[Federal Register Volume 60, Number 169 (Thursday, August 31, 1995)]
[Proposed Rules]
[Pages 45580-45604]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21525]




[[Page 45579]]

_______________________________________________________________________

Part IV





Environmental Protection Agency





_______________________________________________________________________



40 CFR Parts 80, 86, and 89



Control of Air Pollution From Heavy-Duty Engines; Proposed Rule

  Federal Register / Vol. 60, No. 169 / Thursday, August 31, 1995 / 
Proposed Rules   

[[Page 45580]]


ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 80, 86, and 89

[AMS-FRL-5288-4]
RIN 2060-AF76


Control of Air Pollution From Heavy-Duty Engines

AGENCY: Environmental Protection Agency.

ACTION: Advance notice of proposed rule.

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SUMMARY: This advance notice of proposed rule (ANPRM) reviews the need 
and potential for additional reductions in emissions of oxides of 
nitrogen (NOX), hydrocarbons (HC), and particulate matter (PM) 
from mobile source heavy-duty engines (HDEs), announces EPA's intent to 
establish new emission controls for highway heavy-duty engines, and 
also describes EPA's plans to work cooperatively with engine and 
equipment manufacturers to consider additional reductions from nonroad 
(off-highway) heavy-duty engines. Ozone pollution poses a serious 
threat to the health and well-being of millions of Americans and a 
large burden to the U.S. economy. Many ozone nonattainment areas face 
great difficulties in reaching and maintaining attainment of the ozone 
health-based air quality standards in the years ahead. Recognizing this 
challenge, states, local governments and others have called on EPA to 
promulgate additional national measures to reduce NOX and HC in 
order to protect the public from the serious health effects of ozone 
pollution. The control of PM emissions from HDEs is also a priority for 
these stakeholders.
    In response to the need for national pollution reduction measures, 
EPA has initiated discussions with engine manufacturers regarding 
future emission controls for HDEs. EPA, the California Air Resources 
Board (CARB), and HDE manufacturers recently signed a Statement of 
Principles (SOP) calling for significantly tighter NOX and non-
methane hydrocarbon (NMHC) standards for on-highway HDEs starting with 
model year 2004. The SOP calls on manufacturers to achieve these ozone 
precursor reductions without increasing PM emissions, even though 
current diesel technology typically results in increased PM (and HC) 
emissions when NOX emissions are reduced. The parties plan to 
continue their discussions and to invite others to join them, with a 
goal of reaching a similar SOP for nonroad HDEs.
DATES: EPA requests comment on this ANPRM no later than October 2, 
1995. Should a commenter miss the requested deadline, EPA will try to 
consider any comments that it receives prior to publication of the 
expected NPRM regarding additional highway heavy-duty engine emission 
controls. There will also be an opportunity to comment on any NPRM that 
EPA publishes.

ADDRESSES: Materials relevant to this ANPRM are contained in Public 
Docket A-95-27, located at room M-1500, Waterside Mall (ground floor), 
U.S. Environmental Protection Agency, 401 M Street SW., Washington, DC 
20460. The docket may be inspected from 8 a.m. until 5:30 p.m., Monday 
through Friday. A reasonable fee may be charged by EPA for copying 
docket materials.

    Comments on this ANPRM should be sent to Public Docket A-95-27 at 
the above address. EPA requests that a copy of comments also be sent to 
Tad Wysor, U.S. EPA, Regulation Development and Support Division, 2565 
Plymouth Road, Ann Arbor, MI 48105.

    This ANPRM is available electronically on the Technology Transfer 
Network (TTN), which is an electronic bulletin board system (BBS) 
operated by EPA's Office of Air Quality Planning and Standards. The 
service is free of charge, except for the cost of the phone call. Users 
are able to access and download TTN files on their first call using a 
personal computer and modem: TTN BBS, (919) 541-5742; Voice Helpline, 
(919) 541-5384.

FOR FURTHER INFORMATION CONTACT: Tad Wysor, U.S. EPA, Regulation 
Development and Support Division, 2565 Plymouth Road, Ann Arbor, MI 
48105. Telephone: (313) 668-4332.

SUPPLEMENTARY INFORMATION: EPA is issuing this ANPRM to invite 
comment from all interested parties on the need and potential for 
additional reduction of NOX, HC and PM emissions from HDEs and 
EPA's plans to achieve such reductions. After reviewing the 
comments, EPA intends to issue a Notice of Proposed Rulemaking 
(NPRM) proposing standards for Model Year 2004 and later heavy-duty 
highway engines in accordance with the SOP. In addition, comments 
received regarding reduction in emissions from nonroad HDEs will 
inform any EPA discussions with manufacturers regarding additional 
emission reductions.

I. Introduction

    Poor air quality represents a serious threat to the health and 
well-being of millions of Americans and a large burden to the U.S. 
economy. This threat exists despite the fact that, over the past two 
decades, great progress has been made at the local, state and national 
levels in controlling emissions from many sources of air pollution. As 
a result of this progress, many individual emission sources, both 
stationary and mobile, pollute at only a fraction of their pre-control 
rates. However, continued industrial growth and expansion of motor 
vehicle usage threaten to reverse these past achievements. Today, more 
than four years after the passage of major amendments to the Clean Air 
Act (CAA or Act),1 many states are still finding it difficult to 
meet the air quality standards by the CAA deadlines. Furthermore, other 
states which are approaching or have reached attainment of National 
Ambient Air Quality Standards (NAAQS) may see those gains lost if 
current trends persist.

    \1\ See 42 U.S.C. 7401 et seq.
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    In recent years, efforts to improve air quality have focused 
largely on ground-level ozone and its main precursors, nitrogen oxides 
(NOX) and volatile organic compounds (VOCs, consisting mostly of 
hydrocarbons, HC). In addition, airborne particulate matter (PM) has 
been a major air quality concern in many regions. As discussed below, 
NOX, ozone, and PM have all been linked to a range of serious 
respiratory health problems and a variety of adverse environmental 
effects.
    At this time, ozone levels remain unacceptably high in many areas 
across the country. For many years, control of VOCs was the main 
strategy employed in efforts to reduce ground-level ozone. VOC 
reductions were more cost effective (on a per-ton basis) and more 
readily achievable than NOX reductions. In addition, it was 
generally believed that greater ozone benefits could be achieved 
through VOC reductions. More recently, it has become clear that 
NOX controls are often the most effective strategy for reducing 
ozone, especially where ozone is high over a large region (as in the 
Midwest and Northeast). As a result, attention has turned to NOX 
emissions as the key to improving air quality in many areas of the 
country.
    Current projections show a slight decrease in total NOX 
emissions during the next few years as stationary and mobile source 
control programs promulgated under the 1990 CAA are phased in. However, 
downward trends in NOX pollution will begin to reverse and 
NOX emission inventories begin to rise by the early 2000s, due to 
growth in stationary and mobile source activity, and emissions from 
heavy-duty highway and nonroad engines are projected to represent a 
significant fraction of mobile 

[[Page 45581]]
source NOX emissions by the middle of the next decade. In some 
areas, the rise in NOX emissions can be expected to be accompanied 
by a significant increase in ground-level ozone. Levels of PM are also 
expected to rise, both because of the expected increase in numbers of 
PM sources and because in the atmosphere, NOX is transformed into 
fine acidic nitrate particles which account for a substantial fraction 
of the airborne particulate in some areas of the country (``secondary 
particulate formation'').
    Given these expected trends, and in the absence of new emission 
control initiatives, some of the nation's hard-won air quality 
improvements will begin to be seriously threatened in the early 2000s. 
In response to widespread urging by states, municipalities, health 
officials, and concerned citizens in virtually every region of the 
country,2 EPA has intensified its efforts to understand and 
respond to today's stubborn air quality challenges. Over the past 
decade, ambient air measurements and computer modeling studies have 
repeatedly demonstrated that ozone and its precursors, NOX and 
VOC, are transported across large distances. Thus, while there is a 
role for all levels of government to address these issues, EPA's state 
and local partners generally agree that only with new initiatives at 
the regional and national level can long-term clean air goals be 
achieved.

    \2\ See Section VI for more detailed discussion of the comments 
received by EPA to date.
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    States are assigned the jurisdiction by the CAA for implementing 
most stationary source emission controls. In most regions of the 
country, states are implementing stationary source NOX control 
options (as well as stationary source VOC controls) for the control of 
acid rain, ozone, or both. However, in many areas these controls will 
not be sufficient for reaching and/or maintaining the ozone standard 
without significant additional NOX reductions from mobile sources. 
California can establish emission control standards for new motor 
vehicles, and other states may adopt California's programs.3 
Traditionally, however, nationwide VOC and NOX control programs 
for new motor vehicles are initiated at the federal level. Similarly, 
mobile sources of PM emissions, especially the direct and indirect PM 
from diesel engines, are a major consideration to local and state 
officials in areas facing current and future air quality problems. 
Thus, those charged with delivering cleaner air to the citizens of 
their states are looking to the national mobile source emission control 
program as a necessary complement to their efforts to reduce NOX, 
PM, HC, and other emissions. Common emission standards for mobile 
sources across the nation are also strongly supported by manufacturers, 
which often face serious production inefficiencies when different 
requirements apply to engines/vehicles sold in different states or 
areas.

