[Federal Register Volume 59, Number 161 (Monday, August 22, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-19769]


[[Page Unknown]]

[Federal Register: August 22, 1994]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 86

[A-94-13; FRL-5030-1]

 

Control of Air Pollution From New Motor Vehicles and New Motor 
Vehicle Engines; Nonconformance Penalties for 1996 and 1998 Model Year 
Emission Standards for Heavy-Duty Vehicles and Engines

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of proposed rulemaking.

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SUMMARY: EPA is proposing that nonconformance penalties (NCPs) be made 
available for specific emission standards taking effect in the 1996 and 
1998 model years. In general, the availability of NCPs allows a 
manufacturer of heavy-duty engines (HDEs) or heavy-duty vehicles (HDVs) 
(which include heavy light-duty trucks) whose engines or vehicles fail 
to conform with certain applicable emission standards, but do not 
exceed a designated upper limit, to be issued a certificate of 
conformity upon payment of a monetary penalty. The specific emission 
standards for which NCPs have been considered in this rulemaking are 
the 1996 and later model year Tier 1 standards for heavy light-duty 
trucks, the 1996 and later model year Particulate Matter (PM) standard 
for urban bus applications, and the 1998 and later model year heavy-
duty diesel engine oxides of nitrogen (NOX) standard.
    EPA is proposing to offer NCPs for the 1996 and later model year 
particulate matter (PM) standard of 0.10 g/mile for Light Duty Trucks 3 
(LDT3) at full useful life. EPA has considered, but is not proposing to 
offer NCPs for the other standards. The proposed upper limit associated 
with the LDT3 PM standard is the previous diesel-fueled LDT3 vehicle 
standard of 0.13 g/mi.

DATES: Public comment: All comments should be received on or before 
September 21, 1994 or within 30 days following the conclusion of the 
public hearing, if one is held.
    Public hearing: If requested, EPA will hold a public hearing 
regarding this proposed rule on September 21, 1994, beginning at 10:00 
a.m. Any person desiring to present oral testimony must request the 
hearing by noon, EDT, September 6, 1994. Pursuant to section 307 of the 
Clean Air Act, the record of the hearing, if held, will be kept open 
for 30 days following its conclusion to provide an opportunity for 
submission of rebuttal or other information.

ADDRESSES: Public comment: Send written comments to: Public Docket A-
94-13 at the Air Docket (LE-131), US Environmental Protection Agency, 
401 M Street, SW., Washington, DC 20460. If possible, an additional 
copy of the written comments should be submitted to the EPA contact 
person listed below.
    Public hearing: The hearing, if requested, will take place at a 
location to be determined. Any person wishing to attend should call the 
EPA contact person, listed below, to determine if the hearing will be 
held.
    Requests for, or questions about the hearing should be directed to 
the EPA contact person listed below. To the extent possible, any person 
desiring to participate in a hearing should, prior to the hearing, 
notify the EPA contact person of his or her intention and submit an 
outline of the points to be discussed and the time needed to discuss 
these points.
    Public docket: Copies of materials relevant to this rulemaking 
proceeding are contained in Public Docket A-94-13 at the Air Docket of 
the US Environmental Protection Agency, 401 M Street, SW., Washington, 
DC, 20460, and are available for review in room M-1500 between the 
hours of 8 a.m. and 4 p.m. on weekdays. As provided in 40 CFR part 2, a 
reasonable fee may be charged for copying services.

FOR FURTHER INFORMATION CONTACT: Mr. Leo Breton, Manufacturers 
Operations Division (6405-J), US Environmental Protection Agency, 401 M 
Street, SW., Washington, DC 20460, telephone (202) 233-9245.

SUPPLEMENTARY INFORMATION:

