[Federal Register Volume 62, Number 203 (Tuesday, October 21, 1997)]
[Rules and Regulations]
[Pages 54694-54730]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-27494]



[[Page 54693]]

_______________________________________________________________________

Part II





Environmental Protection Agency





_______________________________________________________________________



40 CFR Parts 9 and 86



Control of Emissions of Air Pollution From Highway Heavy-Duty Engines; 
Final Rule

  Federal Register / Vol. 62, No. 203 / Tuesday, October 21, 1997 / 
Rules and Regulations  

[[Page 54694]]



ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 9 and 86

[AMS-FRL-5908-8]
RIN 2060-AF76


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

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The new standards and related provisions contained in this 
final rule will result in significant progress throughout the country 
in protecting public health and the environment. In this action, EPA is 
adopting a new emission standard and related provisions for diesel 
heavy-duty engines (HDEs) intended for highway operation, beginning 
with the 2004 model year. The new standard represents a large reduction 
(approximately 50 percent) in emission of oxides of nitrogen 
(NOx), as well as reductions in hydrocarbons (HC) from 
diesel trucks and buses. The reduction in NOx will also 
result in significant reductions in secondary nitrate particulate 
matter (PM) in areas where levels of nitrate PM are high. For diesel 
HDEs, EPA is also finalizing changes to the existing averaging, 
banking, and trading program that provide additional flexibility for 
manufacturers in complying with the stringent new standards. EPA is 
also adopting several provisions to increase the durability of emission 
controls, help ensure proper levels of maintenance, and prevent 
tampering, including during engine rebuilding. The resulting emission 
reductions will translate into significant, long-term improvements in 
air quality in many areas of the U.S. This will provide much-needed 
assistance to 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.
    Although EPA proposed new standards and related averaging, banking, 
and trading provisions for otto-cycle HDEs (e.g., gasoline-fueled 
engines), EPA is not taking final action for that category of engines 
at this time. EPA received several comments urging the Agency to adopt 
more stringent control measures for these engines than those proposed 
in the NPRM (June 27, 1996). EPA continues to evaluate the comments 
received regarding otto-cycle engines and plans to issue a Supplemental 
Notice of Proposed Rulemaking to address otto-cycle engines 
specifically.

DATES: This regulation is effective December 22, 1997. The 
incorporation by reference of a certain publication listed in the 
regulations is approved by the Director of the Federal Register as of 
December 22, 1997.

ADDRESSES: Materials relevant to this final rule have been placed in 
Public Docket No. A-95-26. The docket is located at the Air Docket 
Section, U.S. Environmental Protection Agency, 401 M Street SW, 
Washington, DC 20460 (Telephone 202-260-7548; Fax 202-260-4400) in Room 
M-1500, Waterside Mall, and may be inspected weekdays between 8:00 a.m. 
and 5:30 p.m. A reasonable fee may be charged by EPA for copying docket 
materials.

FOR FURTHER INFORMATION CONTACT: Chris Lieske, U.S. EPA, Engine 
Programs and Compliance Division, 2565 Plymouth Rd., Ann Arbor, 
Michigan 48105. Telephone: (313) 668-4584. Fax: (313) 741-7816.

SUPPLEMENTARY INFORMATION:

Regulated Entities

    Entities potentially regulated by this action are those that sell 
new motor vehicles heavy-duty engines in the United States and entities 
who rebuild/remanufacture such engines. Regulated categories and 
entities include:

------------------------------------------------------------------------
               Category                  Examples of  regulated entities
------------------------------------------------------------------------
Industry..............................  New motor vehicle heavy-duty    
                                         engine manufacturers.          
Industry..............................  Heavy-duty engine rebuilders/   
                                         remanufacturers.               
------------------------------------------------------------------------

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be regulated by this 
action. This table lists the types of entities that EPA is now aware 
could potentially be regulated by this action. Other types of entities 
not listed in the table could also be regulated. To determine whether 
your activities are regulated by this action, you should carefully 
examine the applicability criteria in 40 CFR 86.094-1 and, for engine 
rebuilders/remanufacturers, Sec. 86.004-40 of the rule. If you have 
questions regarding the applicability of this action to a particular 
entity, consult the person listed in the preceding FOR FURTHER 
INFORMATION CONTACT section.

Obtaining Electronic Copies of the Regulatory Documents

    The preamble, Summary and Analysis of Comments, regulatory language 
and Regulatory Impact Analysis are also available electronically from 
the EPA Internet Web site. This service is free of charge, except for 
any cost you already incur for internet connectivity. The electronic 
Federal Register version is made available on the day of publication on 
the primary Web site listed below. The EPA Office of Mobile Sources 
also publishes these notices on the secondary Web site listed below.

Internet (Web)

http://www.epa.gov/docs/fedrgstr/EPA-AIR/
(either select desired date or use Search feature)

http://www.epa.gov/OMSWWW/
(look in What's New or under the specific rulemaking topic)

    Please note that due to differences between the software used to 
develop the document and the software into which the document may be 
downloaded, changes in format, page length, etc. may occur.

Outline and List of Acronyms

    The Supplementary Information section of this final rule is 
organized as follows:

I. Introduction/Summary of Proposal
II. Need for Control and Air Quality Benefits of This Rule
    A. Ozone
    B. Particulate Matter
III. Content of the Final Rule
    A. Emission Standards
    1. Standard Levels
    2. 1999 Review
    3. NMHC Measurement
    4. Non-Conformance Penalties
    B. In-Use Emissions Control Elements
    1. Useful life
    2. Emissions Related Maintenance
    3. Emissions Defect and Performance Warranties
    4. Additional Manufacturer Requirements
    5. Engine Rebuilding Provisions
    C. Revised Averaging, Banking, and Trading Provisions
    D. Display of OMB Control Numbers
IV. Public Participation
    A. EPA's Air Quality Justification for the Proposed Program
    1. Modeling
    2. Possible Ozone Increases from NOX Reduction
    3. Trends in Ozone Levels
    B. Level of Standards
    1. Diesel Engines--NOX Plus NMHC
    2. Highway Diesel Engine--PM
    3. Otto-Cycle Engines
    C. In-Use Emissions Control and Compliance
    1. In-Use Emissions Control Regulatory Elements

[[Page 54695]]

    2. State Inspection and Maintenance Programs
    3. In-Use Compliance Issues
    D. Averaging, Banking, and Trading
    1. Applicability
    2. The Modified ABT Program (1998-2003)
    3. The Modified ABT Program 2004 and Later
    4. Other Changes for the Modified ABT Program
V. Economic Impact and Cost-Effectiveness
    A. Engine Costs
    B. Aggregate Costs to Society
    C. Cost-Effectiveness
VI. Administrative Requirements
    A. Administrative Designation and Regulatory Analysis
    B. Compliance With Regulatory Flexibility Act
    C. Compliance With Paperwork Reduction Act
    D. Unfunded Mandates Reform Act
    E. Submission to Congress and the General Accounting Office
VII. Statutory Authority
VIII. Judicial Review
IX. Copies of Rulemaking Documents

List of Acronyms and Abbreviations

ABT  Averaging, banking, and trading
ANPRM  Advance Notice of Proposed Rulemaking
ARB  Air Resources Board
ATA  American Trucking Association
CAA or Act  Clean Air Act as amended in 1990
CFR  Code of Federal Regulations
DDC  Detroit Diesel Corporation
EGR  Exhaust gas recirculation
EPA  United States Environmental Protection Agency
FRM  Final Rulemaking
GVWR  Gross vehicle weight rating
HC  Hydrocarbons
HDDEs  Heavy-duty diesel engines
HDEs  Heavy-duty engines
HDVs  Heavy-duty vehicles
HHDDEs  Heavy heavy-duty diesel engines
HHDVs  Heavy heavy-duty vehicles
ICR  Information Collection Request
I/M  Inspection and Maintenance
LEV  Low emissions vehicle
LHDDEs  Light heavy-duty diesel engines
LHDVs  Light heavy-duty vehicles
MHDDEs  Medium heavy-duty diesel engines
MOU  Memorandum of Understanding
NAAQS  National Ambient Air Quality Standard
NESCAUM  Northeast States for Coordinated Air Use Management
NLEV  National Low Emissions Vehicle
NMHC  Nonmethane hydrocarbons
NOX  Oxides of nitrogen
NPRM  Notice of Proposed Rulemaking
NRDC  Natural Resources Defense Council
OBD  On-bourd diagnotics
OMB  Office of Management and Budget
OTAG  Ozone Transport Assessment Group
PM  Particulate matter
R&D  Research and development
RIA  Regulatory Impact Analysis
ROM  Regional Oxidant Model
SAE  Society of Automotive Engineers
SEA  Selective Enforcement Audit
SOP  Statement of Principles
UAM  Urban Airshed Model
VOC  Volatile organic compounds

