Federal Register, Volume 61 Issue 125 (Thursday, June 27, 1996)

[Federal Register Volume 61, Number 125 (Thursday, June 27, 1996)]
[Proposed Rules]
[Pages 33421-33469]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16330]

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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 86

[AMS-FRL-5526-9]

Control of Emissions of Air Pollution from Highway Heavy-Duty
Engines

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of proposed rulemaking.

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SUMMARY: In this action, EPA proposes new emission standards and
related provisions for heavy-duty engines intended for highway
operation, beginning in the 2004 model year. The proposed provisions
represent a large reduction (approximately 50 percent) in emission of
oxides of nitrogen (NOX), as well as reductions in hydrocarbons
(HC) and nitrate particulate matter (PM) from trucks and buses. If the
proposed standards are implemented, the resulting emission reductions
would translate into significant, long-term improvements in air quality
in many areas of the U.S. This would provide much-needed assistance to
a range of states and regions facing ozone and particulate air quality
problems that are causing a range of adverse health effects for their
citizens, especially in terms of respiratory impairment and related
illnesses.
EPA is also proposing several provisions to increase the durability
of emission controls and to provide flexibility for manufacturers in
complying with the stringent new standards. The Agency previously
published an Advance Notice of Proposed Rulemaking relating to this
action and addresses here a number of the comments received on the
Advance Notice. EPA believes the proposed program would result in
significant progress throughout the country in protecting public health
and the environment.

DATES: EPA requests comment on the proposal rulemaking no later than
August 26, 1996.
EPA will hold a public hearing on this proposal on July 25, 1996.
EPA will also hold a public meeting on July 19, 1996, to discuss
the proposed HDE regulations and receive informal public input on them,
and to discuss other potential mobile source controls identified in the
California Ozone State Implementation Plan for the South Coast (the
greater Los Angeles area).
More information about commenting on this action and on the public
hearing and meeting may be found under Public Participation, in Section
II of SUPPLEMENARY INFORMATION.

ADDRESSES: Materials relevant to this proposal including the draft
regulatory text and Regulatory Impact Analysis (RIA) 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, S.W.,
Washington, DC 20460. The docket may be inspected from 8:00 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 proposal should be sent to Public Docket A-95-27
at the above address. EPA requests that a copy of comments also be sent
to Chris Lieske, U.S. EPA, Engine Programs and Compliance Division,
2565 Plymouth Road, Ann Arbor, MI 48105.
The hearing on this proposal will be held at the Marriott Hotel and

[[Page 33422]]

Conference Center, 1275 South Huron Street, Ypsilanti, MI, (313) 487-
2000, from 9:00 am until all testimony has been presented.
The public meeting to discuss the proposed HDE regulations will be
held Downtown Los Angeles Hyatt Regency, 711 South Hope Street, Los
Angeles, California. The public meeting will be conducted in two
sessions beginning at 2:00 p.m. and 7:00 p.m., with a dinner recess
before the 7:00 p.m. sessions.
This proposal, the draft regulatory text, and the draft Regulatory
Impact Analysis (RIA) are available electronically and can be obtained
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 and via the internet. Details on how to access
TTNBBS and the internet are included in Section XIII of SUPPLEMENTARY
INFORMATION.

FOR FURTHER INFORMATION CONTACT: Chris Lieske, U.S. EPA, Engine
Programs and Compliance Division, (313) 668-4584.

SUPPLEMENTARY INFORMATION:

I. Introduction

Air pollution continues to represent 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 precontrol
rates. However, continued industrial growth and expansion of motor
vehicle usage threaten to reverse these past achievements. Today, more
than five years after passage of major amendments to the Clean Air Act
(CAA or the Act), many states are still finding it difficult to meet
the ozone and PM National Ambient Air Quality Standards (NAAQSs) by the
deadlines established in the Act.\1\ Furthermore, other states which
are approaching or have reached attainment of the ozone and PM NAAQSs
will likely see those gains lost if current trends persist.
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\1\ See 42 U.S.C. 7401 et seq.
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In recent years, significant efforts have been made on both a
national and state level to reduce air quality problems associated with
ground-level ozone, with a focus on its main precursors, oxides of
nitrogen (NOX) and volatile organic compounds (VOCs).\2\ 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.
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\2\ VOCs consist mostly of hydrocarbons (HC).
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NOX control is now seen as a critical strategy to control
ozone levels, which 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 deemed
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 an
effective strategy for reducing ozone where its levels are high over a
large region (as in the Midwest and Northeast). As a result, attention
has turned to controlling NOX emissions as a key to improving air
quality in many areas of the country.
Current projections show total NOX emissions decreasing
slightly during the next few years as stationary and mobile source
control programs promulgated under the 1990 CAA amendments are phased
in. However, the downward trends in NOX pollution will begin to
reverse and NOX emission inventories will begin to rise by the
early or middle part of the next decade due to growth in stationary and
mobile source activity. In this timeframe, emissions from mobile
sources will account for about half of all NOX emissions and
heavy-duty vehicles are projected to represent about one quarter of
mobile source NOX emissions. In most areas, a significant increase
in ground-level ozone is expected to accompany the rise in NOX
emissions. Levels of PM are also expected to rise, both because of the
expected increase in numbers of PM sources and because NOX is
transformed in the atmosphere into fine nitrate particles that account
for a substantial fraction of the airborne particulate in some areas of
the country (a process called ``secondary particulate formation'').
Given these expected trends and the absence of new emission control
initiatives, the Agency believes that some of the nation's hard-won air
quality improvements will begin to be seriously threatened early in the
next decade.
Over the past decade, ambient air measurements and computer
modeling studies have repeatedly demonstrated that ozone is a regional-
scale issue, not just a local issue, in part because ozone and its
precursors, NOX and VOC, are often transported across large
distances. Thus, 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.
The states have jurisdiction to implement a variety of stationary
source emission controls. In most regions of the country, states are
implementing significant stationary source NOX controls (as well
as stationary source VOC controls) for controlling acid rain, ozone, or
both. In many areas, however, these controls will not be sufficient to
reach and maintain the ozone standard without significant additional
NOX reductions from mobile sources. Generally, the Clean Air Act
specifies that standards for controlling NOX, HC, and PM emissions
from new motor vehicles must be established at the federal level.^{3
Thus, the states look to the national mobile source emission control
program as a complement to their efforts to meet air quality goals. The
concept of common emission standards for mobile sources across the
nation is strongly supported by manufacturers, which often face serious
production inefficiencies when different requirements apply to engines
or vehicles sold in different states or areas.
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\3\ The CAA limits the role states may play in regulating
emissions from new motor vehicles. California is permitted to
establish emission control standards for new motor vehicles, and
other states may adopt California's programs (Sections 209 and 177
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 focused on heavy-duty trucks (ranging from
large pickups to tractor-trailers), buses, and nonroad equipment.
Since the 1970s, manufacturers of heavy-duty engines for highway
use have developed new technological approaches in response to periodic
increases in the stringency of emission standards.^{4 However, the
technological characteristics of heavy-duty engines, particularly
diesel engines, have so far prevented achievement of emission levels
comparable to today's light-duty

[[Page 33423]]

gasoline vehicles. While diesel engines provide advantages in terms of
fuel efficiency, reliability, and durability, controlling NOX
emissions is a greater challenge for diesel engines than for gasoline
engines. Similarly, control of PM emissions, which are very low for
gasoline engines, represents a substantial challenge for diesel
engines. Part of this challenge is that most traditional NOX
control approaches tend to increase PM, and vice versa.
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\4\ Highway heavy-duty engines, sometimes referred to as highway
HDEs in this proposal, are used in heavy-duty vehicles, which EPA
defines as highway vehicles with a gross vehicle weight rating over
8,500 pounds.
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Despite these technological challenges, there is substantial
evidence of the ability for heavy-duty highway engines to achieve
significant 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 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 heavy-duty vehicles is discussed further in
Section IV of this proposal and in the associated Regulatory Impact
Analysis (RIA).
Recognizing the need for additional NOX and PM control
measures to address air quality concerns in several parts of the
country and the growing contribution of the heavy-duty engine sector to
ozone and PM problems, EPA issued an Advance Notice of Proposed
Rulemaking (ANPRM) on August 31, 1995. In the ANPRM, the Agency sought
early comment on the general framework of a program to reduce emissions
from the heavy-duty engine category. The Agency has been pleased that a
broad range of interested parties have responded to the ANPRM with
their comments. To the extent possible, EPA has considered and
addressed these comments in the preparation of this Notice of Proposed
Rulemaking (NPRM). EPA continues to encourage comment on all aspects of
the proposed program; where ANPRM commenters may believe that this
action fails to address their comments, EPA encourages them to resubmit
those comments in the context of this formal proposal.
This preamble is organized as follows: Section II.A. summarizes the
public health and environmental concerns from ozone, PM and their
precursors; Section II.B. discusses the connection of these emissions
to air quality trends and the regional nature of the ozone and PM
problems; Section II.C. presents trends in overall nationwide NOX,
VOC, and PM emissions; Section II.D. presents the current and projected
future contribution of heavy-duty vehicles to overall emissions;
Section II.E. summarizes the overall rationale for the action being
proposed; Section III. then describes in detail the standards and other
provisions being proposed as well as background on the regulation of
highway heavy-duty engines; Section IV. summarizes the technological
feasibility of the proposed program; Section V. reviews the results of
EPA's economic and environmental analyses; Section VI. discusses the
potential role of several incentive-based programs; and Section VII.
provides information about the formal public comment process, including
a public hearing. The actual proposed regulatory language is available
in the public docket and electronically (see ADDRESSES above and
Section XIII. for further information).

II. Need for New NOX and VOC Emission Control

A. Health and Environmental Impacts of Ambient NOX and VOC: Ozone,
Particulate Matter, and Other Effects

Oxides of nitrogen (NOX) comprise a family of highly reactive
gaseous compounds that contribute to air pollution in both urban and
rural environments. 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), highway sources (such as light-duty and
heavy-duty vehicles) and nonroad sources (such as construction and
agricultural equipment). Ambient levels of NOX can be directly
harmful to human health and the environment. More importantly from an
overall health and welfare perspective, NOX contributes to the
production of secondary chemical products that in turn cause additional
health and welfare effects. Prominent among these are ozone and
secondary PM formation. Each of these phenomena is briefly discussed in
this proposal and in more detail in the Regulatory Impact Analysis.
Much of the evaluation of the health and environmental effects
related to NOX found in this section and in the Regulatory Impact
Analysis (RIA) were also discussed in the August 31, 1995 ANPRM.^{5
EPA encourages comment on the Agency beliefs expressed in this proposal
and in the RIA.
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\5\ Information cited in this section and other related
information on health and environmental effects related to NOX
and VOC are available from the Regulatory Impact Analysis and other
documents found in Docket A-95-27.
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1. Direct Health Effects of NOX
The component of NOX that is of most concern from a health
standpoint is nitrogen dioxide, NO2. EPA has set a primary
(health-related) NAAQS for NO2 of 100 micrograms per cubic meter,
or 0.053 parts per million. Direct exposure to NO2 can reduce
breathing efficiency and increase lung and airway irritation in healthy
people, as well as in the elderly and in people with pre-existing
pulmonary conditions. Exposure to NO2 at or near the level of the
ambient standard appears to increase symptoms of respiratory illness,
lung congestion, wheeze, and increased bronchitis in children.^{6
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\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).
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2. Indirect Health and Welfare Effects of NOX and VOC
In addition to the direct effects of NOX, the chemical
transformation products of NOX also contribute to adverse health
and environmental impacts. These secondary impacts of NOX include
ground-level ozone, nitrate particulate matter, acid deposition,
eutrophication (plant overgrowth) of coastal waters, and transformation
of other pollutants into more dangerous chemical forms. Each of these
is discussed below and in the Regulatory Impact Analysis. Also,
volatile organic compounds (VOCs), composed of a very large number of
different hydrocarbons (HC) and other organic compounds, are primary
precursors to ozone. The health and environmental effects of these
compounds as a class are generally considered in terms of their effect
on ozone and are discussed below and in the RIA. Health or other
effects of individual toxic compounds are not separately addressed in
this proposal.
a. Ozone
NOX and VOCs are primary precursors to ground level ozone
(O3). As discussed later in this proposal, ozone tends to be a
regional phenomenon in which elevated levels of ozone can develop over
wide areas.
Ozone is a highly reactive chemical compound that can affect both
biological tissues and man-made materials. Ozone exposure causes a
range of human pulmonary and respiratory health effects. While ozone's
effects on the pulmonary function of sensitive individuals or
populations (e.g., asthmatics) are of primary concern, evidence
indicates that high ambient levels of ozone can cause respiratory
symptoms in healthy adults and

[[Page 33424]]

children as well. For example, exposure to ozone for several hours at
moderate concentrations, especially during outdoor work and exercise,
has been found to decrease lung function, increase airway inflammation,
increase sensitivity to other irritants, and impair lung defenses
against infections in otherwise healthy adults and children. Other
symptoms include chest pain, coughing, and shortness of breath.^{7
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\7\ Air Quality Criteria Document for Ozone and Related
Photochemical Oxidants (External Review Draft), EPA/600/P-93/004aF-
cF, 1996.
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Recent studies focusing on chronic lung effects are also being
evaluated as part of EPA's review of the current ozone NAAQS. Repeated
exposures in laboratory animals suggest a cumulative impact,
potentially causing permanent structural changes to respiratory
tissues.^{8 Extrapolation of these results to humans raises concern
that individuals who have been exposed to ambient air containing high
levels of ozone each summer of their lives may experience a reduced
quality of life in their later years.^{9
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\8\ Gross, K.B., White, H.J. (1987) ``Functional and pathologic
consequences of a 52-week exposure to 0.5 PPM ozone followed by a
clean air recovery period,'' Lung 165:283-295.; Huang, Y, Chang, L.-
Y, Miller, F.J., Crapo, J.D. (1988) ``Lung injury caused by ambient
levels of ozone,'' J. Aerosol Med. 1:180-183; Tyler, W.S., Tyler,
N.K., Last, J.A., Gillespie, M.J., Barstow, T.J. (1988) ``Comparison
of daily and seasonal exposures of young monkeys to ozone,''
Toxicology 50:131-144.
\9\ See, for example, Euler, G.L.; Abbey, D.E.; Hodgkin, J.E.;
Magie, A.R. (1988) ``COPD symptom effects of long-term cumulative
exposure to ambient levels of total oxidants and nitrogen dioxide in
California Seventh-Day Adventist residents,'' Arch. Environ. Health
43:279-285.
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As described in more detail in the RIA, the presence of elevated
levels of ozone is of concern in rural areas as well. Because of its
high chemical reactivity, ozone causes injury to vegetation. This
injury has been observed at ozone levels above and also below the
current ozone NAAQS; EPA in is the process of reconsidering the
appropriate level of the ozone NAAQS in light of such evidence.
Although the action proposed is not being proposed for the purpose of
reducing crop damage from ozone, it is of interest to note that
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 injury in many crops, which reduces their marketability and value.
Finally, there is evidence that exposure to ambient levels of ozone
existing in many parts of the country may be 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.
b. Nitrate Particulate Matter
The conversion of NOX into fine particulate matter (such as
ammonium nitrate) is of significant human health and environmental
concern. In general, air pollutants collectively called particulate
matter (PM) are divided into primary and secondary sources. Primary
sources 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. Ambient PM is related to
several adverse health and environmental effects.
At the present time, data is not available to precisely partition
PM-10 into its primary and secondary PM components. Most of the well
developed nationwide PM-10 inventories are based only on primary
sources, but inventories for some PM-10 nonattainment areas have
identified the primary and secondary PM. From the available data, it is
clear that the roles of primary and secondary PM vary geographically.
For example, ammonium nitrate is a significant portion of the PM-10
inventory in cities in the western states (e.g., Denver, Salt Lake
City, Los Angeles) and a smaller portion of total PM in cities in the
eastern states (e.g., Philadelphia, New York). As discussed in the RIA,
EPA estimates that the NOX to Nitrate conversion rate varies from
near zero to about 20 percent, with a U.S. average in the order of
about 5 percent. While there is not data available on this at the
present time, it is reasonable to assume that NOX emissions from
heavy-duty engines are converted to nitrate at the same rate as
NOX from other sources.
The existing NAAQS for particulate matter were set in 1987. The
primary standards, intended to protect human health, are an average
concentration of 150 micrograms per cubic meter (g/m^{3)
over a 24-hour period and an average concentration of 50 g/
m^{3 annually. PM-10 was selected as the indicator for particle
pollution based on lung deposition studies. PM-10 includes all
particles in the size range of 10 micrometers or less. Particles
smaller than 2.5 micrometers are capable of penetrating deeper into the
lungs and air sacs. The secondary standards, intended to protect
against damage to the environment, were set identical to the primary
standards.
Since the last review of the PM-10 NAAQS in 1987, many
epidemiological studies of PM-10 exposure at levels below the existing
24-hour and annual standards have associated higher levels of particle
pollution with increased occurrence of illness and death (e.g.,
increased hospital admissions, aggravation of bronchitis and asthma,
and premature deaths). Based on studies of human populations exposed to
high concentrations of particles and on laboratory studies of animals
and humans, there are major human health concerns associated with PM.
These include deleterious effects on breathing and the respiratory
system, aggravation of existing respiratory and cardiovascular disease,
alterations in the body's defense mechanisms against foreign materials,
direct and indirect damage to lung tissue resulting in fibrosis,
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 emphysema-like conditions
or cardiovascular diseases, chronic obstructive pulmonary disease,
those with influenza, asthmatics, the elderly, and children. PM-10 also
soils and damages materials, and fine particles are a major cause of
visibility impairment in the United States.^{10
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\10\ Air Quality Criteria for Particulate Matter (External
Review Draft), EPA-600/AP-95/001a-a, April 1995.
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All particles in the atmosphere scatter light and, hence, reduce
visibility. However, light is scattered most efficiently by particles
with a diameter of 0.5-1.0 micrometers. Secondary particles such as
nitrates are in this size range. As discussed in the RIA, in locations
such as the western U.S., where the ambient levels of SO2 tend to
be low, EPA believes nitrate particles are major contributors to
visibility attenuation.
c. Other Secondary Effects of NOX
NOX is a major contributor to acid deposition. The damage
caused by acid deposition continues to be documented and includes
acidification of surface waters and soil, reduction in fish
populations, damage to forests and associated wildlife, soil
degradation, damage to materials, monuments, buildings, etc., and
reduced visibility.^{11

[[Page 33425]]

Effects of acid deposition are most pronounced during springtime
snowmelts, when ``pulses'' of highly acidic water, often containing
high concentrations of toxic aluminum, enter lakes and streams. In
addition, nitrogen compounds deposited on ecosystems can transport
acids already contained in the soils and thus contribute to the
acidification of those ecosystems. Although one commenter on the ANPRM,
API, challenged the importance of NOX control in reducing acid
deposition, EPA believes that geographically broad controls like those
proposed in this action represent a cost-effective method of reducing
overall levels of deposited acid.^{12
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\11\ ``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.
\12\ More information about EPA's position on the relationship
between NOX and acid deposition may be found as item II-A-13 in
Docket A-95-28, titled Draft Report: Adverse Effects of Nitrogen
Oxides and Benefits of Reductions.
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Another secondary effect of NOX emissions is their role in the
overgrowth of algae and other plants and oxygen depletion
(eutrophication) in coastal estuaries in the eastern part of the
country, including the Chesapeake Bay, as well as other estuaries and
coastal waters.^{13 Airborne nitrogen compounds act as fertilizers
for plant growth, contributing an estimated 25 percent of nitrogen
loading in some coastal waters. In waters where nitrogen compounds are
the limiting factor, eutrophication is resulting in the reduction or
loss of commercially valuable aquatic/marine species as well as
diminution of water-related recreational activities. EPA addressed this
effect on estuaries in the ANPRM and received no comments counter to
the Agency's assessment; comment on this issue is encouraged.
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\13\ Deposition of Air Pollutants Into the Great Waters: First
Report to Congress, EPA-453/r-93-055, May 1994.
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EPA encourages comment on all aspects of its review of the human
health and environmental impacts of ozone, NOX, and PM (especially
secondary nitrate PM), both in this preamble and in the Regulatory
Impact Analysis.

B. Need for NOX and VOC Control To Address Ozone and PM Issues

1. Regional NOX Control as a Strategy for Addressing Regional
Ozone Problems
The precursors to ozone and ozone itself are transported long
distances under some commonly occurring meteorological conditions.
Specifically, concentrations of ozone and its precursors in a region
and the transport of ozone and precursor pollutants into, out of, and
within a region are very significant factors in the accumulation of
ozone in any given area. Regional-scale transport, as it is discussed
in this proposal, may occur within a state or across one or more state
boundaries. Local source NOX and VOC controls are key parts of the
overall attainment strategy for nonattainment areas. However, the
ability of an area to achieve ozone attainment and thereby reduce
ozone-related health and environmental effects is often heavily
influenced by the ozone and precursor emission levels of upwind areas.
Thus, for many of these areas, EPA believes that attainment of the
ozone NAAQS will require control programs much broader than strictly
locally focused controls to take into account the effect of emissions
and ozone far beyond the boundaries of any individual nonattainment
area.
EPA therefore believes that effective ozone control requires an
integrated strategy that combines cost-effective reductions in
emissions from both mobile and stationary sources. EPA's current
initiatives, including the national highway heavy-duty engine standards
proposed in this action, are components of the Agency's integrated
ozone reduction strategy.
By the time the 1990 amendments to the Clean Air Act were passed,
the understanding that many areas face regional-scale ozone problems
was well established. Before 1990, the Act required states to address
the contribution of their pollution to other areas' attainment of the
ozone standard. Then, in the 1990 amendments, Congress included
additional provisions for states to address regional ozone transport in
their efforts to reach attainment by the statutory deadlines (the
Northeast Ozone Transport Region and Commission resulted from these
provisions). Since 1990, the understanding of regional transport of
ozone precursors and ozone itself has continued to expand.
The problem of regional transport of ozone and its precursors is
widely recognized by the states. In response to concerns about this
problem raised by state environmental commissioners comprising the
Environmental Council of the States (ECOS), EPA has worked closely with
states in the Ozone Transport Assessment Group (OTAG) to develop
various recommended control measures intended to address the regional
nature of ozone. Similarly, state and local air administrators, under
the auspices of STAPPA and ALAPCO, recently passed a unanimous
resolution endorsing national NOX emission regulations.^{14
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\14\ See comments from STAPPA/ALAPCO in Docket A-95-27.
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As the understanding of the photochemical phenomena related to
ozone has developed, NOX control options have received increasing
attention. Especially in addressing regional-scale ozone problems,
control of NOX has emerged as the primary strategy. VOC control,
by comparison, is seen as most effective in addressing localized ozone
peak concentrations found in or near major urban areas. As discussed
further below, EPA has conducted modeling studies in recent years
covering the eastern half of the U.S., which have reinforced the
understanding that regional-scale control of NOX emissions will be
essential to reducing the levels of transported ozone in large areas of
the Northeast, Southeast, and Midwest. EPA believes that ozone problems
in California also represent regional problems that would be
susceptible to regional NOX control. Thus, the extent of local
controls that will be needed to attain and maintain the ozone NAAQS in
and near seriously polluted cities is sensitive both to the amount of
ozone and precursors transported into the local area and to the
specific photochemistry of the area. In some cases (e.g., portions of
the Northeast Corridor, the Lake Michigan area, Atlanta, and
California) preliminary local modeling performed by the states
indicates that it will likely not be feasible to find sufficient local
control measures for individual nonattainment areas unless transport
into the areas is reduced in some manner. EPA has carefully considered
this important relationship between local and regional NOX
controls for individual areas and regions and for the country as a
whole, as summarized in the next sections. EPA requests comment on
these issues as well as general comments on the need for regional-scale
NOX controls.
a. Action by States and EPA To Achieve CAA Air Quality Goals
Title I of the 1990 Clean Air Act amendments (Sections 181-185(b),
generally) established an aggressive strategy for ozone nonattainment
areas to come into compliance with the ozone NAAQS. (The case of
attainment of the PM NAAQS is discussed in section B.3. below.) The
Act's strategy provides the framework for action by states and EPA for
national, regional, and local controls. Under these provisions, states
are expected to submit State Implementation Plans (SIPs)

[[Page 33426]]

demonstrating how each nonattainment area will reach attainment of the
ozone NAAQS. Based on the degree that ozone concentrations in an area
exceed the standard, the Act spells out specific requirements that
states must incorporate into their attainment plans and sets specific
dates by which nonattainment areas must reach attainment.
For nonattainment areas designated as serious, severe, or extreme,
state attainment demonstrations involve 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 that
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, based on a two-phase approach for the submittal of
ozone SIP attainment demonstrations.^{15 Under Phase I, the state is
required to conduct limited UAM modeling and submit a plan implementing
a set of specific local control measures to achieve major reductions in
ozone precursors. Phase II involves a two-year process during which
EPA, the states, regional associations, and other interested parties
can improve emission inventories and modeling and identify regional
measures that may be needed to supplement the local controls of Phase
I. These improved analyses are then to be considered by states in
identifying additional local control measures that may be needed to
attain the NAAQS by the statutory dates. Currently, under Phase I of
the process, states are submitting plans and EPA is taking action to
approve or disapprove them.
---------------------------------------------------------------------------