I. Statutory Authority

    Section 206(g) of the Clean Air Act (the Act), 42 U.S.C. 7525(g), 
requires EPA to issue a certificate of conformity for HDEs or HDVs 
which exceed an applicable section 202(a) emissions standard, but do 
not exceed an upper limit associated with that standard, if the 
manufacturer pays an NCP established by rulemaking. Congress adopted 
section 206(g) in the Clean Air Act Amendments of 1977 as a response to 
perceived problems with technology-forcing heavy-duty emissions 
standards. (It should be noted, however, that the existence of NCPs 
does not change the criteria under which the standards have been and 
will be set under section 202.) Following International Harvester v. 
Ruckelshaus, 478 F.2d 615 (D.C. Cir. 1973), Congress realized the 
dilemma that technology-forcing standards were likely to cause. If 
strict standards were maintained, then some manufacturers, 
``technological laggards,'' might be unable to comply initially and 
would be forced out of the marketplace. NCPs were intended to remedy 
this potential problem. The laggards would have a temporary alternative 
that would permit them to sell their engines or vehicles by payment of 
a penalty. At the same time, conforming manufacturers would not suffer 
an economic disadvantage compared to nonconforming manufacturers, 
because the NCP would be based, in part, on money saved by the 
technological laggard and its customer from the nonconforming engine or 
vehicle.
    Under section 206(g)(1), NCPs may be offered for HDVs or HDEs. The 
penalty may vary by pollutant and by class or category of vehicle or 
engine.
    HDVs are defined by section 202(b)(3)(C) as vehicles in excess of 
6,000 pounds gross vehicle weight rating (GVWR). The light-duty truck 
(LDT) classification includes trucks that have a GVWR of 8500 lbs or 
less. Therefore, certain LDTs may be classified as HDVs. Historically, 
LDTs up through 6000 lbs GVWR have been considered ``light light-duty 
trucks'' (LLDTs) and LDTs between 6,001 and 8,500 pounds GVWR have been 
considered ``heavy light-duty trucks'' (HLDTs). Based on various new 
requirements established by the Clean Air Act Amendments of 1990, each 
of these two light truck categories has been further subdivided into 
groups by weight.
    The LLDTs are classified by weight based on ``loaded vehicle 
weight,'' or LVW, which maintains its current definition: curb weight 
plus 300 lbs. The trucks up through 3750 lbs LVW make up a subclass 
called light-duty-trucks-1, or LDT1. Those greater than 3750 lbs LVW 
but less than or equal to 6000 lbs GVWR are the subclass light-duty-
trucks-2, or LDT2.
    The HLDTs are divided at 5750 lbs ``adjusted loaded vehicle 
weight,'' or ALVW. Adjusted loaded vehicle weight is the average of the 
curb weight and the GVWR. The HLDTs that are up through 5750 lbs ALVW 
are called light-duty trucks-3, or LDT3. Those above 5750 lbs ALVW but 
less than or equal to 8500 lbs GVWR are light-duty-trucks-4, or LDT4. 
The LDT3 and LDT4 subclasses make up the HLDT vehicle class. Since NCPs 
are only offered for heavy duty vehicles or engines, this notice 
addresses only emission standards for light duty trucks of the LDT3 and 
LDT4 categories.

    Section 206(g)(3) requires that NCPs:
     Account for the degree of emission nonconformity;
     Increase periodically to provide incentive for 
nonconforming manufacturers to achieve the emission standards; and
     Remove the competitive disadvantage to conforming 
manufacturers.

    Section 206(g) authorizes EPA to require testing of production 
vehicles or engines in order to determine the emission level on which 
the penalty is based. If the emission level of a vehicle or engine 
exceeds an upper limit of nonconformity established by EPA through 
regulation, the vehicle or engine would not qualify for an NCP under 
section 206(g) and no certificate of conformity could be issued to the 
manufacturer. If the emission level is below the upper limit but above 
the standard, that emission level becomes the ``compliance level,'' 
which is also the benchmark for warranty and recall liability; the 
manufacturer who elects to pay the NCP is liable for vehicles or 
engines that exceed the compliance level in-use, unless, for the case 
of HLDTs, the compliance level is below the in-use standard. The 
manufacturer does not have in-use warranty or recall liability for 
emissions levels above the standard but below the compliance level.

II. Availability of Nonconformance Penalties

A. Review of NCP Eligibility Criteria

    The generic NCP rule (Phase I) established three basic criteria for 
determining the eligibility of emission standards for nonconformance 
penalties in any given model year. See 40 CFR 1103-87. First, the 
emission standard in question must become more difficult to meet. This 
can occur in two ways, either by the emission standard itself becoming 
more stringent, or due to its interaction with another emission 
standard that has become more stringent.
    Second, substantial work must be required in order to meet the 
emission standard. EPA considers ``substantial work'' to mean the 
application of technology not previously used in that vehicle or engine 
class/subclass, or a significant modification of existing technology, 
in order to bring that vehicle/engine into compliance. EPA does not 
consider minor modifications or calibration changes to be classified as 
substantial work.
    Third, a technological laggard must be likely to develop. A 
technological laggard is defined as a manufacturer who cannot meet a 
particular emission standard due to technological (not economic) 
difficulties and who, in the absence of NCPs, might be forced from the 
marketplace. EPA will make the determination that a technological 
laggard is likely to develop, based in large part on the above two 
criteria. However, these criteria are not always sufficient to 
determine the likelihood of the development of a technological laggard. 
An emission standard may become more difficult to meet and substantial 
work may be required for compliance, but if that work merely involves 
transfer of well-developed technology from another vehicle class, it is 
unlikely that a technological laggard would develop.