I. Introduction/Summary of Proposal

    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 pre-control 
rates. However, continued industrial growth and expansion of motor 
vehicle usage threaten to reverse these past achievements. Today, many 
states are finding it difficult to meet the current 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 current 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, 
ozone and PM have 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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    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 current 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 thus far prevented achievement of emission levels 
comparable to today's light-duty gasoline vehicles. While diesel 
engines provide advantages in terms of fuel efficiency, reliability, 
and durability, 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, 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. The emerging technological potential for much cleaner 
diesel heavy-duty engines is discussed elsewhere in this preamble and 
in the Regulatory Impact Analysis (RIA) associated with this final 
rule.
    Recognizing the need for additional NOX and PM control 
measures to address air quality concerns in several

[[Page 54696]]

parts of the country and the growing contribution of the heavy-duty 
engine sector to ozone and PM problems, EPA, the California Air 
Resources Board, and engine manufacturers representing over 90 percent 
of annual nationwide engine sales signed a Statement of Principles 
(SOP) in July of 1995. The SOP established a framework for a proposed 
rulemaking, setting out goals and conditions supported by the 
signatories. EPA sought early comment on the general regulatory 
framework laid out in the SOP in an Advance Notice of Proposed 
Rulemaking (ANPRM) on August 31, 1995 (60 FR 45580) and issued a Notice 
of Proposed Rulemaking (NPRM) on June 27, 1996 (61 FR 33421).
    The centerpiece of EPA's proposal was a new NOX plus 
nonmethane hydrocarbon standard (NMHC) of 2.4 g/bhp-hr (or 2.5 g with a 
0.5 g NMHC cap) for 2004 and later model years, which represents over a 
50 percent reduction from the 1998 NOX and HC standard of 
4.0 g/bhp-hr and 1.3 g/bhp-hr, respectively. EPA proposed the standard 
for both diesel and otto-cycle (primarily gasoline-fueled) engines. EPA 
requested comment on options for more stringent control of emissions 
from otto-cycle engine in response to comments received by the Agency 
on the ANPRM. Because the standards would require the use of 
technologies not yet fully developed and proven, EPA also proposed to 
reopen the rulemaking in 1999 and review the appropriateness of the 
standards.
    In addition, EPA proposed several other provisions. To provide 
critical flexibility to the manufacturers and help ease their 
transition to the new standards, EPA proposed a modified averaging, 
banking, and trading (ABT) program. The proposed program was viewed to 
be tied directly to the stringency of the standard. In the NPRM, the 
Agency stressed that the program changes would allow manufacturers to 
reasonably achieve a more stringent standard earlier than without the 
changes. EPA proposed a modified program for model years 1998 through 
2006, with the current ABT program resuming in 2007. Under the proposed 
modified program, engine manufacturers could earn undiscounted, 
unlimited life NOX and PM credits for use in meeting the 
2004 standards. The current program requires a one-time 20 percent 
discount on any credits traded or banked for future use and limits 
credit life to 3 years. For the modified program, EPA also proposed 
that manufacturers maintain at least a 5 percent compliance margin, 
unless they had data to support the use of a smaller margin.
    EPA also proposed several provisions to help ensure adequate 
durability of emissions controls and proper maintenance and repair of 
emissions controls during the life of the engine, including during 
engine rebuilding. EPA viewed the proposals as necessary because the 
proposed standards would likely prompt manufacturers to add emissions 
control technologies, such as exhaust gas recirculation and exhaust 
aftertreatment. The failure of such systems would not necessarily cause 
decreased engine performance. Thus, EPA could not be certain that 
failure of emissions control systems would prompt the owner to perform 
repairs. Additionally, the proposed changes were intended to update 
existing requirements to consider recent increases in engine life.
    The primary proposals for updating existing regulations included a 
proposed increase in the useful life mileage interval for heavy heavy-
duty engines from 290,000 miles to 435,000 miles, an increase in the 
minimum allowable maintenance intervals for several emissions related 
components, and changes in the emissions defect and performance 
warranties. EPA also proposed provisions to help ensure that emission 
controls are properly addressed during the process of engine rebuilding 
and not removed or otherwise dismantled.
    This preamble is organized as follows: Section II. describes the 
need for control and air quality benefits associated with the final 
rule, Section III. describes in detail the standards and all other 
provisions being finalized; Section IV. describes each of the 
proposals, key comments received by EPA, and any changes to the 
proposals as a result of those comments; Section V. reviews the results 
of EPA's economic analyses; The remaining preamble sections pertain to 
administrative requirements, statutory authority, judicial review, and 
more information on how to obtain copies of rulemaking documents. The 
actual regulatory language follows the preamble.

II. Need for Control and Air Quality Benefits of This Rule

    The new emission standards for highway HDEs that EPA is issuing 
today represent a major step in reducing the human health and 
environmental impacts of ground-level ozone and a significant 
contribution to reducing secondary nitrate particulate matter (PM). 
This section summarizes the air quality rationale for these new 
standards and their anticipated impact on heavy-duty vehicle emissions.

A. Ozone

    There is a large body of evidence showing that ozone (which is 
caused by the photochemical reaction of NOX and VOCs) causes 
harmful respiratory effects including chest pain, coughing, and 
shortness of breath, affecting people with compromised respiratory 
systems and children most severely. In addition, NOX itself 
can directly harm human health. Beyond their human health effects, 
other negative environmental effects are also associated with ozone and 
NOX. Ozone has been shown to injure plants and materials; 
NOX contributes to the secondary formation of PM (nitrates), 
acid deposition, and the overgrowth of algae in coastal estuaries. 
These environmental effects, as well as the health effects noted above, 
are described in the Regulatory Impact Analysis. (Additional 
information may be found in EPA's ``staff papers'' and ``air quality 
criteria'' documents for ozone and nitrogen oxides 5 
6 7 8).
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    \5\ U.S. EPA, 1996, Review of National Ambient Air Quality 
Standards for Ozone, Assessment of Scientific and Technical 
Information, OAQPS Staff Paper, EPA-452/R-96-007.
    \6\ U.S.EPA, 1996, Air Quality Criteria for Ozone and Related 
Photochemical Oxidants, EPA/600/P-93/004aF.
    \7\ U.S. EPA, 1995, Review of National Ambient Air Quality 
Standards for Nitrogen Dioxide, Assessment of Scientific and 
Technical Information, OAQPS Staff Paper, EPA-452/R-95-005.
    \8\ U.S.EPA, 1993, Air Quality Criteria for Oxides of Nitrogen, 
EPA/600/8-91/049aF.
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    Today, many states are finding it difficult to show how they can 
meet or maintain compliance with the current National Ambient Air 
Quality Standard (NAAQS) for ozone by the deadlines established in the 
Act. 9 There are 66 areas currently designated 
``nonattainment'' for ozone.
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    \ 9\ See 42 U.S.C. 7401 et seq.
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    Local, state and federal organizations charged with delivering 
cleaner air have mounted significant efforts in recent years to reduce 
air quality problems associated with ground-level ozone, and there are 
signs of partial success. The main precursors of ozone, oxides of 
nitrogen (NOX) and volatile organic compounds (VOCs) 
10 appear to have been reduced, and average levels of ozone 
seem to have begun gradually decreasing. However, this progress is in 
jeopardy. EPA projects that reductions in ozone precursors that will 
result from the full implementation of current emission control 
programs will fall far short of what would be needed to offset the 
normal emission increases that accompany economic expansion. By the 
middle of the next decade, the Agency expects that the downward trends 
will have reversed, primarily due to