    \3\ A similar relationship applies to new nonroad engines and 
vehicles, although states may not set standards for certain classes 
of these engines and vehicles. See Sections 209 and 213 of the Act.
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    Motor vehicle emission control programs have a history of 
technological success that, in the past, has largely offset the 
pressure from constantly growing numbers of vehicles and miles traveled 
in the U.S. The per-vehicle rate of emissions from new passenger cars 
and light trucks has been reduced to very low levels. As a result, 
increasing attention is now being focused on heavy-duty trucks (ranging 
from large pickups to tractor-trailers), buses, and nonroad equipment. 
For purposes of this ANPRM, the Agency is primarily interested in the 
component of nonroad sources greater than 50 horsepower (37 kilowatts), 
which is termed ``heavy-duty nonroad'' in this Notice. (Nonroad engines 
greater than 50 hp represent the single largest contributor to total 
nonroad NOX emissions.) EPA is addressing other off-highway 
sources, such as small nonroad engines, locomotives, aircraft and 
marine engines in separate actions.
    Since the 1970s, manufacturers of heavy-duty engines for highway 
use have developed new technological approaches in response to 
increasingly stringent emission standards. However, the technological 
characteristics of heavy-duty engines, particularly diesel engines, 
have to date prevented the achievement of emission levels comparable to 
today's light-duty gasoline vehicles. While diesel engines provide 
advantages in terms of fuel efficiency, reliability, and durability, 
control of NOX emissions is a much greater challenge for diesel 
engines than for gasoline engines. Similarly, control of PM emissions, 
which are at very low levels for gasoline engines, represents a 
substantial challenge for diesel engines.
    Despite these technological challenges, there is emerging agreement 
that heavy-duty highway engines offer the potential for substantial 
additional emission reductions. In their successful efforts to reach 
lower NOX and PM levels over the past 20 years, heavy-duty highway 
diesel engine manufacturers have identified new technologies and 
approaches that today offer promise for significant new reductions. New 
technological options are available to manufacturers of heavy-duty 
gasoline engines as well. The emerging technological potential for much 
cleaner highway heavy-duty engines is discussed further in Section VIII 
below.
    In addition, many engines used in highway trucks have similar 
counterparts that are used in certain nonroad equipment applications. 
The first emission control regulations covering these heavy-duty 
nonroad engines have been only recently established; these new 
standards are less stringent than current standards for similar heavy-
duty engines intended for highway use. A strong potential exists for 
current highway engine emission control technology to be applied in 
many cases to heavy-duty nonroad engines (even though differences in 
application and usage complicate direct translation of the technology), 
representing a future avenue for additional mobile source emission 
reductions.
    Recognizing the need for additional NOX (and PM) control 
measures at the national level to address air quality concerns in a 
number of parts of the country and the growing contribution of the 
heavy-duty engine sector to ozone (and PM) problems, EPA recently held 
a series of discussions with the California Air Resources Board (CARB) 
and representatives of the heavy-duty engine manufacturing industry. 
The purpose of these discussions was to exchange views on the 
appropriateness and feasibility of new emission standards for heavy-
duty engines. Based on these discussions, a Statement of Principles 
(SOP) regarding highway heavy-duty engines has been signed by these 
parties.
    The SOP is described in more detail in Section VII of this notice 
and is attached as an Appendix. It addresses NOX, PM, and NMHC 
standards for highway heavy-duty engines starting in model year 2004, 
the important role that fuel may play in achieving these standards, a 
procedure to reevaluate the appropriateness of these standards in 1999, 
the intent of the parties to undertake development of a joint industry/
government research program aimed at meeting and exceeding the NOX 
and PM levels discussed in the SOP, and the intent of the parties to 
continue discussions with others with the goal of signing a similar SOP 
with respect to nonroad heavy-duty engines. Other important elements of 
the SOP are also discussed in Section VII.
    The main purposes of today's ANPRM are to provide an early focus 
for an open and comprehensive discussion of the issues involved in 
achieving additional emission reductions from heavy-duty engines and to 
make the SOP available to the public for comment on specific 

[[Page 45582]]
emission reductions from highway heavy-duty engines.4 The rest of 
the ANPRM is organized as follows: Section II summarizes the public 
health and welfare needs for this initiative and trends in overall 
nationwide NOX, VOC, and PM emissions; Section III describes the 
contribution of HDEs to overall emissions; Section IV summarizes the 
need for control of heavy-duty engines; Section V provides the history 
and status of highway heavy-duty engine emission standards; Section VI 
summarizes a range of requests for action that EPA has received to 
date; Section VII reviews the development and content of the Statement 
of Principles; Section VIII discusses some approaches to highway HDE 
emission control; and Section IX describes EPA's plans for involving 
the public in the upcoming rulemaking process. The complete text of the 
Statement of Principles is included as an Appendix to today's Notice.

    \4\ Also, in a letter to certain organizations related to clean 
air issues in California, EPA agreed that it would issue an ANPRM 
regarding national standards for highway HDEs.
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II. Health Concerns and Air Quality Issues: NOX, VOC, Ozone, 
and Particulate Matter

A. Health and Environmental Effects Related to NOX, VOC, and Ozone 
5

    \5\ Information cited in this section and other related 
information on health effects of NOX, VOC and Ozone are 
available from Docket A-95-27.
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    Oxides of nitrogen comprise a family of highly reactive gaseous 
compounds that contribute to air pollution in both urban and rural 
environments. Because NOX emissions are produced during the 
combustion of fuels at high temperatures, the primary sources of 
atmospheric NOX include both stationary sources, such as power 
plants and industrial boilers, and mobile sources, such as light- and 
heavy-duty vehicles as well as construction, agricultural, and other 
nonroad equipment. NOX is directly harmful to human health and the 
environment, contributes to particulate pollution, and plays a critical 
role in the formation of atmospheric ozone. The current primary 
(health-based) and secondary (welfare-based) national ambient air 
quality standards (NAAQS) for NO2 are both set at a concentration 
of 0.053 parts per million (ppm), on an annual average.
    Exposure to NO2 can reduce pulmonary function and increase 
airway irritation in healthy subjects as well as people with pre-
existing pulmonary conditions. In children, exposure to NO2 at or 
near the level of the ambient standard appears to increase the risk of 
respiratory illness.6 NOX and its transformation products 
(e.g., nitric acid, peroxyacetyl nitrate (PAN) and nitrate particles) 
also contributes to a number of adverse environmental impacts such as 
the overgrowth of algae and oxygen depletion (eutrophication).7 
NOX and its products contribute to acid rain, which affects both 
terrestrial and aquatic ecosystems, including acidification of surface 
waters, reduction in fish populations, damage to forests and associated 
wildlife, soil degradation, damage to materials, monuments, buildings, 
etc., and reduced visibility.8

    \6\ Air Quality Criteria Document for Oxides of Nitrogen, EPA-
600/8-91/049aF-cF, August 1993 (NTIS #: PB92-17-6361/REB,-6379/REB-
6387/REB).
    \7\ Deposition of Air Pollutants Into the Great Waters: First 
Report to Congress, EPA-453/r-93-055, May 1994.
    \8\ ``Acid Deposition Standard Feasibility Study, A Report to 
Congress,'' prepared for the U.S. Environmental Protection Agency by 
the Cadmus Group, Inc., under Contract Number 68-D2-0168, February 
1995.
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    NOX is also a primary precursor to atmospheric ozone 
(O3). (Volatile organic compounds (VOC), composed of a very large 
number of different hydrocarbons (HC) and other organic compounds, are 
also primary precursors to ozone. Their effects as a class of compounds 
on health are generally considered in terms of ozone health effects; 
health implications of individual toxic compounds are not separately 
addressed in this Notice.) The rate of ozone creation depends on highly 
complex interactions between VOCs and NOX in the presence of 
sunlight. However, in areas with high VOC to NOX ratios, which 
includes most of the area covering the eastern United States, ozone 
formation is NOX limited, and NOX reductions will reduce 
ozone levels. Areas with lower VOC to NOX ratios (particularly the 
core of many large highly urbanized nonattainment areas) are VOC 
limited and NOX emissions will interact with ozone to reduce ozone 
levels. However, in NOX limited areas, downwind of these same 
areas, NOX reductions will reduce ozone levels.
    Ozone is a highly reactive chemical compound which can affect both 
biological tissues and man-made materials. Ozone can affect human 
pulmonary and respiratory health--symptoms include chest pain, 
coughing, and shortness of breath.9 Studies, to date, indicate 
that at the current standard these effects are reversible when exposure 
stops.

    \9\ Air Quality Criteria Document for Ozone and Related 
Photochemical Oxidants (External Review Draft), EPA-600/AP-93/004a-
c, February, 1995 (NTIS #: PB94-17-3127, -3135, -3143).
    The presence of elevated levels of ozone is of concern in rural 
areas as well. Because of its high chemical reactivity, ozone causes 
damage to vegetation. Estimates based on experimental studies of the 
major commercial crops in the U.S. suggest that ozone may be 
responsible for significant agricultural crop yield losses. In 
addition, ozone causes noticeable leaf damage in many crops, which 
reduces marketability and value. Finally, there is evidence that 
exposures to ambient levels of ozone which exist in many parts of the 
country are also responsible for forest and ecosystem damage. Such 
damage may be exhibited as leaf damage, reduced growth rate, and 
increased susceptibility to insects, disease, and other environmental 
stresses and has been reported to occur in areas that attain the 
current standard. There are complexities associated with evaluating 
such effects due to the wide range of species and biological systems 
introduce significant uncertainties.

B. Health and Other Effects Related to Particulate Matter 10

    Air pollutants collectively called particulate matter (PM) include 
dust, dirt, soot, smoke and liquid droplets directly emitted into the 
air by sources such as factories, power plants, cars, trucks, 
woodstoves/fireplaces, construction activity, forest fires, 
agricultural activities such as tillage, and natural windblown dust. 
Particles formed secondarily in the atmosphere by condensation or the 
transformation of emitted gases such as SO2, NOX, and VOCs 
are also considered particulate matter.

    \10\ Information cited in this section and other related 
information on the health effects of particulate matter are 
available for the public from Docket A-95-27.
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    Based on studies of human populations exposed to high 
concentrations of particles (sometimes in the presence of SO2), 
and laboratory studies of animals and humans, there are major human 
health concerns associated with PM. These include deleterious effects 
on breathing and respiratory systems, aggravation of existing 
respiratory and cardiovascular disease, alterations in the body's 
defense systems against foreign materials, damage to lung tissue, 
carcinogenesis, and premature death. The major subgroups of the 
population that appear to be most sensitive to the effects of 
particulate matter include individuals with chronic obstructive 
pulmonary or cardiovascular disease, 

[[Page 45583]]
those with influenza, asthmatics, the elderly, and children. 
Particulate matter also soils and damages materials, and fine particles 
are a major cause of visibility impairment in the United States.11

    \11\ Air Quality Criteria for Particulate Matter (External 
Review Draft), EPA-600/AP-95/001a-c, April 1995 (NTIS #PB95-22-1727, 
-1735, -1743).
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C. Need for NOX and VOC Control; Ozone and Other Air Quality 
Management Issues

    States are obligated under the Clean Air Act to submit State 
Implementation Plans (SIPs) demonstrating how each nonattainment area 
will reach attainment of the ozone NAAQS. For nonattainment areas 
designated as serious or worse, this obligation involves the use of 
photochemical grid modeling (e.g., Urban Airshed Modeling, or UAM) for 
each nonattainment area. Although these attainment demonstrations were 
due November 15, 1994, the magnitude of this modeling task, especially 
for areas which are significantly affected by transport of ozone and 
precursors generated outside of the nonattainment area, has delayed 
many states in submitting complete modeling results.
    Recognizing these challenges, EPA recently issued guidance on ozone 
demonstrations,12 based on a two-phase approach for the submittal 
of ozone SIP attainment demonstrations. Under the first phase, the 
state is required to submit a plan implementing a set of specific 
control measures to obtain major reductions in ozone precursors along 
with limited UAM modeling. The second phase includes a two-year process 
during which EPA, the states, regional associations, and other 
interested parties can improve emission inventories and modeling and 
better assess regional and local impacts and control strategies on 
ozone attainment. These analyses are then to be used by states as their 
basis for demonstrating ozone attainment plans in their phase II SIPs.