\15\ Memorandum from Mary D. Nichols, Assistant Administrator
for Air and Radiation, to EPA Regional Administrators, re Ozone
Attainment Demonstrations, March 2, 1995.
---------------------------------------------------------------------------

As part of these Phase I submittals, some states have indicated
that on the basis of preliminary information, locally based stationary
source NOX controls in those nonattainment areas would not be
helpful--or, in a few cases, would be detrimental--to attainment of the
ozone NAAQS. These states have petitioned EPA under Section 182(f) of
the Act for exemptions from local NOX stationary source controls
they would otherwise be required to implement under Reasonably
Available Control Technology (RACT) and New Source Review (NSR)
regulations. In general, Section 182(f) provides that waivers must be
granted if states show that reducing NOX within a nonattainment
area would not contribute to attainment of the ozone NAAQS within the
same nonattainment area.\16\ This section of the Act was added in 1990
in recognition of the fact that NOX reductions within some
nonattainment areas can increase ozone concentrations.
---------------------------------------------------------------------------

\16\ ``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.
---------------------------------------------------------------------------

Section 182(f) of the Act also requires EPA to limit the assessment
of state petitions to the effect that NOX reductions within a
nonattainment area are likely to have on that local area's ability to
meet the NAAQS (i.e., this section of the Act does not permit an
assessment of pollutant transport into and out of the area). However,
in their modeling supporting their overall attainment demonstrations
under Phase II, states will need to project the levels of ozone and
precursors that are transported into the area (these assumptions are
called ``boundary conditions''). In many areas, the boundary conditions
used in Phase II modeling will need to assume that significant
reductions in ozone and NOX will be accomplished upwind. Thus, in
Phase II of the current process, it will be necessary for states and
EPA to consider the impacts of NOX controls at both the local and
regional levels in assessing how attainment can be achieved. As
described below, in most cases, EPA believes that broad, regional ozone
and NOX control in upwind areas will be necessary for Phase II
demonstrations even where Phase I modeling results currently indicate
that local NOX controls may be unnecessary or detrimental.
b. Local NOX Exemptions' Relation to Regional NOX Control
Needs
The state petitions for exemption from local RACT and NSR
requirements so far granted by EPA fall into three categories: (1) EPA
approved four state petitions for areas (Dallas and El Paso, TX,
Birmingham, AL, and northern Maine) for which Phase I modeling shows
that the areas will attain the ozone NAAQS without additional NOX
controls (there is no analysis for these areas showing NOX
controls are either beneficial or detrimental); (2) EPA granted
exemptions for five areas (Baton Rouge, LA, Beaumont, TX, Houston, TX,
the Lake Michigan area, and Phoenix, AZ) after Phase I modeling showed
that local NOX controls could worsen peak ozone concentrations in
the nonattainment areas; (3) EPA approved ten other petitions based on
monitoring data that shows the areas attained the ozone NAAQS without
additional NOX controls (there is no analysis for these areas
showing NOX controls are either beneficial or detrimental). It is
important to note that only five exemptions that have been granted
assert that NOX controls would be detrimental to attainment plans.
It is very important to view EPA's granting of exemptions from
local NOX controls in some areas under Phase I of the attainment
process in the broader context of the ultimate Phase II determinations.
Although EPA believes that it is reasonable to initiate new control
programs to address regional ozone problems on the strength of
information already available (see Section II.E. below), a better
overall picture of regional and local air quality phenomena for each
area will exist once Phase II demonstrations are completed. Some
commenters on the ANPRM have argued that EPA's granting of local
NOX exemptions for some areas during Phase I of the process should
be interpreted as a conclusion by the Agency that no further NOX
controls--local, regional, or national--will be necessary for these
areas to reach and maintain attainment or that such controls would be
harmful. API commented that EPA ``has failed to reconcile [the] two
incongruous policies,'' referring to the initiation of new regionally
based controls in a period when local NOX exemptions are being
granted in some areas. Similarly, the National Petroleum Refiners
Association (NPRA) stated that they view such simultaneous action to be
``contradictory and arbitrary.'' For several reasons, EPA believes that
such characterizations fail to recognize the limited role of local
NOX exemptions within the broader Phase II attainment
demonstration process.
First, because most of the NOX waiver petitions contain no
modeling analyses and many of those that contain modeling analyses are
being supplemented with improved Phase II modeling, EPA's approval of
each NOX exemption has been granted on a contingent basis.\17\
That is, a monitoring-based exemption lasts for only as long as the
area's monitoring data continue to demonstrate attainment. Thus, if a
violation is monitored (prior to the area being redesignated as being
in attainment) the exemption would be revoked and the

[[Page 33427]]

requirement to adopt NOX controls would again apply. Similarly,
any modeling-based exemption may need to be withdrawn if updated
modeling analyses for Phase II reach a different conclusion than the
Phase I modeling on which the exemption was based.\18\
---------------------------------------------------------------------------

\17\ ``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.
\18\ NOX Supplement to the General Preamble, 57 FR 55628
(Nov. 25, 1992).
---------------------------------------------------------------------------

Second, as discussed above, Section 182(f) of the Act does not
permit EPA to consider regional-scale NOX issues when acting on
state petitions for exemptions from local NOX controls. Because
NOX has been shown to be effective in reducing regionally
transported ozone, the broader modeling under Phase II is expected to
show that many areas will need regional NOX controls to counter
expected growth and maintain or reach attainment. Where this occurs, it
might also lead to withdrawal of exemptions from local NOX
controls.
Third, EPA has separate authority under the CAA (Section
110(a)(2)(D)) to require a state to reduce emissions from sources where
there is evidence showing that transport of such emissions would
contribute significantly to nonattainment or interfere with maintenance
of attainment in other states. For example, local NOX controls may
need to be reinstated if Phase II modeling shows that additional
reductions in that area are needed for attainment and maintenance in
downwind areas, superseding any NOX exemption that may have been
granted under Phase I. If this need arises, Section 110(a)(2)(D) would
provide EPA the authority to require such additional reductions.
EPA therefore believes that decisions about initiating new NOX
control programs that have a regional-scale effect are appropriately
made based on the best understanding available at that time of the
broad attainment needs of all areas. As is discussed below for several
regions of the country, there is strong evidence that regional-scale
controls will be needed to achieve and maintain attainment. As a part
of the Phase II assessments, the impact of and need for NOX
control and the continuation or withdrawal of local NOX exemptions
would be taken fully into account. Thus, in assessing EPA's overall
NOX policy, it is important to understand the limited and perhaps
temporary nature of exemptions from NOX controls in some areas
within the context of the anticipated implementation of broader,
regional NOX control strategies upon completion of the Phase II
modeling.
An important issue that states and EPA will consider during the
Phase II process is the interaction between prospective regional
control programs and local air quality conditions. For nonattainment
areas that are granted local NOX exemptions based on the lack of
need for additional NOX controls (this covers the great majority
of current and pending exemptions, as shown above), introducing
regional controls that have an effect both inside and outside the
nonattainment area is generally not expected to harm air quality within
the area. In the few areas where Phase I modeling indicates that
reduction of NOX in the area could increase ozone in some
locations, a balancing of all relevant factors will be necessary if
Phase II modeling reinforces that a significant potential problem
exists. For example, if ozone and NOX transported into the area
would be significantly reduced by regional-scale controls, the absolute
level of ozone within the area would drop, changing the photochemistry
of the area and potentially offsetting any localized detriment to air
quality that might still be introduced by the regional controls (e.g.,
cleaner trucks within the area).
In its comments on the ANPRM, API referred to recent modeling
studies performed by the Modeling Ozone Cooperative, which API says
challenge EPA's earlier conclusions about the need for NOX control
in the Northeast. EPA is aware of and is reviewing the results of these
modeling studies. Based on EPA's evaluation of these studies to date,
the Agency finds that these studies in fact support EPA's previous
conclusions that broad regional-scale controls will be necessary for
the Northeast and other areas to attain and maintain the ozone NAAQS.
As API observes, these studies also predict that NOX reductions
may increase ozone levels in several areas. API also cites modeling
performed by the Lake Michigan Air Directors Consortium (LADCO), which
appears to predict similar results for the Lake Michigan area. As
described below, the LADCO studies do however, suggest that reductions
in regional ozone at the boundary of their modeling domain will likely
play a key role in determining whether the NAAQS can be attained with
local VOC-oriented control measures.
EPA is concerned about these results and is interested in
additional modeling to further explore the degree to which NOX
control programs may increase ozone in some areas. Questions not
answered by current modeling include (1) how the results change if
additional stationary and mobile source NOX and VOC control
programs are assumed to be implemented by the time the heavy-duty
engine emission standards proposed in this action would be in place and
(2) whether urban-scale modeling of higher resolution can shed more
light on how widespread potential areas of increased ozone might be.
EPA expects that on balance it will continue to be preferable to
achieve regional-scale NOX and ozone reductions whenever possible,
even where current modeling indicates that increases in ozone may occur
in parts of some areas. EPA requests comments on this general
assessment, as well as on the discussions of individual regions below;
comments including additional data and modeling results that challenge
or reinforce EPA's views will be particularly valuable.
2. Role of Regional-Scale NOX Control in Addressing Ozone Problems
in Several Regions of the U.S.
EPA believes that the best data and modeling available show that
NOX in several large geographic areas of the country will continue
to contribute greatly to ozone problems in nonattainment areas well
into the future. Together, these areas account for about 87 percent of
nationwide NOX emissions from heavy-duty vehicles (see Chapter 7
of the RIA). Several of these regions are discussed individually below.
Where there are existing or pending exemptions from local NOX
controls in the region, their relationship to regional-scale NOX
controls is also discussed.
a. Eastern United States
There is a growing body of evidence that reducing regional ozone
levels holds the key to the ability of a number of the most seriously
polluted nonattainment areas in the Eastern United States, in both the
Southeast and the Northeast, to attain and maintain the ozone NAAQS.
Regional Oxidant Modeling (ROM) studies conducted by EPA (called the
ROMNET and Matrix studies) reinforce that reducing NOX emissions
in large geographical regions is the most effective approach for
reducing ozone levels in those large regions.^{19 At the same time,
these studies, as well as ongoing UAM modeling by states, suggest that
reductions in VOC emissions may be

[[Page 33428]]

key to reducing locally generated peak ozone concentrations.^{20
---------------------------------------------------------------------------

\19\ 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.
\20\ Because of the significant role that NOX plays in
atmospheric chemistry, additional regional NOX control can also
be very helpful in addressing the problems of year-round NOX
deposition in the Chesapeake Bay and other nitrogen-limited lakes
and estuaries and acid deposition and visibility degradation in the
eastern U.S. (as well as parts of the West).
---------------------------------------------------------------------------

In its analysis supporting the approval of a Low Emission Vehicle
program in the mid-Atlantic and Northeast states comprising the Ozone
Transport Region (OTR), EPA reviewed existing work and performed new
analyses to evaluate in detail the degree to which NOX controls
are needed.^{21 22 These studies showed that NOX emissions must
be reduced by 50 to 75 percent from 1990 levels throughout the OTR.
These studies showed that VOC emissions must also be reduced by 50 to
75 percent in and near the Northeast urban corridor. The studies also
concluded that transport of ozone and precursors from upwind areas both
inside and outside the OTR contributes significantly to ozone
predictions in much of the OTR.
---------------------------------------------------------------------------

\21\ The Northeast Ozone Transport Region (OTR) is comprised of
the states of Maine, New Hampshire, Vermont, Massachusetts, Rhode
Island, Connecticut, New York, New Jersey, Pennsylvania, Delaware,
Maryland, and the Consolidated Metropolitan Statistical Area that
includes the District of Columbia and northern Virginia.
\22\ Environmental Protection Agency, Low Emission Vehicle
Program for Northeast Ozone Transport Region; Final Rule, 60 FR
48673, January 24, 1995.
---------------------------------------------------------------------------

More recently, three studies have become available confirming 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.^{23 Taken together, these studies strongly support
the view that NOX emissions must be reduced in the range of 50 to
75 percent throughout the OTR and that VOC emissions must be reduced by
the same amount in and near the Northeast urban corridor to reach and
maintain attainment.
---------------------------------------------------------------------------

\23\ 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.
---------------------------------------------------------------------------

Among the Northeast states, only Maine, based on unique air
trajectory patterns, has sought an exemption from local NOX
control; this exemption is granted for the northern part of the state.
b. The Southeast
A recent Southern Oxidant Study report describes the results of
research showing that, in the South, relatively high concentrations of
ozone are measured in both rural and urban areas.^{24 These
pervasive levels of ozone, while for the most part not in excess of the
current ozone NAAQS, form a background into which individual urban
plumes are interspersed. Preliminary modeling analyses performed by the
State of Georgia Department of Natural Resources suggests that it will
be very difficult to meet the NAAQS in Atlanta during episodes similar
to those modeled episodes, given the high background levels of ozone
that appear to prevail in the South. Further analyses of monitored data
by Southern Oxidant Study investigators suggest that the background
ozone levels are likely to be more responsive to reductions in NOX
emissions than in VOC emissions. There are no petitions at this time
for local NOX exemptions in this region.
---------------------------------------------------------------------------

\24\ ``The State of the Southern Oxidant Study (SOS): Policy-
Relevant Findings in Ozone Pollution Research,'' 1988-1994. North
Carolina State University, April 1995. See this reference for all
statements in this paragraph.
---------------------------------------------------------------------------

c. The Lake Michigan Area
Modeling studies performed to date for the states surrounding Lake
Michigan (Wisconsin, Illinois, Indiana, and Michigan) under Phase I of
their attainment demonstrations clearly indicate that reducing ozone
and precursors transported into the nonattainment areas would have a
significant effect on the number and stringency of local control
measures needed to meet the ozone NAAQS.\25\ These studies suggest that
without such region-wide reductions, the necessary degree of local
control will be very difficult to achieve, even with very stringent
local controls. The EPA Matrix study referenced above reinforces that
regional NOX control will be effective in reducing ozone across
the Midwest region. Taken together, the information available to date
suggests that additional reductions in regional NOX emissions will
probably be necessary in meeting the NAAQS in the Chicago/Gary/
Milwaukee area and downwind (including western Michigan), even though
currently available modeling shows that there may be a detrimental
effect from applying NOX controls locally in and near the major
nonattainment areas, in the absence of regional controls.
---------------------------------------------------------------------------

\25\ Lake Michigan Ozone Study; Lake Michigan Ozone Control
Program: Project Report, December 1995.
---------------------------------------------------------------------------

EPA has granted an exemption from local NOX controls for
several areas in the Lake Michigan region based on Phase I modeling.
Phase II modeling is underway by these states, which the Agency is
hopeful will clarify the conditions under which NOX controls might
cause an increase in ozone in the future, the magnitude of such an
increase, and the parts of the nonattainment areas in this region in
which this may occur.
d. Eastern Texas
There has been only limited modeling work focusing on the air
quality characteristics of the eastern Texas region to date. The State
of Texas has requested and been granted exemptions for the Houston and
Beaumont/Port Arthur nonattainment areas, based on Phase I modeling
that predicted that additional local NOX controls could worsen the
ozone problem. New modeling is underway by the state, but there is not
yet enough data to draw conclusions about the potential effect of
transport of ozone and its precursors on these areas. This uncertainty
has led the state to request that the exemptions from local NOX
controls in these areas be granted on a temporary basis while more
sophisticated modeling is conducted.
e. California
The State of California has submitted their ozone SIP to EPA for
approval, relying on both NOX and VOC reductions for most
California nonattainment areas, comprising most of the populated
portion of the state, to demonstrate compliance with the NAAQS.
Specifically, the revised SIP projects that the following NOX
reductions are as follows: South Coast, 59 percent; Sacramento, 40
percent; Ventura, 51 percent; San Diego, 26 percent; and San Joaquin
Valley, 49 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.
EPA has granted exemptions from local NOX controls within
three California nonattainment areas; EPA believes that these actions
do not affect the broader need for regional NOX controls in large
parts of the state for ozone and PM NAAQS attainment and maintenance.
3. Secondary PM Formation as a Regional Issue
Measurements of ambient PM in some western U.S. urban areas that
are having difficulty meeting the current NAAQS for PM-10 have
indicated that secondary PM is a very important component of the
problem. Nitrates

[[Page 33429]]

(e.g., ammonium nitrate) are a primary constituent of this secondary
PM. For example, on days when PM-10 is high in Denver, about 25 percent
of the measured particulate is ammonium nitrate. In the Provo/Salt Lake
City area, secondary PM accounts for approximately 50 percent of the
measured PM, with nitrates being an important component of the
secondary particulate. Secondary nitrate PM levels as high as 40
percent of the 24-hour PM-10 NAAQS standard have been measured in the
Los Angeles Basin and concentrations of nitrate PM about one third of
the NAAQS have been measured in the San Joaquin Valley.\26\
---------------------------------------------------------------------------

\26\ Summary of Local-Scale Source Characterization Studies,
EPA-230-F-95-002, July, 1994.
---------------------------------------------------------------------------

NOX is a critical reactant in the complex chemical reactions
which eventually result in the formation of atmospheric nitrates. Thus,
control of NOX emissions from heavy-duty vehicles will have a
positive effect in reducing atmospheric ammonium nitrate. Because the
atmospheric chemistry of secondary PM formation has common attributes
to that of ozone, secondary PM also tends to be a regional, rather than
a strictly local phenomenon. For this reason, EPA believes that, as is
the case for ozone, regional NOX controls can be very effective in
reducing secondary PM over a significant area. For example,
California's revised SIP concludes that secondary formation of nitrate
particulate (primarily ammonium nitrate) contributes to the particulate
problem in the South Coast Air Basin and the San Joaquin Valley. The
Agency requests comment on the role of secondary particulate in PM-10
nonattainment in specific areas and the effect of regional NOX
controls on such emission; comments that include additional data will
be particularly valuable.
The sources that contribute to PM levels can vary significantly
from area to area. In many areas in the western U.S., re-entrained
fugitive dust emissions dominate the overall PM emissions inventory. In
large urban areas, however, direct PM emissions from heavy-duty diesel
vehicles, as well as the secondary PM from NOX produced by all
heavy-duty vehicles, are believed to contribute significantly to
elevated PM levels.
As can be seen from the discussion above, NOX emissions have a
number of different fates in the atmosphere. In some situations, such
as the formation of atmospheric ozone, NOX is used as a catalyst
but not consumed. A single NOX molecule can potentially be
involved in many photochemical reactions producing several ozone
molecules. In other cases, such as the formation of nitrate particulate
and acid precipitation, NOX is consumed. All NOX eventually
leaves the atmosphere in dry gas, particulate deposition, or in wet
deposition. NOX has a mean residence time in the atmosphere on the
order of several days.
It is clear that heavy-duty vehicle NOX emissions have a role
in the formation of ozone, nitrate particulates, and acid
precipitation. The relative partitioning varies across the country
depending on factors such as geography, meteorology, and the
concentration of other atmospheric pollutants. This preamble and the
RIA contain information and analyses describing the positive impact of
this proposal on ozone, PM, and other environmental effects, which EPA
believes form a strong basis for this proposal. EPA is conducting
additional studies to further refine our understanding of the role of
NOX in the formation of ozone and nitrate PM. EPA requests comment
and data regarding the relative partitioning of NOX emissions.

C. National Emission Trends Related to Ozone and PM

1. National NOX and VOC Emissions Trends
Figure 1 displays projected total NOX emissions over the time
period 1990 to 2020, including a breakdown between stationary and
mobile source components over the same period.\27\ Figure 2 presents
similar data for VOC emissions for the period 1990 to 2010 (later-year
projections for VOC are under development).\28\ As the figures show, a
similar pattern is projected for both of these ozone precursor
emissions. Initially, the projections indicate that national
inventories will decrease over the next few years as a result of
continued implementation of finalized CAA stationary and mobile source
NOX control programs. After the year 2000, however, when
implementation of these CAA programs is largely completed and the
pressure of growth continues, these downward trends are expected to
reverse, resulting in rising national VOC and NOX emissions.
---------------------------------------------------------------------------

\27\ A discussion of the data used for projecting emissions from
various sources is found in the Regulatory Impact Analysis.
\28\ The data in these and the succeeding figures in this
proposal are discussed in the RIA, and take into account the
expected effects of various CAA control programs that have been
promulgated at the time of the modeling. These include 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 or
other programs are not reflected in the data. In these figures,
nonroad emission data includes emissions from a broad range of
nonroad sources including locomotives, aircraft, and marine vessels.

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[[Page 33432]]

In its comments on the ANPRM, API observed that monitoring data
from some areas show progress in reducing ozone. EPA agrees that this
progress appears to be occurring and the Agency believes that this
progress may continue for the next few years in many areas as current
NOX and VOC programs are implemented. As shown in Figures 1 and 2
above, however, EPA believes that, in the absence of significant new
control efforts, the current downward trends in ozone precursor
emissions will be reversed in the middle of the next decade. The Agency
also believes that the projected increase in emissions will again
increase ozone levels in urban areas. EPA continues to examine this
issue and welcomes new modeling analyses that relate NOX and VOC
emission trends to ozone levels.
2. 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, it is appropriate to focus on the ``controllable''
portion of the particulate pollution problem when considering the need
for PM controls. The result is shown in Figure 3, which displays
national trends in PM-10 levels from stationary and mobile sources,
including secondary nitrate PM, 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, including NOX controls, mobile source and industrial
source PM emissions are expected to rise after 2000.

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[[Page 33434]]

Currently, there are 82 PM-10 nonattainment areas across the U.S.
As discussed in section II.B.3. above, in some areas of the West,
nitrate particulate represents between 15 and 40 percent of total
particulate matter. The level of nitrate PM is a function of the
availability of NOX. It is appropriate to expect that the relative
proportions of nitrate particulate caused by stationary and mobile
sources are similar to the relative contributions of NOX by these
source categories. Thus, based on the NOX projections of Figure 1,
which EPA believes are generally typical of NOX projections in the
West, EPA estimates that about half of total nitrate PM is caused by
mobile sources, or about one tenth of total PM-10 in the western part
of the country. In the eastern part of the country, peak fine
particulate matter levels occur in the summer, primarily because
photochemical processes involving SO2 and NOX driven by
strong sunshine accelerate the formation of sulfate and nitrate
particulate matter. Thus, reducing NOX over a broad area is one
strategy for reducing the net fine particle formation in the East. EPA
requests comment, including applicable data whenever possible, on its
assessment of the relationship of NOX to ambient nitrate PM.

D. Contribution of Heavy-Duty Vehicles to Mobile Source Emissions

Heavy-duty vehicles represent about 12 percent of nationwide
NOX emissions and are also an important source of VOC (as a result
of HC emissions) and PM throughout the country. This section reviews
EPA's current estimates of the contribution of heavy-duty vehicles to
the nation's ozone, PM, and NOX air pollution problems now and
into the future. The projections presented here incorporate the
emission reductions from all national mobile source emission control
programs for which final regulations were in place at the time of the
modeling and are discussed further in the RIA.
1. National Mobile Source NOX Emissions Trends
Figure 4 shows the total mobile source NOX inventory by
emission source (light-duty vehicles, heavy-duty vehicles, and nonroad
engines) projected over the next 25 years. For light- and heavy-duty
vehicles, the figure shows a decline in emissions over the next decade
as current programs phase in. The figure also shows, however, that this
current downward trend is projected to end, resulting in a return to
current NOX levels in the absence of further controls. Nonroad
emissions are projected to rise throughout the period.

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[[Page 33436]]

2. National Mobile Source VOC Emissions Trends
Figure 5 shows the total national mobile source VOC inventory by
emission source. As with the NOX emission projections in Figure 4,
this 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 heavy-duty vehicles and nonroad engines are
projected to rise gradually throughout this period.

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[[Page 33438]]

3. National Mobile Source PM Emissions Trends
EPA's latest projected trends for directly emitted mobile source
emissions of PM-10 are shown in Figure 6. The figure shows that over
the next 15 years the contribution of heavy-duty vehicles and other
highway sources to PM-10 pollution are expected to decrease
significantly and then remain relatively constant well into the next
decade.