[[Page 54697]]

increasing numbers of emission sources. By around 2020, EPA expects 
that NOX levels will have returned to current levels in the 
absence of significant new reductions.11 To the extent that 
some areas are seeing a gradual decrease in ozone levels in recent 
years, EPA believes that the expected increase in NOX will 
likely result in an increase in ozone problems in the future.
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    \10\ VOCs consist mostly of hydrocarbons (HC).
    \11\ See Chapter 2 of the Regulatory Impact Analysis associated 
with this rule.
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    NOX controls are an effective strategy for reducing 
ozone where its levels are relatively high over a large region (as in 
the Northeast and much of the Midwest, Southeast, and California). EPA 
and states see control of NOX emissions as a key to 
improving regional-scale air quality in many parts of the country, in 
addition to local-scale VOC and NOX controls. Specifically, 
EPA believes that regional-scale reductions in NOX emissions 
will be necessary for many areas to attain and maintain compliance with 
the current ozone NAAQS. For the regions listed above, the 
NOX reductions needed are very large (greater than 50 
percent from base 1990 emissions in many cases). New programs to 
control emissions from both stationary and mobile sources will be 
necessary in most of these areas, since it is unlikely that cost 
effective controls of this magnitude can be achieved with either source 
category alone. Although in some locations and circumstances moderate 
reductions in local NOX emissions may be associated with 
localized increases in ozone, the Agency is convinced that the ultimate 
attainment goal of all nonattainment areas necessitates continued 
reduction of regional-scale NOX emissions.
    The new emission standards for highway HDEs issued in today's rule 
are intended to address the effects of ozone (and also PM, as discussed 
below) through substantial regional-scale reductions in NOX 
throughout the country. EPA projects that the nationwide NOX 
reduction by 2020 will be approximately 1.1 million tons per year, or 
about 9.5 percent of projected 2020 mobile source NOX 
emissions and 4.5 percent of all 2020 NOX emissions. This is 
shown in Figure 1 and is discussed in detail in the RIA for this rule. 
The Agency also expects that small NMHC reductions will also result 
from this program. EPA has designed this program to play a significant 
role in reducing ozone levels in many areas of the country in concert 
with other mobile source and stationary source ozone reduction programs 
at the federal, state, and local levels.

BILLING CODE 6560-50-P

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[GRAPHIC] [TIFF OMITTED] TR21OC97.000



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B. Particulate Matter

    Particulate matter, like ozone, has been linked to a range of 
serious respiratory health problems. Particles are deposited deep in 
the lungs and result in effects including premature death, increased 
hospital admissions and emergency room visits, increased respiratory 
symptoms and disease, decreased lung function (particularly in children 
and individuals with asthma), and alterations in lung tissue and 
structure and in respiratory tract defense mechanisms. These effects 
are discussed further in the RIA for this rule. (Additional information 
may be found in EPA's ``staff paper'' and ``air quality criteria 
document'' for particulate matter.12 13)
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    \12\ U.S. EPA, 1996, Review of National Ambient Air Quality 
Standards for Particulate Matter, Assessment of Scientific and 
Technical Information, OAQPS Staff Paper, EPA-452/R-96-013.
    \13\ U.S.EPA, 1996, Air Quality Criteria for Particulate Matter, 
EPA/600/P-95/001aF.
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    Currently, there are 80 PM-10 nonattainment areas across the U.S. 
(PM-10 refers to particles smaller than 10 microns in diameter). As is 
the case with NOX, levels of PM caused by mobile sources are 
also expected to rise in the future. EPA believes that this projected 
increase will occur both because of the expected increase in numbers of 
PM sources, including diesel engines, and because NOX from 
heavy-duty diesels and other sources is transformed in the atmosphere 
into fine secondary nitrate particles.
    Secondary nitrate PM accounts for a substantial fraction of the 
airborne particulate in some areas of the country, especially in the 
West. 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. Secondary nitrate PM (consisting mostly ammonium nitrate) is 
the major constituent of this secondary PM. For example, in Denver, on 
days when PM levels are high, about 25 percent of the measured PM-2.5 
is ammonium nitrate. In the Provo/Salt Lake City area, secondary PM 
comprises about 40 percent of the measured PM-10. Similarly, in the Los 
Angeles Basin, secondary nitrate PM levels represent about 25 percent 
of measured PM-10.14 Nitrate PM constitutes a smaller, but 
often important, fraction of PM in other areas of the country.
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    \14\ Summary of Local-Scale Source Characterization Studies, 
EPA-230-S-95-002, July, 1994.
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    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 regional-scale NOX controls, including control 
of mobile NOX sources, are very effective in reducing 
secondary PM over a significant area. For example, California's PM SIPs 
for serious areas conclude that secondary formation of nitrate 
particulate due to regional-scale NOX emissions contributes 
to the particulate problem in the South Coast Air Basin, Coachella 
Area, and the San Joaquin Valley.15 EPA and the State of 
California believe that reduction of this fraction of the total PM will 
require additional regional-scale reductions in NOX 
emissions.
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    \15\  Memorandum to the docket from Carol Bohnenkamp, EPA Region 
9, regarding regional nature of secondary nitrate PM in California, 
July 30, 1997. Docket A-95-27.
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    The primary effect of the standards promulgated in this Notice on 
ambient PM levels will occur as a result of the large anticipated 
reductions in NOX. EPA expects that the resulting reductions 
in secondary PM will be significant, especially in areas of the West 
where nitrate PM is a major contributor to overall PM levels. In the 
proposal, EPA estimated on the basis of existing information that 100 
tons of NOX will on average result in the formation of about 
4 tons of nitrate PM. EPA recently evaluated this effect in more 
detail.16 The report's conclusions confirmed EPA's earlier 
estimate, also concluding that 100 tons of NOX reduction 
will on average result in about 4 tons of secondary PM reduction. (The 
conversion rate varies from region to region, and is greatest in the 
West.). Based on the average conversion rate, EPA estimates that the 
approximately 1.1 million tons per year of NOX reduction 
from today's rule by 2020 will result in a national average reduction 
in secondary PM of about 44,000 tons per year. This estimated average 
nitrate PM reduction is similar in magnitude to that which would result 
from reducing the diesel PM emission standard by half.17
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    \16\ Benefits of Mobile Source NOX Related 
Particulate Matter Reductions, October 1996, EPA Contract No. 68-C5-
0010.
    \17\ Based on the following calculation: The difference between 
the 1998 and 2004 HDE NOX standards is nominally 2.0 g/
bhp-hr (4.0 vs. 2.0 g/bhp-hr). Using the above estimated average 
factor of 4% of NOX being converted to secondary PM, an 
equivalent reduction in secondary PM of 0.08 g/bhp-hr can be 
estimated. This reduction in secondary PM compares to the roughly 
0.05 g/bhp-hr that potentially would result from a reduction in the 
HDE PM standard from 0.1 to 0.05 g/bhp-hr.
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III. Content of the Final Rule

    The following is a concise description of the regulations being 
adopted in this final rule, with any changes from the proposal also 
noted. A summary of the proposal is contained in preamble Section I., 
above. A full description of the proposals, supporting rationale for 
these actions, and response to comments are contained in the Summary 
and Analysis of Comments for the rule. Preamble section IV., Public 
Participation, also provides additional information.

A. Emission Standards

1. Standard Levels
    EPA is adopting the proposed NMHC+NOX emission standards 
for on-highway heavy-duty diesel-cycle engines fueled by diesel, 
methanol, and gaseous fuels and their blends. These standards apply to 
model year 2004 and later. Engine manufacturers will have the choice of 
certifying heavy-duty diesel 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.

All emissions standards other than NMHC and NOX applying to 
1998 and later model year heavy-duty engines continue at their 1998 
levels. No new standards are being finalized for on-highway heavy-duty 
otto-cycle engines.
2. 1999 Review
    EPA is also finalizing today a regulatory provision providing for 
1999 review of the standard levels finalized in this rule. As proposed, 
this review will reassess the appropriateness of the standards under 
the Clean Air Act including the need for and technical and economical 
feasibility of the standards based on information available in 1999. If 
during 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. The standards finalized today will 
stay in effect unless revised by this subsequent rulemaking procedure. 
In addition, EPA, together with the oil and engine industries, is 
engaged in assessing the potential impact of fuel changes on emissions 
from 2004 and later model year diesel engine technology.
    The 1999 review process has the potential of either tightening or 
relaxing the standards finalized today. If due to new information in 
1999 EPA finds the standards to not be technologically feasible for 
model year 2004 or otherwise not in accordance with the Act, then EPA 
expects to propose adjusted standards which do not exceed the 
following:


[[Page 54700]]


2.9 g/bhp-hr NMHC+NOx or
3.0 g/bhp-hr NMHC+NOx with a limit of 0.6 g/bhp-hr NMHC

    EPA believes that the 2004 model year standards being finalized 
today are technologically feasible without any changes to diesel fuel. 
As part of the 1999 review, EPA will evaluate in light of any new 
information whether diesel fuel improvements are needed for the 
standards to be appropriate for 2004. If EPA finds that diesel fuel 
changes are needed to meet the standards finalized here and if EPA 
believes such changes would be a cost-effective method for reducing 
emissions and appropriate under section 211 of the Clean Air Act, then 
EPA will address the potential for fuel improvements through a separate 
rulemaking which will include a separate cost-effectiveness analysis 
and opportunity for public comment. However, if EPA were to determine 
in the 1999 review that the feasibility of the standards requires 
diesel fuel changes and EPA does not engage in a rulemaking to require 
such changes, EPA expects to 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