B. Phase II NCPs

    The above criteria were used to determine eligibility for NCPs 
during Phase II of the NCP rulemaking (50 FR 53454, December 31, 1985). 
NCPs were offered for the following 1987 and 1988 model year standards: 
the particulate matter (PM) standard for 1987 diesel-fueled light-duty 
trucks with loaded vehicle weight in excess of 3750 pounds (LDDT2s), 
the 1987 gasoline-fueled light HDE (LHDGE) HC and CO emission 
standards, the 1988 diesel-fueled HDE (HDDE) PM standard, and the 1988 
HDDE NOX standard. As discussed in the Phase II preamble, NCPs 
were considered, but not offered, for the 1987 HLDT NOX standard 
and the 1988 (later, the 1990) gasoline-fueled HDE (HDGE) NOX 
standard.

C. Phase III NCPs

    The availability of NCPs for 1991 model year HDE standards was 
addressed during Phase III of the NCP rulemaking (55 FR 46622, November 
5, 1990). NCPs were offered for the following: the 1991 HDDE PM 
standard for petroleum-fueled urban buses, the 1991 HDDE PM standard 
for petroleum-fueled vehicles other than urban buses, the 1991 
petroleum-fueled HDDE NOX standard, and the PM emission standard 
for 1991 and later model year petroleum-fueled light-duty diesel trucks 
greater than 3750 lbs loaded vehicle weight (LDDT2s). As discussed in 
the Phase III preamble, NCPs were also considered but not offered for 
the methanol-fueled heavy-duty diesel engine and heavy-duty gasoline 
engine standards as it was concluded that those standards did not meet 
the eligibility criteria established in the generic rule.
    In addition, Phase III of the NCP rulemaking described how NCPs 
would be integrated into the HDE NOX and PM averaging program.

D. Phase IV NCPs

    The availability of NCPs for HDVs and HDEs subject to the 1994 and 
later model year emission standards for particulate matter (PM) was 
addressed by Phase IV of the NCP rulemaking (58 FR 68532, December 28, 
1993). NCPs were offered for the following: the 1994 and later model 
year PM standard for heavy-duty diesel engines (HDDEs) used in urban 
buses, and the 1994 and later model year PM standard for HDDEs used in 
vehicles other than urban buses. NCPs were also considered, but not 
offered for the 1994 and later model year methanol-fueled HDE PM 
standard and the 1994 and later model year cold carbon monoxide (CO) 
standard for heavy light-duty gasoline fueled trucks.

E. NCP Eligibility for 1996 Tier 1 HLDT, 1996 Urban Bus PM, and 1998 
HDE NOX, and Later Emission Standards for Petroleum-Fueled HDEs 
and HDVs

    NCPs were not considered for the Tier 1 ``in-use'' standards since 
NCPs are a mechanism to allow manufacturers to certify engine families, 
not to assist manufacturers in complying with ``in-use'' standards. The 
remainder of this proposal addresses whether NCPs should be made 
available for the 1996 Urban Bus PM standard of 0.05 g/BHP-hr, the 1998 
HDE NOX standard of 4.0 g/BHP-hr, and the following Tier 1 
standards applicable to 1996 HLDTs at the intermediate\1\ useful life 
and at the full\2\ useful life:
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    \1\Intermediate useful life is 5 years or 50,000 miles.
    \2\Full useful life is 11 years or 120,000 miles.
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A. LDT3

1. Non-methane hydrocarbon (NMHC) standard.
    a. 0.32 g/mi at intermediate useful life;
    b. 0.46 g/mi at full useful life;
2. Carbon Monoxide (CO) standard.
    a. 4.4 g/mi at intermediate useful life;
    b. 6.4 g/mi at full useful life;
3. Oxides of Nitrogen (NOX) standard.
    a. 0.70\3\ g/mi at intermediate useful life;
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    \3\There is no intermediate useful life standard for diesel-
fueled vehicles.
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    b. 0.98 g/mi at full useful life;
4. Particulate Matter (PM) standard of 0.10 g/mi at full useful 
life;

B. LDT4

1. NMHC standard.
    a. 0.39 g/mi at intermediate useful life;
    b. 0.56 g/mi at full useful life;
2. CO standard.
    a. 5.0 g/mi at intermediate useful life;
    b. 7.3 g/mi at full useful life;
3. NOX standard.
    a. 1.1\4\ g/mi at intermediate useful life;
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    \4\There is no intermediate useful life standard for diesel-
fueled vehicles.
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    b. 1.53 g/mi at full useful life;
4. PM standard of 0.12 g/mi at full useful life;