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[[Page 33440]]

The emission data on which Figure 6 is based do not include
secondary nitrate PM-10 produced by the transformation of NOX in
the atmosphere. EPA believes that for those areas where secondary PM
formed from NOX is a problem, the proportions of total secondary
PM that may be attributed to different emission source categories
mirror the proportions of total NOX emissions from those sources
in those areas. Thus, based on the trends for NOX emissions shown
in Figures 1 and 4 above and assuming that the availability of ammonia
in the atmosphere remains roughly constant, the contribution of heavy-
duty vehicles to secondary PM problems can be expected to decline
slightly in the next few years and then to begin to increase again,
likely reaching and exceeding current levels after about 2020. Also
based on Figures 1 and 4, EPA believes that on average the proportion
of total nitrate PM that may be attributed to heavy-duty vehicles is in
the same range as the proportion of total NOX contributed by these
vehicles, or roughly 10 percent.
As discussed earlier in this proposal, EPA has not completed its
assessment of the relative importance of fine PM to health and welfare
concerns as compared with PM-10. As a result, EPA has not yet developed
specific projections showing the contribution of heavy-duty vehicles to
total fine particulate emissions. However, since nearly all mobile
source related PM, both directly emitted PM and secondary nitrate PM
formed from NOX emissions, falls in the fine particulate category,
it follows that the relative contribution of heavy-duty vehicles to
total fine particulate is greater than their contribution to total PM-
10.

E. Conclusions

1. The Rationale for Controlling Heavy-Duty Vehicle Emissions
EPA believes that immediate proposal of new emission standards for
highway heavy-duty engines is appropriate. The decision to issue this
NPRM is based on thorough consideration of a range of relevant factors,
as described above. Section II.A. presented the serious effects to
human health and the environment of elevated levels of ozone and other
chemical products of NOX emissions, including secondary PM . That
section describes a range of serious respiratory health effects that
have been closely connected to exposure to ozone levels exceeding the
NAAQS, which exist in many areas of the country. In light of the many
years of research by many parties into the health effects of ozone, the
Agency believes that a clear picture has emerged that, not only those
with existing respiratory conditions, but also healthy adults and
children are in danger of experiencing medical problems and a reduced
quality of life when exposed to elevated levels of ozone. Also
discussed were the variety of health concerns that have been associated
with exposure to PM at levels above the current NAAQS. Beyond these and
other serious health concerns, Section II.A. also discussed major
impacts on vegetation, crops, coastal estuaries, visibility, and other
effects that result from the transformation of NOX into ozone,
acid deposition, and nitrate PM formed from NOX. The current NAAQS
levels reflect the need to address exposure to ozone and PM wherever
the NAAQS standards are exceeded.
Section II.B. discussed EPA's belief that the widespread exposure
of people to elevated ozone levels will continue and worsen in the
absence of major regional-scale reductions in NOX. This section
discussed the regional characteristic of the ozone problem and how
various large areas of the country are projected to require regional-
scale NOX controls to reach and maintain attainment of the ozone
standard. EPA believes this remains true even where local NOX
control waivers must be granted under the CAA. This section also noted
that regional-scale control of NOX would be beneficial in reducing
the formation of secondary PM in some areas of the western U.S. and
would thereby assist these areas in reaching and attaining the PM
NAAQS.
Section II.B. also presented projections of emissions over the next
20 to 30 years to help assess the likelihood of continued air quality
problems in the future. In general, EPA's most recently developed
emission inventories show that national levels of ozone precursors will
tend to drop slightly, but only temporarily, after which they will
return to current levels. The link of these projected future emissions
to the formation of ozone was reinforced by recent air quality modeling
projecting continued ozone problems in major areas of the country in
the absence of new controls. The information assembled in this section
leads EPA to believe that a strong need exists for new regional-scale
NOX control programs over large areas of the country if the
negative trends are to be arrested and reversed. Similarly, the data on
PM suggests that secondary PM reductions will be helpful in reversing a
national trend of increasing PM emissions, especially in the western
states.
Section II.C. presented national mobile source emission inventories
over the next 20 to 30 years, divided into the key mobile source
categories. These presentations showed that heavy-duty vehicles
contribute significantly to mobile source NOX , VOC, and PM
emissions and to the overall trends in mobile source emissions into the
future. In its comments on the ANPRM, API gave several reasons why
projections of future emission inventories may be in error and
questioned the future contribution of heavy-duty vehicle emissions.
Although EPA believes that the projections presented in this proposal
can be improved and will continue to take actions to improve them, the
Agency believes that they represent the highest quality estimates
available today. As such, they clearly indicate that heavy-duty
vehicles will remain significant contributors to these emissions well
into the future.
After consideration of all the available information, including
comments received on the ANPRM, EPA believes that heavy-duty vehicles
contribute significantly to air pollution, which has a serious impact
on health and the environment. The Agency believes that this body of
information on balance supports taking action to revise heavy-duty
engine emission standards, which will reduce NOX, HC, and
secondary PM from this segment of mobile sources.
2. Appropriateness of a National Heavy-Duty Vehicle Program
EPA further believes that the mobile source emission control
program proposed in this action is most appropriately national in
scope, for several reasons. First, as summarized above, the regional
character of both ozone and secondary PM formation leads EPA to believe
that major new NOX controls over large regions of the country are
needed to achieve the regional-scale ozone and PM reduction many areas
require. Control of NOX from heavy-duty vehicles and other mobile
sources are effective approaches to such regional control since the
resulting control covers a wide area. Second, heavy-duty vehicles, like
other mobile sources, represent an emissions source that itself crosses
boundaries of nonattainment areas, states, and regions. A mobile source
control program that covers only certain parts of the country has the
disadvantage of allowing high-emitting vehicles to travel regularly
into areas with more stringent requirements, compromising the
effectiveness of the program. Finally, the structure and marketing
patterns of the engine and vehicle manufacturing industries would make
it impractical and inefficient for a

[[Page 33441]]

patchwork of different emission standards to be enacted in various
parts of the country. Rather, for engine manufacturers to achieve
economies of scale and to concentrate research and development
resources most effectively, EPA believes it is most practical to
establish a single set of emission requirements applying to engines in
trucks and buses used anywhere in the country. A key reason why EPA,
CARB, and engine manufacturers agreed to a Statement of Principles was
the potential for nationally harmonized requirements for heavy-duty
vehicles.
3. Issues of Timing
EPA also believes that for the anticipated benefits of new highway
heavy-duty engine emission standards to be available when they are
needed, it is best to finalize such a program in the near future. There
are several reasons for and positive consequences of expeditious
promulgation of new emission requirements for heavy-duty engines. The
primary reason to begin the process now is that the current emission
and air quality projections discussed above project a need in many
areas of the country for significant additional emission reductions in
the post-2000 period to reach and maintain attainment.
In addition, the highway heavy-duty engine manufacturers have
communicated to EPA that to meet the stringent standards proposed in
this action for model year 2004 and later, they need to have the
precise emission requirements affecting them in place and begin work
toward those goals very soon. The industry's perspective is based on
its expectation that the standards proposed here would represent a very
significant technological challenge requiring large investments by the
members of the industry. EPA's technology assessment is consistent with
the industry view. If new standards are established by approximately
the end of 1996, about two years will be available before the proposed
1999 technology review for manufacturers to marshall appropriate
resources to achieve significant technological progress. Then, if such
progress is confirmed at that time, about four years will remain for
additional resources to be assembled and the new technologies to be
developed and incorporated into 2004 model year engines. Based on the
Agency's technology assessment as of the time of this proposal, EPA
agrees that it is best to set the process in motion now to achieve the
full benefits of cleaner heavy-duty vehicles beginning in 2004.
Another compelling reason to initiate the process of enacting new
heavy-duty engine emission requirements soon is that the Agency is
proposing to encourage voluntary marketing of cleaner engines,
especially engines that incorporate new technologies, earlier than 2004
(see Section III.B. below for proposed changes to the Averaging,
Banking, and Trading program). An expeditious completion of the
rulemaking process would encourage manufacturers to consider such
options in the earliest possible model year.
State air quality planners will also benefit if the program
proposed in this action can be formally established soon. States must
soon finalize ozone SIPs demonstrating attainment in the years ahead,
and expeditious EPA action on additional heavy-duty vehicle emission
reductions will allow states to know whether to incorporate expected
reductions from heavy-duty vehicle controls into their SIPs. At the
same time, any significant delay in promulgation might also require a
delay in the year of implementation past 2004, postponing the full
benefit of the program as an air quality strategy. For this and the
other reasons given in this section, EPA plans to finalize the proposed
requirements as soon as possible should the Agency reach a final
determination that such a program is warranted.

III. Proposed Program for Reducing Highway HDE Emissions

A. Background on Highway HDE 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
(HDEs) are used in a wide range of heavy-duty vehicle categories, from
small utility vans to large trucks. Because one type of HDE 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 an HDE consists of exercising it over a prescribed duty
cycle of engine speeds and loads using an engine dynamometer.
Highway HDEs are categorized into diesel and otto-cycle
(predominantly gasoline-fueled) engines with each, in some cases,
having different standards and program requirements. EPA has further
subdivided heavy-duty diesel engines (HDDEs) into three
subclassifications or ``primary intended service classes''; light,
medium, and heavy HDDEs. HDDEs are categorized into one of the three
subclasses depending on the GVWR of the vehicles for which they are
intended, the usage of the vehicles, the engine horsepower rating, and
other factors ^{29. The subclassifications allow EPA to more
effectively set requirements that are appropriate for the wide range of
sizes and uses of HDDEs. With one exception, emission standards are the
same for HDDE in all of the subclasses but other programmatic
requirements differ as appropriate. Engines used in ``urban buses''
(large transit buses)^{30, which fall mostly in the heavy HDDE
subclass, have somewhat different standards and program requirements.
The standards and program requirements for the various categories and
types of engines are discussed below and in following sections, as
appropriate.
---------------------------------------------------------------------------

\29\ 40 CFR Part 86.090-2.
\30\ 40 CFR Part 86.093-2.
---------------------------------------------------------------------------

Emissions from HDEs 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 HDEs is to perform work and that there is a
large variation in work output among the engines used in heavy-duty
applications. This system allows EPA to apply the same standards to a
very wide range of engines.
Emission standards have been in place for highway diesel and
gasoline-fueled HDEs 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 HDEs and for PM from urban buses. 42 U.S.C.
7521(a)(3), 7521(f), and 7554(b).
The current exhaust emission standards for highway heavy-duty
diesel and gasoline engines are presented in Table 1. Standards for
urban buses, which specify more stringent PM levels than those applying
to other HDEs, are displayed separately in the table.

[[Page 33442]]

Table 1.--Highway Heavy-Duty Emission Standards
----------------------------------------------------------------------------------------------------------------
Diesel
Year HC (g/bhp- CO (g/bhp- NOX (g/bhp- particulate
hr) hr) hr) (g/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
Otto-cycle HC
(g/bhp-hr) CO
(g/bhp-hr) NOX
(g/bhp-hr) Evaporative
HC
(g/test)
1991-97:
(A)..................................................... 1.1 14.4 5.0 3.0
(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. Gross Vehicle Weight Rating (GVWR).
``(B)'' denotes the standard for engines in trucks 14,000 lbs. GVWR.
*.07 g/bhp-hr in-use.
This table does not contain all applicable standards. A complete set of standards may be found in 40 CFR Part
86.

Under section 202(a)(3), emission standards for highway HDEs 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
HDE 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 HDEs 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 highway
HDEs before the model year 2004. 42 U.S.C. 7521(b)(1)(C).

B. Description of Today's Proposal

In this action, EPA proposes a comprehensive program to address the
significant contribution of highway HDEs to ambient pollutant
concentrations and the resultant air quality problems around the
country. The proposed program consists of stringent new emission
standards, changes to maintain the durability of HDE emissions in use,
and changes to the current Averaging, Banking, and Trading regulations
to encourage the early introduction of cleaner engines and new
technology.
1. Emission Standards
a. Standards Proposed in Today's Action. EPA proposes new emission
standards for model years 2004 and later. These standards are in the
form of combined non-methane hydrocarbons plus nitrogen oxides (NMHC +
NOX) and are presented in units of g/bhp-hr. They would apply to
otto and diesel cycle engines fueled by gasoline, diesel, methanol, and
gaseous fuels and their blends. Manufacturers would have the choice of
certifying their engines to either of two optional sets of standards:

2.4 g/bhp-hr NMHC + NOX
or
2.5 g/bhp-hr NMHC + NOX with a limit of 0.5 g/bhp-hr on NMHC

EPA proposes that all other emission standards and other requirements
applying to model year 1998 and later model years remain unchanged.
For the most part, EPA expects that either of these standards will
result in the essentially the same NOX and NMHC emission rates in-
use. As is discussed elsewhere in the proposal and in the supporting
RIA, EPA expects that the proposed standards will generally result in
NMHC levels of about 0.4 g/bhp-hr and NOX levels of about 2.0 g/
bhp-hr. Most, but not all, HDEs now have HC certification levels of 0.5
g/bhp-hr or less. The standards will result in modest NMHC reductions
for the HDE class taken as a whole and will serve as a cap against
increases in NMHC emissions as manufacturers implement NOX control
strategies. The expected NOX levels would result in reductions of
50 percent as compared to the 1998 standard. For administrative
simplicity, EPA would prefer only one standard and based on current HC
certification levels the 2.4 g/bhp-hr standard seems most appropriate.
However, the manufacturers would prefer the flexibility of the
alternate standard and EPA sees no environmental harm from offering
this option. EPA asks comment on whether two standards are appropriate
and why.
The form of the proposed standards differs in some aspects from the
current and 1998 model year standards for HDEs presented in Table 1.
First, EPA is proposing a combined standard (NMHC+NOX) instead of
separate standards. EPA is using this approach because for in-cylinder
control strategies there is a tradeoff between HC and NOX control.
Thus, expressing the requirements as a combined standard provides the
manufacturers some small amount of additional flexibility. Further, EPA
sees no environmental harm from providing this flexibility. While there
is not a direct one to one trade-off in every area of the country, both
pollutants are generally considered key ingredients in the formation of
ozone. Thus a little more control of one pollutant at the expense of
the other should provide essentially the same air quality benefits as
if the engines were meeting separate standards for NOX and NMHC at
comparable levels (nominally 2.0 g/bhp-hr NOX and 0.4 g/bhp-hr
NMHC). Second, EPA is proposing an NMHC standard instead of a total HC

[[Page 33443]]

standard. This approach is being proposed primarily because methane is
largely unreactive in the formation of ozone and thus its control would
not help to achieve the ozone air quality objectives of this proposal.
This is not intended to suggest that the control of methane is not
valuable in the context of other environmental objectives EPA may
consider in the future, but methane emissions from these engines are
only a small fraction of their total HC and thus foregoing control at
this time is reasonable. Both the use of an NMHC standard and the use
of a combined standard is also consistent with the current California
LEV program requirements for medium-duty vehicles and the requirements
for HDEs prescribed in section 245 of the 1990 amendments to the Clean
Air Act.
The proposed standards (rooted in the California Federal
Implementation Plan and identified in the SOP) represent a reduction of
more than 50 percent in NOX and NMHC/HC over current requirements.
Reductions of this magnitude are a significant challenge, especially
for diesel HDEs, and will require a major research and development
effort to achieve. At this time there is not one firm set of
technologies to be applied to all diesel HDEs to achieve the proposed
standards. Diesel HDEs will need to consider approaches from a number
of different technological strategies and control hardware which have
been identified and assessed in a few laboratory programs and then
apply their choices to their 2004 models. In many cases these
strategies and hardware have not been used on production diesel engines
and there are substantial development challenges ahead to apply this
technology cost effectively with due consideration to impacts on
operating and maintenance costs as well as engine durability.
Regulatory enhancements such as the proposed revisions to the
Averaging, Banking, and Trading program (as discussed below) will also
help to enhance overall feasibility of the standards for all engine
models. As is discussed elsewhere in proposal and in the supporting
RIA, EPA believes the proposed standards while very challenging are
technically feasible and otherwise appropriate in the context of
section 202(a)(3). With about eight years remaining before the 2004
model year, manufacturers have an unprecedented amount of leadtime to
fully assess, develop, and optimize the various control approaches and
to integrate them into their 2004 model year products in a manner which
minimizes engine costs and fuel impacts and does not raise safety
concerns. Indeed the widespread support of the HDE industry for the SOP
tends to support EPA's conclusion.
While there are promising technologies and aftertreatment control
strategies which otto cycle (gasoline) HDEs may employ to achieve the
proposed standards, these still require development if they are to be
applied to all different otto-cycle engine models and the standards are
to be met in use. EPA believes it will be easier technologically for
otto-cycle (gasoline) HDEs to achieve the proposed standards but
proposes the same standards for otto and diesel cycle HDEs for two
reasons. First, work is required to apply these technologies/
aftertreatment control strategies to all otto cycle engines. EPA
expects that much of this progress will be made in response to the 1998
HDE NOX standard and others in response to market competitive
pressures. Nonetheless, EPA still expects that some models will need to
develop and employ technology/aftertreatment control upgrades to meet a
2.4 g/bhp-hr NMHC + NOX standard. This may especially be the case
for the few otto-cycle HDE families which may not employ closed loop
control, fuel injection systems with catalysts before 2004. Second,
because otto and diesel cycle HDEs compete in the market place, there
is a degree to which for market equity reasons it is appropriate to
apply standards of equivalent stringency to both classes of engines.
This approach reduces the possibility that emission standards could
have disruptive effect on the HDE market. Both EPA and the California
Air Resources Board have set HC and NOX standards of equivalent
stringency for otto-cycle and diesel HDEs in the past.
b. 1999 Rulemaking Review
EPA proposes to conduct a special review in 1999 to reassess the
appropriateness of the standards under the CAA including the need for
and the technological and economic feasibility of the standards at that
time. Before making a final decision in this review regarding the
appropriateness of these standards under the CAA, EPA intends to issue
a proposal regarding this issue and offer an opportunity for public
comment on whether the standards continue to be technologically
feasible for implementation in 2004 and consistent with the CAA.
Following the close of the comment period, EPA would issue a final
agency decision under section 307 of the CAA.
If in 1999 EPA finds the standards to not be feasible for model
year 2004 or otherwise not in accordance with the Act, EPA will propose
adjusted standards which do not exceed the following:

2.9 g/bhp-hr NMHC + NOX
or
3.0 g/bhp-hr NMHC + NOX with a limit of 0.6 g/bhp-hr on NMHC.

However, if EPA determines that the feasibility of the standards
requires diesel fuel changes and EPA does not engage in rulemaking to
require such changes, EPA will propose adjusted standards which do not
exceed the following:

3.4 g/bhp-hr NMHC + NOX
or
3.5 g/bhp-hr NMHC + NOX with a limit of 0.7 g/bhp-hr on NMHC.

The standards finalized in the rulemaking initiated by today's
proposal would stay in effect unless revised by this subsequent
rulemaking procedure. EPA has included language in the proposed
regulatory text regarding the 1999 review.
Over the next several years EPA will be actively engaged in
programs to evaluate technology (engine/fuel quality) interactions/
developments and progress toward meeting the proposed standards through
in-house programs and coordination with the involved industries. To aid
in this process EPA has established a working group under its Mobile
Sources Technical Advisory Sub-Committee to the CAA Advisory Committee
to solicit technical advice and input from engine, fuel, and related
experts from around the country. If as a result of this evaluation, EPA
reaches the view that the available information is sufficient to
indicate that the feasibility of the standards may depend on
modifications to diesel fuel, any potential for diesel fuel changes
could then be considered within the context of the 1999 Review. EPA
recognizes that any consideration of potential fuel diesel
modifications must be appropriate under section 211(c) of the CAA
(including considerations of cost, cost effectiveness, and other
relevant cost considerations), and is especially sensitive to the
substantial leadtime requirements that may be associated with fuel
modifications.
Based on the information presented in the RIA and in section IV of
this proposal, EPA believes the proposed standards are technologically
feasible and otherwise appropriate under the CAA. Nonetheless,
especially for diesel engines, it is clear that a significant amount of
research and development will be needed to comply. The alternate
standards discussed above are designed to serve as a backstop in the
event that

[[Page 33444]]

the 1999 review leads to the conclusion that a revision is appropriate.
Based on the technical analysis in the RIA, these levels represent
upper limits for these potential revisions. If during the course of the
review EPA concludes that a revision is appropriate, a rulemaking will
be conducted to determine the appropriate level for the model year 2004
and later standards.
c. Other Issues Related to HDE Emission Standards. Several
commenters to the ANPRM expressed concern with the levels of the
emission standards EPA is proposing today. Representatives of
environmental organizations and several states argued that EPA should
propose more stringent standards for one or more pollutants. While EPA
believes at this time that today's proposed program represents the best
combination of standards that are achievable given our current
understanding of technological constraints, as explained below, and the
other criteria set forth in CAA section 202(a)(3), EPA remains open to
additional information and will consider finalizing more stringent
standards in this action or proposing more stringent standards by
separate action if such standards are warranted.
In comments the Agency has received thus far, commenters generally
address potential standards for NOX and PM separately and somewhat
independently. These comments urge the Agency to propose an NMHC +
NOX standard low enough to assure that NOX levels of 2.0 g/
bhp-hr are reached by all diesels, expressing concern that a 2.4 or 2.5
g/bhp-hr NMHC + NOX standard will actually translate into 2.2-2.3
g/bhp-hr NOX, not the 2.0 g/bhp-hr level applied in the California
Federal Implementation Plan (FIP) to model year 2002 engines. These
commenters also suggest that a PM standard of 0.05 g/bhp-hr be
proposed, equal to the level which currently applies to urban buses.
The Agency believes that because of the close interaction among
NOX, NMHC, and PM emissions from diesel engines, decisions about
proposed emission standards cannot be made independently from one
another. As described below in section IV, EPA believes that reaching
all the standards proposed today simultaneously will require a very
large technological effort on the part of diesel HDE manufacturers.
Based on the information available today, the Agency believes that the
scale of the effort which will be required is such that if NOX,
NMHC, or PM standards lower than those proposed here were to be
required, the feasibility of implementing the program for the 2004
model year would be threatened. That is, while manufacturers may be
able to achieve lower emission levels for some engine models, at this
time EPA does not believe that this would be feasible, on average, for
the full line of engines manufacturers will likely be offering in 2004.
(The technological assessment on which EPA based a 2.0 g/bhp-hr
NOX emission standard in the California Federal Implementation
Plans assumed that only engines sold in California, not all engines
nationally, would be affected.) Regarding a specific comment that a
combined NOX + NMHC standard allows NOX emissions
significantly higher than the 2.0 g/bhp-hr NOX goal, the Agency
accepts the intention of the engine industry to reach levels very close
to 2.0 g/bhp-hr. This also seems likely from a technical perspective
since at best modest NMHC reductions can be achieved over current
levels. By combining the NOX standard with NMHC, EPA proposes to
allow a small degree of flexibility to manufacturers which succeed in
achieving very low NMHC levels in conjunction with the proposed
NOX and PM standards. However, the Agency does not expect that the
opportunity to take advantage of that flexibility will be frequently
used and expects that on average in-use NOX levels would be
approximately 2 g/BHP-hr.
As is the case for NMHC, for many in-cylinder control strategies
there is a trade-off between NOX and PM emission rates. In-
cylinder techniques which reduce NOX may increase PM and vice-
versa. For HDDEs, EPA expects that most manufacturers will rely on in-
cylinder NOX control techniques as opposed to aftertreatment
devices. Some of these techniques are likely to put upward pressure on
PM levels, and thus will require special optimization to ensure that PM
levels are not increased. A simultaneous reduction in the PM standard
could have an adverse effect on the feasibility of the NMHC + NOX
standard. Nonetheless, EPA recognizes the need for and value of
additional reductions in PM emission rates and asks for comments on
this matter.
EPA encourages further, detailed comment on the appropriateness of
the proposed levels for NMHC + NOX and PM in light of the
technological interactions of their formation and control. EPA will
consider finalizing standards different than those proposed today to
the degree that comments and analysis support such action. However, the
interactions among the pollutants would require a reassessment of all
pollutants if a more stringent standard is to be considered for any one
pollutant.
One commenter requested that EPA propose voluntary low emission
standards for NOX and PM which would apply between 1998 and 2003
at levels below the 4.0 g/bhp-hr NOX and 0.10 g/bhp-hr PM which
would be required in 2004. The ultimate purchasers of HDEs certified to
meet the voluntary low emission standards would be able to market the
emission credits generated. EPA asks for comment on the need for and
desirability of lower voluntary NOX and PM standards as a means to
encourage technological innovation and the value of such a program
given that manufacturers can already elect to certify to lower
standards (family emission limits) under the Averaging, Banking, and
Trading (A,B,&T) program. These extra emission reductions from these
HDEs could be sold for marketable credits provided there is not double
counting between the A,B,&T program and a user program.
Commenters also raised the issue of whether standards for otto-
cycle HDEs (gasoline-fueled) should be different, and more stringent,
than those for diesel-cycle HDEs. As commenters observe, the
technological challenge of achieving lower NOX levels
simultaneously with low NMHC levels has been less for otto- than
diesel-cycle HDEs in the past and current data suggests this may be the
case for the proposed 2004 standards. In 1996 there were seven otto-
cycle HDE families that certified to the existing standards with
combined NMHC+NOX levels below the level of the proposed
NMHC+NOX standard. However, of these seven, only about half had
actual test data to demonstrate emission levels which could allow them
to certify to the level of the proposed standards. Durability test data
on others indicates that they would be unable to meet a 2.4 g/BHP-hr
NMHC+NOX standard at the end of their useful life period.
Lower certification levels for some families does not necessarily
lead to the conclusion that levels significantly less than the proposed
standards are achievable by all families in the near term. Indeed, the
industry has raised concern that even if the level of the proposed
standard can be achieved on laboratory prototypes in the near term,
some engine models will require additional work to gain the additional
emission reductions needed to account for the effects of production and
test variability and the deterioration in the efficiency of emission
controls in use. Industry has suggested that a prototype engine
emission rate about 1 g/BHP-hr less than the proposed standard is
needed to be assured of compliance by production engines.