    \12\ Memorandum from Mary D. Nichols, Assistant Administrator 
for Air and Radiation, to EPA Regional Administrators, re Ozone 
Attainment Demonstrations, March 2, 1995.
    Modeling results already available and the need for two-phased 
ozone attainment plans highlight the fact that ozone pollution is a 
regional problem, not simply a local or state problem. Ozone itself and 
its precursors are transported long distances by winds and 
meteorological events. Thus, achieving ozone attainment for an area and 
thereby protecting its citizens from ozone-related health effects often 
depends on the ozone and/or precursor emission levels of upwind areas. 
Local stationary source NOX and VOC controls will assist 
nonattainment areas toward their ozone reduction goals, but for many 
areas with persistent ozone problems, attainment of the ozone NAAQS 
will require broader control strategies for both NOX and VOC. As a 
result, effective national ozone control requires an integrated 
strategy which combines cost-effective approaches in both the mobile 
and stationary source arenas at both the local and national levels.
    The rate of ozone creation depends on highly complex interactions 
between VOCs and NOX in the presence of sunlight. While regional 
concentrations and transport of precursor pollutants have a significant 
role in determining the rate of ozone production in many areas, local 
conditions are also important and may be predominant factors in some 
cases. Generally, the formation of ozone in locations with low VOC to 
NOX ratios tends to be VOC limited. Low VOC to NOX ratios are 
characteristic of the central core of many highly urbanized 
nonattainment areas, which may thus be dependent on VOC control for 
effective ozone reduction. On the other hand, in areas with higher VOC 
to NOX ratios, ozone formation is NOX limited, and NOX 
reduction strategies are required for effective ozone control. Such 
conditions occur over broad regions of the U.S., including many areas 
downwind of large urban centers. As concluded in a recent report by the 
National Research Council (NRC), ``the optimal set of controls relying 
on VOCs, NOX, or, most likely, reductions of both, will vary from 
one place to the next.'' 13

    \13\ National Research Council. Rethinking the Ozone Problem in 
Urban and Regional Air Pollution. National Academy Press, 
Washington, D.C., 1991.
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    While both NOX and VOC emissions are subject to various 
stationary and mobile source regulations, VOCs have often been the 
primary focus of past ozone abatement strategies, and specific air 
quality issues regarding NOX emissions have received somewhat less 
attention. Accordingly, the next sections describe some of the key 
regional ozone and other air quality problems around the country for 
which additional NOX controls will be beneficial.
1. Eastern United States
    There is a growing body of evidence that reduction of regional 
ozone levels holds the key to the ability of a number of the most 
seriously polluted areas in the Eastern United States, in both the 
Southeast and the Northeast, to meet the ozone NAAQS. Regional Oxidant 
Modeling (ROM) studies conducted by EPA (called the ROMNET and Matrix 
studies 14) strongly suggest that reducing NOX emissions is 
the most effective approach for reducing ozone over large geographical 
areas. (In contrast, as described below, local NOX controls may or 
may not be helpful in individual nonattainment areas.) At the same 
time, these studies, as well as ongoing UAM modeling by states, suggest 
that reduction in VOC emissions may be key to reducing locally 
generated peak ozone concentrations. Additional NOX control will 
also contribute to addressing the problems of year-round NOX 
deposition in the Chesapeake Bay and other nitrogen-limited estuaries 
15 and acid rain in the eastern part of the country.

    \14\ See Regional Ozone Modeling for Northeast Transport 
(ROMNET), EPA Doc. EPA-450/4-91-002a (June 1991), and Chu, S.H., 
E.L. Meyer, W.M. Cox, R.D. Scheffe, ``The Response of Regional Ozone 
to VOC and NOX Emissions Reductions: An Analysis for the 
Eastern United States Based on Regional Oxidant Modeling,'' 
Proceedings of U.S. EPA/AWMA International Specialty Conference on 
Tropospheric Ozone: Nonattainment and Design Value Issues, AWMA TR-
23, 1993.
    \15\ Deposition of Air Pollutants Into the Great Waters: First 
Report to Congress, EPA-453/r-93-055, May 1994.
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    In its analysis supporting the approval of a Low Emission Vehicle 
program in the eastern and northeast states comprising the Ozone 
Transport Region (OTR),16 EPA reviewed existing work and performed 
new analysis to evaluate in detail the degree NOX controls are 
needed.17 These studies showed that 50-75 percent reductions in 
NOX from 1990 levels would be needed throughout the OTR. These 
studies also showed that 50-75 percent reductions in VOC would be 
needed in and near the portion of the OTR comprising the Northeast 
urban corridor. The studies also concluded that transport of ozone and 
precursors from upwind areas is a significant contributor to ozone 
exceedances downwind in essentially all nonattainment areas in the OTR.

    \16\ Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, 
Connecticut, New York, New Jersey, Pennsylvania, Delaware, Maryland, 
District of Columbia, and northern Virginia.
    \17\ Environmental Protection Agency, Low Emission Vehicle 
Program for Northeast Ozone Transport Region; Final Rule, 60 FR 
48673, January 24, 1995.
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    More recently, three new studies have become available which 
confirm the conclusions of the earlier studies. In one of these, the 
Agency performed new ROM analyses evaluating the eastern third of the 
U.S. and southern Canada.18 

[[Page 45584]]
Taken together, these studies strongly support the view that NOX 
emission reductions in the range of 50-75 percent will be needed in 
each state in the OTR and VOC reductions in the range of 50-75 percent 
will be needed in and near the Northeast urban corridor to reach and 
maintain attainment.

    \18\ Environmental Protection Agency, ``Summary of EPA Regional 
Oxidant Model Analyses of Various Regional Ozone Control 
Strategies,'' November 28, 1994; Kuruville, John et al., ``Modeling 
Analyses of Ozone Problem in the Northeast,'' prepared for EPA, EPA 
Document No. EPA-230-R-94-108, 1994; Cox, William M. and Chu, Shao-
Hung, ``Meteorologically Adjusted Ozone Trends in Urban Areas: A 
Probabilistic Approach,'' Atmospheric Environment, Vol. 27B, No. 4, 
pp 425-434, 1993.
2. Other Regions
    A recent Southern Oxidant Study (SOS) report 19 describes the 
results of research showing that, in the south, relatively high 
concentrations of ozone accumulate in both rural and urban areas. 
Although the rural ozone levels tend to be lower than in urban areas, 
and are generally in compliance with the current ozone NAAQS, the rural 
ozone concentrations are still high enough to inhibit photosynthesis, 
thus reducing agricultural yields and causing damage to forests and 
ornamental plants.

    \19\ The State of the Southern Oxidant Study (SOS): Policy-
Relevant Findings in Ozone Pollution Research, 1988-1994. North 
Carolina State University, April 1995.
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    These rural concentrations of ozone and its precursors create a 
relatively high ozone background on which the ozone plumes from 
stationary and area sources in urban areas are superimposed. As a 
result, modeling in the Atlanta metropolitan area, designated as a 
serious ozone nonattainment area, suggests that a 90 percent decrease 
in NOX emissions will be required to achieve the current NAAQS in 
Atlanta.
    Modeling studies performed to date for the states surrounding Lake 
Michigan (Wisconsin, Illinois, Indiana, and Michigan) indicate that 
reducing ozone transported into this region has a significant effect on 
the number and stringency of local control measures likely to be needed 
to meet the ozone NAAQS. Without such reductions, these studies suggest 
that the necessary degree of local control will be very difficult to 
achieve. The EPA Matrix study referenced above also indicates that 
NOX control will be effective in reducing regional ozone in the 
Midwest. This suggests that new reductions in NOX emission will be 
helpful in meeting the NAAQS in the Lake Michigan area, even though 
NOX control in the immediate vicinity of and within major 
nonattainment areas near Lake Michigan do not appear to contribute to 
attainment in these areas.
    The ozone SIP that the State of California has submitted to EPA for 
approval relies on NOX and VOC reductions for most California 
nonattainment areas to demonstrate compliance with the NAAQS. 
Specifically, the revised SIP projects that the following NOX 
reductions will be required: South Coast, 59 percent; Sacramento, 40 
percent; Ventura, 51 percent; San Diego, 26 percent; and San Joaquin 
Valley, 40 percent. For VOC, the required reductions will be the 
following: South Coast, 79 percent; Sacramento, 38 percent; Ventura, 48 
percent; San Diego, 26 percent; and San Joaquin Valley, 40 percent. 
Transported ozone and precursor emissions are also an important factor 
in California's need for additional NOX controls.20

    \20\ In addition, the revised SIP concludes that secondary 
formation of nitrate particulate from NOX (primarily ammonium 
nitrate) contributes to the particulate problem in the South Coast 
Air Basin and the San Joaquin Valley. Reduction of this fraction of 
the total PM will require additional NOX emission reductions.
---------------------------------------------------------------------------

    The Agency requests comment on these studies and the application of 
their findings to the planned actions in this Notice as well as any 
additional data or analysis that would inform any future actions.
4. Waivers of Local Stationary Source NOX Control Requirements
    In some cases, states with nonattainment areas subject to NOX 
Reasonably Available Control Technology (RACT) requirements for 
stationary sources have petitioned EPA for a waiver from these 
requirements. EPA guidance on such waivers provides that waivers may be 
granted if states show that reducing NOX in a nonattainment area 
would not contribute to attainment of the ozone NAAQS within the same 
nonattainment area.21 EPA's policy is to limit the assessment of 
the petitions to the effect that NOX reductions within a 
nonattainment area have on that specific area's ability to meet the 
NAAQS (i.e., an assessment of pollutant transport outside the area is 
not made). EPA has separate authority under the CAA to require a state 
to reduce emissions from sources where there is evidence showing that 
such emissions would contribute significantly to nonattainment or 
interfere with maintenance of attainment in other states.

