamlining actions as 
part of the Regulatory Review initiative. Some of these may have some 
bearing on implementation of the proposed Tier 3 vehicle and fuel 
standards, while others deal with other aspects of EPA's existing 
vehicle and fuel regulations.
    EPA is also proposing to synchronize a number of different 
reporting deadlines under various regulations affecting transportation 
and motor vehicle fuels and fuel additives. This action would reduce 
regulatory burdens by aligning reporting deadlines across several 
programs and would lay the foundation for the overall goal of combining 
various fuels reports together into a single, simplified electronic 
format.

A. Amendments to 40 CFR Parts 79 and 80

    The following sections discuss our proposed changes to regulations 
in 40 CFR part 79 and part 80. Some of these changes are technical 
amendments to correct minor errors or inconsistencies in the 
regulations; others are to address areas in the regulations that could 
benefit from clarification and/or streamlining.
    With regard to regulatory streamlining, the majority of these items 
involve clarifying vague or inconsistent language, removal or updating 
of outdated provisions, and decreasing the frequency and/or volume of 
reporting burden where data is either no longer needed or is redundant 
in light of other EPA fuels programs. In general, we believe that these 
changes would reduce burden on industry with no expected environmental 
impact. We believe that the regulatory streamlining items that we are 
proposing are changes that are straightforward and that should be made 
quickly. There are also additional items that would need further 
consideration and discussion, such as a new fuels program compliance 
structure, as discussed below in Section VI.A.1.b. We are also 
requesting comment on expanding the downstream butane blending 
provisions to allow for pentane blending, as discussed in Section 
VI.A.4.
1. Regulatory Streamlining
a. Summary of Proposed Amendments
    Below is a table listing the provisions that we are proposing to 
amend in today's action. We have provided additional explanation for 
those amendments that warrant additional explanation below.

                Table VI-1--Summary of Proposed Regulatory Streamlining and Technical Amendments
----------------------------------------------------------------------------------------------------------------
                  Section                                                Description
----------------------------------------------------------------------------------------------------------------
Varied.....................................  Various sections amended to update references to test methods (see
                                              Section Section VI.A.1.a.iii).
79.5.......................................  Revises periodic reporting requirements.
80.2.......................................  Revises and adds definitions.
80.8.......................................  Amended to update sampling test methods, and to state to which
                                              fuels Sec.   80.8 applies.
80.10......................................  Added to allow for de minimis changes in compliance reports that
                                              would not require a resubmission of compliance reports when a
                                              minor discrepancy of a few barrels is uncovered.
80.46......................................  Revises measurement of RFG fuel parameters.
80.47......................................  Revises Performance-Based Test Method Approach.
80.65......................................  Amended to reduce complex model test parameters and reporting.
80.65(f)(5)................................  Added to allow for designation of an alternative lab.
80.75......................................  Revises RFG reporting requirements.
80.82......................................  Amended to apply butane blending provisions to entire part 80 and
                                              to revise RVP test method.
80.101.....................................  Revises measurement of conventional gasoline fuel parameters.
80.105.....................................  Amended to require identification of test methods used and revises
                                              reporting requirements.
80.161(b)(1)(ii)(A)(2).....................  Amended to allow an alternative gasoline detergent certification
                                              option.
80.161(b)(1)(ii)(A)(3).....................  Added to allow an alternative detergent certification option.
80.161(b)(2)...............................  Amended to address the submission of gasoline detergent samples
                                              under the alternative gasoline detergent certification option.
80.161(b)(3)(ii)(C)........................  Amended to reflect that documentation of the fuel injector deposit
                                              demonstration test would be required under the alternative
                                              detergent certification option.
80.161(b)(3)(v)............................  Amended to state that the results of the intake valve and fuel
                                              injector deposit demonstration test must be submitted to EPA as
                                              part of the certification letter under the alternative detergent
                                              certification option.
80.161(b)(3)(viii).........................  Amended to change ``PFID test'' to ``fuel injector test''.
80.161(d)(1)...............................  Amended to reflect the availability of the alternative gasoline
                                              detergent certification option.
80.163(a)(1)(iii)..........................  Amended to allow use of the alternative gasoline detergent
                                              certification option.
80.164(a)..................................  Amended to reference the test fuel requirements under the
                                              alternative gasoline detergent certification option.
80.165.....................................  Amended the introductory paragraph to accommodate the alternative
                                              deposit control test procedures and standards under the
                                              alternative gasoline detergent certification option.
80.167(a)..................................  Amended the introductory paragraph to specify how confirmatory
                                              testing would be conducted for additives certified under the
                                              alternative gasoline detergent certification option.
80.176.....................................  Added to specify the certification test procedures and standards
                                              under the alternative gasoline detergent certification option.
80.177.....................................  Added to specify the certification test fuels under the alternative
                                              gasoline detergent certification option.
80.178.....................................  Incorporates standards and test methods by reference.
80.330.....................................  Revises sampling and testing requirements.
80.370.....................................  Amended to require identification of test method used and revises
                                              reporting requirements.
80.511.....................................  Revises per-gallon and marker requirements.
80.572.....................................  Revises labeling requirements.
80.573.....................................  Revises labeling requirements.
80.574.....................................  Revises labeling requirements.

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80.580.....................................  Incorporates test methods by reference.
80.585.....................................  Revises test method approval process.
80.604.....................................  Revises reporting requirements.
80.1235(a)(6),.............................  Amended to allow refiners and importers who are blending blendstock
                                              into previously certified gasoline (PCG) an alternative to
                                              directly test the blendstock for benzene.
80.1235(a)(5)..............................  Amended to clarify that refiners and importers may use either
                                              approach for blendstocks that are blended into either conventional
                                              gasoline or reformulated gasoline.
80.1235(b)(2)..........