[[Page 33445]]

Nonetheless, the recent engine and emission control system
improvements and the resultant reduction in the NMHC+NOX emission
levels of many of the current otto-cycle families clearly indicate that
the proposed standards are feasible by the 2004 model year. Some
concern has been expressed that the proposed standard may be more
difficult for otto-cycle engines used in heavier vehicles (>14,000 lbs
GVWR). If not formulated properly, the efficiency of their catalysts
may be reduced by heat stress which occurs during the longer periods of
high load operation which are characteristic of some of these vehicles.
However, the fact that otto-cycle HDEs with these lower emission rates
are used in vehicles of all weight classes suggests that vehicle design
and use patterns do not govern the feasibility of low NOX catalyst
technology. EPA believes that any technological feasibility concerns
for otto-cycle HDE families required to meet the proposed standard can
be resolved within the next eight years.
Given the relatively low NMHC+NOX certification levels of some
current otto-cycle engines and the available leadtime, EPA requests
comment on setting the NMHC+NOX standard for otto-cycle engines in
the range of 1.5-2.0 g/BHP-hr. In addition to comments on technological
feasibility, EPA requests comment on the appropriateness of a lower
standard in the context of emission inventory benefits, environmental
need, costs of compliance (purchase and operating), energy impact,
safety, and market equity concerns. Comments regarding market equity
should address how different levels of NMHC+NOX standards for
otto- and diesel-cycle engines would affect the market relationship
between these technologies. EPA also requests comment on whether
implementing a separate standard for otto-cycle engines (which are
largely gasoline-fueled engines) would be an appropriate change from
the historical ``fuel neutral'' nature of EPA's emission standards for
NMHC and NOX emissions from HDEs, and whether such a change could
adversely affect the development of and use of clean alternative fuels.
EPA also requests comment on another alternative approach for otto-
cycle engines. Under this approach, manufacturers could voluntarily
elect to certify these engines to the proposed standard significantly
earlier (i.e., model year 1999, 2000, or 2001 instead of 2004) as an
alternative to meeting the more stringent standard discussed above
(1.5-2.0 g/bhp-hr) in 2004. In this concept, the more stringent 2004
standard for otto-cycle engines either would not apply or would apply
to a model year after 2004 to a manufacturer that elected to meet the
proposed standard early. This approach would have the benefit of
providing early emission reductions and, to the extent that
manufacturers choose the proposed standard early, would help reduce the
potential market equity impacts mentioned above since the same standard
would apply to both otto- and diesel-cycle engines. While EPA may not
impose on highway heavy-duty engines NOX standards more stringent
than 4.0 g/bhp-hr for any model year before 2004 (CAA sections
202(b)(1)(C) and (a)(3)(B)(ii)), EPA believes it retains authority to
offer manufacturers the voluntary option of complying with a NOX
plus NMHC standard of 2.4 g/bhp-hr beginning before model year 2004.
EPA requests comment on the appropriateness of finalizing this concept.
Should a commenter favor this concept, they should specify the version
they prefer (i.e., implementation date of the 2.4 g/BHP-hr standard or
implementation date and numerical value of a later more stringent
standard. EPA seeks comment on the technical feasibility and
appropriateness in the context of environmental need, costs of
compliance, energy impact, safety and market equity for the option
supported. The public docket contains a memo further discussing each of
the alternative approaches to otto-cycle HDE standards as laid out
above.
Finally, several commenters encouraged EPA to reconsider the role
of alternative fuel technologies in reaching low emission levels. EPA
believes HDE technologies using alternative fuels can reach or exceed
the emission standards proposed today. For this reason, EPA has for
many years supported, and continues to support, expanded use of
optimized alternative fuel engines. The Agency is pleased that
development of HDEs which use alternative fuels is continuing and that
some of these engines have been marketed, usually for specialized
purposes. However, it does not appear that a major shift in the market
toward alternative fuel HDEs is underway, and EPA does not believe at
this time that the HDE manufacturing industry is in a position to shift
a significant amount of its production toward non-petroleum fuels by
the year 2004. Thus, EPA believes it is likely that petroleum-fueled
HDEs will continue to dominate the HDE industry well into the next
century, and the Agency does not believe that EPA action that could
theoretically force a faster shift toward alternative fuel technologies
(e.g., extremely low emission requirements for all engines) would be
effective in the absence of a strong market demand for such engines.
Therefore, the Agency believes that it is appropriate to base new
proposed HDE emission standards on the projected capabilities of
petroleum-fueled engines rather than on the current or projected
capabilities of alternative fuel engine technologies. If the stringent
standards proposed today, while achievable by petroleum-fueled engines,
are indeed relatively easy for some alternative fueled engines to meet,
the result may be the introduction of alternative fueled HDEs that are
both acceptable to the market and priced competitively. From the
Agency's perspective, such a market-based promotion of alternative fuel
technologies would be a positive result of today's proposed action.
d. Non-conformance Penalties. Section 206(g) of the Clean Air Act
requires EPA to allow an HDE manufacturer to receive a certificate of
compliance for an engine family which exceeds the applicable standard
(but does not exceed an upper limit) if the manufacturer pays a non-
conformance penalty established by EPA through rulemaking. The NCP
program established through rulemaking is codified in Subpart L of 40
CFR 86. EPA plans to address provisions related to NCPs for the
proposed 2004 model year standards in conjunction with the 1999 review
discussed above.
2. In-use Emissions Control Elements
a. Introduction. Historically, EPA has viewed in-use emissions
deterioration as a problem associated more with gasoline engines than
with diesel engines. For NOX emissions, EPA has tended to be less
concerned with diesel engine emissions deterioration because diesels
are currently equipped with fewer aftertreatment or other emission
control 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
resulted in improved performance, fuel economy, and durability as well.
As described below in Section IV. A., as standards are reduced
diesel HDE manufacturers will likely continue to strive to meet the
standards through engine, air intake, and fuel systems redesign.
However, they may find it necessary to introduce new technologies, such
as exhaust gas recirculation (EGR), which function solely to reduce
emissions. Long-term emissions performance becomes a

[[Page 33446]]

greater concern with the addition of such emissions control
technologies. 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. This is of particular concern because the heavy-
duty engine market has demanded longer-lasting engines, and
manufacturers have been successful in increasing engine life. It is
EPA's understanding that some current large engines accumulate in
excess of 500,000 miles before being rebuilt and are used for several
hundred thousand more miles after rebuild. Thus, failure of emissions
controls early in the engine's life could offset a significant portion
of the expected benefit associated with the more stringent standards
proposed today.
As described below, EPA is proposing revisions to its current
regulations regarding in-use emissions control including changes to
useful life, emissions related maintenance and warranty provisions.
These changes are intended as updates to current requirements which
will further encourage engine manufacturers to use emissions controls
that will have a high degree of durability, and that perform well in
use without an unreasonable degree of owner involvement. EPA is also
proposing other basic provisions to help encourage the maintenance and
repair of emissions controls after the regulatory useful life is
reached, and especially during engine rebuild. The proposals would be
effective beginning with 2004 model year engines. EPA believes that the
industry is fully capable of responding to the challenge of achieving
the benefits of low emissions standards, not just in the early years of
engine life, but throughout the time that the engine is in-use. EPA
requests detailed comments, with as much supporting rationale as
possible, on all of the following proposals.
b. Revisions to Current Regulations
To help ensure the durability of new emissions related technology
used to meet the new standards, EPA is proposing revisions to its
current regulations in the areas of ``useful life'', ``emissions
related maintenance'', and ``emission defect and performance
warranties''.
i. Useful life
As provided in section 202 of the Clean Air Act, EPA specifies the
``useful life'' periods for the various heavy-duty engine types. The
regulatory useful life is the period of time or operation during which
manufacturers are liable for emissions compliance. Manufacturers are
responsible for making sure their engines meet emissions standards not
just at the time of certification and production but also for the
regulatory useful life of the engines. EPA has the authority to test
engines selected from the production line and from the in-use fleet to
determine compliance with this requirement. EPA can require
manufacturers to recall and repair engines in an engine family if
testing of properly maintained and used engines or other information
indicates that a substantial number of engines in the engine family do
not meet emissions standards during the useful life. EPA's ongoing
programs for production-line auditing (Selective Enforcement Auditing)
and in-use recall are two primary EPA enforcement mechanisms for engine
emissions standards. The statutory authority for these programs is
found in Sections 206 and 207 of the Clean Air Act.
Currently for heavy-duty on-highway engines, the useful life is
generally defined as eight years or 110,000 miles for light heavy-duty
diesel engines (HDDEs) and gasoline heavy-duty engines, eight years or
185,000 miles for medium HDDEs, and eight years or 290,000 miles for
heavy HDDEs, whichever comes first.^{31 These mileage values were
originally chosen to roughly correspond to the prevailing average
engine lives before retirement (for smaller engines) or major engine
rebuilds (for larger engines). Since the middle 1980s, manufacturers
have increased very significantly the mechanical durability of heavy-
duty diesel engines, allowing the engines to go many more miles before
rebuild. Also, the annual vehicle miles travelled (VMT) for newer line-
haul trucks has increased which results in the trucks reaching the end
of their defined useful life more quickly. It is not uncommon for line
haul trucks to reach their current maximum useful life of 290,000 miles
well before the years useful life interval.
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\31\ 40 CFR 86.096-2. The Clean Air Act Amendments of 1990
specify a minimum useful life years limit of ten years for heavy-
duty engines with respect to any standard that first becomes
applicable after the 1990 amendments were enacted. 42 U.S.C. 7521
(d)(2). Standards adopted after the Amendments such as the urban bus
particulate standard and the 1998 and later model year NOX
standard have a useful life years limit of ten years (e.g., 40 CFR
86.098-2). Standards adopted before the Clean Air Act Amendments of
1990 have a useful life years limit of eight years.
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The first part of the following discussion concerns the mileage
portion of the useful life. The years useful life interval is much less
critical because it is not generally the limiting interval. EPA is
proposing to make the years portion consistent at ten years for all
heavy-duty engines and standards beginning with the 2004 model year.
The discussion of the years interval proposal follows the proposals and
discussion regarding mileage.
The engines of greatest concern to EPA are those in the heavy
heavy-duty diesel engine category because they, for the most part, are
the engines that tend to reach the end of the useful life quickly and
then continue to accumulate many more miles than the current useful
life before needing to be rebuilt. Published warranty information
indicates that the major engine components of heavy HDDEs are warranted
for 500,000 miles in most cases and extended base engine coverage is
often available for up to 5 years/500,000 miles. Since the repair or
replacement of some of the components covered by the warranties due to
wear is fundamental to rebuilding, the warranties are one good
indication that some engines greatly exceed EPA's current useful life
miles limit of 290,000 miles. Also, it is commonly accepted in the
trucking industry that, with sound maintenance practices, today's heavy
HDDEs last much longer than 290,000 miles before rebuild.^{32
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\32\ Comments of American Trucking Association, Inc., October
17, 1995, Docket A-95-27, II-D-40.
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Although EPA could perhaps justify proposing an increase of the
heavy HDDE useful life requirement to 500,000 miles or more based on
how long engines are lasting today before rebuild, EPA believes that a
somewhat lower value is appropriate. Engine manufacturers have stated
that they will be challenged to meet the proposed new standards and an
extremely long useful life could affect the feasibility of the 2004
standards. EPA acknowledges that the length of the useful life can
affect the feasibility of the standards. EPA believes that the program
goal of ensuring durable emissions control designs would be achieved
through a 50 percent increase in the useful life up to 435,000 miles.
This value represents a meaningful increase in the useful life without
potentially compromising the feasibility or cost effectiveness of the
2004 standards. Additionally, other programs, as described below, can
help ensure emissions controls continue to operate properly after the
end of the useful life. The end of the useful life does not necessarily
mean the end of good in-use emissions performance.
Not all heavy HDDEs are used in line-haul trucks which accumulate
miles very quickly. A small minority of heavy

[[Page 33447]]

HDDEs are used in urban (transit) buses and other urban vehicles that
accumulate miles much more slowly. For example, urban buses average
about 13 miles per hour (including idle time) ^{33 and about 40,000
miles per year.^{34 For urban vehicles such as urban buses, a useful
life of 435,000 miles would be excessive because of their slow mileage
accumulation rates. EPA has addressed such concerns in other
regulations by adopting an hours limit that is equivalent to a miles
limit which is set to reflect typical operation of heavy-duty engines.
Vehicles that accumulate mileage more slowly than typical for heavy-
duty vehicles would reach the hours interval before the mileage
interval. In keeping with this approach, EPA proposes to add an hours
limit of 13,000 hours to the useful life for heavy HDDEs. The 13,000
hours limit is based on other hours and miles equivalents used in
existing EPA regulations regarding heavy-duty engines.^{35
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\33\ ``National Transit Summaries and Trends For the 1993
National Transit Database Section 15 Report'', Federal Transit
Administration, May 1995.
\34\ ``Data Tables For the National Transit Database Section 15
Report Year'', Federal Transit Administration, December 1994.
\35\ 40 CFR 86.094-25 (b)(4) contains several hours and miles
equivalents for HDDEs all of which are based on the ratio of one
hour to 33.3 miles of operation.
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EPA, however, is concerned that the hours interval being proposed
could, in effect, relax the useful life from its current level, as
would be the case in instances when vehicles would reach 13,000 hours
before reaching 290,000 miles. Given the average speed for urban buses
of 13 miles per hour, this would be likely to occur frequently. To
ensure that the addition of an hours limit does not result in a useful
life less than the current useful life in any instance, EPA proposes
not to allow the hours limit to be effective until after an engine
reaches 290,000 miles. In summary, EPA proposes a useful life for heavy
HDDEs of 435,000 miles, 13,000 hours, or ten years, whichever occurs
first, but in no case less than 290,000 miles.
EPA requests comments on two alternative approaches to adopting an
hours limit of 13,000 hours. The first option is to not have an hours
interval and retain the useful life mileage interval of 290,000 miles
for urban bus engines with an increase of the mileage interval to
435,000 miles for all other heavy HDDEs. This would simplify
regulations but could disadvantage engine manufacturers where engines
are used in slow moving urban vehicles other than urban buses, such as
solid waste haulers. The second option is to set the hours interval to
be equivalent to the number of hours it takes an urban bus, on average,
to accumulate 290,000 miles. Using the 13 miles per hour estimate from
above, the hours interval would be 22,300 hours. With this second
option, EPA also requests comments on whether or not a minimum useful
life of 290,000 miles is appropriate. These two alternatives may work
well for urban buses but may not be as appropriate for other urban
heavy-duty vehicles.
Currently the years component of the useful life is eight years for
some standards and ten years for others depending on whether the
standards were adopted before or after the Clean Air Act Amendments of
1990. Standards promulgated after the Clean Air Act Amendments, such as
the 1998 4.0 g/bhp-hr NOX standard, are required to have a useful
life years limit of 10 years. EPA proposes to make the useful life
years limits consistent for all pollutants and for all heavy-duty
engines by raising the years component of the useful life so that it is
ten years in all cases. The change affects the carbon monoxide and
particulate matter standards (except the urban bus particulate
standards which are already at ten years). EPA regards this change as a
simplification of the regulations with very little or no impact on the
stringency of the standards because EPA believes that vehicles will
reach the mileage limits before the years limits in almost all cases.
EPA requests comments on the appropriateness of the useful life
proposals described above. In particular, EPA seeks comments on the
appropriateness of the 435,000 mileage limit, the appropriateness of
treating engines used in urban vehicles differently from other heavy
HDDEs, and the appropriateness of the proposed 13,000 hour limit.
ii. Emissions-Related Maintenance
The frequency of emission-related maintenance actions that
manufacturers require owners to perform as a condition of their
emissions warranties is another issue that affects the actual in-use
emission performance of engines. If such required maintenance is more
than the vehicle owner is likely to perform due to cost or
inconvenience, then in-use emissions deterioration can result.
Therefore, EPA currently imposes limits on the frequency of maintenance
that can be required of HDE owners for emissions related items. These
limits also apply to the engine manufacturer during engine
certification and durability testing. The requirements currently apply
for the useful life of the engine. Table 2 summarizes current
regulations regarding the mileage interval limitations for the
maintenance manufacturers may specify on certain emissions-related
items for heavy-duty diesel engines (HDDEs). Engine manufacturers
cannot require maintenance to be performed any more often than is noted
in the table but may specify longer periods. The intervals are in miles
or hours, whichever occurs first.

Table 2.--Current Intervals for Emission-related Maintenance \1\
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
50,000 miles or 1,500 hours 100,000 miles or 150,000 miles or None listed.
for all heavy duty diesel 3,000 hours for 4,500 hours for
engines (HDDEs). Light HDDEs. Medium and Heavy
HDDEs.
EGR systems including all Turbocharger......... Turbocharger......... Catalytic converter.\2\
related filters and control
valves \2\.
PCV valve \2\................. Fuel injectors....... Fuel injectors.......
Fuel injector tip cleaning.... Electronic engine Electronic engine
control unit, control unit,
sensors, and sensors, and
actuators \2\. actuators \2\.
Particulate trap \2\. Particulate trap \2\.
----------------------------------------------------------------------------------------------------------------
\1\ Source 40 CFR 86.094-25.
\2\ Critical emissions-related components.

Table 2 notes components that EPA considers ``critical emissions-
related components'' and EPA has additional requirements for these
components (see 40 CFR 86.094-25 (b) (6)). Specifically, manufacturers
must show that

[[Page 33448]]

maintenance which the manufacturer requires for a critical emission-
related component has a reasonable likelihood of being performed by the
operator in use. The engine manufacturer has a variety of options for
making such a demonstration such as showing that component degradation
will also cause vehicle performance to degrade or by using visual
displays to notify the driver that maintenance is needed.
EPA believes that revising the maintenance intervals for certain
technologies is appropriate in order to adequately cover the
technologies which manufacturers may use to meet the proposed 2004 and
later model year standards. The new standards may prompt the use of EGR
on heavy-duty diesel engines and an increased interval for EGR valves
and tubing will help ensure adequate system durability. Similarly, EPA
believes that catalytic converters should be added to the list of
emission-related components for HDDEs for which a minimum interval is
specified, also to ensure adequate durability. Except for the recent
use of catalytic converters for particulate control, neither technology
has been used significantly for HDDEs in the past. Accordingly, EPA
proposes for EGR valves and tubing and catalytic converters that
manufacturers specify maintenance no more often than the intervals
shown in Table 2 for other technologies; 100,000 miles or 3,000 hours,
whichever occurs first, for light HDDEs and 150,000 miles or 4,500
hours for medium and heavy HDDEs. For EGR system filters and coolers,
EPA proposes that the maintenance interval would remain 50,000 miles/
1,500 hours due to manufacturer concerns that a longer interval for
these components may not be feasible.
In addition, there is the possibility that new technologies not
listed in Table 2 could be used to meet the proposed standards.
Therefore, EPA proposes to apply the same maintenance intervals as
listed above for most components, 100,000 miles or 3,000 hours,
whichever occurs first, for light HDDEs and 150,000 miles or 4,500
hours for medium and heavy HDDE, to any additional add-on emissions-
related components that manufacturers introduce in the future. EPA
proposes to define add-on emission-related components for this purpose
as components whose sole or primary purpose is to reduce emissions or
whose failure will significantly degrade emissions control and whose
function is not integral to the design or performance of the engine.
EPA would also consider such components critical emission-related
components for purposes of 40 CFR 86.094-25(b)(6). EPA believes that
this proposal is necessary to provide the same minimum level of
durability for all emissions-related components (except EGR filters and
coolers) used to meet the standards. The minimum requirement will also
be helpful in the development of future technologies as it will provide
a clear minimum design target for technology development.
Maintenance requirements for gasoline-fueled heavy-duty engines and
light heavy-duty diesel engines are currently the same for EGR and
several other components due to the similarity in their duty cycles.
EPA believes that it is appropriate for the maintenance intervals for
EGR for light heavy-duty diesel engines and heavy-duty gasoline engine
to remain consistent with each other given this similarity. Therefore,
for otto-cycle (i.e., gasoline-fueled) heavy-duty engines, EPA proposes
that the maintenance interval for EGR valves and tubing be increased to
100,000 miles or 3,000 hours from the current 50,000 mile or 1,500 hour
interval. Because gasoline-fueled engines emit less particulate (which
can cause deterioration of the EGR system) than do diesel engines, EPA
does not believe that the change represents a particular challenge for
gasoline-fueled engines.
EPA requests comments on the proposed changes to the maintenance
intervals described above including comments on the length of the
intervals and the technologies for which intervals are being proposed.
Also, EPA requests comment on the definition of ``add-on emission-
related component'' offered here.
iii. Emissions Defect and Performance Warranties
Emissions warranties are provided by manufacturers as required
under Section 207 of the Clean Air Act. The performance warranty
provides that if a properly maintained vehicle or engine fails to
conform to EPA emissions requirements at anytime during the warranty
period, and such nonconformity causes the owner to have to bear a
penalty or other sanction, then the engine manufacturer is responsible
for remedying the nonconformity at its own cost.\36\ The defect
warranty provides that manufacturers are responsible for defects in
materials and workmanship which cause an engine not to conform with
applicable regulations. EPA currently requires that the emission defect
and emission performance warranties for heavy-duty gasoline engines and
light HDDEs last 5 years/50,000 miles and for medium and heavy HDDEs
last 5 years/100,000 miles, whichever occurs first, but in no case may
the warranty period be less than the manufacturer's basic mechanical
warranty period for the engine family.\37\
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\36\ While EPA is proposing to revise the performance warranty
period as discussed below, in accordance with Section 207(i) of the
Clean Air Act, EPA has not prescribed regulations under Section
207(b)(2) of the Act which require heavy-duty engine manufacturers
to provide performance warranties.
\37\ Useful life definition paragraph (6), 40 CFR Part 86.096-2.
---------------------------------------------------------------------------

EPA proposes to clarify that the period of the warranty is to be in
no case less than the basic mechanical warranty period that the
manufacturer provides to the purchaser with the engine rather than the
general warranty period for the engine family. It is common for
manufacturers to provide negotiated mechanical warranties that are
longer than the published base warranties for the engine family. EPA
believes that this modification is appropriate because negotiated
warranties are prevalent and therefore the published warranty is not
reflective of the true mechanical warranty period in many cases. EPA
requests comments on this proposal.
c. Maintenance and Repair of Emissions Controls After the End of the
Useful Life
As discussed above, EPA regulates maintenance and repairs of
emissions control components that manufacturers may specify during the
useful life of the engines. However, these provisions will not ensure
emissions control for the full operating life of all heavy-duty
engines. Large diesel engines have an extremely long life that is
extended through rebuilding. If the vehicle owner and engine rebuilder
were to not properly maintain or repair emissions control components,
the controls could degrade and cause an unacceptable increase in
emissions. Because there may be no effect on engine performance, the
degraded components may otherwise go unnoticed for a significant
portion of the total life of the engine. Since HDEs are typically
rebuilt, EPA also believes it is appropriate to take steps to ensure
that emissions-related components used to meet the new standards
receive all needed maintenance and repair beyond the useful life
period. The proposals described below fall into two categories:
manufacturer requirements and engine rebuilding requirements. The
proposals are intended to help enhance the focus on emissions-related
components and the Agency does not believe that the proposals will
result in significant costs above those that would be incurred for