EPA's consideration of NCPs for each of these standards is discussed 
below.
a. 1996 Tier 1 Non-Methane Hydrocarbon (NMHC) Standard for LDT3
    Since there is no NMHC standard for earlier model year LDT3s, the 
new NMHC standard represents an increase in stringency over the THC 
standard for previous model years, satisfying the first eligibility 
criterion. EPA acknowledges that one manufacturer has indicated that it 
may have difficulty complying with this standard. Based on the 
manufacturer's planned strategy, however, EPA does not believe that 
substantial work, as described above, will be necessary to meet the new 
standard for either the intermediate useful-life level of 0.32 g/mi or 
the full useful-life level of 0.46 g/mi, since it does not represent a 
major modification of existing technology. EPA also does not believe 
that a technological laggard is likely to develop, based on discussions 
with vehicle manufacturers. For these reasons, EPA is not proposing to 
offer NCPs for this standard.
b. 1996 Tier 1 CO Standard for LDT3
    EPA recognizes that the new CO standard of 6.4 g/mi at full useful 
life represents an increase in stringency over the prior standard of 10 
g/mi at full useful life for LDT3s, satisfying the first eligibility 
criterion. Based on 1993 model year certification levels, only one 
manufacturer is currently producing LDT3 vehicles which would not meet 
the new standard at full useful life. Since this manufacturer does not 
anticipate difficulty in meeting the new CO standards, EPA does not 
believe that a technological laggard is likely to develop. The half 
useful-life standard of 4.4 g/mi is considered by EPA and manufacturers 
to be less difficult to meet compared with the full useful life 
standard. For these reasons, EPA is not proposing to offer NCPs for 
these standards.
c. 1996 Tier 1 NOx Standard for LDT3
    EPA recognizes that the new NOX standard of 0.98 g/mi at full 
useful life represents an increase in stringency over the prior 
standard of 1.7 g/mi at full useful life for LDT3s, satisfying the 
first eligibility criterion. Based on discussions with current 
manufacturers of vehicles which, if not modified, would exceed the new 
NOX standard at full useful life, EPA believes those manufacturers 
possess the desirable technology to meet the new standard, and EPA does 
not believe that a technological laggard is likely to develop among 
manufacturers of that group. The half useful-life standard for non-
diesel vehicles of 0.70 g/mi is considered by EPA and manufacturers to 
be less difficult to meet compared with the full useful life standard.
    For the case of diesel-fueled LDT3s, however, EPA believes the 
increased stringency is likely to require substantial work to comply 
with the PM standard because most conventional means of reducing 
NOX emissions from diesel-fueled engines result in increased PM 
emissions from such engines. Since EPA believes that NOX emissions 
of diesel-fueled vehicles will be lowered by adjusting engine operating 
and design parameters, not requiring significant work, EPA is not 
proposing to offer NCPs for the new NOX standards for either 
gasoline fueled LDT3s or diesel-fueled LDT3s. However, significant work 
may be required to reduce any resulting increase in PM emissions or 
reduced decrease in PM emissions for diesel-fueled vehicles. The 
interrelationship between NOX emissions and PM emissions for 
diesel-fueled vehicles will be taken into account when considering NCPs 
for the new PM standard, as discussed below.
d. 1996 Tier 1 PM Standard for LDT3
    There is no previous PM standard for non-diesel-fueled LDT3s. Since 
it is well-recognized in the industry that non- diesel fueled vehicles 
emit very low levels of particulate matter, no work should be required 
by manufacturers to meet this new standard and no technological laggard 
should develop. Therefore, EPA is not proposing to offer NCPs for those 
vehicles.
    EPA recognizes that the new PM standard of 0.10 g/mi at full useful 
life represents an increase in stringency over the prior standard of 
0.13 g/mi at full useful life for diesel-fueled LDT3s, satisfying the 
first eligibility criterion. Based on discussions with current 
manufacturers, at least one manufacturer is adapting technology from 
similar engines, but having different service requirements. Significant 
work will probably be required for the technology adaptation specified 
by that manufacturer, especially when considering the interrelationship 
of the NOX and PM emissions of diesel-fueled engines, as stated 
above. EPA also believes that a technological laggard may develop 
because of the amount of work involved. For these reasons, EPA is 
proposing to offer NCPs for diesel-fueled LDT3s at the full useful 
life. The proposed penalty rates are discussed below.
e. 1996 Tier 1 Non-Methane Hydrocarbon (NMHC) Standard for LDT4
    There is no NMHC standard for earlier model year LDT4s. Both EPA 
and vehicle manufacturers believe that the NMHC standard represents an 