    \21\ ``Section 182(f) Nitrogen Oxides (NOX) Exemptions-- 
Revised Process and Criteria,'' EPA Memo from John S. Seitz, 
Director, OAQPS, to Regional Air Directors, February 8, 1995.
---------------------------------------------------------------------------

    EPA's approval of a NOX exemption is granted on a contingent 
basis.22 That is, a monitoring-based exemption lasts for only as 
long as the area's monitoring data continue to demonstrate attainment 
and a modeling-based exemption lasts for only as long as the area's 
modeling continue to demonstrate attainment without NOX reductions 
from major stationary sources.23

    \22\ ``Section 182(f) Nitrogen Oxides (NOX) Exemptions-- 
Revised Process and Criteria,'' EPA Memo from John S. Seitz, 
Director, OAQPS, to Regional Air Directors, May 27, 1994.
    \23\ NOX Supplement to the General Preamble, 57 FR 55628 
(Nov. 25, 1992).
---------------------------------------------------------------------------

    Given these circumstances, EPA's approval of NOX waivers for 
certain areas should not be viewed as contradictory to the 
consideration of regional and national measures to reduce NOX 
emissions. As discussed above, new regional and/or national NOX 
controls are needed to obtain the NAAQS designed to protect the public 
health.
5. National NOX and VOC Emissions Trends 24

    \24\ For today's notice, EPA has assembled data available to 
date projecting emissions from various sources into the future. The 
data comes from the EPA ``Trends Document'' (National Air Pollutant 
Emission Trends, 1900-1993, EPA-454/R-94-027, October 1994), MOBILE5 
emissions modeling, and work performed under EPA's contract with 
E.H. Pechan and Associates. EPA expects to continue to revise and 
improve its projections of emissions and will discuss and rely on 
such updated information in future rulemakings.
---------------------------------------------------------------------------

    Figure 1 displays projected total NOX emissions over the time 
period 1990 to 2020 as well as stationary and mobile source components 
over the same period. Figure 2 presents similar data for VOC emissions 
for the period 1990 to 2010 (later-year projections for VOC are under 
development).25 As the figures show, a similar pattern is 
projected for both of these ozone precursor emissions. Initially, the 
projections indicate that the national inventories will decrease over 
the next few years as a result of continued implementation of existing 
CAA stationary and mobile-source NOX control programs. After the 
year 2000, however, as the implementation of new CAA programs is 
completed and the 

[[Page 45585]]
pressure of growth continues, these downward trends are expected to 
reverse, and national VOC and NOX emissions are both expected to 
rise again.

    \25\  The data in these and the succeeding figures in this ANPRM 
take into account the expected effects of various CAA control 
programs which have been promulgated to date, including Tier I 
tailpipe standards, new evaporative emission test procedures, 
enhanced inspection and maintenance requirements, reformulated 
gasoline, oxygenated fuels, and California LEV (Low Emission 
Vehicle) requirements. Nonroad NOX emission projections also 
reflect the future effects of existing nonroad emission regulations. 
The potential effects of contemplated National LEV requirements are 
not reflected in the data. In these figures, nonroad emission data 
includes emissions from a broad range of off-highway sources 
including, locomotives, aircraft and marine vessels.
---------------------------------------------------------------------------

    Figures 1 and 2 present emissions data for the entire country. In 
nonattainment areas, the fraction of NOX and VOC total emissions 
contributed by mobile sources on average is greater than in the 
nationwide assessment and is in excess of the stationary source 
contribution.

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D. Need for PM Control; PM Air Quality Issues and Emission Trends

    The overwhelming proportion of PM-10 emissions is created by wind 
erosion, accidental fires, fugitive dust emissions (from road surfaces, 
agricultural tilling, construction sites, etc.), and other 
miscellaneous sources. As much as 85 percent of PM-10 in nonattainment 
areas can be composed of these ``crustal'' and miscellaneous materials. 
Since these sources are not readily amenable to regulatory standards 
and controls, when considering the need for PM controls it is 
appropriate to focus on the ``controllable'' portion of the particulate 
pollution problem. The result is shown in Figure 3, which displays 
national trends in PM-10 levels from stationary and mobile sources, 
projected for the twenty year period 1990 to 2010. Similar to the 
pattern discussed above for VOC and NOX emissions, the figure 
shows that total PM from these sources will decline slightly as the 
beneficial effects of the 1990 CAA Amendments continue to be felt. 
However, in the absence of additional controls, mobile source and 
industrial source emissions of PM-10 levels are expected to rise after 
2000.

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    Currently, there are 44 PM-10 nonattainment areas in 18 states. 
More generally, diesel emissions contribute significantly to higher 
than average PM levels that tend to occur in high-population, high-
traffic urban settings. These areas frequently have elevated ambient 
levels of other air pollutants as well. To the extent that higher PM 
exposures result from these factors, control of PM emissions from 
diesel engines could be expected to provide public health and welfare 
benefits for a relatively large number of individuals.

III. Contribution of Heavy-Duty Engines to National NOX, VOC, 
and PM Emissions

    Heavy-duty highway and nonroad engines contribute significantly to 
levels of NOX and are also an important source of VOC (as a result 
of HC emissions) and PM in most parts of the country. This section 
describes the current and expected future role of HDEs in contributing 
to the nation's major air pollution problems.

A. HDE Contribution to National NOX Emissions

    Figure 4 shows the total mobile source NOX inventory by 
emission source (light-duty highway vehicles, heavy-duty highway 
vehicles, and nonroad engines), projected over the next 25 years.

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B. HDE Contribution to National VOC Emissions

    Figure 5 shows the total mobile source VOC inventory by emission 
source. The figure shows that light-duty vehicle emissions can be 
expected to decline for some years but then begin rising in the 2005 
time frame. VOC emissions from highway heavy-duty engine and nonroad 
sources are projected to rise slightly throughout this period.

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C. HDE Contribution to National PM Emissions

    Projected mobile source trends for PM-10 are shown in Figure 
6.26 The figure shows that, over the next 15 years, the 
contribution of highway sources including HDEs to PM-10 emissions are 
expected to decrease and then remain relatively constant well into the 
next decade, while PM emissions from nonroad sources are expected to 
increase.

    \26\ Environmental Protection Agency, ``National Air Pollutant 
Emission Trends, 1900-1993,'' EPA-454/4-94-027, October 1994.

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IV. The Need for New Heavy-Duty Engine Emission Control

    The Agency believes several factors combine to support rulemaking 
to reduce NOX, HC, and PM emissions from highway and nonroad 
heavy-duty engines in the next decade. First, HDE emission controls 
offer a means to address at the national level the need for new 
approaches to NOX, HC, and PM reductions that is described in 
Section II. As explained more fully above, local measures alone to 
control NOX, HC and PM will prove insufficient if all areas of the 
country are to achieve and maintain attainment of the ozone and PM 
NAAQS in the years ahead. Heavy-duty engines, like other mobile 
sources, represent an emissions source that crosses attainment areas 
and state boundaries; trucks and buses often travel long distances 
while nonroad heavy-duty engines power a variety of equipment used in 
both urban and rural areas, and are often relocated to different 
regions of the country as needed.
    Second, the projections in Section III above show that heavy-duty 
engines contribute in varying degrees to the national inventory of 
NOX, HC, and PM emissions.27 Third, an effort now to 
implement national HDE controls may prevent a patchwork of regulation 
where some states require HDE controls while other states do not. 
Indeed, engine manufacturers felt it was very important that the new 
program which EPA expects to propose regarding highway HDEs (see 
Section VII below) provide for the harmonization of requirements 
between EPA and CARB, resulting in a single set of heavy-duty standards 
applicable in all 50 states. A national program thus appears to offer 
the most efficient way for states, engine manufacturers, and EPA to 
implement additional HDE controls. Fourth, since states must soon 
finalize SIPs demonstrating attainment in the years ahead, action on 
additional HDE controls will allow states to incorporate the expected 
reductions from HDE controls in their SIPs.

    \27\ For PM emissions, the projections show that the mobile 
source contribution is growing; available data shows that heavy-duty 
highway and nonroad engines represent significant fractions of 
mobile source emissions.
---------------------------------------------------------------------------

    Fifth, with respect to highway HDEs, cost effective technology 
options now appear to be within reach which can achieve very large 
NOX emission reductions from new highway HDEs manufactured in 
model year 2004 and subsequent years (see Section VIII below for a more 
detailed discussion of this issue). The Agency is optimistic that, with 
continued investment in research and development by the highway HDE 
manufacturers, and with cooperation between EPA, CARB, the 
manufacturers, and the oil refining industry, technological barriers 
which have prevented NOX emissions from diesel HDEs from reaching 
levels characteristic of gasoline engines will be overcome. For the 
benefits of these NOX reductions to be realized to a significant 
degree in the next decade, the Agency believes that this work must 
begin soon.
    Finally, with respect to nonroad heavy-duty engines, EPA believes 
that there is the potential to apply current highway HDE emission 
control technology to many nonroad HDEs, providing an avenue for 
significant additional mobile source emission reductions. Only recently 
have the first emission controls been applied to heavy-duty nonroad 
engines, and standards are currently set at levels significantly higher 
than current highway heavy-duty engine standards. While control of some 
or all nonroad heavy-duty engines raises special issues such as the 
lack of a vehicle registration system and the potential difficulty of 
``packaging'' engines on a variety of equipment types, many engines 
used in highway trucks have similar counterparts that are used in 
nonroad equipment applications. It therefore makes sense to explore 
ways to apply highway HDE emission control technology to nonroad HDEs.
    The Agency is interested in comment on the role of NOX 
emissions in contributing to high ozone levels over broad areas and the 
need for national HDE controls to address NOX and ozone levels. In 
addition the Agency solicits comment on other approaches such as local 
and regional controls.