[[Page 33449]]

the proper maintenance/repair of emissions-related components. As with
the related provisions proposed above, EPA believes that these basic
provisions are necessary beginning with the 2004 model year because new
add-on emissions-related components which may require occasional
maintenance and repair may be used to meet the 2004 and later model
year standards.
i. Provisions Affecting Manufacturers
Manufacturers currently provide owners with comprehensive service/
maintenance manuals covering the maintenance necessary to keep engines
operating properly. If a manufacturer required maintenance on any
emissions-related components during the useful life, as described above
in 2.b.ii. of this section, maintenance procedures would be detailed in
this manual. EPA proposes to require that manufacturers, in addition,
include in the manual maintenance needed for emissions related
components after the end of the regulatory useful life, including
mileage/hours intervals and procedures to determine whether maintenance
or repair is needed. The recommended practices must also include
instructions for accessing and responding to any emissions-related
diagnostic codes that may be stored in on-board monitoring systems. The
recommended maintenance practices would be based on engineering
analysis or other sound technical rationale. In the event that an
emission-related component is designed not to need maintenance during
the full life of the vehicle, the manual would need to contain at a
minimum a description of the component noting its purpose and a
statement that the component is expected to last the life of the
vehicle without maintenance or repair. In addition, manufacturers would
be required to highlight in the manual any rebuild provisions adopted
by the Agency, as described in 2.c.ii. below, to ensure that owners and
rebuilders are aware of the requirements.
As described above in 2.b.ii. of this section, manufacturers must
ensure that critical emissions-related scheduled maintenance has a
reasonable likelihood of being performed in-use. Manufacturers may
elect to provide such assurance by using some form of on-board driver
notification when maintenance is needed on a critical emission related
component.\38\ The signal may be triggered either based on mileage
intervals or component failure. It is currently considered a violation
of the Clean Air Act's prohibition on tampering (Section 203(a)(3)) to
disable or reset the signal without also performing the indicated
maintenance procedure.\39\
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\38\ 40 CFR 86.094-25(b)(6)(ii)(C)
\39\ 40 CFR 86.094-25(b)(6)(iii)
---------------------------------------------------------------------------

EPA proposes to require that manufacturers electing to use such
signal systems to ensure that critical emissions-related maintenance
has a reasonable likelihood of being performed must design the systems
so that they do not cease to function at or beyond the end of the
regulatory useful life. For example, if the signal is designed to be
actuated based on mileage intervals, it would have to be designed to
continue to signal the driver at the same intervals after the end of
the useful life. EPA does not propose, however, to hold the
manufacturer responsible or liable for recall due to signal failure in
instances where the signal fails to function as designed beyond the end
of the useful life. Manufacturer recall liability is limited to
failures during the regulatory useful life under Section 207 of the
Clean Air Act. (The manufacturer is also not responsible for repairs
when the signal does function after the end of the useful life unless
such repairs are covered by the emission warranty provided as described
above in 2.b.ii.)
EPA believes these proposals will help ensure that information
necessary to care for critical emission related components through the
engines' entire life on the road will be widely available to owners,
rebuilders and others maintaining and repairing heavy-duty engines. EPA
requests comments on the proposals.
ii. Provisions Pertaining to Engine Rebuilding Practices
EPA has two concerns regarding the rebuilding of 2004 and later
model year engines, both related to new emissions related components
that may be added to the engine to meet the new standards. First, EPA
is concerned that during engine rebuilding, there may not be an
incentive to check and repair emissions controls that do not affect
engine performance. Second, EPA is concerned that there may be an
incentive to rebuild engines to a pre-2004 model year configuration due
to real or perceived performance penalties associated with 2004 and
later model year technologies. Such practices would likely result in a
loss of emissions control.
EPA currently does not have regulations concerning engine
rebuilding practices for heavy-duty engines other than requirements for
engines used in 1993 and earlier model year urban buses.\40\ Clean Air
Act Section 202(a)(3)(D) directed EPA to study heavy-duty engine
rebuild practices and the impact rebuilding has on engine emissions.
Based on the study and other information, EPA may prescribe
requirements to control rebuilding practices (whether or not the engine
is past its useful life), which in the Administrator's judgement cause,
or contribute to, air pollution which may reasonably be anticipated to
endanger public health or welfare taking costs into account. 42 U.S.C.
7521 (a)(3)(D). EPA conducted a study of engine rebuilding and
determined that current-technology engines, when rebuilt, generally
emit at levels near or below the certification standards that applied
to the engine when new and that regulations to control rebuild
practices did not appear to be warranted at that time.\41\
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\40\ 40 CFR Part 85, Subpart O, Urban Bus Rebuild Requirements.
\41\ ``Heavy-duty Engine Rebuilding Practices,'' EPA Final
Report by Tom Stricker and Karl Simon, March 21, 1995.
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In the ANPRM, EPA requested comments on establishing rebuild
requirements to promote continued in-use compliance for 2004 and later
model year engines. The Automotive Engine Rebuilders Association (AERA)
and other related associations stated in their comments on the ANPRM
that it is extremely unlikely that engine rebuilders would rebuild to
non-original specifications because such a product would not be
acceptable to the purchaser.\42\ AERA further commented that a rebuild
program where the rebuilder would be required to conduct certification
testing and be held liable for emissions performance in-use would be
unreasonable for the many rebuilders that are small businesses. AERA
commented that, given what is known about the rebuilding industry, EPA
has no basis for rebuild regulations.
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\42\ EPA Docket A-95-27, Docket II-D-41.
---------------------------------------------------------------------------

EPA does not believe that a major program placing substantial new
requirements on the rebuilding industry needs to be proposed at this
time to adequately address the Agency's concerns described above, based
on comments received and EPA's findings regarding current industry
practices. Therefore, EPA does not propose regulations at this time
under the authority of Clean Air Act Section 202(a)(3)(D). However, EPA
does believe that establishing basic regulatory provisions regarding
engine rebuilding under Section 203 of the Clean Air Act (``Prohibited
Acts'') would help the rebuilding industry understand what is needed to
ensure that rebuilt 2004 and

[[Page 33450]]

later model year engines closely approximate original emissions
performance when they are rebuilt.
Clean Air Act Section 203(a)(3) states that it is prohibited for
``any person to remove or render inoperative any device or element of
design installed on or in a motor vehicle or motor vehicle engine'' in
compliance with regulations, either before or after its sale and
delivery to the ultimate purchaser. 42 U.S.C. 7522 (a)(3)(A). EPA
commonly refers to violations of this provision of the Clean Air Act as
tampering. Engine rebuilding practices are currently addressed in
general terms under EPA policies established under Clean Air Act
Section 203(a)(3) regarding tampering. The Agency has established a
policy that when switching heavy-duty engines the new engine must be
``identical to a certified configuration of a heavy-duty engine of the
same or newer model year''.\43\ EPA has also established policies
regarding the use of aftermarket parts during rebuild.\44\
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\43\ Engine Switching Fact Sheet, April 2, 1991. Docket A-95-27,
II-B-6.
\44\ ``Interim Tampering Enforcement Policy'', Mobile Source
Enforcement Memorandum No. 1A., June 25, 1974. Docket A-95-27, II-B-
5.
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EPA is proposing to codify these policies as they apply to
rebuilding and to propose new measures. The Agency believes that
rebuilding is currently a time when emissions control is restored,
along with the engine itself, and that the proposed provisions
described below will help ensure that this continues for the 2004 and
later model year engines. Currently, the engine and all emissions
related components are treated as a package for purposes of engine
certification and other programs and EPA believes it is important to
maintain this view at time of engine rebuild. The provisions proposed
below would specify what minimum action is necessary at time of rebuild
under Clean Air Act Section 203(a)(3) to ensure continued emissions
control.\45\ These provisions reflect what EPA believes will be common
practice for rebuilding engines, but also will help to focus attention
on new emission-related components used to meet the 2004 standards.
---------------------------------------------------------------------------

\45\ Note that other actions not specified may also be
prohibited under Clean Air Act Section 203.
---------------------------------------------------------------------------

EPA proposes that parties involved in the process of rebuilding or
remanufacturing engines (which may include the removal of the engine,
rebuilding, assembly, reinstallation and other acts associated with
engine rebuilding) must follow the provisions described below to avoid
tampering with the engine and its emissions controls.
(1) During engine rebuilding, parties involved must have a
reasonable technical basis for knowing that the rebuilt engine is
equivalent, from an emissions standpoint, to a certified configuration
(i.e., tolerances, calibrations, specifications) of the same or newer
model year as the engine being rebuilt. A reasonable basis would exist
if:
(a) Parts used when rebuilding an engine, whether the part is new,
used, or rebuilt, is such that a person familiar with the design and
function of motor vehicle engines would reasonably believe that the
part performs the same function with respect to emissions control as
the original part, and (b) Any parameter adjustment or design element
change is made only (i) in accordance with the original engine
manufacturer's instructions or (ii) where data or other reasonable
technical basis exists that such parameter adjustment or design element
change, when performed on the engine or similar engines, is not
expected to adversely affect in-use emissions.
(2) A replacement engine must be of (or rebuilt to) a configuration
of the same or later model year as the original engine. Thus, in
addition, under the proposed regulations a party supplying a rebuilt
engine would be prohibited from supplying a replacement engine that is
not rebuilt to a configuration of the same or later model year as the
trade-in engine.
(3) At the time of rebuild, emissions-related codes or signals from
on-board monitoring systems may not be erased or reset without
diagnosing and responding appropriately to the diagnostic codes,
regardless of whether the systems are installed to satisfy EPA
requirements under 40 CFR 86.094-25 or for other reasons and regardless
of form or interface. Diagnostic systems must be free of all such codes
when the rebuilt engines are returned to service. Further, such signals
may not be rendered inoperative during the rebuilding process.
(4) When conducting an in-frame rebuild or the installation of a
rebuilt engine, all emissions-related components not otherwise
addressed by the above provisions must be checked and cleaned,
repaired, or replaced where necessary, following manufacturer
recommended practices.
EPA proposes that any person or entity engaged in the process, in
whole or in part, of rebuilding engines who fails to comply with the
above provisions may be liable for tampering in violation of CAA
Section 203(a)(3). Parties would be responsible for the activities over
which they have control and as such there may be more than one
responsible party for a single engine in cases where different parties
perform different tasks during the engine rebuilding process (e.g.,
engine rebuild, full engine assembly, installation). EPA is proposing
no certification, recordkeeping, or other requirements of the rebuilder
or engine owner and there would be no in-use emissions requirements.
Because the above proposal represents what EPA believes would be
sound rebuilding practices for 2004 and later model year engines, EPA
does not believe that there are costs associated with the above
proposed requirements. Items 1 and 2 of the proposal closely reflect
established EPA policy regarding tampering (discussed above). Any
changes to rebuild practices will be due to the industry adjusting to
the use of new technologies. EPA believes that any added cost to the
rebuilding of the engines will be due to the technology used to meet
the standards and not due to the rebuilding provisions being proposed.
Additionally, EPA continues to have the authority to regulate
rebuilding if future studies or other information were to provide the
basis for such regulations. EPA views the proposal above as
preventative, in that it will help ensure that the rebuild industry is
aware of the new technologies and that rebuilding of engines with 2004
and later technology will not impact emissions negatively. EPA requests
comments on all aspects of the above proposal.
To ensure that engine rebuilders and others involved in engine
rebuilding are complying with the requirements and to maintain a level
playing field between those who follow the rules and those who do not,
EPA's enforcement office intends to take action against violations of
the rebuild provisions. EPA is concerned, however, that proving
violations will be difficult without some form of records available for
inspection.
EPA is considering the adoption of minor recordkeeping requirements
which EPA believes would be in line with customary business practices.
The Agency would then be able to inspect such records to determine
compliance with the rebuild provisions. The records would be required
to be kept by persons involved in the process of heavy-duty engine
rebuilding or remanufacturing and would have to include the mileage
and/or hours at time of rebuild and a list of the work performed on the
engine and related emission control systems including a list of
replacement parts used, engine parameter adjustments, design element
changes, emissions related codes and signals that are

[[Page 33451]]

responded to and reset and the response to the signals and codes, and
work performed as described in item (4) of the rebuild provisions
above. If it is customary practice to keep records for groups of
engines where the engines are being rebuilt or remanufactured to an
identical configuration, such recordkeeping practices would satisfy
these requirements. EPA would require such records to be kept for two
years after the engine is rebuilt.
EPA's intention with such record keeping requirements would be to
make basic records available to the Agency such that enforcement
officials would be able to understand what work was performed on an
engine during the rebuild process. EPA believes that those in the
rebuilding industry already keep detailed records on work performed on
engines as part of good business practices and therefore, EPA believes
that the above recordkeeping requirements would impose no additional
burden on affected businesses. Moreover, EPA has always had the
authority to request such records pursuant to section 208 of the Clean
Air Act and the above requirements would only standardize the records
available for EPA inspection. EPA requests comments on the above record
keeping requirements.
d. State Inspection/Maintenance Programs
Many states are currently in various stages of planning or
implementing inspection/maintenance (I/M) programs for trucks. The
programs are mostly focused on identifying trucks with high smoke
emissions, which usually result from tampering or poor maintenance, and
requiring their repair. EPA has received requests from several sources
including the American Trucking Association, the Engine Manufacturers
Association, and state organizations to become involved in the
development of truck I/M programs, with the hope that state programs
can be standardized under EPA guidance. Currently, programs may differ
widely from state-to-state causing a variety of problems for the
parties affected.
In response, EPA has begun an effort in this area with the goal of
developing a guidance document that states can use to establish
programs. EPA intends to address issues regarding testing procedures
and standards or pass/fail cut points for heavy-duty engine I/M
programs in coordination with interested parties. Although the guidance
document would not preclude states from designing programs differently,
it should help decrease program differences from state-to-state.
3. Revised Averaging, Banking, and Trading Provisions
Today's proposal makes changes to the heavy-duty engine averaging,
banking and trading (ABT) provisions. They are intended to enhance the
flexibility offered to manufacturers in meeting the stringent standards
being proposed and to encourage the early introduction of cleaner
engines, thus securing emissions benefits earlier than would otherwise
be the case. Further, the proposed ABT changes also allow EPA to
propose more stringent emission standards than it otherwise might,
since the flexibility provided by ABT lowers the costs to manufacturers
and makes it easier to meet the technical challenges of lower
standards.
Under a modified program proposed to be available to manufacturers
between 1998 and 2006 inclusive, credits could be earned without the
current ABT credit discounting or limited life provisions. These
credits could be used beginning in model year 2004 to ease the impact
of the new standards in their initial years of applicability. With the
exception of a minor adjustment in how credit exchanges are conducted
between families, other provisions of the existing ABT program would
remain essentially unchanged, including prohibitions on cross subclass
and cross combustion cycle ABT. A further description of the proposed
changes, including provisions designed to safeguard against any
potential adverse air quality impacts, is provided later in this
section.
a. Overview of the Current Averaging, Banking and Trading Program
The proposed changes come in the context of the existing ABT
program, the bulk of which was adopted in 1990. The existing program
includes otto and diesel cycle HDEs fueled by petroleum (gasoline and
diesel), gaseous fuels, and methanol (see 55 FR 30584, July 28, 1990
and 59 FR 43472, September 21, 1994), and is available for meeting
applicable NOX and particulate matter (PM) standards. The three
aspects of ABT: averaging, banking and trading, are briefly described
in the following paragraphs.
Within a given manufacturer's product line, averaging allows
certification of one or more engine families at levels above the
applicable emission standard (but below a set upper limit), provided
their increased emissions are offset by those from one or more families
certified below the same emission standard, such that the average
emissions from all the manufacturer's families (weighted by horsepower
and production) are at or below the level of the emission standard.
Averaging results are calculated for each specific model year. The
mechanism by which this is accomplished is certification of the engine
family to a ``family emission limit'' (FEL) set by the manufacturer,
which may be above or below the standard (an FEL above the standard may
not exceed a prescribed upper limit specified in the ABT regulations).
Once an engine family is certified to an FEL, that FEL becomes the
enforceable limit used to determine compliance during assembly line and
in-use compliance testing.
The second element of the current ABT program is banking. Banking
gives the manufacturer generating the credits in one model year the
option to defer their use until a later model year for averaging or
trading. Under the current program, credits are discounted by 20
percent when banked and have a three year life. EPA believes banking
promotes the development and early introduction of advanced emission
control technology, which provides emission reduction benefits to the
environment sooner than would otherwise occur. An incentive for early
introduction arises because the banked credits can subsequently be used
by the manufacturer to ease the compliance burden of new, more
stringent, standards. For the same reasons, banking can promote the
introduction and use of clean alternative-fueled engines.
The final element of the ABT program is trading. Since averaging is
limited to a given manufacturer's own product line, the manufacturer
must have two or more engine families within a given averaging set to
participate in the program. This could limit the opportunities for
smaller HDE manufacturers with more limited product lines to optimize
their costs. Trading resolves this concern by allowing credit exchanges
between manufacturers. Thus, averaging benefits can be extended to
manufacturers who might not otherwise be able to participate due to
their limited product lines. Trading can also be advantageous to larger
manufacturers because extending the effective averaging set through
trading can allow for overall optimization of cost across
manufacturers.
Due to manufacturer equity and environmental impact concerns there
are some limitations on credit exchanges in the existing ABT program.
First, for diesel cycle engines, NOX and PM credit exchanges are
prohibited across the various subclasses (LHDDE,

[[Page 33452]]

MHDDE, HHDDE). Second, no credit exchanges are permitted between
diesel-cycle and otto-cycle engines. Finally, cross fuel credit
exchanges are permitted only within engines of the same basic
combustion cycle and subclass. Details on these credit exchange
restrictions, including the reasons for their existence, are discussed
in the previously cited Federal Register notices.
b. Description of Proposed ABT Program Changes
As noted at the outset of this section, EPA is proposing two
principal changes to the existing ABT program designed to temporarily
remove the discounting and limited life of credits generated under
current provisions. Behind these changes is the recognition that the
proposed standards represent a major technological challenge to the
industry. ABT provisions can ease the need to bring all engines into
compliance in MY 2004 by allowing accumulated credits to be used, for
example, to temporarily offset emissions from some particularly
difficult to control engine line. Thus, the Agency can adopt new
standards without the need to show that they can be met by all engines
when first implemented. While the current ABT provisions were designed
with these same general goals in mind, EPA believes that the nature of
the challenge presented by today's proposed standards justifies efforts
to increase the flexibility of the ABT program. The Agency wishes to
maximize the flexibility and incentives for early introduction of
technology which ABT offers. This will help insure that the proposed
new standards will, in fact, be attainable for the manufacturers, and
will be met at the lowest cost. It is also the case that the Agency has
gained experience with the operation of its ABT program which gives it
more confidence in being able to successfully modify the program in the
face of this need.
The proposal being made today would establish a second, parallel,
ABT program targeted specifically at helping manufacturers meet the
proposed more stringent standards in MY 2004 through 2006, the first
three model years to which the new standards would apply. Credits could
be earned under this program beginning in 1998 and would not be
discounted, nor would they expire after 3 years as do current ABT
credits. These credits could only be used to comply with the 2004
standards. If a manufacturer wished to apply them to its compliance
program for earlier model years they could be transferred into the
original ABT program, but would at the same time become subject to the
20 percent discount and three year life of the original program. EPA is
also proposing that this alternate program would be in effect only for
the years immediately surrounding the transition to the new standards.
The ability to generate credits under the proposed new program would be
eliminated in 2007 (the current ABT program would be available for 2007
and later model years). EPA thinks the need for unlimited life and no
credit discounting to enhance the technological feasibility of the
standards would be greatly diminished after the first three years of
the model year 2004 standards. EPA believes it is appropriate to remove
the discounting and limited life restrictions in the modified ABT
program and still keep them in the current ABT program because these
modifications have been considered in developing the proposed
standards, but not prior standards subject to the ABT program. The
Agency seeks comment on what expiration date, if any, would be
appropriate for the proposed program modifications and why.
As in the current ABT program, only NOX and PM credits could
be earned under the modified program. NMHC credits would not be
included because of the potential for windfall credit generation from
the very low NMHC levels of many current engines. NOX-only credit
generation also allows the credits to be transferred back to the
current program if deemed necessary by the manufacturer. The NOX
credits would be applied against the NOX + NMHC standards
beginning in 2004 (but not the NMHC cap associated with the 2.5 g/bhp-
hr optional standard).
EPA proposes that the upper limits for engine families certified
above the 2004 standard and using offsetting ABT credits would be 4.5
g/bhp-hr, NOX + NMHC and 0.25 g/bhp-hr for PM. The 0.25 g/bhp-hr
upper limit proposed here for PM is a reduction from the 0.60 g/bhp-hr
which now applies. EPA believes a reduction in this value is
appropriate even though the stringency of the PM standard is not being
changed. Unless other factors dictate, normal practice has been to set
the upper limit for FELs at the level of the previous standard. An
exception to this practice was made in 1990 when the full current ABT
program was promulgated. At that time engines were only meeting a 0.60
g/bhp-hr PM standard, and it was not clear that a 0.25 g/bhp-hr upper
limit would provide adequate flexibility for 1994 and later model
years. At that time the PM standard was set to drop from 0.60 g/bhp-hr
to 0.25 g/bhp-hr in 1991. The 0.25 g/bhp-hr standard was to be in place
for only three model years (1991-1993) before dropping to 0.10 g/bhp-hr
and as part of their compliance strategy some manufacturers indicated
plans to use credits to meet the 0.25 g/bhp-hr standard and desired
that flexibility to continue after the standard dropped to 0.10 g/bhp-
hr. By 2004, the 0.10 g/bhp-hr standard will have been in place for ten
years, and the need for flexibility to certify above 0.25 g/bhp-hr
should have disappeared by that time. In fact, in 1996 only three
diesel engine families out of about 90 certified above the 0.25 g/bhp-
hr level.
One of the potential problems with ABT programs is the possibility
that manufacturers will reduce their compliance margins relative to the
standards, or associated FELs, in order to maximize the generation of
credits for low emitting engines and minimize the need for credit use
for high emitting engines. Compliance margins are used to protect
against unexpected failure of emission standards due to the variability
inherent in both producing and emission testing of engines. To avoid
having engines exceed their FEL, the manufacturer includes a safety
factor and certifies with emission levels somewhat below the FEL. As
the manufacturer reduces these compliance margins, it increases its
odds of experiencing an unexpected failure of the FEL, either during
assembly line testing or in-use. However, the ability to generate and
use credits encourages the manufacturer to set its FELs as low as
possible. To the extent that a manufacturer reduces its compliance
margins under the proposed new ABT provisions, there is a risk that
such a manufacturer's engines would not meet the FELs.
The Agency is unsure to what extent such ``margin shaving'' might
occur as a result of the modified ABT program being proposed today.
However, to protect against such a possibility, EPA is proposing to
require a minimum margin in order to participate in the modified ABT
program. Based on current certification data, compliance margins vary
from essentially zero to about 18 percent, with the average being about
10 percent. To help ensure that a manufacturer's engines do in fact
meet their FELs without unduly constraining how margins are used,
today's proposal requires a minimum margin of at least five percent to
participate in the modified ABT program. Even though some manufacturers
have higher margins, EPA believes that a five percent value provides
reasonable protection against margin shaving. The larger margins found
in some engine families may exist for other reasons. To

[[Page 33453]]

provide reasonable flexibility, it is also proposed that manufacturers
be permitted to use a margin of less than five percent if they have
test data which demonstrates that a lower margin is sufficient.
Comments are requested on the validity of the Agency's concern as well
as on the proposed use of a minimum required margin. Commenters
supporting this approach should also comment on the appropriate size of
the margin.
Since the useful life for heavy heavy-duty diesels (HHDDEs) is
being proposed to increase in 2004 along with the change in emission
standards, the question arises of how to determine appropriate credits
under the modified ABT program for those HHDDEs engines being certified
to the shorter useful life provisions prior to 2004. In-use emissions
generally increase, or ``deteriorate,'' with increasing mileage. Thus,
if those engines had been certified to the longer useful life, they
normally would have had to account for more deterioration than for the
shorter life. This would have produced a higher FEL, and less credit,
than would the shorter life.
For NOX, dealing with the issue of the amount of credits is
fairly straightforward. NOX emissions from HHDDEs show little
deterioration, and in some cases can actually decline with age.
Therefore, the Agency believes an appropriate adjustment for useful
life can be made by simply extending the NOX deterioration factor
used in certifying the engine family to the proposed 435,000 mile life.
This should give a conservative estimate of likely deterioration over
the longer life period. Under this approach the extension would be
performed only for the purposes of calculating credits for the modified
ABT program, and would not impose added certification durability
requirements or extended recall testing limits as the useful life (and
corresponding obligation to comply with the emission standards) would
not be extended. If a manufacturer felt that a projection of its
deterioration factor was inappropriate, it could exercise the existing
option under 40 CFR 86.090-21(f) to petition the administrator for a
longer useful life for its engine, and determine a new deterioration
factor for that new useful life.
Under the approach just described for extending NOX
deterioration factors, the manufacturer incurs no added liability for
the mileage extension from 290,000 miles to 435,000 miles. The above
approach seems appropriate to the Agency for purposes of quantifying
the amount of credits given the transitional nature of the useful life
issue and the general stability and predictability of NOX
emissions. However, in various credit and trading programs EPA has set
policy that credit generation should be based on an enforceable
obligation to achieve the expected emission reductions. See, e.g.,
Interim Guidelines on the Generation of Mobile Source Emission
Reduction Credits, 58 FR 11134 (February 23, 1993). If deemed
appropriate, this could be accomplished by requiring the manufacturer
to certify using the same extended NOX deterioration factor it
used for credit calculations. This would establish in-use liability for
the extended mileage period. If this were done, it would apply only for
the NOX standard. EPA believes this extended useful life could be
accomplished without imposing additional certification burdens or
requirements, given the current flexibility in certification
regulations and the expected deterioration associated with NOX
emissions over time. EPA invites comments on this alternate approach as
well as the proposal to calculate the amount of NOX credits
without extending the useful life. Comments should address which of
these approaches should be adopted in the final rule.
In the case of particulate matter (PM) emissions, the Agency has
much less confidence in the reliability of projections from the current
290,000 mile life. In this case there is a greater possibility of
unexpected changes in emissions later in the engine life which would
not be consistently captured with such an approach. Therefore, EPA is
proposing to allow credits to be generated only for the applicable
engine family's certified useful life period. In most cases this would
be 290,000 miles. However, as with NOX, if a manufacturer wished
to generate credits for a longer period, it could petition the
Administrator under the provisions of 40 CFR 86.090-21(f) for a longer
useful life for its engine. It would then be able to generate credits
for that entire useful life period.
Finally, it should be noted that EPA is proposing to revise the
technique used to calculate credit exchange (generation and use)
amounts. In the current ABT system, credits are generated based on the
lowest horsepower configuration in a family and credit use is
calculated based on the highest horsepower configuration. Credit
generation is calculated based on the configuration which generates the
least benefit within the family while credit use is based on the
configuration which requires the most credits to comply. In some cases
this can result in large offsets (i.e., credits are generated at the
lowest rate and credits required at the highest rate). Based on EPA's
experience with ABT programs, we find this offset to be unnecessary.
Over the past five years the ABT program has been implemented smoothly,
leaving less need for the safeguards this provision brought to the
original program. Furthermore, this provision tends to introduce a
penalty for credit generating engines, thus reducing the incentive to
introduce clean technology. Therefore, EPA proposes to base such
calculations on sales-weighted average horsepower values within each
family. EPA believes use of an average horsepower for generating and
using engines is sufficient to ensure no environmental loss from the
credit transaction.
EPA received comments on the ANPRM requesting clarification on
whether or not, and if so, how credits from engines certified below the
applicable standard can be used by entities other than the engine
manufacturers (e.g., engine purchasers). EPA believes that in some
circumstances this could well be appropriate and consistent with the
intent of the ABT regulations. EPA asks comment on what revisions or
clarifications may be needed to the ABT program to facilitate this
possibility. For example, EPA is interested in comment on how we can
assure that credits not be counted by both the engine manufacturer and
the vehicle/engine user (double counted).
The interim modifications to relax the credit discounting and
lifetime restrictions for model years 1998-2006 are being included
primarily to assist in compliance with the proposed standards beginning
in 2004. As was discussed earlier in this section, the technological
challenge of meeting the proposed standards is much less for otto-cycle
engines as compared to diesel cycle engines. In fact many models
already have certification levels near or below the level of the
proposed standard. While the revised ABT program could provide an
incentive to produce even cleaner otto-cycle engines before 2004, EPA
is concerned that the discount and lifetime revisions would provide
``windfall credits'' to the otto-cycle industry. A similar concern does
not exist for diesel cycle engines, because their current NMHC+NOX
emission rates are well above the level of the proposed standard. EPA
asks comment on this issue including whether or not and why these two
program changes should be extended to otto-cycle engines or just the
current A, B,& T program should be available.