    Based on the technical analysis in the RIA, the levels described 
above represent upper limits for any potential revisions. Because EPA 
does not at this point predict further breakthroughs in innovative 
emission reduction technology for mass production in the 2004 time 
frame which would allow for a standard lower than that being finalized, 
a lower limit is not predicted at this time. However, if EPA determines 
that lower standards are technologically feasible and appropriate under 
the Clean Air Act, EPA expects to propose those lower standards.
3. NMHC Measurement
    For heavy-duty diesel engines, EPA is allowing three options to the 
measurement procedures currently in place for alternative fueled 
engines. They are as follows: (1) Use a THC measurement in place of an 
NMHC measurement; (2) use a measurement procedure specified by the 
manufacturer with prior approval of the Administrator; or (3) subtract 
two percent from the measured THC value to obtain an NMHC value. The 
methodology must be specified at time of certification and will remain 
the same for the engine family throughout the engines' useful life.
    For natural gas vehicles, EPA is allowing the option of measuring 
NMHC through direct quantification of individual species by gas 
chromatography.
4. Non-Conformance Penalties
    Section 206(g) of the Clean Air Act requires EPA to allow a 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 Part 86. EPA 
plans to address provisions related to NCPs for the 2004 model year 
standards in conjunction with the 1999 review discussed above.

B. In-Use Emissions Control Elements

    EPA is finalizing provisions to enhance the control of emissions 
from in-use vehicles subject to the new model year 2004 standards. 
Where noted, some of the provisions below also apply to 2004 and later 
model year otto-cycle engines. The in-use provisions include both: (1) 
Revisions of existing regulations, including useful life, emissions-
related maintenance, and emissions defect and performance warranties, 
and (2) new provisions regarding maintenance and repair of emissions 
controls after the end of the useful life, including manufacturer 
requirements and engine rebuild provisions. All of the following 
changes to the regulations are effective beginning with the 2004 model 
year.
1. Useful Life
    EPA is finalizing a revised useful life for the heavy heavy-duty 
diesel engine service class of 435,000 miles, 22,000 hours, or 10 
years, whichever occurs first, for all pollutants beginning in model 
year 2004.18 In response to comments, EPA has modified the 
useful life for heavy heavy-duty engines from the proposal by 
increasing the hours interval and removing a minimum mileage interval. 
EPA proposed a useful life of 435,000 miles, 13,000 hours, or ten years 
whichever occurred first, but in no case less than 290,000 miles. As 
proposed, EPA is also establishing a useful life years interval of 10 
years for all heavy-duty engine service classes, otto-cycle and diesel-
cycle, and all pollutants.
---------------------------------------------------------------------------

    \18\ Note that for an individual engine, if the useful life 
hours interval is reached before the engine reaches 10 year or 
100,000 miles, the useful life shall become 10 years/100,000 miles, 
whichever occurs first, as required under Clean Air Act section 
202(d). EPA believes that this provision will be used only very 
rarely, if ever, given the usage patterns of affected vehicles.
---------------------------------------------------------------------------

2. Emissions Related Maintenance
    EPA is finalizing the changes to emission related maintenance 
intervals shown in Table 1, with compliance beginning in 2004. The 
intervals are in miles or hours, whichever occurs first. The term 
``Add-on emissions-related component'' is being defined as a component 
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 and performance of the engine. EPA is not 
changing the interval for EGR filters and coolers from its current 
interval of 50,000 miles (1,500 hours). The maintenance interval 
changes are being finalized as proposed.

                       Table 1--Changes to Minimum Emission-Related Maintenance Intervals                       
----------------------------------------------------------------------------------------------------------------
       Intended service class            Component or system          Change to minimum maintenance interval    
----------------------------------------------------------------------------------------------------------------
Otto-cycle engines.................  EGR system (except filters   Increase from 50,000 miles (1,500 hours) to   
                                      and coolers).                100,000 miles (3,000 hours).                 
Light HDDEs........................  EGR system (except filters   Increase from 50,000 miles (1,500 hours) to   
                                      and coolers).                100,000 miles (3,000 hours).                 
                                     --Add-on emission-related    Establish 100,000 mile (3,000 hour) interval. 
                                      components.                                                               
                                     --Catalytic converter                                                      
Medium and heavy HDDEs.............  EGR system (except filters   Increase from 50,000 miles (1,500 hours) to   
                                      and coolers).                150,000 miles (4,500 hours).                 

[[Page 54701]]

                                                                                                                
                                     --Add-on emission-related    Establish 150,000 mile (4,500 hour) interval. 
                                      components.                                                               
                                     --Catalytic converter                                                      
----------------------------------------------------------------------------------------------------------------

3. Emissions Defect and Performance Warranties
    Currently, the emissions defect and emissions performance warranty 
periods are specified in hours and miles intervals. The regulations 
also provide that the warranty periods for highway HDEs may in no case 
be less than the manufacturer's basic mechanical warranty period for 
the engine family.19 However, manufacturers often provide 
extended warranties for individual engines. EPA proposed that the 
warranty period be at least as long as the basic mechanical warranty of 
the engine, whether it be the published warranty for the engine family 
or a longer warranty provided to the engine purchaser. In response to 
comments, EPA is revising the regulations regarding the warranty period 
as follows. The warranty period shall not be less than the basic 
mechanical warranty of the particular engine as provided to the 
purchaser. Thus, the warranty shall be longer than that published for 
the engine family in cases where a manufacturer provides to the 
customer a longer basic mechanical warranty for a particular engine. 
Extended warranties on select parts do not extend the emissions 
warranty requirements for the entire engine but only for those parts. 
Also, in cases where responsibility for an extended mechanical warranty 
is shared between the owner and the manufacturer, the manufacturer is 
responsible only for their share of the emissions warranty per the 
warranty agreement. These changes to the warranty provisions apply to 
both diesel and otto-cycle engines.
---------------------------------------------------------------------------

    \19\ 40 CFR 86.094-2(f).
---------------------------------------------------------------------------

4. Additional Manufacturer Requirements
    EPA proposed modest new manufacturer requirements which may 
increase the likelihood of emissions related maintenance being 
performed when needed after the end of the engine's useful life by 
providing information to the vehicle owner. EPA received only 
supportive comments on these proposals. Therefore, all of the following 
manufacturer requirements are being finalized as proposed for both 
diesel and otto-cycle engines.
    Engine manufacturers provide owners with manuals specifying 
maintenance needed to ensure proper engine operation. Starting in 2004, 
EPA is requiring that manufacturers include in the engine service 
manual, maintenance which may be needed for emissions related 
components after the end of the engine's regulatory useful life, 
including mileage/hours intervals and procedures for determining 
whether or not 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 may 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 are required to include in the manual the rebuild 
provisions being adopted by the Agency, as described below, to ensure 
that owners and rebuilders are aware of the requirements.
    Under existing regulations, 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.20 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.21
---------------------------------------------------------------------------

    \20\ 40 CFR 86.094-25(b)(6)(ii)(C).
    \21\ 40 CFR 86.094-25(b)(6)(iii).
---------------------------------------------------------------------------

    EPA is finalizing a requirement that manufacturers of 2004 and 
later model year engines 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 must be designed to continue to signal the driver at the 
same intervals after the end of the useful life. EPA will not, however, 
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.)
5. Engine Rebuilding Provisions
    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''.22 EPA has also established 
policies regarding the use of aftermarket parts during 
rebuild.23 EPA is codifying these policies as they apply to 
engine rebuilding, and also finalizing new measures, as follows, for 
both diesel and otto-cycle engines.
---------------------------------------------------------------------------

    \22\ Engine Switching Fact Sheet, April 2, 1991. Docket A-95-27, 
II-B-6.
    \23\ ``Interim Tampering Enforcement Policy'', Mobile Source 
Enforcement Memorandum No. 1A., June 25, 1974. Docket A-95-27, II-B-
5.