V. Background on Highway Heavy-Duty Engine Standards

    Under EPA's classification system, vehicles with a gross vehicle 
weight rating (GVWR) over 8,500 pounds are considered heavy-duty 
vehicles. (The State of California classifies the lighter end of EPA's 
heavy-duty class as ``medium-duty vehicles.'') Heavy-duty engines are 
used in a wide range of heavy-duty vehicle categories, from small 
utility vans to large trucks. Because one type of heavy-duty engine may 
be used in many different applications, EPA emission standards for 
heavy-duty vehicles are based on the emissions performance of the 
engine (and any associated aftertreatment devices) separate from the 
vehicle chassis. Testing of a heavy-duty engine consists of exercising 
the engine over a prescribed duty cycle of engine speeds and loads 
using an engine dynamometer.
    Emissions from heavy-duty engines are measured in grams of 
pollutant per brake horsepower-hour (g/bhp-hr) or, in more recent 
regulations, in grams per kilowatt hour (g/kw-hr). These units for 
emission rates recognize that the primary purpose of heavy-duty engines 
is to perform work and that there is a large variation in work output 
among the engines used in heavy-duty applications. Under this system, 
standards per unit of work are the same for all heavy-duty engines.
    Emission standards have been in place for highway diesel and 
gasoline heavy-duty engines since the early 1970s. The first 
regulations focused on control of emissions of smoke. Subsequent 
regulations broadened emission control requirements to include gaseous 
and particulate emissions. The 1990 amendments to the Clean Air Act 
required EPA to set more stringent standards for NOX emissions 
from all heavy-duty highway engines and for PM from buses. 42 U.S.C. 
7521(a)(3), 7521(f), 7554(b).
    The current exhaust emission standards for highway heavy-duty 
diesel and gasoline engines are presented in Table 1. Standards for 
``urban buses'' (large transit buses), which specify more stringent PM 
levels than those applying to other heavy-duty engines, are displayed 
separately in the table.

                                                                        

[[Page 45597]]
                                 Table 1.--Highway Heavy-Duty Emission Standards                                
----------------------------------------------------------------------------------------------------------------
                                                                                Oxides of            Diesel     
                Year                   Hydrocarbons (g/   Carbon Monoxide    nitrogen (g/bhp-   particulate (g/ 
                                           bhp-hr)           (g/bhp-hr)            hr)              bhp-hr)     
----------------------------------------------------------------------------------------------------------------
Diesel:                                                                                                         
    1991-93.........................                1.3               15.5                5.0               0.25
    1994-97.........................                1.3               15.5                5.0               0.10
    1998............................                1.3               15.5                4.0               0.10
Urban buses:                                                                                                    
    1991-92.........................                1.3               15.5                5.0               0.25
    1993............................                1.3               15.5                5.0               0.10
    1994-95.........................                1.3               15.5                5.0               0.07
    1996-97.........................                1.3               15.5                5.0              *0.05
    1998............................                1.3               15.5                4.0              *0.05
Gasoline:                                                                                                       
1991-97:                                                                                                        
    (A).............................                1.1               14.4                5.0                4.0
    (B).............................                1.9               37.1                5.0                4.0
1998:                                                                                                           
    (A).............................                1.1               14.4                4.0                3.0
    (B).............................                1.9               37.1                4.0               4.0 
----------------------------------------------------------------------------------------------------------------
Note: ``(A)'' denotes the standard for engines in trucks  14,000 lbs. GVWR.                          
``(B)'' denotes the standard for engines in trucks  14,000 lbs. GVWR.                                
*.07 g/bhp-hr in-use.                                                                                           


    Under Section 202(a)(3), emission standards for heavy-duty highway 
engines are set at the ``greatest degree of emission reduction 
achievable through the application of technology which the 
Administrator determines will be available for the model year to which 
such standards apply, giving appropriate consideration to cost, energy, 
and safety factors associated with the application of such technology'' 
(42 U.S.C. 7521(a)(3)(A)). In addition, Section 202(a)(3) provides that 
highway heavy-duty engine manufacturers will have four model years of 
lead time before any new emission standards may be implemented (42 
U.S.C. 7521(a)(3)(C)). The Act also provides that standards for heavy-
duty engines apply for at least three model years to provide stability 
to any heavy-duty standards. Id. Finally, the Act precludes new 
NOX emission standards for heavy-duty highway engines before the 
model year 2004. 42 U.S.C. 7521(b)(1)(C).

VI. Summary of Public Support for EPA To Take Action

    Several states, public interest groups and environmental 
organizations, trucking associations, and others have strongly 
encouraged EPA to pursue additional NOX, HC, and PM emissions 
reductions from HDEs through national programs. The Agency has received 
numerous letters encouraging EPA to move forward with a national 
program to reduce heavy-duty engine emissions. In December of 1994, 
several organizations including the American Lung Association and the 
Natural Resources Defense Council sent a letter to the EPA Assistant 
Administrator for Air and Radiation requesting that EPA tighten the 
heavy-duty engine standards to 0.05 g/bhp-hr for particulates and 2.0 
g/bhp-hr for NOX.28 Jim Edgar, Governor of Illinois, sent a 
letter to U. S. Senator Paul Simon in March of 1995, urging him to 
request that EPA implement national rules to reduce ozone precursor 
emissions from, among other sources, heavy-duty engines. The California 
Air Resources Board signed a Memorandum of Understanding with EPA in 
April, 1995 to undertake joint efforts in support of EPA's development 
of a national program for the control of NOX, PM, and HC emissions 
from heavy-duty engines. In addition, the ozone SIP submitted by the 
State of California relies on EPA to set national standards for highway 
heavy-duty engines at the level of 2.0 g/bhp-hr and requests such 
action. During May and June of 1995 the Administrator received letters 
from the State and Territorial Air Pollution Program Administrators/
Association of Local Air Pollution Control Officials (STAPPA/ALAPCO), 
the Northeast States for Coordinated Air Use Management (NESCAUM), and 
the Mid-Atlantic Regional Air Management Association (MARAMA) on behalf 
of their member states, requesting that EPA implement new national 
controls for heavy-duty engine emissions. The Northeast Ozone Transport 
Commission adopted a resolution on June 13, 1995 supporting EPA's 
efforts to control diesel engine emissions. EPA also received support 
for reducing the heavy-duty engine NOX standard from the 
Manufacturers of Emission Controls Association (MECA). On June 22, 
1995, the Appalachian Mountain Club, a conservation and recreation 
group with 65,000 members in eleven regional areas, sent a letter to 
the Administrator that supports EPA's initiative as critical for 
controlling ozone, PM, acid deposition, and regional haze in the 
Northeast. In addition to written requests, EPA has received numerous 
positive comments from concerned individuals, municipalities, and other 
organizations endorsing a new national control program to reduce 
emissions from heavy-duty engines.

    \28\ Copies of all letters cited and received to date can be 
obtained from Docket A-95-27, as described at the beginning of this 
Notice.
---------------------------------------------------------------------------

VII. Summary of Government/Industry Statement of Principles

    EPA initiated discussions with engine manufacturers, California's 
Air Resources Board (CARB), and others to begin to explore what 
additional controls could be implemented to further reduce emissions 
from heavy-duty engines. As a result of these discussions, EPA, 
individual members of the highway heavy-duty engine industry, and CARB 
have signed a Statement of Principles (SOP) regarding future highway 
HDE emission reductions. The manufacturer signatories 29 represent 
more than 95 percent of sales by the highway heavy-duty engine 
industry. With this SOP, presented in its entirety as an Appendix to 
this notice, the heavy-duty engine 

[[Page 45598]]
industry has stepped forward to become a leader in environmental 
protection, and industry and government will work as partners to bring 
about cleaner air. The following presents a summary of the key elements 
of this Statement of Principles.

    \29\ Caterpillar, Inc., Cummins Engine Company, Inc., Detroit 
Diesel Corporation, Ford Motor Company, General Motors Corporation, 
Hino Motors, Ltd., Isuzu Motors America, Inc., Mack Trucks, Inc., 
Mitsubishi Motors America, Inc., Navistar International, and Volvo 
Truck Corporation.
---------------------------------------------------------------------------

    The goal of all Signatories to the SOP is to reduce NOX 
emissions from highway HDEs to levels approximating 2.0 g/bhp-hr 
beginning in model year (MY) 2004, while also achieving reductions in 
HC. Accordingly, the Signatories concur that EPA would issue a notice 
of proposed rulemaking (NPRM) proposing to implement (1) a combined 
NOX plus non-methane hydrocarbon (NMHC) standard of 2.4 g/bhp-hr 
and (2) a combined NOX plus NMHC standard of 2.5 g/bhp-hr together 
with a NMHC cap of 0.5 g/bhp-hr, with flexibility for an engine family 
to comply with either of these standards as the manufacturer 
determines. The Signatories expect that these standards will result in 
emissions comparable to a NOX standard of 2.0 g/bhp-hr as well as 
reduced NMHC emissions. In order to facilitate the rulemaking process 
and solicit additional views, the SOP Signatories concur with EPA's 
desire to precede the issuance of the NPRM with this ANPRM.
    The Signatories acknowledge that fuel composition 30 has a 
significant effect on emissions, and commit to making improvements in 
HDE fuel as appropriate under the CAA to meet the MY2004 emission 
standards, taking into consideration costs and other relevant factors. 
The Signatories also recognize that any changes to both certification 
and commercial fuel specifications would have to become effective no 
later than October 2003 to ensure fuel availability at the time the 
MY2004 engine standards would go into effect.