[[Page 33454]]

In its comments on the ANPRM submitted on behalf of a consortium of
environmental groups, NRDC raised several objections to the possible
ABT program changes discussed in that document and in the SOP. Among
these, NRDC opposed removal of the discounting and limited life
provisions of the current program. NRDC argued that these changes could
lead to unnecessary delays in compliance with the proposed new
standards and could result in increased emissions. Commenting
specifically on the removal of discounting, NRDC argued that in the
absence of discounting, the public ``relinquishes all of the benefits
of unanticipated advances in technology.'' The Agency does not agree
with these comments. As described above, existence of the ABT program
allows the Agency to propose and finalize a standard that might not be
otherwise appropriate under the CAA, since ABT reduces the cost and
improves the technological feasibility of achieving the standard.
Furthermore, the generation of credits means that emission reductions
have been realized earlier than required by the standards, which EPA
believes is a benefit to the public. The fact that the use of credits
would allow some specific engine families to delay compliance with the
proposed new standards has no inherent air quality impact since the
credits represent offsetting emission reductions below the applicable
standard from other engines. EPA encourages further comment on the
appropriateness of the Agency's proposal to impose no discount or life
limit on credits generated and used under the modified ABT program.
In their comments NRDC also opposed expansion of the trading
provisions to include cross-cycle, cross sub-class or cross-source
trading. None of those changes are included in today's proposal.
Comments are invited on the appropriateness of EPA at some later date
proposing to allow cross-cycle, cross-cycle with the same fuel, cross-
subclass or cross-category (e.g., highway and non-road) credit
exchanges as part of the modified ABT program.
In their comments on the ANPRM, NRDC stated that only engines
meeting the proposed standards early should be able to get the benefits
of the temporary changes to discount and lifetime provisions. EPA
explored this concept, but for two reasons chose not to include it in
the NPRM. First, such a restriction would reduce the value of ABT
programs in assisting transition to the 2004 standards. A manufacturer
would have no incentive to introduce improved technology early unless
the engine made it all the way to the level of the proposed standards.
Second, since early additional emission reductions have equal value
whether the engine is above or below the proposed standards it would be
inconsistent with air quality goals to create a disincentive for early
additional emission reductions. However, this view is premised on the
design criterion discussed above, i.e., no cross-cycle credit
exchanges. If cross-cycle exchanges are permitted without some form of
a trigger level for eligibility, an unusual situation could be created
where gasoline-fueled otto cycle engines could generate credits for use
by petroleum-fueled diesel cycle engines. This in turn would create a
disincentive for technology innovation for diesels which is one of the
key goals for the ABT program.
Readers are encouraged to review the draft regulations for a fuller
understanding of how the proposed ABT program would operate. The Agency
solicits comments on all aspects of the ABT changes being proposed,
including comments on the benefit of these changes to manufacturers in
meeting the proposed emission standards and any potential air quality
impacts which might be associated with them.

IV. Technological Feasibility

This section discusses the emission control technologies that EPA
believes would be available for engine manufacturers to meet the
proposed 2004 standards. Included in this discussion are estimates of
emission reductions associated with these technologies and their
potential to impact performance. Because of the significant differences
between the operation, emissions, and likely control strategies for
diesel and gasoline heavy-duty engines, each engine type will be
treated separately. Further information on the basic characteristics of
diesel and gasoline heavy-duty engines may be found in Docket A-95-
27.^{46
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\46\ Memo from Tad Wysor (EPA) to Air Docket A-95-27, ``Summary
of Heavy-Duty Engine Emission Control Technologies,'' II-B-4, August
24, 1995.
---------------------------------------------------------------------------

Following is a summary of the key technologies discussed in the
Regulatory Impact Analysis (RIA). For more detail on the emission
control technology described in this section, see Chapter 4 of the RIA.
This chapter of the RIA also describes many of the technologies that
are still under development that could allow heavy-duty highway engines
to meet or exceed the reduced emission standards proposed in this
action. Several technologies described in the RIA are not included in
this section because EPA believes they are less likely to be used by
engine manufacturers in 2004 than those strategies, techniques, and
technologies described here.^{47
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\47\ The technological feasibility of meeting the proposed
standards using alternative fuels is discussed in Chapter 4 of the
RIA.
---------------------------------------------------------------------------

The following discussion of technologies includes a wide range of
alternatives from which manufacturers may choose to comply with the
proposed emission standards. Not all of these technologies will be
needed to reduce NOX or HC emissions to comply with the proposed
emission standards. Manufacturers may develop and use technologies to
improve fuel economy or performance or to control particulate emissions
at a lower cost. The analysis of economic impacts in Section V.B.
reflects this by assessing the incremental cost of adopting a limited
package of technological changes to heavy-duty engines.
As will be discussed further below, EPA believes that the goals set
by this proposal are challenging but feasible. They clearly represent
major reductions compared to current engine emission levels. At the
same time, heavy-duty engine technology is in a period of rapid
development, and EPA does not see any reason to expect that such
development will be slowed in the foreseeable future. Published work
shows that research engines are already beginning to approach the
levels required by the new standards. There are certainly many
significant technical challenges to translating research work into
acceptable products for the marketplace. However, the emission targets
are set in the framework of a long lead time, substantially longer than
has been the case in many previous heavy-duty engine rules. Also,
except for the use of EGR on heavy-duty diesel engines, each of the
technologies anticipated for complying with the proposed emission
standards, as described below, have already been applied to and proven
on recent model year heavy-duty engines. Thus, on balance, the Agency
believes that the proposed standards are feasible for the heavy-duty
industry.
Through comments on the ANPRM, some concern has been expressed to
EPA that lower standards may be more appropriate for heavy-duty
engines. One suggestion was that heavy-duty diesel engines should be
required to meet a 0.05 g/bhp-hr PM standard since urban buses are now
held to this level. In addition, commenters recommended that separate,
lower HC plus NOX and CO standards should be set into place for
heavy-duty gasoline engines. Based on the information discussed further

[[Page 33455]]

below and in the RIA, EPA believes that the proposed standards
represent the lowest levels consistent with the constraints of section
202 (a)(3)(A)(i) of the Clean Air Act. That section requires EPA to
establish 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.''
Given the uncertainty associated with the long lead time, this
analysis would be re-evaluated in the proposed 1999 review of the
feasibility of the standards discussed in section III.B above. EPA
requests comment on the availability and effectiveness of emission
control technologies that may be applied to heavy-duty on-highway
engines to meet the proposed standards. EPA also requests specific
comment on the appropriateness of a separate, lower standard for heavy-
duty gasoline engines.

A. Diesel Engines

Highway heavy-duty diesel engine manufacturers have historically
been very successful in lowering both NOX and PM levels to meet
EPA emission standards. EPA standards have required a reduction in
NOX emissions of over 50 percent and PM reduction of over 80
percent largely within the past 5 years. Engine manufacturers have been
able to achieve the majority of these reductions using changes in
engine hardware with minimal reliance on exhaust aftertreatment
devices. Today's heavy-duty diesel engines are also well below the
standards for HC and CO. Over this same period, engine manufacturers
have been able to provide their customers with increased power,
improved fuel economy and improved engine durability.
Indications are that HC, NOX and PM control technologies have
not yet reached their full potential. A broad range of current
published research, referenced in the RIA, shows that HC + NOX
levels of 2.5 g/bhp-hr with a PM level of 0.10 are already being
approached in laboratory diesel engines. One example, discussed in the
RIA, is a turbocharged and aftercooled engine that uses optimized swirl
and cooled EGR to achieve emission levels of 2.0 g/bhp-hr HC + NOX
and 0.13 g/bhp-hr PM (average of three operating modes). Engine
manufacturers and other companies have conducted extensive research
that is still confidential or is not yet published for other reasons.
EPA believes that the unpublished work in the field of diesel engine
emission control represents progress in research and development that
goes well beyond that described in the published literature. The Agency
recognizes that such results do not, of themselves, demonstrate the
feasibility of reaching such levels in production engines. However, as
discussed below, EPA believes that for the 2004 time frame,
technologies will be optimized to meetand in some cases possibly
exceedfuture emission-control targets.
Under the proposal, the engine manufacturers will have an effective
leadtime of eight years. This is twice that available in previous
heavy-duty engine rules. This long leadtime is valuable to heavy-duty
diesel engine manufacturers for several reasons. Due to the stringency
of the proposed standards, it is likely that manufacturers will need to
make fundamental changes in engine technology. History has shown that
emissions can be reduced more cost-effectively when the engine
manufacturers are given a reasonable amount of time for research and
development (R&D). The relatively long lead time available for this
rule provides adequate time for a strong, orderly, and comprehensive
R&D program which focuses not only on emission reduction, but also on
addressing fuel consumption, durability and maintenance concerns. EPA
anticipates that heavy-duty diesel engine manufacturers would focus
primarily on NOX control strategies to meet the proposed 2004
standards rather than NMHC control. EPA also expects that manufacturers
will focus on in-cylinder control strategies as opposed to
aftertreatment approaches. Combustion optimization through improved air
and fuel controls are expected to be at the center of the strategy for
reducing NOX emissions (and HC where possible), while holding the
line on PM emission rates. Such strategies also hold promise for
positive impacts on fuel consumption. Combustion optimization can be
achieved through a combination of strategies related to combustion
chamber design improvements, upgrades in fuel system controls, and
modifications of intake air distribution approaches and
characteristics. The R&D associated with the assessment and
optimization of such strategies and the application of the results of
this work to the various heavy-duty diesel engine models will need to
be conducted during the available leadtime.
Individual technologies may have different effects on NOX, PM,
and HC emissions, though manufacturers can balance these to produce an
engine that effectively controls all emissions. NOX emissions are
controlled primarily by lowering peak combustion chamber temperatures.
However, simply lowering combustion temperatures can lead to an
increase in PM or HC formation because PM and HC are more likely to
form at lower temperatures. NOX control strategies such as
retarding fuel injection timing by themselves are limited because they
cause an increase in PM or HC. Engine manufacturers have had to devise
more sophisticated emission control strategies that allow them to
simultaneously control NOX, and PM, and HC. Manufacturers have
used a variety of technologies, often balancing their effects and
optimizing among them to comply with the emission standards. EPA
therefore believes that manufacturers will need some, but certainly not
all, of the technologies that are primarily for controlling PM or HC
emissions to meet the standards proposed in this action.
Combustion chamber design is a key area for improvements to reduce
emissions and increase performance. Manufacturers are continuously
working to improve the combustion chamber geometries of their engines
to maximize efficiency and reduce emissions. Design variables include
such things as the shape of the combustion chamber, the location of the
fuel injector, valve timing, and air intake geometry. Efforts to
redesign the shape of the combustion chamber and the location of the
fuel injector have been directed primarily at optimizing the relative
motion of the air and injected fuel. Increasing the turbulence of the
intake air (such as through inducing swirl) can reduce NOX and PM
emissions from diesel engines by improving the mixing of air and fuel
in the combustion chamber. Increasing the compression ratio of the
engine will generally reduce fuel consumption and PM, but tends to
increase NOX emissions. Moving from 2 to 4 valves per cylinder can
be used to improve engine breathing and will allow the fuel injector to
be placed in the center of the cylinder bore, improving combustion.
Finally, higher precision in the bore honing and the matching of the
piston and rings can reduce the amount of oil that passes from the
crankcase into the cylinder. This will result in a reduction in PM.
Emission control and diesel engine performance may also be improved
through advances in fuel injector design. Design variables for fuel
injectors include injection pressure, spray pattern, and control of the
rate of fuel injection over the course of the injection event. The
combination of

[[Page 33456]]

reduced droplet size and improved mixing leads to decreased HC and PM.
This improved fuel injection can simultaneously lower NOX
emissions by reducing the time between the initial injection and
ensuing ignition of the fuel, which minimizes the level of premixed
combustion.
Varying the rate at which fuel is injected into the cylinder is
another strategy that may be used to reduce HC, NOX, and PM
emissions. This ``rate shaping'' is especially effective when combined
with electronic controls. A low rate pilot injection may be used at the
beginning of combustion to shorten the ignition delay, therefore
shortening the pre-mixed burning phase of combustion, which is most
conducive to NOX formation. At low loads, improved fuel injection
can reduce NOX, the soluble organic fraction of PM, and fuel
consumption, with some possible penalty in smoke. One experimental
study, referenced in the RIA, showed that rate shaping and fuel
injection parameters could be used to achieve 3.5 g/bhp-hr NOX and
0.10 g/bhp-hr PM from a diesel engine operating at 75 percent load,
without the use of EGR (HC levels were not reported).
Engine manufacturers may reduce emissions from their engines
through optimization of charge air pressures and response rates for all
types of engine operation (speed and load). Charge air compression is
used in almost all current heavy-duty diesel engines. For four-stroke
diesels, turbocharging is the most common method of increasing boost
air pressure into the cylinder. With an increase of air moved into the
cylinder, more fuel may be injected resulting in higher power. One
limitation of a turbocharger is that it has an inertial lag time
associated with its response to changing operating conditions. As a
result, during transient operation, too little intake air compression
may occur at the beginning of an acceleration, while an excessive boost
may remain at the start of the next steady-state operation. In
addition, a given turbocharger optimized for high loads may have
compromised efficiency at low loads. A variable geometry turbocharger
may be used to increase the boost response rate and provide appropriate
air/fuel ratios for varying loads and speeds. This control of the air/
fuel ratio can often lead to decreased emissions. In one study,
referenced in the RIA, electronic controls combined with a variable
geometry turbocharger achieved a 37 percent reduction in HC and a 34
percent reduction in NOX without an increase in PM over a portion
of the HD-FTP.
Exhaust gas recirculation (EGR) is probably the most important in-
cylinder diesel engine control technology for obtaining significant
NOX reductions to meet the 2004 proposed standard. Under this
approach, a portion of the exhaust gas is routed back into the intake
manifold. This has the effect of reducing peak temperatures, and thus
reducing NOX formation in the cylinder. This strategy will be
focused on low and medium load conditions due to possible PM and fuel
consumption increases at high loads. EPA expects that the effectiveness
of the EGR system will be optimized and its potential adverse affects
minimized by integrating its control into the overall electronic
controls used for other engine systems. One method for controlling the
PM emissions attributed to EGR, which may be used on some designs, is
to cool the exhaust gas recirculated to the intake manifold. By cooling
the recirculated gas, more exhaust gas can be added to the intake
charge without reducing the supply of fresh air into the cylinder.
Another concern associated with EGR is that, by being recirculated, the
particulate or other contaminants in the exhaust may find its way into
the oil and degrade the oil's performance, resulting in a durability
concern. This durability concern may be alleviated by keeping the EGR
fraction of the intake charge below 10 or 15 percent, modifying
lubricating oil additive packages, improving oil filtration, and/or
more frequent oil changes. In the worst case, some manufacturers may
consider some form of an in-line particulate removal device such as a
filter in the stream of recirculated exhaust gas.
Engine manufacturers have started to use oxidation catalysts in
some cases where engines have needed help meeting particulate
standards. Efforts are also being made to develop a durable and cost
effective NOX reduction catalyst that will operate on the lean
exhaust which is produced by diesel engines. However, due to projected
engine design improvements, EPA expects the engine manufacturers to
focus on meeting the proposed standard without the use of
aftertreatment. Alternatives to aftertreatment are generally preferable
because of high costs, space requirements, backpressure effects, and
possible durability concerns (with respect to long life of diesel
engines) associated with aftertreatment devices.
In summary, EPA believes that combustion optimization through
strategies such as air and fuel control and EGR would be the primary
NOX control strategy for meeting the proposed standards. However,
as NOX emissions are reduced through engine controls, there is
often a tradeoff resulting in an increase in PM emissions. Strategies
that would be expected to be used to control PM emissions include
further optimization of combustion chamber geometry, advances in fuel
injection, fuel rate shaping, and advances in turbocharger design.
These PM control technologies may also be used to increase power from
the engine and reduce fuel consumption. EPA believes that manufacturers
would make use of the PM control technologies, regardless of further
emission control, to achieve benefits in power and fuel consumption.
All of the technologies described in this section have been applied to
and proven in on-highway diesel engine applications. Further, all of
the technologies, with the exception of EGR, have been proven in heavy-
duty diesel applications. Even EGR is used on at least one 1996 light
heavy-duty diesel engine model. By combining these strategies in
various ways, EPA believes it is technologically feasible to meet the
proposed standards for model year 2004. Together these strategies
should allow heavy-duty diesel engines to achieve the proposed NOX
+ NMHC reductions without increasing PM or other emissions.
Most of the results discussed above are based on research using
conventional on-highway diesel fuel. Another parameter which affects
emissions from diesel engines is the composition of the fuel being
used. While much can be said about the effect of current fuels on
current engines, the degree of sensitivity of future, low emitting,
engines to fuel parameters is not as well understood. The Agency's
current view is that fuel changes could reduce the amount of emission
control necessary for the engine, but fuel changes are probably not
necessary to meet the proposed standards. However, this remains an area
of uncertainty and is one of the issues which would be addressed
further in the proposed 1999 review of the feasibility of the standard,
as discussed in section III.B above.

B. Gasoline Engines

Gasoline engine manufacturers are producing heavy-duty engines that
exceed the level of emission control required by current standards.
Some 1996 model year heavy-duty gasoline engine families have certified
emission levels below the standards proposed for 2004. Thus, the Agency
believes that complying with the proposed standards will be fairly
straightforward for gasoline engines. EPA requests

[[Page 33457]]

comment on the appropriateness and effectiveness of the technologies
described below.
Current heavy-duty gasoline engine emission levels are achieved
mainly through the use of EGR and either air-assisted oxidation
catalysts or three-way catalysts. Many of these engines have used open-
loop engine controls and electronic fuel injection for years. However,
the three-way catalysts require precise control of the exhaust air-fuel
ratio for maximum performance. By including a feedback loop in the
control system, the precision of the air-fuel ratio in the exhaust is
greatly increased, especially during transient operation. Therefore,
EPA believes that, through the use of closed-loop electronic control
and the upgrades to system management available with that approach,
manufacturers can significantly improve their emission-control
capability. These reductions may be further assisted by improvements in
fuel injection technology or EGR.
Improving fuel injection has been proven to be an effective and
durable strategy for controlling emissions and reducing fuel
consumption from gasoline engines. Improved fuel injection will result
in better fuel atomization and a more homogeneous charge with less
cylinder-to-cylinder and cycle-to-cycle variation of the air-fuel
ratio. These engine performance benefits will increase as technology
advances allow fuel to be injected with better atomization. Increased
atomization of fuel promotes more rapid evaporation by increasing the
surface area to mass ratio of the injected fuel. This results in a more
homogeneous charge to the combustion chamber and more complete
combustion. EPA believes that multi-port fuel injection will be used in
most, if not all, applications under the proposed standards because of
its proven effectiveness. Because of the performance and fuel
consumption improvements associated with multi-port fuel injection, it
is likely that most engine models would incorporate this technology by
2004 anyway.
Exhaust gas recirculation is currently used on heavy-duty gasoline
engines as a NOX control strategy. Recirculated gases reduce the
peak flame temperature, thus reducing NOX. Because the
recirculated gases limit the amount of oxygen available for combustion,
there can be some penalty in fuel economy if too much gas is
recirculated. One method of increasing the engine's tolerance for EGR
is to stratify the recirculated gases in the cylinder. This
stratification allows high amounts of dilution near the spark plug for
NOX reduction while making undiluted air available to the
crevices, oil films, and deposit areas so that HC emissions may be
reduced. Stratification may be induced radially or laterally through
control of air and mixture motion determined by the geometry of the
inlet ports. One study of this strategy is referenced in the RIA.
EPA believes that the most promising overall emission control
strategy for heavy-duty gasoline engines is the combination of a three-
way catalyst and closed loop electronic control of the air-fuel ratio.
Control of the air-fuel ratio is important because the three-way
catalyst is only effective if the air-fuel ratio is at a narrow band
near stoichiometry. For example, for an 80 percent conversion
efficiency of HC, CO, and NOX with a typical three-way catalyst,
the air-fuel ratio must be maintained within a fraction of one percent
of stoichiometry. During transient operation, this minimal variation
cannot be maintained with open-loop control. For closed-loop control,
the air-fuel ratio in the exhaust is measured by an oxygen sensor and
used in a feedback loop. The throttle position, fuel injection, and
spark timing can then be adjusted for given operating conditions to
result in the proper air-fuel ratio in the exhaust. In addition,
electronic control can be used to adjust the air-fuel ratio and spark
timing to adapt to lower engine temperatures, therefore controlling HC
emissions during cold start operation.
A three-way catalyst may be a single converter or have two
converters in series. A converter is constructed of a substrate,
washcoat, and catalytic material. The substrate may be metallic or
ceramic with a flow-through design similar to a honeycomb. A high
surface area coating, or washcoat, is used to provide a suitable
surface for the catalytic material. Under high temperatures, the
catalytic material will increase the rate of chemical reaction of the
exhaust gas constituents. In a typical three-way catalyst design with
two converters, the first converter will be a reduction catalyst which
converts NOX to nitrogen and water. Palladium is often used as the
NOX reduction catalytic material with rhodium added to control
ammonia formation. Ammonia, which may be converted back to NOX in
the second converter, can also be controlled through the use of tight
air-fuel ratio control. The second converter is an oxidation catalyst
and typically uses platinum and rhodium to convert HC and CO to
CO2 and water. Three-way catalytic converters using a single
monolith generally use one or more of the metals mentioned above
(platinum, rhodium, and palladium) to catalyze the desired reactions.
These designs may be preferable since less materials are used and less
space is required.
In summary, EPA believes that gasoline engine manufacturers, to the
extent they need to make improvements, can meet the proposed standards
by refining those technologies already employed on their engines. The
use of more powerful electronics to better control combustion and
aftertreatment will likely be the most important focus of technology
upgrades enabling manufacturers to reduce emissions. EPA therefore
believes it is technologically feasible for heavy-duty gasoline engines
to meet the proposed standards for model year 2004.