increase in stringency over the THC standard for previous model year 
LDT4s, satisfying the first eligibility criterion. The same 
manufacturer that expressed concern in meeting the NMHC standard for 
LDT3 has similar concerns in meeting this standard and will use a 
similar strategy to lower the emissions. For the same reasons stated in 
the above discussion of the NMHC standard for LDT3s, EPA does not 
propose to offer NCPs for the NMHC standard at either the intermediate 
or the full useful life.
f. 1996 Tier 1 CO Standard for LDT4
    EPA recognizes that the new CO standard of 7.3 g/mi at full useful 
life represents an increase in stringency over the prior standard of 10 
g/mi at full useful life for LDT4s, satisfying the first eligibility 
criterion. Based on discussions with current manufacturers of affected 
vehicles, EPA believes that manufacturers will not have difficulty in 
meeting the new standard. Since there are no 1993 model year LDT4s with 
CO certification levels higher than the new standard at full useful 
life, EPA does not believe that a technological laggard is likely to 
develop. The half useful-life standard of 5.0 g/mi is generally 
considered by EPA and manufacturers to be less difficult to meet 
compared with the full useful life standard of 7.3 g/mi. For these 
reasons, EPA is not proposing to offer NCPs for these standards.
g. 1996 Tier 1 NOX Standard for LDT4
    EPA recognizes that the new NOX standard of 1.53 g/mi at full 
useful life represents some increase in stringency over the prior 
standard of 1.7 g/mi at full useful life for LDT4s, satisfying the 
first eligibility criterion. Based on discussions with current 
manufacturers of affected vehicles, and based on the fact that there 
were no model year 1993 LDT4s certified which would exceed the new 
standard at full useful life, EPA believes that substantial work, as 
described above, will not be required of manufacturers and that a 
technological laggard is not likely to develop. The half useful-life 
standard for non-diesel vehicles of 1.10 g/mi is generally considered 
by EPA and manufacturers to be less difficult to meet compared with the 
full useful life standard. For these reasons, EPA does not propose to 
offer NCPs for the new LDT4 NOX standards.
h. 1996 Tier 1 PM Standard for LDT4
    EPA recognizes that the new PM standard of 0.12 g/mi at full useful 
life represents an increase in stringency over the prior standard of 
0.13 g/mi at full useful life for LDT4s, satisfying the first 
eligibility criterion. As in the case of non-diesel LDT3s, no work 
should be required to meet the new PM standard for non-diesel LDT4s. 
And based on discussions with current manufacturers of diesel-fueled 
LDT4 vehicles and on 1993 model year certification levels, EPA does not 
believe that a technological laggard is likely to develop or that 
substantial work, as described above, will be required to meet the new 
PM standard. For these reasons, EPA is not proposing to offer NCPs for 
the new LDT4 PM standard.
i. 1996 HDDE Urban Bus PM Standard
    The 1996 HDDE urban bus PM standard of 0.05 g/BHP-hr is more 
stringent than the previous 1994 0.07 g/BHP-hr PM standard it is 
superseding. EPA recognizes that some work may be necessary for the 
urban bus engine manufacturers to comply with the new standard. Based 
on discussions with those manufacturers, EPA does not believe that a 
technological laggard is likely to exist. Reinforcing that belief is 
the fact that the 0.05 g/BHP-hr standard was originally proposed as a 
1994 standard. Detroit Diesel Corporation successfully argued that they 
could not effectively comply by 1994, and that if the 0.05 g/BHP-hr 
standard was delayed until 1996, and a standard of 0.07 g/BHP-hr was 
adopted in 1994, compliance could be achieved more efficiently. 
Furthermore, compliance with the 0.05 g/BHP-hr standard has been 
demonstrated in certification using a particulate trap system. And a 
catalyst equipped 1994 urban bus engine tested as low as 0.05 g/bhp-hr, 
although it certified to 0.07 g/bhp-hr. For these reasons, EPA is not 
proposing to offer NCPs for the 1996 0.05 g/BHP-hr PM standard for HDDE 
used for urban buses.
j. 1998 HDE NOX Standard
    EPA acknowledges that the 1998 HDE NOX standard of 4.0 g/BHP-
hr is an increase in stringency over the present 5.0 g/BHP-hr standard. 
EPA also believes, based on discussions with current manufacturers of 
HDEs, that additional work will be required to comply with the new 
standard. Improvements to turbochargers, conversion of remaining 
mechanical fuel injection systems to electronic control, and, in some 
cases, the use of exhaust gas catalytic converters will be necessary. 
But, based on those same discussions with manufacturers, and 
considering the fact that the standard does not become effective for an 
additional four years from this time, EPA believes that a technological 
laggard is not likely to develop. Therefore, EPA does not propose to 
offer NCPs for the 1998 HDE NOX standard.