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

[[Page 54702]]

    Under the regulatory provisions finalized today, parties involved 
in the process of rebuilding or remanufacturing model year 2004 and 
later 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 the 
actions being characterized as 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) and the model year(s) 
of the engine configuration must be identified. 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) When an engine is being rebuilt and remains installed or is 
reinstalled in the same vehicle, it must be rebuilt to a configuration 
of the same or later model year as the original engine. When an engine 
is being replaced, the replacement engine must be an engine of (or 
rebuilt to) a configuration of the same or later model year as the 
original 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.
    Any person or entity engaged in the process, in whole or in part, 
of rebuilding engines who fails to comply with the above provisions 
shall be liable for tampering in violation of CAA section 203(a)(3). 
Parties are 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 not finalizing any certification or in-
use emissions requirements for the rebuilder or engine owner.
    In response to comments, EPA has removed proposed provisions 
requiring that the rebuilder or remanufacturer rebuild engines to the 
same or newer model year configuration when the engine is not going to 
be placed back into the original vehicle. EPA has also modified rebuild 
provision (2) which, in the proposal, read ``A replacement engine must 
be of (or rebuilt to) a configuration of the same or later model year 
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.'' Provision (2) was 
modified because the language regarding ``a party supplying a rebuilt 
engine'' could be construed to mean an engine remanufacturer or other 
party not working directly with the vehicle. EPA believes that parties 
not working directly with the vehicle should not have an obligation to 
ensure that the correct engine is placed in the vehicle.
    EPA is adopting minor recordkeeping requirements which EPA believes 
are in-line with customary business practices and which will assist EPA 
in assessing compliance with the new rebuild provisions. The records 
shall be kept by persons involved in the process of heavy-duty engine 
rebuilding or remanufacturing and shall 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 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. EPA is requiring such 
records to be kept for two years after the engine is rebuilt.
    Parties may keep the information in whatever format or system they 
choose, provided that the information can be understood by an EPA 
enforcement officer. Parties are not required to keep information that 
they do not have access to as part of normal business practices.
    If it is customary practice to keep records for engine families 
rather than specific engines, where the engines within that family are 
being rebuilt or remanufactured to an identical configuration, such 
recordkeeping practices would satisfy these requirements. Rebuilders 
can use records such as build lists, parts lists, and engineering 
parameters that they keep for the engine families being rebuilt rather 
than on individual engines, provided each engine is rebuilt in the same 
way to those specifications. In addition, rebuilders are not required 
to keep information on each individual emissions related diagnostic 
code that might be reset if the codes are always addressed through a 
set of uniform procedures that are followed during the rebuilding 
process. For example, if an engine is equipped with a sensor that 
monitors the EGR flow rate, the rebuilder may keep on record the 
specifications and procedures used to rebuild the EGR system in all 
instances. EPA expects that engine remanufacturers currently keep these 
types of records in order to control the quality of their products.
    In the NPRM, EPA explained that it was considering adopting minor 
recordkeeping requirements in the final rule. In response to comments, 
EPA has modified the contemplated recordkeeping requirements to: (1) 
Further clarify that records may be kept on an engine family basis, (2) 
allow parties to keep information in whatever format or system they 
choose, provided that the information can be understood by an EPA 
enforcement officer, and (3) not require parties to keep information 
that they do not have access to as part of normal business practices.

C. Revised Averaging, Banking, and Trading Provisions

    EPA is finalizing with revisions various modifications to the ABT 
program. EPA believes this program is an important element in making 
the stringent emissions standards adopted today appropriate with regard 
to technological feasibility, lead time, and cost. The ABT program 
provides important flexibility to manufacturers, helping them to 
transition their entire product lines to the new standards. The ABT 
program also encourages the early

[[Page 54703]]

introduction of cleaner engines, thus securing earlier emissions 
benefits. The modified ABT program being implemented by EPA for 1998 
and later model year engines applies only to diesel cycle engines. EPA 
proposed but is not finalizing the modified ABT program for otto-cycle 
engines. (The ABT program implemented in 1990 remains in effect for 
otto-cycle engines). The provisions being finalized for the modified 
ABT program are described below. As proposed, the modified program and 
current program are separate and engines cannot participate in both 
programs. Credits generated under the modified program may be used only 
in 2004 and later model years. As was proposed, credits generated 
between 1998 and 2003 are based on NOX only, not 
NMHC+NOX, and are calculated against the 4.0 g/BHP-hr 
NOX emission standard. Diesel PM credits are based on 
reductions beyond the 0.10 g/BHP-hr emission standard for truck engines 
and the 0.05 g/BHP-hr emission standard for urban buses. Credits earned 
under the modified program may be transferred to the current program 
but would then be subject to the current program's credit life limit of 
three years from model year of generation and a one-time 20 percent 
discount.
    For the modified program between 1998 and 2003, for engine families 
certified at NOX levels 3.5 g/BHP-hr, no discount 
will be applied to any NOX or PM credits generated for 
banking or trading. For engine families certified at NOX 
levels above 3.5 g/BHP-hr, a one-time 10 percent discount will be 
applied to all credits generated for banking and trading against the 
model year 2004 standards, both NOX and PM. For example, if 
an engine family is certified to a NOX level of 3.7 in the 
modified program, the manufacturer will earn only 0.27 g/bhp-hr 
(0.3x.9) credit for use in meeting the 2004 standard. The credit life 
for credits under the modified program is unlimited.
    Beginning in 2004, the form of the standard changes from separate 
HC and NOX standards to a combined NMHC+NOX 
standard. Therefore, starting in 2004, credits will be based on 
combined NMHC+NOX values. NMHC+NOX credits will 
be generated against the 2.4 g/BHP-hr standard. Diesel PM credits will 
continue to be generated against the 0.10 g/BHP-hr emission standard 
for truck engines and the 0.05 g/BHP-hr emission standard for urban 
buses. For engine families certified with NMHC+NOX levels at 
or below 1.9 g/BHP-hr, credits will not be discounted. Credits for 
banking and trading will be discounted by 10 percent for engines with 
certification levels above 1.9 g/bhp-hr NMHC+NOX with the 
following exception: carry-over engine families certified prior to 2004 
with NOX+NMHC certification levels below the 2004 standards 
may earn undiscounted credits through model year 2006. For model year 
2007 and thereafter, the 10 percent discount applies. As with credits 
generated in the modified program prior to 2004, there will be no limit 
on credit life for credits generated after 2004 under the modified 
program. As proposed, the upper limits for NMHC+NOX and PM 
certification will be 4.5 g/BHP-hr and 0.25 g/BHP-hr, respectively. 
That is, no engine family may use credits to establish FELs above 
either of these levels.
    For reasons discussed later in this document, as well as in the 
Summary and Analysis of Comments, the provisions regarding credit life 
and discounting differ somewhat from those proposed. EPA proposed no 
discounting or credit life limits for the modified program. EPA also 
proposed that the modified program end in 2007 and that all credits 
thereafter would be generated under the current program which includes 
a one-time discount of 20 percent and a three year credit life limit. 
Under the final rule, the modified program does not end in 2007, but 
continues indefinitely. In addition, as noted above, credits for engine 
families certified above the appropriate trigger level will have a 10 
percent discount.
    There are several other provisions which apply to the modified 
program beginning in model year 1998. First, as proposed, EPA is 
eliminating the ``buy high-sell low'' conversion factor provision of 
86.094-(c)(2) and replacing it with the production-weighted average 
value. Under the current buy high-sell low provision, families 
generating credits use the lowest horsepower configuration factor and 
those using credits use the highest horsepower configuration factor in 
the formula to establish the number of credits generated or used. In 
the modified program, the production-weighted average value will be 
used in both cases. Second, because the 2004 standards apply in all 
fifty states, beginning in 2004, the California and federal programs 
will harmonize and ABT will be applicable to all federal 
certifications. Third, EPA is finalizing provisions to allow 
manufacturers the option to make the NOX and PM credits 
generated by their engines available to other persons for use outside 
the ABT program instead of limiting credits to only manufacturers.
    Based on comments received EPA is not finalizing two provisions 
which had been proposed. First, EPA is not finalizing its proposal for 
pre-2004 model years to allow NOX credits to be generated 
based on a useful life of 435,000 miles while retaining the actual 
useful life for the engine family at 290,000 mile interval for all 
other program purposes. EPA proposed to allow manufacturers to 
establish an FEL based on simple extrapolation of the deterioration 
factor for NOX from 290,000 miles to 435,000 miles and earn 
credits up to 435,000 miles without incurring any additional in-use 
liability for the mileage between 290,000 mile and 435,000 miles. 
Because EPA is not finalizing the proposed change, all credits must be 
based on the useful life of the engine family, which is the current 
Agency requirement. Manufacturers wanting to generate credits up to 
435,000 miles will be required to establish the 435,000 mile interval 
as the official useful life for the engine family. Second, EPA is not 
finalizing its proposal to require a compliance margin (i.e., the 
difference between the engine certification level and the FEL) of at 
least 5 percent under the modified ABT program. All of the above 
changes to the modified ABT program are being made for the reasons 
explained in the Summary and Analysis of Comment document for this 
rule.