C. Safety and Energy

One of the factors considered by EPA in assessing the feasibility
of its proposed standards is safety. Section 202(a)(3) of the Clean Air
Act requires that EPA set emission standards for heavy-duty engines
that reflect 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.'' \48\ EPA
has considered the safety implications of the standards in today's
proposal. In the course of this consideration, the Agency has consulted
with the Department of Transportation, to make use of that Department's
expertise in assessing vehicle safety.
---------------------------------------------------------------------------

\48\ 42 U.S.C. 7521(a)(3)(A)(i).
---------------------------------------------------------------------------

EPA does not believe that there are any significant safety concerns
associated with the technologies described in this section. In general,
they all represent the progressive development of technology already in
use. Except for the use of EGR on heavy-duty diesel engines, all of the
technologies anticipated for use in 2004 have already been applied to
and proven on recent model year heavy-duty engines. As for the use of
EGR, EPA is not aware of any safety problems where EGR has been used on
light-duty diesel vehicles or on heavy-duty gasoline engines. EPA sees
no reason why the use of EGR on heavy-duty diesels would create any new
safety problems. EPA welcomes comment on any safety issues that
commenters believe might be associated with today's proposal.
EPA believes that there will not be significant energy concerns
associated

[[Page 33458]]

with the control strategies which would be available to meet the
proposed standards. EPA expects that manufacturers will focus on
maintaining or decreasing the fuel consumption of their engines in the
development of engines that will meet the proposed standards. For
heavy-duty diesel engines, many of the technologies that would likely
be used to control PM emissions would also be used to offset the
negative effects of EGR on fuel economy. For heavy-duty gasoline
engines, the combination of fuel injection advances and closed-loop
control used to control emissions could actually result in a fuel
economy benefit.

V. Impacts of Proposed Program

A. Environmental Impacts

1. Heavy-Duty NOX Emissions Impacts
The NOX inventories used for this rulemaking were based on a
detailed analysis of NOX emissions that was prepared for EPA by
E.H. Pechan and Associates, as described in Section II. To calculate
the impact of this proposal, it is necessary to estimate average
NOX and average NMHC emission levels resulting from the combined
NOX + NMHC standard. The NOX emission level was determined by
analyzing the relative cost effectiveness of NOX and NMHC
emissions reduction technologies; NOX-reduction technologies are
expected to be much more cost-effective than NMHC-reduction
technologies, which are only practical for a small number of engine
families that have relatively high NMHC emissions. As a result, NMHC
emissions are expected to be only slightly less than current levels,
(see following section for additional discussion), and NOX
emissions are expected to be reduced to below 2.0 g/BHP-hr to provide a
sufficient compliance margin. Thus, the effect of the combined
standards on NOX was modeled as being equivalent to a 2.0 g/BHP-hr
NOX-only standard. Full details of the air quality impacts can be
found in the RIA. The following paragraphs summarize the key results.
The public is encouraged to read the full analysis, and to comment on
all aspects of the work.
Figure 7 shows projections of total NOX emissions, with and
without the proposed controls, for the entire nation. The emissions are
projected to decline over the next several years, due to the
implementation of previously promulgated controls, but then begin to
increase due to growth in the number of vehicles and other sources. By
the year 2020, without additional control, total national NOX
emissions are projected to actually exceed current levels. Even with
the implementation of the proposed standards, total NOX emissions
are expected to grow in the future. Figure 8, which presents the
projections of NOX emissions from heavy-duty engines, with and
without the proposed controls, shows that the proposed standards are
expected to prevent the contribution of heavy-duty engines from
increasing before the year 2020.

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[[Page 33460]]

[GRAPHIC] [TIFF OMITTED] TP27JN96.030

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[[Page 33461]]

The estimates of the total NOX reductions are shown in Table
3. Almost half of the reductions would occur in nonattainment areas,
and nearly 90 percent of the reductions would occur in regions where
NOX emissions are reasonably expected to have a significant effect
on nonattainment areas.^{49
---------------------------------------------------------------------------

\49\ These regions include all counties in ozone nonattainment,
as well as all counties in attainment in: California, Texas, all
states east of the Mississippi River, and all states on the western
border of the Mississippi River.

Table 3.--Estimated National NOX Emissions Reductions From Proposed
Standards for Heavy-Duty Engines
[Thousand Tons per Year]
------------------------------------------------------------------------
Diesel Gasoline Total
Year emissions emissions emissions
reductions reductions reductions
------------------------------------------------------------------------
2005................................ 106 12 118
2010................................ 518 59 577
2015................................ 832 102 934
2020................................ 1,066 149 1,215
------------------------------------------------------------------------

2. Heavy-Duty NMHC Emissions Impacts
Estimates of the impact of this action on NMHC emissions were
developed by assuming that the combined NMHC plus NOX standards
are equivalent to that of 0.4 g/BHP-hr NMHC-only standards; this
discussion briefly summarizes the detailed analysis in the RIA. This is
consistent with the previous assumption that the combined standards are
equivalent to that of 2.0 g/BHP-hr NOX-only standards It was also
assumed that, without the proposed NMHC control, average NMHC emissions
from 2004 and later model year heavy-duty engines would be the same as
1994 model year heavy-duty engines (based on certification data), since
there are no new PM or HC standards after 1994. Using these
assumptions, the expected exhaust NMHC reductions for 2004 and later
model year engines would be 9 percent for diesels and 24 percent for
gasoline. The effect of these reductions on nationwide emissions was
modeled using MOBILE5a, using the VMT estimates from Pechan. The
results are shown in Table 4. The reason why these reductions are small
relative to the decrease in the numerical level of the standards is
that many heavy-duty engines are currently being certified well below
their applicable hydrocarbon standards. As is discussed in the RIA,
however, the lowering of the NOX standard in 1998 may cause some
increases in NMHC emissions from diesel engines (even if the emissions
remained below the current HC standard), such that the actual benefit
of this standard may be greater. Moreover, it is worth noting that the
inclusion of NMHC emissions in the proposed standards also serves to
prevent increases in NMHC emissions that may otherwise have occurred as
a result of lowering the NOX standard, given the tradeoff between
NOX reductions and HC/PM reductions that is often observed with
diesel engines.

Table 4.--Estimated National NMHC Emissions Reductions From Proposed
Standards for Heavy-Duty Engines
[Thousand Tons per Year]
------------------------------------------------------------------------
Diesel Gasoline Total
Year emissions emissions emissions
reductions reductions reductions
------------------------------------------------------------------------
2005................................ 2.2 0.5 2.7
2010................................ 6.8 2.9 9.7
2015................................ 12.1 5.2 17.3
2020................................ 16.4 8.4 24.8
------------------------------------------------------------------------

3. Particulate Emissions Impacts
The action being proposed should not have any effect on direct
particulate emissions from heavy-duty engines, since it does not change
the particulate standard. Manufacturers are expected to continue to
produce engines with particulate levels slightly below the standard.
The NOX reductions discussed above, however, are expected to
reduce the concentrations of secondary nitrate particulates. As
discussed previously, NOX can react with ammonia in the atmosphere
to form ammonium nitrate particulates. In some areas in the western
states, ammonium nitrate particulates can represent more than one
quarter of the fine particulate in the air. The California Air
Resources Board has preliminarily estimated that, in California, there
are typically 4 to 19 (with an average of about 7) tons of nitrate
particulate in the air for every 100 tons of NOX in the
air.^{50 Unfortunately, such information is not available for the
rest of the nation. As was described in the RIA, the national average
for the years of interest was estimated as 4.3:100, assuming that the
ratio would be 7.0 for the western part of the nation, and 3.5 for the
eastern part. This estimate was used to determine the equivalent fine
particulate emissions reductions caused by the NOX emissions
reductions, as is shown in Table 5. Future year estimates are
extrapolations based on the NOX reduction estimates for those
years. The Agency recognizes the limited precision of these estimates,
and requests comments on the potential for developing better estimates
of the expected relationship between NOX emissions and nitrate
particulate formation during and after the year 2004.
---------------------------------------------------------------------------

\50\ ``Conversion Factors for Secondary Formation of PM Nitrate
from NOX Emissions for California'', Draft, June 6, 1996, Leon
J. Dolislager, Nehzat Motallebi, Bart E. Croes, California Air
Resources Board.

Table 5.--Estimated Equivalent National Particulate Emissions Reductions
From Proposed Standards for Heavy-Duty Engines
[Thousand Tons per Year]
------------------------------------------------------------------------
Equivalent
Total NOX particulate
Year emissions emissions
reductions reductions
------------------------------------------------------------------------
2005........................................... 118 5
2010........................................... 577 25
2015........................................... 934 40
2020........................................... 1215 52
------------------------------------------------------------------------

4. Effect on Ozone
The effect of these NOX emissions reductions on ozone
concentrations is expected to vary geographically. In general, when
fully phased-in, the effect of this action in most nonattainment areas
should be a reduction in ozone concentrations on the order of a few
percent. It should be noted, however, that the potential exists for a
few localized areas to actually experience slight increases in ozone
concentrations as a result of NOX emissions reductions. The Agency
is attempting to develop a more precise analysis of the effect of these
reductions on ozone, including an analysis of the extent to which
potential localized ozone increases could be mitigated through other
emissions control programs.
5. Other Effects
Reducing NOX emissions has a positive effect on visibility,
since both NO2 and nitrate particulates absorb visible light. As
noted in the RIA, NO2 and nitrate particulates can be responsible
for 20 to 40 percent of the visible haze in some urban areas. The
effect of this action on visibility should be small but potentially
significant, given that it is expected to reduce overall NOX
emissions by several percent. For example, the proposed controls are
expected to result in about 5 percent less total NOX in the year
2020, and therefore would be expected

[[Page 33462]]

to result in a decrease in haze of about 1 percent in an area where
NO2 and nitrate particulates cause 20 percent of the haze.
NO2 and nitrate particulates also contribute to decreased
visibility in scenic rural areas in southern California, so these areas
would similarly benefit from reduced NOX emissions.
The standards being proposed here are also expected to provide
benefits with respect to nitrogen deposition. The 1.2 million-ton per
year reduction in NOX emissions expected in 2020 as a result of
this action is greater than the 400,000-ton per year reduction expected
from Phase I of the Agency's acid rain NOX control rule (59 FR
13538), which was considered to be a significant step toward
controlling the ecological damage caused by acid deposition. This
action should also lead to a reduction in the nitrogen loading of
estuaries. This is significant since high nitrogen loadings can lead to
eutrophication of the estuary, which causes disruption in the
ecological balance. The effect should be most significant in areas
heavily affected by atmospheric NOX emissions. One such estuary is
Chesapeake Bay, where as much as 40 percent of the nitrogen loading may
be caused by atmospheric deposition. In addition to these benefits, the
NOX reductions from the proposed new engine standards are expected
to have beneficial impacts with respect to crop and forest damage.

B. Economic Impact and Cost-Effectiveness

This rulemaking does not follow the normal pattern of allowing four
years following the conclusion of the rule before requiring production
of the new low-emitting engines. The engine manufacturers, by signing
the Statement of Principles, have committed themselves to challenging,
long-term design targets. This provides manufacturers fully eight years
to allocate resources and conduct planning for a very thorough long-
term R&D program. Manufacturers have expressed a confidence that
several years of research will provide them opportunity to develop a
complying engine that they can market with full confidence.
The above presentation of the range of technologies shows a good
deal of promise for controlling emissions, but also makes clear that
much effort remains to optimize the technologies for maximum emission-
control effectiveness with minimum negative impacts on engine
performance, durability, and fuel consumption. On the other hand, it
has become clear that manufacturers have a great potential to advance
beyond the current state of understanding by identifying aspects of the
key technologies that contribute most to hardware or operational costs
or other drawbacks and pursuing improvements, simplifications, or
alternatives to limit those burdens. To reflect this improvement and
long-term cost saving potential, the cost analysis includes an
estimated $230 million (net present value in 1996) in R&D outlays for
heavy-duty engine emission control over several years. The cost
analysis accordingly presumes extensive improvements on the current
state of technology from these future developments. The 1999 technology
review provides a check on EPA's projected costs. EPA will revisit the
analysis of the full life-cycle costs as part of the 1999 technology
review. EPA and manufacturers will at that time confirm whether or not
technology development is progressing as needed to meet the proposed
emission standards.
In assessing the economic impact of changing the emission
standards, EPA has made a best estimate of the combination of
technologies that an engine manufacturer might use to meet the proposed
standards at an acceptable cost. Full details of EPA's cost and cost-
effectiveness analyses, including information not presented here, can
be found in the Regulatory Impact Analysis in the public docket. The
Agency invites comments on all aspects of these analyses.
Estimated cost increases are broken into purchase price and total
life-cycle costs. The incremental purchase price for new engines is
comprised of variable costs (for hardware and assembly time) and fixed
costs (for R&D, retooling, and certification). Total life-cycle costs
factor in an additional estimate for operating costs attributable to
any increased maintenance or fuel consumption. Cost estimates based on
these projected technology packages represent an expected incremental
cost of engines in the 2004 model year. Costs in subsequent years would
be reduced by several factors, as described below. Separate projected
costs were derived for engines used in three service classes of heavy-
duty diesel engines. Cost estimates are presented for all gasoline
heavy-duty vehicles as a single group. All costs are presented in 1996
dollars. Life-cycle costs have been discounted to the year of sale.
Diesel engine costs are considered first, followed by gasoline engines.
1. Costs for Diesel Engines
The following discussion provides a description and estimated costs
for those technologies EPA believes will be needed to comply with the
proposed emission standards. It is difficult to make a distinction
between technologies that are needed to reduce NOX emissions for
compliance with 2004 model year standards and those technologies that
offer other benefits for improved fuel economy and engine performance
or for better control of particulate emissions. EPA believes that
manufacturers, in the absence of 2004 model year standards, would
continue research on and eventually deploy numerous technological
upgrades to improve engine performance or more cost-effectively control
emissions. EPA therefore believes that a small set of technologies
represent the primary changes manufacturers must make to meet the
proposed 2004 model year standards. Other technologies applied to
heavy-duty engines, before or after implementation of new emission
standards, will make relatively minor positive contributions to
controlling NOX emissions and are therefore considered secondary
improvements for this analysis. In this category are design changes
such as improved oil control, variable-geometry turbochargers,
optimized catalyst designs, and variable-valve timing. Lean NOX
catalysts are also considered here to be secondary technologies, not
because NOX control is an incidental benefit, but rather because
it appears unlikely that they will be part of 2004 model year
technology packages. Modifications to fuel injection systems will also
continue independently of new standards, though some further
development with a focus on reducing NOX emissions would be
evaluated.
Several technological improvements are projected for complying with
the proposed 2004 model year emission standards. Selecting this package
of technologies requires extensive engineering judgment. The fact that
manufacturers have nearly a full decade before implementation of the
proposed standards virtually ensures that the technologies used to
comply with the proposed emission standards will develop significantly
before reaching production. This ongoing development will lead to
reduced costs in three ways. First, research will lead to enhanced
effectiveness for individual technologies, allowing manufacturers to
use simpler packages of emission control technologies than we would
predict given the current state of development. Similarly, the
continuing effort to improve the emission control technologies will
include innovations that allow lower-cost production. Finally,
manufacturers will focus research efforts on any drawbacks, such as
increased fuel consumption or

[[Page 33463]]

maintenance costs, in an effort to minimize or overcome any potential
negative effects.
A combination of primary technology upgrades are anticipated for
the 2004 model year. Achieving very low NOX emissions will require
basic research on reducing in-cylinder NOX and HC. Modifications
to basic engine design features can be used to improve intake air
characteristics and distribution during combustion. Manufacturers are
also expected to utilize upgraded electronics and advanced fuel-
injection techniques and hardware to modify various fuel injection
parameters, including injection pressure, further rate shaping and some
split injection. EPA also expects that many engines will incorporate
light-load EGR.
If not developed and implemented properly, EGR has the potential to
increase operating costs, either by increasing fuel consumption or
requiring additional maintenance to avoid accelerated engine or
component wear. While it is possible to develop scenarios and estimate
the impact on operating costs of current diesel EGR concepts, this is
of minimal value due to the expected continuing development of these
technologies. Nevertheless, EPA has assessed the potential for
increased operating costs, as described below, first for EGR-related
maintenance, then for fuel economy. EPA understands that manufacturers
will make a great effort to minimize any potential new maintenance
burden for the end user, investing in research to design an engine
acceptable to users. The cost to address the durability concern is
therefore included not as a maintenance item, but as a fixed cost. The
analysis includes a separate maintenance cost for EGR systems--EPA
expects engine rebuilding will include preventive maintenance to clean
or replace EGR components.
With respect to fuel economy, several of the secondary technologies
described below may lead to cost savings, while EGR has the potential
to incur a fuel economy penalty. As with potential new maintenance cost
burdens, EPA believes manufacturers will focus their research efforts
on overcoming any negative impact on fuel economy caused by EGR. In any
case, it is not clear at this stage of development that the set of
changes resulting from the proposed emission standards will have any
net negative impact on fuel economy; additional fuel costs are
therefore not included in the cost analysis.
Meeting the proposed NOX+NMHC standard will somewhat increase
the challenge to control particulate emissions. Manufacturers might use
a number of different technologies to maintain control of particulate
emissions; however, EPA believes that the fuel system improvements
described above will be sufficient to prevent any potential
particulate-emission increase. In fact, manufacturers are attempting to
lessen the cost of meeting current particulate emission standards over
the next several years by decreasing their reliance on catalysts. This
underscores EPA's belief that 2004 model year engines will be able to
control particulate emissions without major technological innovation.
The costs of these new technologies for meeting the proposed
standards are itemized in the Regulatory Impact Analysis and summarized
in Table 6. For light heavy-duty vehicles, the incremental cost of a
new 2004 model year engine is estimated to be $185, with no additional
operating costs. For medium heavy duty vehicles the new engine purchase
price is estimated to increase by $327, with total life-cycle costs of
$371. Similarly, for heavy heavy-duty engines, initial purchase price
is expected to increase by $403, while total life-cycle cost estimates
reach $499.
For the long term, EPA has identified various factors that would
cause cost impacts to decrease over time. First, the analysis
incorporates the expectation that manufacturers will apply ongoing
research to making emission controls more effective and less costly
over time. This expectation is similar to manufacturers' stated goal of
decreasing their reliance on catalysts to meet emission standards in
the future. Research in the costs of manufacturing has consistently
shown that as manufacturers gain experience in production, they are
able to apply innovations to simplify machining and assembly
operations, use lower cost materials, and reduce the number or
complexity of component parts.\51\ The analysis incorporates the
effects of this learning curve by projecting that the variable costs of
producing the low-emitting engines decreases by 20 percent starting
with the third year of production (2006 model year) and by reducing
variable costs again by 20 percent starting with the sixth year of
production. Finally, since fixed costs are assumed to be recovered over
a five-year period, these costs disappear from the analysis after the
first five model years. Table 6 lists the projected schedule of costs
for each category of vehicle over time.

Table 6.--Projected Diesel Engine Costs
[1995 dollars discounted to year of sale]
----------------------------------------------------------------------------------------------------------------
Life-cycle
Vehicle class Model year Purchase operating Total life-
price cost cycle cost
----------------------------------------------------------------------------------------------------------------
Light heavy-duty.......................... 2004......................... 185 0 185
2009 and later............... 68 0 68
Medium heavy-duty......................... 2004......................... 327 44 371
2009 and later............... 101 44 145
Heavy heavy-duty.......................... 2004......................... 403 96 499
2009 and later............... 148 96 243
----------------------------------------------------------------------------------------------------------------

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

\51\ ``Learning Curves in Manufacturing,'' Linda Argote and
Dennis Epple, Science, February 23, 1990, Vol. 247, pp. 920-924.
---------------------------------------------------------------------------

2. Costs for Gasoline Engines
The cost analysis for gasoline engines follows the same methodology
as for diesel engines, though with significantly less complexity due to
the expectation that the technological development needed to meet the
proposed standards will not be so far-reaching as for diesel engines.
The same kinds of costs are considered for gasoline engines. Because
the technologies require changes to existing technologies without
affecting the assembly time, no increase in assembly costs are
anticipated. Also, the improvements to gasoline engine technologies
will not affect fuel economy or in-use maintenance; therefore, no
incremental fuel or maintenance costs are anticipated.
Gasoline engines and vehicles need a much different set of changes
to meet the proposed emission standards than do diesel engines. Much of
the very extensive development work done for

[[Page 33464]]

passenger cars can, with appropriate adaptations, be applied to heavy-
duty engines. The technology projections for heavy-duty gasoline
engines therefore depend in part on the experience with light-duty
trucks, as well as on the current view of technology developments for
the heavy-duty applications themselves.
More sophisticated control of EGR flow rates over the various
operating modes may allow more aggressive use of EGR to better control
NOX emissions. Ongoing developments show that three-way catalysts
can be made with modified washcoats and configured in the vehicle in
ways that significantly improve their effectiveness at controlling both
NOX and HC emissions. Some basic engine modifications may also be
needed to fine-tune emission control and operating performance.
Since no operating costs for fuel economy or maintenance are
expected for gasoline engines, all the costs translate into an
increased purchase price of the engine or vehicle. The 2004 model year
cost estimate for an average heavy-duty gasoline vehicle is $162. Costs
can be reduced with continuing production experience, as described for
diesel engines; variable costs are reduced by 20 percent only one time
though, because the changes to gasoline engines are considered to be of
a smaller magnitude. The resulting cost calculation for 2009 and later
model year heavy-duty gasoline vehicles is $101 (Table 7).

Table 7.--Projected Gasoline Engine Costs
[1995 dollars discounted to year of sale]
------------------------------------------------------------------------
Life- Total
Purchase cycle life-
Model year price operating cycle
cost cost
------------------------------------------------------------------------
2004................................... 162 0 162
2009 and later......................... 101 0 101
------------------------------------------------------------------------

3. Aggregate Costs to Society
The above analysis develops per-vehicle cost estimates for each
vehicle class. Using current data for the size and characteristics of
the heavy-duty vehicle fleet and making projections for the future,
these costs can be used to estimate the total cost to the nation for
the proposed emission standards in any year. The result of this
analysis is a projected total cost starting at $300 million in 2004.
Per-vehicle costs savings over time reduce projected costs to a minimum
value of $136 million in 2009, after which the growth in truck
population leads to increasing costs that reach $186 million in 2020.
Total costs for these years are presented by vehicle class in Table 8.
The calculated total costs represent a combined estimate of fixed costs
as they are allocated over fleet sales, variable costs assessed at the
point of sale, and operating costs as they are incurred in each
calendar year.

Table 8.--Estimated Annual Costs for Improved Heavy-Duty Vehicles
[millions of dollars]
------------------------------------------------------------------------
Category 2004 2009 2020
------------------------------------------------------------------------
Light Heavy-Duty Diesel................ 51 23 26
Medium Heavy-Duty Diesel............... 71 22 34
Heavy Heavy-Duty Diesel................ 97 37 62
Gasoline............................... 81 55 64
------------
Total.................................. 300 136 186
------------------------------------------------------------------------

As described in Section X below, EPA expects that complying with
the proposed emission standards will not result in a significant impact
on a substantial number of small entities.
4. Cost-effectiveness
EPA has estimated the per-vehicle cost-effectiveness (i.e., the
cost per ton of emission reduction) of the proposed NOX plus NMHC
standard over the typical lifetime of heavy-duty diesel and heavy-duty
gasoline vehicles. The RIA contains a more detailed discussion of the
cost-effectiveness analyses. EPA requests comments on all aspects of
the cost-effectiveness analyses, including, for example, the
appropriateness of the scope of benefits and costs which EPA
considered.
EPA has examined the cost-effectiveness by two different
methodologies. The first methodology yields a nationwide cost-
effectiveness in which the total cost of compliance is divided by the
nationwide emission benefits. The second methodology yields a regional
ozone strategy cost-effectiveness in which the total cost of compliance
is divided by the emission benefits attributable to the regions that
impact ozone levels in ozone nonattainment areas.^{52 EPA requests
comments on the methodologies used to determine cost-effectiveness in
this analysis.
---------------------------------------------------------------------------

\52\ The RIA contains a detailed description of areas included
in the regional control strategy.
---------------------------------------------------------------------------

In addition to the benefits of reducing ozone within and
transported into urban ozone nonattainment areas, the NOX
reductions from the proposed new engine standards are expected to have
beneficial impacts with respect to crop damage, secondary particulate,
acid deposition, eutrophication, visibility, and forests, as described
above. Due to the difficulty in estimating the monetary value of these
societal benefits, the cost-effectiveness analysis does not assign any
numerical value to these additional benefits. It should be emphasized
that the Agency believes that the actual monetary value of the multiple
environmental and public health benefits produced by the large NOX
reductions under this proposal is likely to be much higher than the
estimated regulatory costs. To the extent possible, EPA plans to take
into consideration the value of these additional benefits in analyzing
the cost-effectiveness of the standards for the final rulemaking. EPA
requests comment on including these benefits in an estimate of the
cost-effectiveness of the proposed standards.
As described above in the cost section, the cost of complying with
the proposed standards will vary by model year. Therefore, the cost-
effectiveness will also vary from model year to model year. For
comparison purposes, the discounted costs, emission reductions and
cost-effectiveness of the proposed standards are shown in Table 9 for
the same model years discussed above in the cost section. The cost-
effectiveness results contained in Table 9 present the range in cost-
effectiveness resulting from the two cost-effectiveness scenarios
described above.