III. Penalty Rates

    This proposed rule is the most recent in a series of NCP 
rulemakings. The discussion of penalty rates in the Phase IV rulemaking 
(58 FR 68532, December 28, 1993), Phase III rulemaking (55 FR 46622, 
November 5, 1990), the Phase II rulemaking (50 FR 53454, December 31, 
1985) as well as the Phase I rulemaking (50 FR 35374, August 30, 1985) 
are incorporated by reference. This section briefly reviews the penalty 
rate formula and discusses how EPA arrived at the penalty rates in this 
proposed rule. Emphasis will be placed on procedures different from 
those used to derive penalty rates during Phase II, Phase III, or Phase 
IV.

A. Parameters

    As in the previous NCP rules, EPA is specifying values for the 
following parameters in the NCP formula for each standard: COC50, 
COC90, MC50, and F. The NCP formula is the same as that 
promulgated in the Phase I rule.
    COC50 is an estimate of the industrywide average incremental 
cost per engine (references to engines are intended to include vehicles 
as well) associated with meeting the standard for which an NCP is 
offered, compared with meeting the upper limit. COC50 is based on 
typical engine technology, as nearly as EPA can identify it. As in the 
previous NCP rules, costs include additional manufacturer costs and 
additional owner costs. The other NCP rules did not include 
certification costs in the calculation of COC50, and none will be 
allowed in this proposed rule because both complying and noncomplying 
manufacturers must incur certification costs.
    COC90 is EPA's best estimate of the 90th percentile 
incremental cost per-engine associated with meeting the standard for 
which an NCP is offered, compared with meeting the associated upper 
limit. COC90 is based on a near worst case technology, as nearly 
as EPA can identify it. COC90, like COC50, includes both 
manufacturer and owner costs, but not certification costs.
    MC50 is an estimate of the industrywide average marginal cost 
of compliance per unit of reduced pollutant associated with the least 
cost effective emission control technology installed to meet the new 
standard. MC50 is measured in dollars per g/BHP-hr for HDEs and in 
dollars per gram per mile (g/mi) for LDTs.
    F is a factor used to derive MC90, the 90th percentile 
marginal cost of compliance with the NCP standard for engines in the 
NCP category. MC90 is defined as being the slope of the penalty 
rate curve near the standard and is equal to MC50 multiplied by F. 
For this rulemaking, as was the case in the previous NCP rules, EPA has 
determined that no reasonable estimate of MC90 can be made based 
on existing marginal cost data and has thus set F at a presumptive 
value of 1.2. This approach was generally supported by commenters on 
the past NCP rulemakings.

B. Parameter Values and Upper Limit

    The derivation of the proposed cost parameters is described in a 
support document entitled ``Calculation of Nonconformance Penalty Rates 
for 1996 and Later Model Year LDT3 Particulate Matter (PM) Standards,'' 
which is available in the public docket for this rulemaking. The upper 
limits applicable to a pollutant emission standard shall be determined 
as per 86.1104-91.

1996 Tier 1 Particulate Matter (PM) Standard of 0.10 g/mi for LDT3 at 
Full Useful Life

    EPA proposes that the following values (in July, 1993 dollars) be 
used in the NCP formula for the 1996 and later model year Tier 1 0.10 
g/mi PM standard for LDT3 at full useful life.

COC50 = $557
COC90 = $1178
MC50 = 557/(.13-.10) = $18,567
F = 1.2

    The values of the compliance parameters are based on the cost of 
projected engine modifications and the use of an oxidation catalyst for 
PM reduction as outlined in ``Calculation of Nonconformance Penalty 
Rates for 1996 and Later Model Year LDT3 Particulate Matter (PM) 
Standards''. While the possibility of complying with the PM standard 
using a particulate trap exists, it is not considered by EPA or 
industry to be a likely solution.
    Since a previous PM standard of 0.13 g/mi exists, EPA is proposing 
that the upper limit which cannot be exceeded by LDT3 vehicles shall be 
0.13 g/mi.