D. Display of OMB Control Numbers

    EPA is also amending the table of currently approved information 
collection request (ICR) control numbers issued by OMB for various 
regulations. This amendment updates the table to accurately display 
those information requirements contained in this final rule. This 
display of the OMB control numbers and their subsequent codification in 
the Code of Federal Regulations satisfies the requirements of the 
Paperwork Reduction Act (44 U.S.C. 3501 et seq.) and OMB's implementing 
regulations at 5 CFR 1320.
    The ICR was previously subject to public notice and comment prior 
to OMB approval. As a result, EPA finds that there is ``good cause'' 
under section 553(b)(B) of the Administrative Procedure Act (5 U.S.C. 
553(b)(B)) to amend this table without prior notice and comment. Due to 
the technical nature of the table, further notice and comment would be 
unnecessary.

IV. Public Participation

    Following the NPRM, EPA held a public hearing on August 12, 1996, 
and accepted written comments on the proposals. This preamble section 
provides an overview of certain key issues raised in the NPRM, a 
summary of comments on these issues, and EPA's response to the 
comments, including

[[Page 54704]]

any significant changes to the rulemaking as a result of the comments. 
For EPA's detailed analysis of the comments received on the NPRM, the 
reader is directed to the Summary and Analysis of Comments document for 
the rulemaking. For information on how to obtain copies of the public 
hearing transcript, written comments, and the Summary and Analysis of 
Comments document, please see the ADDRESSES section above.

A. EPA's Air Quality Justification for the Proposed Program

    In the NPRM, EPA expressed its belief that improvements in air 
quality in many parts of the country will continue to be necessary in 
the future. Specifically, the Agency presented the results of analyses 
indicating that the emissions of key pollutants can be expected to 
increase without further controls and that air quality (in the case of 
both ozone and particulate matter) is likely to worsen as a result. In 
proposing new standards for highway HDEs, the Agency relied on these 
projections in concluding that it should proceed with regulatory action 
as soon as possible.
    Some commenters questioned this conclusion, disputing whether the 
available information in fact justifies establishing new standards for 
highway HDEs. Others argued the opposite--that immediate action is 
indeed justified. Those questioning EPA's analysis raised several 
issues. First, some commenters argued that currently available computer 
modeling is not of sufficient quality to draw conclusions about the 
future need for NOX control. Second, several commenters had 
differing opinions about how much EPA national ozone reduction policy 
should be affected by the fact that NOX reductions can cause 
increases in ozone under localized conditions. EPA stated its belief in 
the proposal that the large expected benefits of NOX control 
over broad areas within and surrounding nonattainment areas should be 
pursued even if these NOX reductions have a neutral or 
negative effect in localized portions of some nonattainment areas. 
Third, one commenter presented an analysis of ozone monitors concluding 
that the number of national ozone exceedances has been steadily 
decreasing over time (when adjusted for ambient temperatures). These 
issues are discussed below.
1. Modeling
    The emissions and air quality modeling to which the commenters 
refer falls into two related categories that are generally performed 
sequentially. The first major step is to develop emission inventories 
simulating the atmospheric loading of ozone precursors in future years. 
These inventories are useful for projecting trends in emissions over 
time and for understanding the relative importance of various emission 
sources. The second major step is to input specially prepared 
inventories into a complex grid-based air quality model which simulates 
the photochemistry of ozone formation over a geographic area for the 
same future years. Modelers have been able to gradually improve the 
quality of both of these types of modeling over many years, and 
improvements continue.
    As discussed more fully in the Summary and Analysis of Comments 
document, EPA believes that the available computer modeling of 
emissions and air quality, while of necessity complex and continually 
undergoing improvement, clearly provides a legitimate basis for today's 
rule. The Agency believes that its modeling projects with reasonable 
accuracy that, absent new control programs, NOX emissions 
would increase in the future and that the expected result would be 
increased ozone problems for many areas.
2. Possible Ozone Increases From NOX Reduction
    In the ANPRM and NPRM, EPA discussed the well known phenomenon that 
reducing NOX emissions in a local area may in certain 
circumstances result in an increase in ozone in limited parts of the 
area. Some commenters suggested that, as a result of this phenomenon, 
any proposed action to reduce NOX emission would be unwise 
or premature. After consideration of all comments received on this 
subject, EPA believes that nothing in the comments warrants a different 
course of action than that proposed by the Agency. In fact, air quality 
modeling work done since the analysis presented in the NPRM shows that 
the Agency's justification for pursuing the proposed program is 
appropriate.
    The OTAG addressed the complex issue of regional impacts due to 
transport of NOX and VOC emissions. The OTAG modeling 
results indicate that urban NOX reductions produce 
widespread decreases in ozone concentrations on high ozone days. In 
addition, urban NOX reductions also produce limited 
increases in ozone concentrations locally, but the magnitude, time, and 
location of these increases generally do not cause or contribute to 
high ozone concentrations. Most urban ozone increases modeled in OTAG 
occur in areas already below the ozone standard and, thus, in most 
cases, urban ozone increases resulting from NOX reductions 
do not cause exceedance of the ozone standard. There are a few days in 
a few urban areas where NOX reductions are predicted to 
produce ozone increases in portions of an urban area with high ozone 
concentrations. In these circumstances, additional VOC control measures 
may be needed to offset associated ozone increases due to 
NOX emissions decreases in local areas.
    Nonetheless, modeling analyses conducted as part of the OTAG 
process indicated that, in general, NOX reduction 
disbenefits are inversely related to ozone concentration. On the low 
ozone days leading up to an ozone episode (and sometimes the last day 
or so) the increases are greatest, and on the high ozone days, the 
increases are least (or nonexistent); the ozone increases occur on days 
when ozone is low and the ozone decreases occur on days when ozone is 
high. This indicates that, in most cases, urban ozone increases may not 
produce detrimental effects. Overall, OTAG modeling thus demonstrates 
that the ozone reduction benefits of NOX control outweigh 
the disbenefits of urban ozone increases in both magnitude of ozone 
reduction and geographic scope.
    The Agency has concluded that the overall benefit of large regional 
reductions in NOX, like those that would occur with the HDE 
standards finalized today, warrant such controls even where localized 
ozone increases may occur.24 25
---------------------------------------------------------------------------

    \24\ ``EPA Staff Observations from Recent Air Quality 
Modeling,'' Memorandum from Norm Possiel to Tad Wysor, August, 1997.
    \25\ Also see EPA's notice of denial of API petition for 
reconsideration of the Phase II reformulated gasoline NOX 
standard. (62 FR 11346 (March 12 1997)).
---------------------------------------------------------------------------

3. Trends in Ozone Levels
    EPA is aware of data indicating gradual improvements in ozone 
levels over the past several years. The Agency attributes this apparent 
trend to the success of past NOX and VOC control programs. 
Since the Agency has concluded that NOX levels will continue 
downward for several years but then level off and begin to rise, the 
welcome downward trend in ozone cannot, unfortunately, be expected to 
continue without new emission reductions. EPA does not agree with the 
commenter that the current trends indicate that new NOX 
control programs are not necessary. Rather, these data help show that 
NOX control can be very effective in reducing ozone. 
Moreover, the data reinforce EPA's belief (as discussed in Section II. 
above) that there will likely be an

[[Page 54705]]

upward trend in NOX emissions and ozone in the future if 
further NOX controls are not implemented. The Agency 
believes, therefore, that further NOX controls, including 
the HDE standards issued today, must be vigorously pursued.