[[Page 33465]]

Table 9.--Discounted Per-Vehicle Costs, Emission Reductions and Cost-Effectiveness of the Proposed NOX and NMHC
Standards
----------------------------------------------------------------------------------------------------------------
Discounted lifetime Discounted
Discounted reductions (tons) cost-
Vehicle class Model year lifecycle -------------------------- effectiveness
cost NOX NMH ($/ton)
----------------------------------------------------------------------------------------------------------------
Heavy-duty diesel vehicles.................. 2004 $333 1.321 0.019 $200-$300
2009+ 143 ........... ........... 100
Heavy-duty gasoline vehicles................ 2004 162 0.190 0.011 800-900
2009+ 101 ........... ........... 500-600
----------------------------------------------------------------------------------------------------------------

VI. Potential for Use of Additional Incentive-based Approaches

When considering how to achieve the greatest emission reductions
possible, a broad variety of options must be evaluated. On one end of
the continuum are mandatory standards, which generally provide the
strongest mechanism to produce cleaner engines. At the other end of the
continuum are voluntary programs, where engine manufacturers and users
are not required to make or use cleaner engines, but are strongly
encouraged to do so. The proposed actions described in Section IV above
include elements of both mandatory programs (emissions standards and
durability-related requirements), as well as voluntary provisions
(enhancements to the averaging banking and trading program). Voluntary
programs can also be used to allow manufacturers and users maximum
flexibility in finding the most cost effective ways to adopt new
standards.
In the following sections, EPA describes additional voluntary
programs that might facilitate the introduction of cleaner heavy-duty
engines. These are voluntary labeling (``green star'') programs, and
emission reduction credit generation under various state-run credit
programs (including scrappage buy-back and open market trading). While
EPA is not proposing these programs in today's NPRM, EPA is soliciting
comments on their applicability and potential usefulness.

A. Voluntary Labeling

One type of economic incentive program is environmental labeling,
or ``green'' labeling. While ``green'' labeling is very closely linked
to environmental marketing, it most often involves setting voluntary
standards and encouraging industry to adopt them based on their
intrinsic value to the common good, as well as individual companies. In
a voluntary labeling program benefits can be direct or indirect. Some
voluntary labeling programs may confer direct economic benefits
(savings), for example, in the form of reduced energy costs. An example
of this is EPA's Green Lights and Energy Star programs. Other voluntary
labeling programs may confer only indirect benefits on companies that
offset emission control costs by providing some other intangible
benefit, such as positive publicity, public goodwill, or improved
efficiency.
Although EPA is not proposing a voluntary environmental labeling
program in this document, EPA is requesting comments on a three-
component labeling concept called the Green Star Engines Program. The
program would seek to identify cleaner engines and classify products
that could be marketed as ``green.'' This would provide positive
publicity and, potentially, economic incentives. These, in turn, could
help encourage engine manufacturers to market cleaner engines and
encourage truckers and other users to purchase those cleaner engines.
The first part of the program would focus on identifying engines
that meet the emission standards contained in today's proposal earlier
than required. The second would also focus on early compliance, but
with intermediate standards which are between pre-2004 levels and those
being proposed today. The third part of the program would concentrate
on identifying engines that can meet or exceed the emissions standard
with the use of alternative fuels. Engine manufacturers benefit from
the public good will created as they demonstrate a commitment to work
cooperatively with other stakeholders to improve air quality. In
addition, producers of alternative fuels would have additional
opportunities to enter the transportation energy market.
As described further below, engines falling under any of the three
parts of the program would be identified with an appropriate engine
label. Trucks equipped with such engines would also be labeled. In the
case of the truck labels, it might be desirable to include a commitment
to advanced maintenance practices on the part of the truck owner as a
condition of displaying the label. EPA envisions that this could be a
cooperative program between the federal or state government and truck
owners/operators. Participants would sign a letter of commitment to
establish specified maintenance programs and maintenance technician
training programs. They would then be recognized as members of the
program and provided with labels to affix to their trucks. The
supervising agency, either EPA or some other entity, would be
responsible for ascertaining that truck owner/operators have the
systems in place to comply with the maintenance requirements. Also, the
commitment would have to be renewed periodically to insure that the
relevant trucks are performing as required.
EPA solicits comment as to the practicality and potential
effectiveness of all aspects of this program, as well as whether and
how the three aspects of the program could be used simultaneously, as
further discussed below.
EPA anticipates that a broad range of interested stakeholders would
wish to participate in the Green Star Programs described in more detail
below. Interested stakeholders would participate as either a Partner or
Supporter. A Partner would be defined as an individual or entity that
either manufactures or uses the Green Star Product and thus has a
greater stake in the program outcome. A Supporter would assist in
making the program successful through public education efforts and by
providing positive publicity.
1. Green Star Engine Program: Early Compliance with Certification
Standards
The first labeling program about which EPA is requesting comment
would identify those heavy-duty engines which meet the federal heavy-
duty certification standards prior to the required implementation date.
All such engines would be identified with the Green Star Engine Label.
Trucks that are equipped with Green Star engines would also be
identified with the Green Star Engine Label.

[[Page 33466]]

The identification of heavy-duty engines, trucks, and equipment
that meet a more protective standard would serve to visually inform
users, states, interested parties, and the general public of the
specific heavy-duty engines, and consequently the trucks and other
heavy-duty equipment, which meet more protective emission standards.
For example, heavy-duty engines which meet the 1998 NOX standard
before 1998 could be labeled with a Green Star Engine label, until
those standards become mandatory. After those standards are mandatory,
but prior to the implementation to the 2004 heavy-duty standard, heavy-
duty engines that meet the 2004 standards could be labeled with the
Green Star Engine label. This program would be intended to encourage
the early introduction of cleaner heavy-duty engines, the idea being
that early users would draw some publicity benefits from using these
engines. Engine manufacturers would benefit from being able to use the
Green Star Engine label as a sales tool. Comments are invited on
whether EPA should propose the early compliance labeling program, and
if it should, how the program should be structured.
2. Green Star Engine: Intermediate Standards Program
Engines which might meet a more stringent intermediate standard
than what would be required by regulation could be identified with the
Green Star Engine intermediate label. The intermediate label would
identify engines (and trucks equipped with those engines) as cleaner
than the current standard but not as clean as the future standard. For
example, such an engine might meet a 2.5-3.0 g/bhp-hr NOX standard
between 1998 and 2004 or meet a 1-1.5 gram NOX standard after
2004. For the 2004 case, it may be desirable to have a somewhat higher
cut point initially, and then lower it over time. Engines certified to
meet an intermediate standard would be demonstrating more advanced
technology options than other engines.
The Agency would expect that advantages similar to the early
certification program would accrue for any potential participants. Of
course, the intermediate standards component of the Green Star Engine
labeling program would not accrue the same level of potential air
quality benefit as the early certification component described above
because the emission standards would not be as stringent. EPA requests
comments on the feasibility of developing an intermediate standard
labeling program. Commenters supporting a proposal are also asked to
comment on the appropriateness of using a 3g/bhp-hr NOX level as a
cut-point for the 1998 to 2004 time period, as well as an appropriate
cut point, or points, for 2004 and later.
3. Green Star Alternative Fuel Engines
Under this component of the program, all engines which meet or
exceed the 1998 or 2004 standards by using alternative fuels would be
identified with a Green Star Alternative fuel engine label. Trucks
using those engines would also be labeled. The primary purpose would be
to encourage the use of alternative fuels by identifying the engines/
trucks which meet or exceed the proposed emission standards by
utilizing alternative fuels (such as CNG, methanol, or LPG) as their
energy source. The use of alternative fuels can bring additional
benefits, such as reduced green house gas emissions, not available with
conventional fuels. Alternative fuels could be included in the labeling
program in conjunction with either of the other two components of the
Green Star Engine program. EPA requests that comments be submitted
regarding the usefulness and practicality of an alternative fuel engine
labeling program. The Agency also asks that comments be submitted on
the logistical aspects of a labeling program for such an approach.

B. Emission Reduction Credit Programs

A third type of economic incentive program involves generating and
trading emission reduction credits. This type of incentive could be
used by those states that have adopted economic incentive programs in
their State Implementation Plan, and would be subject to the details of
those programs. Where they are available, these programs could provide
an incentive for engine manufacturers and truck operators to undertake
emission reduction efforts beyond those required since states may allow
such emission sources to generate and sell emission reduction credits
to other entities such as stationary sources. Alternatively, the
generator of the credits could retain them for use or sale in the
future. The purchaser of the credits would typically use the credits to
offset their own emission reduction requirements and therefore the
credits may not of themselves reduce overall emissions. Another option
available in credit programs is for the purchaser to retire the credits
to benefit the environment instead of using them to offset emission
reduction requirements. Retiring credits would result in an overall
reduction in emissions. Credits programs could lower the overall cost
of emission reductions by allowing for more cost effective emissions
controls to be used on some emissions sources instead of less cost
effective controls on other sources. Additionally, credits programs may
encourage technology advances that may have broad applications, which
could help lower overall emissions in the future.
There are two important credit trading programs of this kind: the
Economic Incentive Program (EIP) and the proposed Open Market Trading
Rule (OMTR) (60 FR 39668, August 3, 1995). Generally, the EIP is more
stringent than the proposed OMTR in that it requires state approval for
trades before they occur. However, these programs are similar in that
they require credits to be surplus (beyond required emissions
reductions), quantifiable, and enforceable.
Because credits must be surplus, engines generating credits for use
in EPA's averaging, banking, and trading (ABT) program cannot also
generate marketable emission reduction credits, based on those same
emission reductions, to be used in the credit trading programs. That
is, a truck operator cannot generate emission reduction credits based
on the difference between the emissions level of the engine and the
standard if that engine is generating credits for use by the
manufacturer in the ABT program. EPA believes that some manufacturers
may choose to pass credit ownership to purchasers of clean engines
rather than using the credits themselves under the ABT program. EPA
believes that in some circumstances this could well be appropriate and
consistent with the intent of the ABT regulations. Further discussion
is provided in section III.B.3. above.
Depending on the state program, truck operators may be able to
generate credits in ways other than purchasing cleaner-than-required
engines. For example, credits might be able to be generated through
operational changes, maintenance changes, or changes in activity
levels. Credits might also be earned through buy-back programs,
commonly known as scrappage programs. Buy-back programs typically
involve giving financial incentives to vehicle owners in exchange for
the voluntary scrapping of their older-technology, higher-emitting
engines or vehicles. Buy-back programs might also be used for helping
an area achieve an air quality goal rather than to generate emission
reduction credits to be sold in an emission trading program (for
example, in the proposed Open Market Trading Rule). Typically, any
credits earned in buy-back programs are earned

[[Page 33467]]

by those purchasing and retiring the old vehicles or engines. As long
as the emission benefits that result can be reliably quantified and
meet the requirements of the relevant state credit program, such
activities could be used to generate emission reduction credits.

VII. Public Participation

As mentioned above, EPA issued an Advance Notice of Proposed
Rulemaking (ANPRM) announcing EPA's intent to formally propose
regulatory action relating to HDE emissions, including today's action
on highway HDEs. During the development of the ANPRM and after its
publication, EPA received a wide range of early comments on the basic
framework of such a program. By the time of the close of the comment
period, the Agency had received more than 60 communications relating to
this program and the ANPRM. These comments have been very valuable in
developing today's proposal, and the Agency looks forward to additional
comment as the formal rulemaking process now begins.
As described in part in the discussions above, comments ranged from
those strongly opposing new highway HDE emission standards like those
proposed today to those strongly supportive of such new standards or of
standards even more stringent. Commenters offered widely varying
rationales for their suggestions, including the availability or
nonavailability of cost effective engine technology or the degree of
need for new NOX and PM control. To the extent possible, EPA has
considered each of the comments relevant to highway HDE emissions and
has accommodated them in this proposal. (Comments relating to other
potential parts of an overall program that are not proposed today,
including regulations affecting fuels or nonroad engines, are under
consideration by the Agency as it contemplates what action it may
pursue in these areas in the future.) To the extent commenters on the
ANPRM believe EPA failed to address their ANPRM comments adequately in
this proposal, they should offer them again as comments to this NPRM
for consideration in this rulemaking.

A. Comments and the Public Docket

EPA today opens a formal comment period for this NPRM and will
accept comments through August 26, 1996. The Agency encourages all
parties that have an interest in the program proposed today to offer
comment on all aspects of this action. Throughout this proposal are
requests for specific comment on various topics. Of particular interest
to the Agency are detailed comments in the following areas: The air
quality need for national or regional NOX, PM, and VOC control;
the need for control of emissions from highway HDEs; EPA's proposed
approaches to encouraging durability and revising the Averaging,
Banking, and Trading program; the technological feasibility of the
proposed standards; EPA's projections of the environmental and economic
impacts of the proposed program; and non-regulatory methods of
encouraging early compliance or cleaner-than-required engines.
The most useful comments are those supported by appropriate and
detailed rationales, data, and analyses. The Agency also encourages
commenters that disagree with the proposed program to suggest and
analyze alternate approaches to meeting the air quality goals of this
proposed program. All comments, with the exception of proprietary
information, should be directed to the EPA Air Docket Section, Docket
No. A-95-27 before the date specified above.
Commenters who wish to submit proprietary information for
consideration should clearly separate such information from other
comments by (1) labeling proprietary information ``Confidential
Business Information'' and (2) sending proprietary information directly
to the contact person listed (see FOR FURTHER INFORMATION CONTACT) and
not to the public docket. This will help ensure that proprietary
information is not inadvertently placed in the docket. If a commenter
wants EPA to use a submission of confidential information as part of
the basis for the final rule, then a nonconfidential version of the
document that summarizes the key data or information should be sent to
the docket.
Information covered by a claim of confidentiality will be disclosed
by EPA only to the extent allowed and in accordance with the procedures
set forth in 40 CFR part 2. If no claim of confidentiality accompanies
the submission when it is received by EPA, it will be made available to
the public without further notice to the commenter.

B. Public Hearing

The Agency will hold a public hearing as noted in the DATES section
above. Any person desiring to present testimony at the public hearing
is asked to notify the contact person listed above at least five
business days prior to the date of the hearing. This notification
should include an estimate of the time required for the presentation of
the testimony and any need for audio/visual equipment. EPA suggests
that sufficient copies of the statement or material to be presented be
available to the audience. In addition, it is helpful if the contact
person receives a copy of the testimony or material prior to the
hearing.
The hearing will be conducted informally, and technical rules of
evidence will not apply. A sign-up sheet will be available at the
hearing for scheduling the order of testimony. A written transcript of
the hearing will be prepared. The official record of the hearing will
be kept open for 30 days after the hearing to allow submittal of
supplementary information.
In addition to the public hearing, EPA will hold a public meeting
in Los Angeles to discuss the proposed EPA regulations for HDEs, and
receive informal public input on them. Other potential mobile source
controls identified in the California Ozone State Implementation Plan
for the South Coast (the greater Los Angeles area) will also be
discussed.\53\ Further details on the public meeting may be found in
the DATES section at the beginning of this document. Because this
public meeting is intended to be an informal exchange of information, a
transcript of the meeting will not be prepared and members of the
public who wish to present comments at the Los Angeles meeting should
be aware that, in order to be considered for the final promulgation,
their comments must also be made either in writing to the rulemaking
docket or at the public hearing.
---------------------------------------------------------------------------

\53\ The 1994 California Ozone SIP includes both the proposed
national HDE measure and 3 proposed State measures for HDEs. The
California Ozone SIP also includes other national mobile source
measures for nonroad engines, ships, aircraft, and pleasure craft as
components of the attainment demonstration for the South Coast
nonattainment area. For further details on the California Ozone SIP,
see 61 FR 10920-10962 (March 18, 1996).
---------------------------------------------------------------------------

VIII. 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

[[Page 33468]]

apply for the useful life period established by the Agency. See 42
U.S.C. 7521(a)(1), 7521(d). 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 proposed in this action.

IX. 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 that is likely to result in a rule that may:
(1) Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or,
(4) raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
Pursuant to the terms of Executive Order 12866, EPA has determined
that this proposal is a ``significant regulatory action'' because the
proposed standards and other regulatory provisions, if implemented,
would have an annual effect on the economy in excess of $100 million. A
Regulatory Impact Analysis has been prepared and is available in the
docket associated with this rulemaking. This action 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 proposal.

X. Impact on Small Entities and Compliance With Regulatory Flexibility
Act

The Regulatory Flexibility Act of 1980 requires federal agencies to
identify potentially adverse impacts of federal regulations upon small
entities. In instances where significant impacts are possible on a
substantial number of these entities, agencies are required to perform
a Regulatory Flexibility Analysis.
EPA certifies that the new emission standards and other related
provisions proposed in this action will not have a significant impact
on a substantial number of small entities, since none of the engine
manufacturers affected by these regulations is a small business entity.
This action also proposes provisions clarifying what would and
would not be considered a prohibited act (tampering) under CAA Section
203 during the heavy-duty engine rebuilding process. Small businesses
are integral to the heavy-duty engine rebuilding industry as noted in
comments provided by the Automotive Engine Rebuilders
Association.^{54 However, EPA does not believe that the proposals
related to engine rebuilding will have a significant impact on a
substantial number of these small entities. EPA is proposing to define
how a broad existing requirement (CAA Section 203) applies specifically
to the process of rebuilding engines, but EPA is not creating a new
program. Second, during the development of the proposal EPA consulted
with the Engine Manufacturers Association, the Automotive Engine
Rebuilders Association, and the Production Engine Rebuilders
Association, associations which together represent a substantial
portion of the engine rebuilding and related businesses. These
organizations did not raise concerns that the proposal may have a
significant impact on small businesses. EPA requests comments on the
proposals regarding engine rebuilding, any significant effect that the
proposals would have on small businesses, and the reasons why such
effects might occur.
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\54\ EPA Docket A-95-27, II-D-41.
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XI. Compliance With Paperwork Reduction Act

The information collection requirements in this proposed rule have
been submitted for approval to the Office of Management and Budget
(OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. An
Information Collection Request (ICR) document has been prepared by EPA
(ICR No. 783.35) and a copy may be obtained from Sandy Farmer,
Regulatory Information Division' U.S. Environmental Protection Agency
(2136); 401 M St., SW., Washington, DC 20460 or by calling (202) 260-
2740.
The information we propose to collect includes certification
results, durability, maintenance, and averaging, banking and trading
information. This information will be used to ensure compliance with
and enforce the provisions in this rule. Section 208 (a) of the CAA
requires that manufacturers provide information the Administrator may
reasonably require to determine compliance with the regulations,
therefore submission of the information is mandatory. EPA will consider
confidential all information which meets the requirements of Sec. 208
(c) of the CAA.
EPA estimates the average first year hours burden per response to
be 4,670, the proposed frequency of response to be annual, and the
estimated number of likely respondents to be twenty. EPA estimates the
aggregate first year hours burden to be 93,410. EPA estimates the
annual first year cost to be $5,603,280, including the annualized
capital and start-up costs. Subsequent year burdens are estimated to be
one-tenth of the first year estimates due to the practice of engine
family carry-over from model year-to-model year. Burden means the total
time, effort, or financial resources expended by persons to generate,
maintain, retain, or disclose or provide information to or for a
Federal agency. This includes the time needed to review instructions;
develop, acquire, install, and utilize technology and systems for the
purposes of collecting, validating, and verifying information,
processing and maintaining information, and disclosing and providing
information; adjust the existing ways to comply with any previously
applicable instructions and requirements; train personnel to be able to
respond to a collection of information; and transmit or otherwise
disclose the information.
An Agency may not conduct or sponsor, and a person is not required
to respond to a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations are listed in 40 CFR Part 9 and 48 CFR Chapter 15.
Comments are requested on the Agency's need for this information,
the accuracy of the provided burden estimates, and any suggested
methods for minimizing respondent burden, including through the use of
automated collection techniques. Send comments on the ICR to the
Director, OPPE Regulatory Information Division; U.S. Environmental
Protection Agency (2136); 401 M St., S.W.; Washington, DC 20460; and to
the Office of Information and Regulatory Affairs, Office of Management
and Budget, 725 17th St., NW., Washington, DC 20503, marked
``Attention: Desk Officer for EPA.''

[[Page 33469]]

Include the ICR number in any correspondence. Since OMB is required to
make a decision concerning the ICR between 30 and 60 days after June
27, 1996, a comment to OMB is best assured of having its full effect if
OMB receives it by July 29, 1996. The final rule will respond to any
OMB or public comments on the information collection requirements
contained in this proposal.

XII. Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L.
104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures to state, local, and tribal governments, in
the aggregate, or to the private sector, of $100 million or more for
any one year. Before promulgating an EPA rule for which a written
statement is needed, section 205 of the UMRA generally requires EPA to
identify and consider a reasonable number of regulatory alternatives
and adopt the least costly, most cost effective, or least burdensome
alternative that achieves the objectives of the rule. The provisions of
section 205 do not apply when they are inconsistent with applicable
law. Moreover, section 205 allows EPA to adopt an alternative other
than the least costly, most cost effective, or least burdensome
alternative if the Administrator publishes with the final rule an
explanation of why that alternative was not adopted. Before EPA
establishes any regulatory requirements that may significantly or
uniquely affect small governments, including tribal governments, it
must have developed under section 203 of the UMRA a small government
agency plan. The plan must provide for notifying potentially affected
small governments, enabling officials of affected small governments to
have meaningful and timely input in the development of EPA regulatory
proposals with significant federal intergovernmental mandates, and
informing, educating, and advising small governments on compliance with
the regulatory requirements.
Today's rule contains no Federal mandates (under the regulatory
provisions of Title II of the UMRA) for State, local, or tribal
governments. The rule imposes no enforceable duties on any of these
governmental entities. Nothing in the proposed program would
significantly or uniquely affect small governments. EPA has determined
that this rule contains federal mandates that may result in
expenditures of $100 million or more in any one year for the private
sector. EPA believes that the proposed program represents the least
costly, most cost-effective approach to achieving the air quality goals
of the proposed rule. EPA has performed the required analyses under
Executive Order 12866 which contains identical analytical requirements.
The reader is directed to section IX, Administrative Designation and
Regulatory Analysis, for further information regarding these analyses.

XIII. Copies of Rulemaking Documents

The preamble, draft regulatory language and draft Regulatory Impact
Analysis (RIA) are available in the public docket as described under
ADDRESSES above and is also 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
and via the internet. The service is free of charge, except for the
cost of the phone call.

A. Technology Transfer Network (TTN)

Users are able to access and download TTN files on their first call
using a personal computer and modem per the following information.

TTN BBS: 919-541-5742 (1200-14400 bps, no parity, 8 data bits, 1 stop
bit) Voice Helpline: 919-541-5384
Also accessible via Internet: TELNET ttnbbs.rtpnc.epa.gov Off-line:
Mondays from 8:00 AM to 12:00 Noon ET

A user who has not called TTN previously will first be required to
answer some basic informational questions for registration purposes.
After completing the registration process, proceed through the
following menu choices from the Top Menu to access information on this
rulemaking.

GATEWAY TO TTN TECHNICAL AREAS (Bulletin Boards)
OMS--Mobile Sources Information
Rulemaking & Reporting
<5> Heavy-duty/Diesel
<1> File area #1...Heavy-duty Truck and Bus Standards

At this point, the system will list all available files in the
chosen category in reverse chronological order with brief descriptions.
To download a file, select a transfer protocol that is supported by the
terminal software on your own computer, then set your own software to
receive the file using that same protocol.
If unfamiliar with handling compressed (i.e. ZIP'ed) files, go to
the TTN top menu, System Utilities (Command: 1) for information and the
necessary program to download in order to unZIP the files of interest
after downloading to your computer. After getting the files you want
onto your computer, you can quit the TTN BBS with the oodbye
command.
Please note that due to differences between the software used to
develop the document and the software into which the document may be
downloaded, changes in format, page length, etc. may occur.

B. Internet

Rulemaking documents may be found on the internet as follow:

World Wide Web

http://www.epa.gov/omswww

FTP

ftp://ftp.epa.gov Then CD to the /pub/gopher/OMS/ directory

Gopher

gopher://gopher.epa.gov:70/11/Offices/Air/OMS
Alternatively, go to the main EPA gopher, and follow the menus:
gopher.epa.gov

EPA Offices and Regions
Office of Air and Radiation
Office of Mobile Sources

List of Subjects in 40 CFR Part 86

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

Dated: June 19, 1996.
Carol M. Browner,
Administrator.
[FR Doc. 96-16330 Filed 6-26-96; 8:45 am]
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