IV. Administrative Designation and Regulatory Analysis

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), EPA 
must determine whether the regulatory action is ``significant'' and 
therefore subject to OMB review and the requirements of the Executive 
Order. The order defines ``significant regulatory action'' as one that 
is likely to result in a rule that may: (1) Have an annual effect on 
the economy of $100 million or more or adversely affect in a material 
way the economy, a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or state, local, or 
tribal governments or communities; (2) create a serious inconsistency 
or otherwise interfere with an action taken or planned by another 
agency; (3) materially alter the budgetary impact of entitlements, 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or (4) raise novel legal or policy issues arising 
out of legal mandates, the President's priorities, or the principles 
set forth in the Executive Order.
    Pursuant to the terms of Executive Order 12866, it has been 
determined that this rule is not a ``significant regulatory action'' 
and is therefore not subject to OMB review. This regulation will not 
have an annual effect on the economy in excess of $100 million and will 
not cause a major increase in the price of HDEs above those that would 
otherwise occur from compliance with the emission standards themselves. 
This regulation is intended to assist manufacturers that are having 
difficulty developing and marketing vehicles which comply with the 1996 
Tier 1 PM standard for LDT3s. Without this proposed rule, a 
manufacturer experiencing difficulty in complying with this new 
emission standard (after the use of credits) has only two alternatives: 
fix the nonconforming engines for the associated model years or not 
sell them at all. NCPs provide manufacturers with additional time to 
bring their engines into conformity.
    In addition, NCPs are calculated to deprive nonconforming 
manufacturers of any cost savings and competitive advantages stemming 
from marketing a nonconforming engine. Thus, NCPs will not have 
significant adverse effects on competition, employment, investment, 
productivity, innovation or on the ability of United States-based 
enterprises to compete with foreign-based enterprises in domestic or 
export markets.

V. Economic Impact

    Because the use of NCPs is optional, manufacturers have the 
flexibility and will likely choose whether or not to use NCPs based on 
their ability to comply with emissions standards. If no HDE 
manufacturer elects to use NCPs, these manufacturers and the users of 
their products will not incur any additional costs related to NCPs.
    NCPs remedy the potential problem of having a manufacturer forced 
out of the marketplace due to that manufacturer's inability to conform 
to new, strict emission standards in a timely manner. Without NCPs, a 
manufacturer which has difficulty certifying HDEs in conformance with 
emission standards or whose engines fail a SEA has only two 
alternatives: fix the nonconforming engines, perhaps at a prohibitive 
cost, or prevent their introduction into commerce. The availability of 
NCPs provides manufacturers with a third alternative: continue 
production and introduce into commerce upon payment of a penalty for an 
engine that exceeds the standard until an emission conformance 
technique is developed.
    Therefore, NCPs represent a regulatory mechanism that allows 
affected manufacturers to have increased flexibility. A decision to use 
NCPs may be a manufacturer's only way to continue to introduce HDEs 
into commerce. Hence, NCPs may be considered to have no adverse 
economic impact.

VI. Environmental Impact

    When evaluating the environmental impact of this proposed rule, one 
must keep in mind that, under the Act, NCPs are a consequence of 
enacting new, more stringent emissions requirements for heavy duty 
engines. Emission standards are set at a level that most, but not 
necessarily all, manufacturers can achieve by the model year in which 
the standard becomes effective. Following International Harvester v. 
Ruckelshaus, 478 F.2d 615 (D.C. Cir. 1973), Congress realized the 
dilemma that technology-forcing standards were likely to cause, and 
allowed manufacturers of heavy-duty engines to certify nonconforming 
vehicles/engines upon the payment of an NCP, under certain conditions. 
This mechanism would allow manufacturer(s) who cannot meet technology-
forcing standards immediately to continue to manufacture these 
nonconforming engines while they tackle the technological problems 
associated with meeting new emission standard(s). Thus, as part of the 
statutory structure to force technological improvements without driving 
manufacturers out of the market, NCPs provide flexibility that fosters 
long-term emissions improvement through the setting of lower emission 
standards at an earlier date than could otherwise be possible. By 
design, NCPs encourage the technological laggard that is using NCPs to 
reduce emission levels to the more stringent standard as quickly as 
possible.

VII. Compliance With Regulatory Flexibility Act

    Under section 605 of the Regulatory Flexibility Act, 5 U.S.C. 
605(b), the Administrator certifies that this rule will not have a 
significant economic impact on a substantial number of small entities. 
None of the affected manufacturers could be classified as small. 
Moreover, as already discussed, the NCP program can be expected to 
benefit manufacturers.
    Some small entities do exist as manufacturers' contractors for the 
testing of engines for Production Compliance Audits (PCAs). It is EPA's 
practice to conduct PCA scheduling (namely, tests per day limitations) 
in such a way as to consider the staff and manpower capabilities of 
such contractors and avoid any problems. The result is that these 
entities are not adversely affected. Thus, I certify that this proposed 
rule will not have any adverse economic impact on a substantial number 
of small entities.