B. Level of Standards

1. Diesel Engines--NOX Plus NMHC
    EPA proposed a combined NMHC+NOX standard of 2.4 g/bhp-
hr with an option to manufacturers of 2.5 g/bhp-hr with a NMHC cap of 
0.5 g/bhp-hr. The emission standards proposed in the NPRM for diesel-
cycle engines were based on what EPA considered to be the greatest 
achievable reductions from technology expected to be available in 2004, 
giving appropriate consideration to cost, energy, and safety. 
Commenters showed general support for the alternative 
NMHC+NOX standards proposed by EPA. The manufacturers 
commented that the proposed NMHC+NOX standards will be 
feasible for most highway heavy-duty diesel engines in 2004, provided 
that PM standards do not change. Manufacturers expressed specific 
support for the standards as they were proposed, including the optional 
2.5 g/bhp-hr standard with 0.5 g/bhp-hr NMHC cap. EPA did not receive 
comment recommending another level for the standard for diesel engines.
    Based on current information, EPA has determined that the proposed 
revision of NOX and NMHC standards is appropriate for 2004. 
The assessment of feasibility in the NPRM remains unchanged. An 
overview of the engine changes manufacturers are expected to make to 
meet the standards can be found in the Economic Impact discussion later 
in the preamble and in the Regulatory Impact Analysis.
2. Highway Diesel Engine--PM
    In the NPRM, EPA proposed to leave the diesel engine PM standards 
at their current levels: 0.10 g/bhp-hr for truck engines and 0.05 g/
bhp-hr (0.07 in-use) for urban buses. State, health, and environmental 
groups were unanimous in their comments exhorting EPA to move forward 
with additional control of diesel PM from on-highway heavy-duty diesel 
engines. These commenters focused on the need for control of diesel PM 
in the context of health effects from PM exposure and EPA's recent 
proposal to revise the National Ambient Air Quality Standard for PM. 
The groups also noted that the urban bus standard for PM was 0.05 g/
bhp-hr and argued that all diesel HDEs could meet that level. In 
contrast, the manufacturers commented that even meeting the current 
diesel PM standards while reducing NOX emissions by 50 
percent presents a significant technical challenge. The manufacturers 
commented that further reduction in the PM standard would threaten the 
overall feasibility and cost-effectiveness of the 2004 NMHC plus 
NOX standards. In the case of urban buses, manufacturers 
asked for a relaxation in the level of the PM standard to be able to 
meet the new levels for NMHC+NOX emissions.
    EPA understands the concerns that have been raised by the state, 
environmental, and health commenters and has an interest in pursuing 
further control of PM emissions if appropriate. As discussed in more 
detail above and in the Regulatory Impact Analysis, PM emissions can 
cause risks to public health and welfare, including a range of 
respiratory illnesses and aggravation of cardiovascular disease. EPA is 
reviewing and will continue to review many strategies for reducing 
harmful emissions of PM, including reduction of emissions from internal 
combustion engines. In fact, the reductions in NOX emissions 
resulting from this rule will significantly lower secondary formation 
of nitrate PM. 26
---------------------------------------------------------------------------

    \26\ Benefits of Mobile Source NOX Related 
Particulate Matter Reductions, October 1996, EPA Contract No. 68-C5-
0010.
---------------------------------------------------------------------------

    However, based on the information available today and the statutory 
factors set forth in section 202(a)(3)(A) of the Clean Air Act, EPA has 
determined that the current diesel PM standards are the lowest 
appropriate levels in 2004 in the context of an approximate 50 percent 
reduction in NOX. Because of the trade-off between 
NOX and PM emissions, manufacturers will have to undertake 
considerable effort to keep PM emissions below the current standard 
while essentially halving NOX emissions. EPA cannot be 
certain at this time that any further reductions in PM emissions can be 
realized in manner that is durable, reliable for the majority of the 
fleet, and cost-effective. As discussed below and in the Summary and 
Analysis of Comments, the ability of urban buses to meet a more 
stringent standard for PM does not necessarily mean that such a 
standard is feasible and appropriate for all heavy duty diesel engines.
    Open issues regarding control technology and strategy have 
contributed to EPA's decision not to lower PM standards at this time. 
To date, most medium heavy-duty and all heavy heavy-duty diesel engine 
families have been successful in meeting the 0.10 g/bhp-hr diesel PM 
standard using in-cylinder or engine-based control strategies. However, 
most of the light heavy-duty diesel engines have employed the use of 
aftertreatment devices such as oxidation catalysts to reach this level. 
All urban bus engines have used aftertreatment to achieve the 
applicable 0.05 g/bhp-hr diesel PM standard, albeit at somewhat higher 
cost and cost effectiveness values than for truck engines. While there 
are clearly different emission control strategy philosophies among the 
manufacturers and differences among engines technologies that lead to 
these variations in technological approach, further work is needed to 
identify and evaluate what set of control strategies have the greatest 
potential to achieve full life emission control at diesel PM levels 
less than 0.10 g/bhp-hr while also reducing NOX to 
approximately 2 g/bhp-hr. This ultimate set of strategies may involve 
aftertreatment techniques similar to those currently used on light 
heavy-duty diesel engines and urban buses or could be a technology 
still in research and development. However, at this time, it is 
uncertain whether potential methods for reduction of PM and 
NOX from heavy-duty engines are capable of reducing emission 
levels for the great majority of the heavy-duty engine fleet below the 
standards promulgated today in a manner that is reliable for the full 
useful life of the engines. Further discussion regarding technological 
feasibility can be found in the Summary and Analysis of Comments and 
the Regulatory Impact Analysis.
    Closely related are the issues of cost and cost effectiveness. The 
purchase and operating cost implications of any additional control 
technology must be considered as part of further evaluation, as should 
the cost-effectiveness of further reductions in new engine emission 
standards. This is best evaluated in the context of the possible 
control technologies as discussed above.
    There are other open scientific and technical issues that EPA plans 
to consider prior to the 1999 review. One issue is related to the form 
of the diesel particulate standard. Current EPA diesel particulate 
standards are based on mass per unit work (g/BHP-hr), and EPA continues 
to believe that this is the appropriate form for setting standards. 
Recently, an issue of a potential impact of technology on particle size 
distribution has arisen. Virtually all diesel particulate matter has a 
diameter less than 1.0 micron and is thus fully respirable by humans. A 
recent study sponsored by the Health Effects Institute on two similar 
and recent engine models (one of a later technology)

[[Page 54706]]

indicated that while the total mass of PM emissions was lower in the 
newer technology engine, the remaining particles from the new engine 
were smaller in diameter and more numerous. 27 The 
implications of this information are not clear either with regard to 
technology or health effects. While EPA continues to believe that mass-
based emission standards for PM are the most appropriate form, more 
information on the impact of any advanced engine and emission control 
technology on diesel PM size, particle count, and chemical constituents 
as well as the health effects of any changes in these particle 
characteristics would be helpful.
---------------------------------------------------------------------------

    \27\ K.J. Baumgard, J.H. Johnson, ``The Effect of Fuel and 
Engine Design on Diesel Exhaust Particle Size Distributions,'' 
Society of Automotive Engineers, 960131, 1996.
---------------------------------------------------------------------------

    Another issue is related to the magnitude of the directly-emitted 
diesel PM inventory and its relative air quality impact. Unlike nonroad 
diesel engines PM emissions, highway diesel engine PM emissions have 
been controlled since 1988, and current standards require an 80 to 90 
percent reduction over uncontrolled levels. Nonetheless, it is clear 
that control of diesel PM emissions is important, and more data on the 
percentage of highway engine diesel PM in the various urban areas and 
nonattainment area inventories and the in-use performance of controlled 
highway diesels would be helpful in guiding the Agency's future 
initiatives with regard to potential highway diesel engine PM control 
strategies. In any case, tightening NOx standards alone 
results in lower levels of ambient PM due to the accompanying reduction 
in secondary formation of nitrate PM, as discussed elsewhere in this 
preamble.
    EPA considers further control of highway diesel engine PM emissions 
to be an important air quality goal and plans to further study these 
issues and others over the next two years, and to reassess the diesel 
PM standard in the 1999 review. In that context, EPA encourages 
continued research and development on PM control technology and seeks 
input in all of the areas described above.
    Urban bus engines are and will continue to be a special case 
because they have unique operating characteristics, are used in only a 
limited range of vehicle applications, and are treated differently than 
other heavy duty engines under the Clean Air Act. Urban buses 
experience a typical duty cycle for which engines can relatively easily 
be designed; other heavy duty engines, in contrast, can be applied to 
several different types of truck applications and can experience a much 
wider range of duty cycles. The duty cycle that engines will see is 
important because manufacturers must design engines to meet the 
standards over their full useful lives. Moreover, the particular 
emphasis on PM reductions in section 219 of the Act indicates that 
Congress was especially interested in such reductions from urban bus 
engines and considered more stringent standards appropriate for such 
engines, even if costs are higher relative to other HDEs. For these 
reasons, EPA believes that the new NMHC+NOx standard along 
with the more stringent urban bus PM standard will be feasible and 
appropriate for urban buses. As part of the 1999 review, EPA will 
reevaluate the appropriateness of the urban bus standards.
3. Otto-Cycle Engines
    In response to the ANPRM, environmental groups provided comments 
highlighting manufacturers' certification data for the 1996 model year, 
which included some engine families with emission levels considerably 
below the standards proposed for the 2004 model year. While EPA 
proposed to adopt more stringent emission standards applicable to both 
diesel and otto-cycle (which are primarily gasoline-fueled) heavy-duty 
engines, EPA also requested comment on the possibility of adopting more 
stringent emission standards for heavy-duty gasoline engines. 
Certification data for 1997 showed a larger number of engine families 
emitting at or below the 2004 levels, with some engines certified at 
emission levels only ten to twenty percent of the 2004 emission 
standards.
    At this point, EPA is not yet ready to take final action on the 
issues associated with otto-cycle HDEs and is not finalizing any 
revised standards for heavy-duty otto-cycle engines. EPA intends to 
issue a Supplemental Notice of Proposed Rulemaking to address these 
engines specifically. A variety of options are under consideration for 
inclusion in the supplemental proposal. First, as described in the 
initial proposal, EPA may pursue a more stringent numerical standard 
using the existing test on an engine dynamometer. Second, EPA will 
evaluate the appropriateness of adopting emission standards for some 
otto-cycle heavy-duty vehicles based on testing with a chassis 
dynamometer. Chassis testing, and associated standards, could be 
patterned after the program adopted by the California Air Resources 
Board for medium-duty vehicles. Alternatively, EPA could develop a test 
and standard using the chassis test cycle specified in 40 CFR Part 86, 
subpart M for heavy-duty gasoline vehicles.