    \30\ Representatives of the fuel industry are not parties to 
this agreement as noted above. EPA will continue to engage the fuel 
industry in discussions as we proceed to implement the SOP, 
including identifying formal ways to cooperate with all parties 
affected by potential heavy-duty engine changes.
---------------------------------------------------------------------------

    In accordance with the SOP, EPA would in 1999 review any rulemaking 
adopting the MY2004 standards by issuing a notice providing the 
opportunity for public comment on whether or not the MY2004 standards 
are technologically feasible and otherwise appropriate under the CAA. 
EPA would review the need, feasibility, and cost of the standards under 
the criteria imposed by the CAA, and would assess whether any fuel 
improvements that are needed to assist heavy-duty engines in complying 
with the MY2004 standards would be available nationwide by the 
appropriate date. After receiving public comment, EPA would take final 
Agency action. Depending on the results of EPA's review, the MY2004 
standards would remain at the levels described above or EPA would 
propose to adjust them. The Signatories expect any adjustment of the 
standards would not exceed (1) 2.9 g/bhp-hr NOX plus NMHC and (2) 
3.0 g/bhp-hr NOX plus NMHC with a proportional increase in the 
NMHC cap (to 0.6 g/bhp-hr), unless improvements to fuel quality are 
needed but not made.
    Both EPA and California recognize in the SOP the benefits of 
harmonizing state and federal regulations regarding highway HDEs. 
California confirms its intent to hold a public hearing regarding 
harmonization of its regulations for dynamometer-certified engines 
greater than 8500 lbs. GVWR with the federal regulations adopted under 
the SOP, provided such action would not compromise California's 
obligations to comply with state and federal law.
    Neither PM nor CO emission standards change under the SOP. Also, 
the SOP is premised on the assumption that EPA will not alter federal 
test procedures for heavy-duty highway engines. With respect to 
durability, the Signatories commit to work to develop appropriate 
measures which ensure that emission gains are maintained in-use.
    As part of the SOP, EPA and CARB commit to work cooperatively with 
industry to develop improved averaging, banking, and trading programs 
that will create more incentive for early introduction of cleaner 
engines. At a minimum EPA would, in the NPRM on the MY2004 standards, 
propose to eliminate any limitations on credit life, propose to 
eliminate all credit discounts, and solicit comment on the merits of 
allowing cross-fuel, cross-subclass, and cross-category credit 
exchanges, to the extent permitted under the CAA.
    A key purpose of the SOP is to provide the HDE industry with 
increased certainty and stability for their business planning. Without 
such certainty and stability, industry would not commit to the enormous 
investment that the SOP standards will require. EPA and CARB in turn 
acknowledge that industry will be making a commitment and investment 
that will require more than the minimum period of stability of three 
years set forth in the CAA.
    The SOP also outlines a plan to undertake a joint industry/
government research program with the goal of developing engine and fuel 
technologies which can meet and exceed the MY2004 standards. Pursuant 
to a separate research agreement, the SOP Signatories and possibly 
others will try to reduce NOX emissions to 1.0 g/bhp-hr and PM 
emissions to 0.05 g/bhp-hr while maintaining current highway diesel 
engine attributes such as performance, reliability, durability, safety, 
and efficiency.
    Finally, while the SOP focuses on highway HDEs, the SOP Signatories 
commit to participate in discussions with nonroad HDE and equipment 
manufacturers to develop a separate SOP by October 1995 addressing 
emission standards for nonroad HDEs.
    The SOP plan offers a flexible means of achieving a 50 percent 
reduction in NOX emissions from the 4.0 g/bhp-hr NOX standard 
that goes into effect beginning in model year 1998. Figure 7 shows the 
estimated national NOX inventory for highway heavy-duty engines 
with and without the potential control measures articulated in the SOP. 
These projections are based on preliminary analysis of available 
information and subject to revision as EPA continues to analyze such 
factors as the future growth and turnover of the heavy-duty fleet, in-
use emission performance, expedited or delayed introduction of new 
emission reduction technology and other factors.

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    For hydrocarbons, EPA expects the NMHC plus NOX standards in 
the SOP to be equivalent to about half or less of the current HC 
standards (1.3 g/bhp-hr for diesel engines and 1.1-1.9 g/bhp-hr for 
gasoline engines). Further, the standards ensure continued control of 
PM emissions from highway HDEs at current levels (0.1 g/bhp-hr), 
despite a tendency for PM emissions from diesel HDEs to increase when 
NOX emissions decrease. Ambient PM reductions may also result from 
the NOX emission reductions, since NOX contributes to 
secondary particulate.
    EPA will actively seek to work with both the Signatories to the SOP 
and the oil refining industry to evaluate the role of fuel improvements 
in achieving the MY2004 standards. EPA believes the joint industry/
government research program with the goal of achieving highway HDE 
emissions of just 1.0 g/bhp-hr NOX and 0.05 g/bhp-hr PM offers an 
unusual opportunity to work collaboratively for the benefit of the 
environment. EPA will also continue discussions with the Signatories 
and others with the aim of achieving an SOP on nonroad heavy-duty 
engines comparable to this SOP regarding highway heavy-duty engines.

VIII. Approaches to Highway Heavy-Duty Engine Emission Control

    Highway heavy-duty engine manufacturers are engaged in ongoing 
efforts to design and produce the cleaner engines envisioned in the 
SOP. As with any motor vehicle engine technology, control of emissions 
from heavy-duty highway engines can come from changes in the design of 
engines and related hardware, changes to fuels, or some combination of 
the two. While EPA and the engine manufacturing industry are not yet 
certain which types of technologies in which combinations might be 
necessary for manufacturers to reach the standards under consideration, 
several promising approaches have been identified to date. EPA has 
prepared a document that describes the causes of highway HDE emissions 
and several engine-based approaches and exhaust aftertreatment devices 
to control emissions. This document is available in Docket A-95-27.
    Changes in engine technology or aftertreatment which can reduce HC, 
NOX and PM emissions must be evaluated with respect to, and bear a 
close relationship to, the fuel composition the engines will be using. 
The petroleum industry has changed fuels a number of times in the past 
either to reduce the emissions from existing vehicles (e.g., gasoline 
volatility, reformulated gasoline) or to make it possible for engine 
manufacturers to employ new engine designs or emission control 
technologies that are sensitive to fuel characteristics (e.g., unleaded 
gasoline to facilitate the use of catalytic converters, low-sulfur 
diesel). EPA intends to work jointly with the petroleum industry and 
the highway HDE manufacturers to develop emission and cost data to help 
EPA assess the potential role of fuel changes in achieving the 
standards set forth in the SOP (Section VII above). EPA request comment 
on the planned approach for assessing the potential role of fuels. In 
addition, engines designed to use non-petroleum alternative fuels may 
provide another avenue for manufacturers to comply with more stringent 
standards.
    EPA is interested in exploring programs and approaches which have 
the potential to help achieve the goals of the planned regulatory 
program in the most effective ways, including cost considerations. The 
Agency expects to continue a broad and open discussion of such 
potential approaches. The sections below briefly discusses an initial 
set of ideas which may improve this program; EPA solicits comments on 
these ideas and encourages suggestions for others.

A. In-Use Emissions Control Elements

    Historically, EPA has viewed in-use emissions deterioration as a 
problem associated more with gasoline engines than diesel engines. EPA 
believes that deterioration of emissions for diesel engines, especially 
NOX, has tended to be less than that of gasoline engines because 
diesel engines currently use fewer aftertreatment or other devices 
susceptible to in-use degradation. Diesel engine emissions standards 
have historically been met mainly through overall improvements to the 
engine and fuel system. These improvements have provided performance, 
fuel economy, and durability benefits as well.
    As standards are reduced and diesel HDE manufacturers introduce new 
technologies such as catalysts and exhaust gas recirculation (EGR) 
solely for emissions control purposes, long-term emissions performance 
becomes a greater concern. The controls may not function as long as the 
engines and there may be little incentive for vehicle owners to conduct 
the repairs on these items needed to ensure emissions control during 
the very long life of the engines. The HDE engine market has demanded 
longer-lasting engines, and manufacturers have been successful in 
increasing engine life. It has been brought to EPA's attention that 
some current engines accumulate in excess of 600,000 miles before the 
first rebuild and are often rebuilt many times; the current regulatory 
``useful life'' is 290,000 miles. Failure of emissions controls early 
in the engine's life would offset much of the benefit associated with 
the expected more stringent standards.
    Programs which encourage manufacturers to design and build engines 
with very durable emission controls and programs to encourage the 
proper maintenance and repair of engines and emissions controls are 
important in achieving the full benefit of emissions standards. The 
goal is for engines to maintain ``new'' engine performance throughout 
their in-use operation. EPA is considering changes to current 
manufacturer emissions durability-related programs to further encourage 
the design and production of durable emission control systems. Possible 
changes include extending the period over which manufacturers are 
responsible for meeting emissions standards (the ``useful life'') and 
adjusting the regulations relating to the emission-related maintenance 
that is required of owners by manufacturers to maintain the engine's 
emissions warranty. EPA is also interested in exploring a program where 
manufacturers would perform in-use compliance testing and could take 
advantage of an averaging, banking, and trading program to help achieve 
in-use compliance. Under such a program, manufacturers would test a set 
percentage of their in-use engine families each year and could 
potentially generate emission credits (or take on liabilities) 
depending on the results of in-use tests relative to the Family 
Emission Limits established for the engine families involved. EPA 
believes such a program could offer a cost-effective means of achieving 
better assurance that standards are being met in-use.
    Proper maintenance and repairs are likely to be important for 
durable emissions controls, especially for engines designed for a 
million or more miles. Therefore, EPA is also interested in approaches 
that involve increased responsibility of the vehicle owner. One 
approach EPA is considering and on which it invites comment is whether 
the incorporation of onboard diagnostic systems for emissions 
monitoring into heavy-duty engine designs would be appropriate. With 
the increasing availability of sophisticated computer controls, there 
is a potential to monitor emission control performance and components. 
EPA is also considering establishing requirements relating to the 
rebuilding of HDEs as a way of ensuring 

[[Page 45601]]
that engines and emission controls remain in their proper working 
condition throughout their full operating life. See 42 U.S.C. 
7521(a)(3)(D).
B. Elements to Add Compliance Flexibility