VIII. Information Collection Requirements

    This proposed rule requires that manufacturers perform certain 
record keeping and submit certain reports to EPA. The Paperwork 
Reduction Act of 1980, 44 USC 3501, et seq., provides that reporting 
and record keeping requirements be approved by OMB before they can be 
enforced by EPA. The information collection requirements in this 
proposed rule have been addressed in previous rulemaking and approved 
by OMB (OMB control no. 2060-0132). At the time of the final rulemaking 
the Agency will submit an Inventory Correction Worksheet to OMB 
amending the approved burden hours to reflect the additional reports 
required by this rulemaking. However, any person wishing to comment on 
these requirements is invited to do so. Comments on these requirements 
should be submitted to Chief, Information Policy Branch, 2136, U.S. 
Environmental Protection Agency, 401 M St., SW., Washington, DC 20460 
and to OMB, Office of Information and Regulatory Affairs, 726 Jackson 
Place, NW, Washington, DC 20503, marked ``Attention: Desk Officer for 
EPA.'' The final rule will respond to any OMB or public comments on the 
information collection requirements.

List of Subjects in 40 CFR Part 86

    Administrative practice and procedure, Air pollution control, 
Gasoline, Motor vehicles, Labeling, Motor vehicle pollution, Reporting 
and recordkeeping requirements.

    Dated: August 4, 1994.
Carol M. Browner,
Administrator.

    For the reasons set forth in the preamble, 40 CFR part 86, is 
proposed to be amended as follows:

PART 86--CONTROL OF AIR POLLUTION FROM NEW AND IN-USE MOTOR 
VEHICLES AND NEW AND IN-USE MOTOR VEHICLE ENGINES: CERTIFICATION 
AND TEST PROCEDURES

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

    Authority: Secs. 202, 203, 206, 207, 208, 215, 301(a), Clean Air 
Act as amended ( 42 U.S.C. 7521, 7522, 7524, 7525, 7541, 7542, 7549, 
7550, and 7601(a)).

    2. Section 86.1105-87 of subpart L is proposed to be amended by 
revising paragraph (e) and adding paragraph (g) to read as follows:


Sec. 86.1105-87  Emission standards for which nonconformance penalties 
are available.

* * * * *
    (e) The values of COC50, COC90, and MC50 in 
paragraphs (a) and (b) of this section are expressed in December 1984 
dollars. The values of COC50, COC90, and MC50 in 
paragraphs (c) and (d) of this section are expressed in December 1989 
dollars. The values of COC50, COC90, and MC50 in 
paragraph (f) of this section are expressed in December 1991 dollars. 
The values of COC50, COC90, and MC50 in paragraph (g) of 
this section are expressed in July 1993 dollars. These values shall be 
adjusted for inflation to dollars as of January of the calendar year 
preceding the model year in which the NCP is first available by using 
the change in the overall Consumer Price Index, and rounded to the 
nearest whole dollar in accordance with ASTM E29-67 (reapproved 1980), 
Standard Recommended Practice for Indicating Which Places of Figures 
are to be Considered Significant in Specified Limiting Values. The 
method was approved by the director of the Federal Register in 
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. This document is 
available from ASTM, 1916 Race Street, Philadelphia, PA 19103, and is 
also available for inspection as part of Docket A-91-06, located at the 
Central Docket Section, EPA, 401 M Street, SW, Washington, DC or at the 
Office of the Federal Register, 800 North Capitol Street, NW., suite 
700, Washington, DC. This incorporation by reference was approved by 
the Director of the Federal Register on January 13, 1992. These 
materials are incorporated as they exist on the date of the approval 
and a notice of any change in these materials will be published in the 
Federal Register.
* * * * *
    (g) Effective in the 1996 model year, NCPs will be available for 
the following emission standard:
    (1) Light-duty truck 3 diesel-fueled vehicle at full useful life 
(as defined in Sec. 86.094-2) particulate matter emission standard of 
0.10 g/mi.
    (i) The following values shall be used to calculate an NCP for the 
standard set forth in Sec. 86.094-9(a)(1)(ii) in accordance with 
Sec. 86.1113-87(a):
    (A) COC50: $557.
    (B) COC90: $1178.
    (C) MC50: $18,567 per gram per mile;
    (D) F: 1.2.
    (ii) The following factor shall be used to calculate the 
engineering and development component of the NCP for the standard set 
forth in Sec. 86.094-9(a)(1)(ii) in accordance with Sec. 86.1113-87(h): 
0.011.
    (2) [Reserved]

[FR Doc. 94-19769 Filed 8-19-94; 8:45 am]
BILLING CODE 6560-50-P