    EPA desires to implement any new regulatory programs in ways that 
minimize the complexity and cost of compliance and maximize flexibility 
for the regulated industry in complying with the requirements. EPA's 
chief goal with such approaches would be to encourage the early 
introduction of cleaner engines whenever possible. EPA may explore a 
number of options for increasing flexibility to comply with more 
stringent emissions standards for highway HDEs. The following presents 
some of the ideas that EPA may consider.
    Averaging, Banking and Trading Program. Currently, an averaging, 
banking, and trading (ABT) program is in place for heavy-duty highway 
engines which allows heavy-duty highway engine manufacturers to average 
the emissions of their various engine families and to generate credits 
when they introduce cleaner engine families than are required by law. 
Under this program, a manufacturer may choose to certify an engine 
family slightly higher or lower than the standard so long as the 
average emission level for all engine families produced by the 
manufacturer is at or below the standard. Credit for selling engines 
that are cleaner than is required can be used immediately, ``banked'' 
for later use, or traded to another manufacturer.
    Along with the standards discussed above, EPA expects to propose an 
expanded ABT program that would apply for these new standards. Because 
exceeding the requirements of the standards under consideration will be 
very challenging, EPA will propose revisions to the current program 
which are expected to encourage aggressive emission control development 
efforts on the part of manufacturers and the early implementation of 
new technology. EPA will propose changes to the ABT program which would 
eliminate the discounting of credits over time and would extend the 
life of the credits indefinitely. EPA will also seek comment on other 
changes to the ABT programs such as trading between highway and nonroad 
engines, among the four heavy-duty diesel subclasses, and between 
heavy-duty diesel and gasoline engines, to the extent permitted under 
the Act. Such approaches could be difficult to develop in an equitable 
way given the very different emissions characteristics of these engine 
types and the fact that the manufacturers' product lines vary.
    Non-Conformance Penalties. In addition to the ABT program described 
above, another existing program which serves to increase the 
flexibility for manufacturers of heavy-duty highway engines facing new 
emission standards is non-conformance penalties (NCPs). The Clean Air 
Act (Section 206(g)) requires EPA to allow a heavy-duty engine 
manufacturer to receive a certificate of compliance for an engine which 
exceeds the standard (but does not exceed an upper limit) if the 
manufacturer pays an NCP established by EPA through rulemaking. NCPs 
increase periodically to discourage long-term nonconformance. EPA 
expects to consider establishing NCPs related to the new heavy-duty 
emission standards that EPA plans to propose.
    Incentive-Based Approaches. EPA is aware of several program 
initiatives that could potentially supplement the emission reductions 
from improved design of new heavy-duty engines. Some of these are 
described briefly in the following paragraphs. EPA encourages these 
activities, and in some cases will be supporting their development. Any 
actions to develop these initiatives, however, will progress in 
parallel with the planned rulemaking to revise highway heavy-duty 
engine emission standards, rather than being incorporated into that 
rule directly.
    Incentive-based approaches to emission control generally seek to 
provide some credit or reward to encourage businesses to make voluntary 
changes in operations or procedures to reduce air emissions. In the 
case of heavy-duty engines, EPA desires incentives that would encourage 
early introduction of cleaner engines. The ongoing effort to establish 
these policies must focus on designing a program to ensure that a 
business's emission reductions are voluntary, quantifiable, and 
enforceable. Open market trading, which is currently under development 
by EPA, could be designed to include the credits generated under these 
programs.
    One potential incentive program would encourage fleets to buy 
cleaner truck engines earlier than required or buy cleaner engines than 
otherwise required and make these credits available as Mobile Emissions 
Reduction Credits. Another idea is to design a program to encourage 
truck fleet owners to accelerate the turnover of their fleets to newer 
engines. Typically, this would involve an encouragement to scrap old 
engines and purchase new lower-emitting engines. Another possibility is 
to rebuild heavy-duty engines with upgraded components so the ``new'' 
engine has the emission control capability of a more recent model year.
    Other Approaches. Changes to vehicle operation may also reduce 
emissions. For example, trucks are frequently allowed to idle for 
several hours to power accessories such as air conditioners during 
extended stops. The potential for electrical hookup at truck stops, 
rest areas, etc., in combination with changes to engine and vehicle 
designs, could reduce the contribution of extended idling to engine 
emissions without inconveniencing drivers. Similarly, a program to 
limit the operating speeds of heavy-duty vehicles, through engine 
design or other changes, would reduce the excess NOx emissions caused 
by vehicle operation at high speeds. The reduced fuel consumption 
associated with these measures would represent a secondary benefit to 
fleet owners.
    Finally, EPA is working with the freight transportation industry to 
identify potential infrastructure or regulatory changes that could 
increase system efficiencies. Any move to improve the efficiency of 
freight transportation, while reducing costs to industry, would reduce 
emissions by decreasing the total mileage driven by heavy-duty trucks.

IX. Public Participation

    EPA intends for this Notice to provide the basis for the beginning 
of a broad-based public discussion of the issues surrounding more 
stringent standards for heavy-duty highway engines presented in the 
Statement of Principles signed by EPA, CARB, and heavy-duty engine 
manufacturers. Specifically, the Agency requests comment on the need 
for heavy-duty engine controls, the proposed timing for Agency action, 
and on whether the standards and other regulatory provisions planned in 
the SOP are reasonable and appropriate. EPA also requests comment on 
the planned approach for dealing with fuels. The Agency requests 
comment on the plan and need to pursue nonroad heavy-duty engine 
standards through cooperative discussions with engine and equipment 
manufacturers and CARB. The Agency also requests any emissions data, 
technical information, or analyses of technical feasibility which can 
be used to inform the planned actions. Finally, the Agency requests 
comment and information on the economic feasibility, including cost 
considerations for the planned actions.
    EPA expects to issue a Notice of Proposed Rulemaking in the near 
future 

[[Page 45602]]
proposing new emission standards for highway heavy-duty engines in 
accordance with the SOP. The Agency is committed to a full and open 
regulatory process and looks forward to input from a wide range of 
interested parties as the rulemaking process develops. These 
opportunities will likely include meetings and workshops in addition to 
the minimum required process involving a formal public comment period 
and a public hearing. EPA encourages all interested parties to become 
involved in this process as it develops.

X. Statutory Authority

    Section 202(a)(3) authorizes EPA to establish emissions standards 
for new heavy-duty motor vehicle engines. See 42 U.S.C. 7521(a)(3). 
These standards are to reflect the greatest reduction achievable 
through the application of technology which the Administrator 
determines will be available, giving appropriate consideration to cost, 
energy, and safety factors associated with the application of such 
technology. This provision also establishes the lead time and stability 
requirements for these standards, and in addition authorizes EPA to 
establish requirements to control rebuilding practices for heavy-duty 
engines. Pursuant to Sections 202(a)(1) and 202(d), these emissions 
standards apply for the useful life period established by the Agency. 
See 42 U.S.C. 7521(a)(1), 7521(d).
    Section 213 authorizes EPA to establish emissions standards for new 
heavy-duty nonroad engines where EPA determines that they cause or 
contribute to ozone or carbon monoxide air pollution in more than one 
area that is in nonattainment for ozone or carbon monoxide, or where 
EPA determines that emissions of other pollutants significantly 
contribute to air pollution which may reasonably be anticipated to 
endanger public health or welfare. As with heavy-duty motor vehicle 
engines, the emissions standards apply for the useful life established 
by the Agency. See 42 U.S.C. 7547.
    Section 211(c) authorizes EPA to establish controls or prohibitions 
on fuels and fuel additives for use in highway and nonroad vehicles and 
engines. EPA may issue such regulations if it determines that (1) any 
emission product of the fuel or fuel additive causes or contributes to 
air pollution which may reasonably be anticipated to endanger the 
public health or welfare, or (2) emissions products of a fuel or fuel 
additive will impair to a significant degree the performance of any 
emissions 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 such regulation promulgated. See 
42 U.S.C. 7545(c).
    EPA's authority to issue a certificate of conformity upon payment 
of a non-compliance penalty established by regulations is found in 
Section 206(g) of the Act. See 42.U.S.C. 7525(g). Other provisions of 
Title II of the Act, along with Section 301, are additional authority 
for the measures discussed in this ANPRM.

XI. Unfunded Mandates Reform Act

    Under Section 202 of the Unfunded Mandates Reform Act of 1995 
(``UMRA''), P.L. 104-4, EPA must prepare a budgetary impact statement 
to accompany any general notice of proposed rulemaking or final rule 
that includes a Federal mandate which may result in estimated costs to 
State, local, or tribal governments in the aggregate, or to the private 
sector, of $100 million or more. Under Section 205, for any rule 
subject to Section 202 EPA generally must select the least costly, most 
cost-effective, or least burdensome alternative that achieves the 
objectives of the rule and is consistent with statutory requirements. 
Under Section 203, before establishing any regulatory requirements that 
may significantly or uniquely affect small governments, EPA must take 
steps to inform and advise small governments of the requirements and 
enable them to provide input.
    EPA has determined that the requirements of UMRA do not extend to 
advance notices of proposed rulemaking such as this notice regarding 
potential controls for heavy-duty engines.

XII. Administrative Designation and Regulatory Analysis

    Under Executive Order 12866 (58 FR 51735 (Oct. 4, 1993)), the 
Agency must determine whether this regulatory action is ``significant'' 
and therefore subject to OMB review and the requirements of the 
Executive Order. The order defines ``significant regulatory action'' as 
any regulatory action (including an advanced notice of proposed 
rulemaking) 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.

    This Advance Notice was submitted to the Office of Management and 
Budget (OMB) for review as required by Executive Order 12866. Any 
written comments from OMB and any EPA response to OMB comments are in 
the public docket for this Notice.

List of Subjects in 40 CFR Parts 80, 86, and 90

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Diesel fuel, Motor vehicles, Motor vehicles 
pollution, Reporting and recordkeeping requirements, Research.

    Dated: August 24, 1995.
Carol M. Browner,
Administrator.

Appendix: Statement of Principles

Statement of Principles

    Members of the heavy-duty engine industry, the U.S. 
Environmental Protection Agency (``EPA''), and the California Air 
Resources Board (``CARB'') (collectively, the ``Signatories'') 
recognize the importance of preserving the environment while 
maintaining a strong industry. This Statement of Principles 
(``SOP'') increases certainty and stability for the heavy-duty 
engine industry which is vital for their business planning. It also 
ensures cleaner air in a manner which is both realistic for industry 
and responds to environmental needs. With this SOP, the heavy-duty 
engine industry has stepped forward to become a leader in 
environmental protection, and industry and government will work as 
partners to bring about cleaner air.
    This SOP outlines the joint understanding of all Signatories, 
including issuance by EPA of a Notice of Proposed Rulemaking 
(``NPRM'') which would be consistent with the points outlined in 
this document. EPA intends to issue the NPRM in 1995 and plans to 
promulgate a final rule by the end of 1996. However, this SOP does 
not change the importance of EPA demonstrating the need for the 
standards described below and EPA's obligation to meet the criteria 
of the Clean Air Act (the ``Act'' or ``CAA'') in finalizing any 
rule, including complying with all applicable rulemaking procedures. 
In order to facilitate the rulemaking process and to solicit 
additional views, EPA will precede the issuance of the NPRM with an 
Advanced Notice of Proposed Rulemaking (``ANPRM'') announcing this 
SOP.
    1. National Standards for On-Highway Heavy-Duty Engines: For 
more than two decades, as public concerns about air pollution and 
smog caused by emissions from heavy-duty trucks and buses have 
increased, both the industry and the government have responded to 
protect public health and the environment. Standards have 

[[Page 45603]]
dropped from levels of 16.0 grams per brake-horsepower/hour (``g/bhp-
hr'') for Hydrocarbons (``HC'')+Oxides of Nitrogen (``NOX'') in 
1974 to just 5.0 g/bhp-hr NOX and 1.3 g/bhp-hr HC for heavy-
duty diesel engines today. The NOX standard will fall again to 
4.0 g/bhp-hr in 1998. California also has NOX standards of 5.0 
g/bhp-hr for these engines today and plans to adopt the federal 4.0 
g/bhp-hr standard for 1998 models.
    Much of the recent focus on improving emissions from diesel 
engines has centered around reducing smoke and soot from the 
exhaust. Particulate matter (``PM'') standards for heavy-duty diesel 
engines have dropped from 0.6 g/bhp-hr in 1988 to just 0.1 g/bhp-hr 
today. The current PM standards represent a 90% reduction from 
unregulated levels. The 0.1 g/bhp-hr standard applies both in the 
California and federal programs. Urban buses have even tighter 
standards.
    Heavy-duty engine manufacturers have certified vehicles to 
operate on clean alternative fuels such as natural gas and methanol 
and continue to research the emissions benefits of alternative and 
renewable fuels. Clearly, the industry has worked hard to improve 
technology and provide cleaner vehicles and engines.
    However, in recent years, concern over the role of NOX and 
HC emissions in causing ozone formation has grown considerably, and 
reducing both has become an important goal. The opportunity to 
reduce overall emissions of these pollutants by producing cleaner 
heavy-duty engines is significant.
    The goal of all Signatories to this SOP is to reduce NOX 
emissions from on-highway heavy-duty engines to levels approximating 
2.0 g/bhp-hr beginning in 2004. The Signatories also recognize the 
need to reduce HC emissions. Because of the air quality importance 
of reducing hydrocarbon emissions to the maximum extent feasible and 
in order to maximize industry's ability to achieve low NOX 
levels, EPA will propose for all heavy-duty engines as part of the 
NPRM: (1) a combined Non-methane Hydrocarbon (``NMHC'')+NOX 
standard of 2.4 g/bhp-hr and (2) a combined NMHC+NOX standard 
of 2.5 g/bhp-hr together with a NMHC cap of 0.5 g/bhp-hr 
(collectively, the ``Standards''), with flexibility for an engine 
family to comply with either one of these Standards as the 
manufacturer determines. It is expected that the Standards would 
result in emissions comparable to a NOX standard of 2.0 g/bhp-
hr (i.e., half of the 1998 NOX standard), and also significant 
reductions in HC emissions.
    While this SOP focuses on NOX and NMHC emissions, the 
Signatories recognize it does not affect other existing emission or 
safety standards which pertain to heavy-duty engines. Specifically, 
all Signatories concur that the feasibility of the Standards would 
be affected by any changes in PM standards. Thus, this SOP is 
premised on EPA not changing the 0.1 g/bhp-hr diesel particulate 
standard currently in effect (or the lower PM standards for urban 
buses). Further, all Signatories concur that any changes in Carbon 
Monoxide (``CO'') standards could affect compliance for spark-
ignited engines. Thus, this SOP is premised on EPA not changing the 
CO standards currently in effect for heavy-duty engines.
    2. Fuel Improvements: All Signatories acknowledge that fuel 
composition has a significant effect on emissions and that changes 
in the composition and improvements in the quality of fuel may be 
needed to make the Standards technologically feasible and otherwise 
appropriate under the Act. As part of the focus on reducing 
NOX, and in cooperation with the fuels industry, the 
Signatories are committed to making improvements in diesel fuel (and 
other fuels used in heavy-duty engines) as appropriate under the Act 
to meet the 2004 Standards, taking into consideration costs and 
other relevant factors. Such efforts may include evaluation of the 
contribution of fuel parameters to heavy-duty engine emissions, 
including a higher cetane number and lower levels of aromatics and 
sulfur. The Signatories recognize fuel improvements are important 
and may be essential in reaching low NOX levels in the most 
efficient manner, considering costs and other factors. The 
Signatories also recognize that any changes to both the 
certification and commercial fuel specification would have to become 
effective no later than October 2003 to ensure fuel availability at 
the time the Standards take effect.
    3. Feasibility: To assess the progress of industry efforts to 
meet the Standards set forth in this SOP and to assure the lowest 
appropriate standards in 2004, in 1999 EPA shall review any 
rulemaking adopting the Standards discussed herein by issuing a 
notice providing the opportunity for public comment on whether or 
not the Standards are technologically feasible and otherwise 
appropriate under the CAA. After receiving public comment, EPA shall 
take final Agency action on the review under Sec. 307 of the CAA, 
and shall revise the rule if the Agency determines that the 
Standards are not technologically feasible or are otherwise not 
appropriate under the CAA. The evaluation will consider the status 
of heavy-duty engine technology in that year and its projection to 
2004. In addition, the evaluation will include an assessment of 
whether any fuel improvements (see item #2) that are needed to 
assist heavy-duty engines in complying with the Standards will be 
available nationwide.
    In reviewing the rulemaking as set forth above, EPA shall review 
the need, feasibility and cost of the Standards under the criteria 
imposed on EPA by the Act, including, without limitation, the need 
to provide engine manufacturers no less than four full model years 
of lead-time. If EPA determines compliance with the Standards in 
2004 is not technologically feasible or is otherwise not in 
accordance with the Act, then the Administrator will adjust the 
standard. If an adjustment is deemed necessary, the Standards for 
2004 are not expected to be raised beyond a cap of: (1) 2.9 g/bhp-hr 
NMHC+NOX and (2) 3.0 g/bhp-hr NMHC+NOX with a proportional 
increase in the NMHC cap. However, if improvements to fuel quality 
are needed but not made, the Standards are not expected to be raised 
beyond a cap of: (1) 3.4 g/bhp-hr NMHC+NOX and (2) 3.5 g/bhp-hr 
NMHC+NOX with a proportional increase in the NMHC cap.
    The Signatories shall meet periodically to provide updates on 
their efforts and progress in complying with the SOP.
    4. California Standards: The California State Implementation 
Plan (``SIP'') includes a proposed control measure to establish a 
2.0 g/bhp-hr NOX emission standard for new engines used in on-
highway trucks sold in California in 2002 and thereafter. Both EPA 
and California recognize the benefits of harmonizing state and 
federal regulations. California confirms its intent to notice a 
public hearing to consider action to harmonize its regulations for 
dynamometer-certified engines greater than 8,500 lbs. GVWR with the 
federal regulations adopted under this SOP, provided such action 
would not compromise California's obligations to comply with state 
and federal law including the SIP. The Signatories recognize that 
California regulations establishing separate emission standards and 
test procedures for gasoline chassis-certified vehicles are not 
affected by this SOP.
    5. Test Procedures: While there has been some discussion of 
current test procedures for heavy-duty engines, the SOP and the 
subsequent NPRM are premised on EPA not altering federal test 
procedures. It is possible that the Agency may evaluate changes for 
testing heavy-duty engines in the future, but it is recognized that 
the SOP is made in the context of current test procedures. Further, 
all Signatories recognize that any test cycle changes or additions 
would likely complicate and delay industry's ability to research, 
design, test, and produce engines that comply with the Standards by 
2004. Any changes to test procedures used to determine compliance 
with the Standards for purposes of EPA certification or enforcement 
programs could also affect industry's ability to meet the Standards.
    6. Durability: All Signatories recognize that it is important 
that emissions from cleaner heavy-duty engines be maintained 
throughout the life of the engine. To meet this goal, the 
Signatories will work to develop appropriate measures which ensure 
that emission gains are maintained in-use.
    7. Averaging, Banking, and Trading Incentives: As part of this 
SOP, EPA and CARB will work cooperatively with industry to develop 
improved national averaging, banking, and trading (``AB&T'') 
programs that will create more incentive for the early introduction 
of cleaner engines. At a minimum, EPA will propose to modify the 
existing AB&T program to eliminate any limitations on credit life 
and to eliminate all credit discounts. The Signatories acknowledge 
that an improved AB&T program may be critical in making the 
Standards feasible in 2004, and would provide an incentive for early 
introduction of cleaner technology.
    In addition, EPA shall solicit comments in the NPRM on the 
merits of allowing cross-fuel, cross-subclass, and cross-category 
(e.g. on-highway and nonroad) credit exchanges, to the extent 
permitted under the Act.
    8. Scope: These standards will apply to all on-highway heavy-
duty engines, including those operating on diesel, gasoline, or 
alternative fuels or fuel blends. It is recognized that EPA and 
California place a 

[[Page 45604]]
high priority on the need for additional nonroad heavy-duty engine 
standards, and that additional nonroad heavy-duty engine standards 
may be required. The Signatories intend to participate in 
discussions with nonroad heavy-duty engine and equipment 
manufacturers to develop a separate SOP by approximately October 
1995 addressing emissions standards for heavy-duty nonroad engines.
    9. Stability: One of the key principles of the SOP is to provide 
industry with increased certainty and stability for their business 
planning. Without such certainty and stability, industry would not 
commit to the enormous investment that the Standards will require. 
And, without such certainty and stability, those investments might 
never be recouped. EPA and California recognize the huge investment 
that will be required of industry. Under the Act, the minimum period 
of stability that EPA must provide for new on-highway heavy-duty 
engine emissions standards is three years. However, EPA and 
California acknowledge that under this SOP industry will be making a 
commitment and investment that will require more than the minimum 
period of stability.
    10. Research Agreement: The Signatories recognize the benefits 
of a joint industry/government research program with the goal of 
developing engine and fuel technologies which can meet and exceed 
the standards for heavy-duty on-highway engines outlined in this 
SOP. The Signatories will undertake development of a separate 
research agreement with goals of reducing NOX emissions to 1.0 
g/bhp-hr and PM emissions to 0.05 g/bhp-hr while maintaining 
attributes of current on-highway diesel engines such as performance, 
reliability, durability, safety, and efficiency. These 
characteristics have allowed current diesel engines to serve as the 
pillar of the international trucking industry. This research 
agreement would include certain of the industry signatories below, 
EPA, CARB, and other organizations, such as the U.S. Department of 
Energy, as are approved by the participants.

    Signed July 11, 1995, Chicago, Illinois.
Mary D. Nichols,
U.S. Environmental Protection Agency.
John D. Dunlap,
California Air Resources Board.

Members of the Engine Manufacturer Association

Caterpillar, Inc.
Cummins Engine Company
Detroit Diesel Corporation
Ford Motor Company
General Motors Corporation
Hino Motors, Ltd.
Mack Trucks, Inc.
Mitsubishi Motors America, Inc.
Navistar International
Volvo Truck Corporation
Environmental Protection Agency (Mary D. Nichols)
California Air Resources Board (John Dunlap)

[FR Doc. 95-21525 Filed 8-30-95; 8:45 am]
BILLING CODE 6560-50-P