C. In-Use Emissions Control and Compliance

1. In-Use Emissions Control Regulatory Elements
    The NPRM contained several proposals which involved modifications 
to existing regulations, including regulations for the useful life of 
the engine, emissions performance and defect warranties, and 
maintenance requirements. These proposals would update the existing 
requirements, which were established several years ago, to better align 
them with current industry experience of longer lasting engines. EPA 
also proposed some elementary provisions regarding engine rebuilding to 
help ensure that rebuilding does not result in the removal of emissions 
control equipment or the reconfiguring of the engine in a way that 
would result in a significant increase in emissions. EPA's final 
actions on these items are described in section III.B. of this 
preamble. The reader is directed to the Summary and Analysis of 
Comments for a full discussion of comments received by EPA on its in-
use emissions related proposals and EPA analysis and response to those 
comments.
2. State Inspection and Maintenance Programs
    EPA noted in the preamble to the NPRM its intention to develop a 
guidance document for states to follow in designing inspection and 
maintenance programs for heavy-duty trucks and buses. Several 
commenters urged EPA to issue guidance to states quickly regarding how 
to conduct in-use inspection and maintenance programs. Commenters noted 
that several states and regions are working on in-use emissions 
programs and EPA guidance is critical to help ensure consistent 
programs from state-to-state. Commenters requested that EPA evaluate 
the Society of Automotive Engineers (SAE) test procedure J-1667 and 
move rapidly to endorse its use in road-side smoke inspection programs. 
State organizations recommended, further, that EPA move to adopt the J-
1667 procedure or other short test procedures as certification short 
test procedures and develop correlations between the short tests and 
the full certification tests. This would allow states and EPA to 
determine vehicle compliance in the field. NESCAUM noted that research 
is needed on the relationship between smoke opacity and particulate 
emissions. NRDC

[[Page 54707]]

commented that the smoke test will be inadequate for verifying 
compliance with the standard proposed in the rule.
    EPA recognizes the importance of providing guidance to states in 
these matters. EPA has been working informally with stakeholders 
including representatives from States, the trucking industry, engine 
manufacturers, and EPA Regions, among others, in its development of 
such guidance. As a result of this effort, EPA has recently issued 
guidance to states recommending the SAE J-1667 test procedure for their 
I/M programs.\28\ EPA plans to continue working with stakeholders to 
address other concerns related to the smoke test procedure such as the 
establishment of appropriate cut-points. The correlation of test 
cycles, establishment of certification short tests, and short tests for 
emissions other than smoke emissions, are complex in nature and must be 
studied further. For these reasons and also because I/M was not a 
subject of any proposals in the NPRM, the Agency is not adopting such 
programs or requirements in this rule.
---------------------------------------------------------------------------

    \28\ ``Guidance to States on In-use Smoke Test Procedure For 
Highway Heavy-duty Diesel Vehicles'', United States Environmental 
Protection Agency, April 3, 1997. Docket A-95-27.
---------------------------------------------------------------------------

3. In-use Compliance Issues
    EPA received comments in several areas related to in-use emissions 
control, but not related to any specific proposals contained in the 
NPRM. Several commenters expressed substantial concern over what they 
believe to be EPA's lack of a practical in-use compliance program for 
heavy-duty engines. They contend that EPA relies entirely on self 
certification and selective enforcement audits for heavy-duty 
compliance due to the impracticality and high cost of in-use engine 
testing. Commenters expressed concern that a number of HDEs have failed 
the SEA testing in recent years. The commenters urged EPA to develop an 
effective in-use compliance testing program including a viable recall 
program to ensure that engines comply with applicable standards over 
their useful lives. One commenter noted that the threat of in-use 
deterioration will increase as the standards are lowered. Commenters 
recommended that the Agency develop a supplemental certification test, 
such as a loaded chassis test, which could be used for in-use 
compliance and one commenter urged the Agency commit to a schedule for 
development and implementation.
    EPA received comments urging the Agency to adopt requirements for 
manufacturers to install on-board diagnostics (OBD) systems in heavy-
duty vehicles. Commenters believe that OBD could be a valuable tool in 
improving maintenance practices and assessing the in-use performance of 
heavy-duty engines. State organizations who commented are interested in 
having OBD systems available as a tool for inspection and maintenance 
programs.
    EPA also received comment that a more representative test cycle is 
a key to controlling excess emissions associated with high speeds and 
loads typical of real world conditions not currently represented in the 
federal test procedure (i.e., off cycle emissions). The commenter also 
believes that the increasing use of onboard computers to control the 
operation of engines further exacerbates the need for different and 
more variable test cycles. The commenter notes that onboard computers 
can be used to change the engine operating conditions to optimize fuel 
economy at the expense of emissions in modes of operation that are not 
well represented in the EPA test procedure. The commenter urged EPA to 
evaluate its current heavy-duty engine test procedure and consider such 
options as a random test cycle to minimize the impact of off-cycle 
emissions.
    While EPA believes that the new standards will achieve the 
emissions reductions estimated in section II of this preamble, EPA also 
recognizes that improvements in the understanding of in-use emissions 
and the need to establish a viable in-use compliance presence are 
essential. To address these concerns EPA has recently engaged in a 
number of activities to address in-use emissions. EPA has signed a 
Memorandum of Understanding (MOU) with the California Air Resources 
Board (ARB) and the Northeast States for Coordinated Air Use Management 
(NESCAUM) to develop a better understanding of in-use emissions from 
heavy-duty vehicles.\29\
---------------------------------------------------------------------------

    \29\ ``Developing an Understanding of In-use Emissions from 
Heavy-duty Diesel Engines'', Memorandum of Understanding, United 
States Environmental Protection Agency, Northeast States for 
Coordinated Air Use Management, California Air Resources Board, 
March 1997, Docket A-95-27.
---------------------------------------------------------------------------

    Under the context of this MOU, EPA has recently implemented a 
small-scale chassis-based screening program for in-use HDV's that will 
establish a viable in-use compliance presence. The screening program 
seeks to identify high emitting engines or technologies, and the causes 
of high emissions. The screening program is initially focused on light 
heavy-duty gasoline engines, although EPA plans to work with ARB and 
NESCAUM to expand the program to all sectors of the on-highway heavy-
duty industry in the next several months and include on-road emissions 
measurements. Such a screening program will allow EPA to identify high-
emitting engine families, potentially signaling the need for recall 
action under section 207 of the Clean Air Act. In addition, the in-use 
screening program will allow EPA to enforce certain provisions of 
section 203 of the Act, including the prohibition against manufacturer-
designed strategies or devices that defeat the operation of the 
emissions control system, and the prohibition against tampering with 
the emissions control system. Lastly, the screening program will allow 
EPA to assess in-use deterioration of HDE's by testing trucks at 
various mileages. Although the screening program will also provide 
important information regarding off-cycle emissions, EPA understands 
that further work in this area may be necessary to fully address the 
off-cycle concern.
    In addition to the screening program and engine testing conducted 
under the MOU, EPA will continue to work with state groups and others 
to develop tools for states to reduce in-use HDV emissions. Many states 
are implementing, or are considering implementing, inspection and 
maintenance (I/M) programs for HDV's. As noted above, EPA has recently 
issued guidance regarding an in-use I/M smoke test procedure, and plans 
to follow-up that guidance with recommended pass/fail cut-points. In 
addition, the EPA plans to study the benefits and feasibility of on-
board diagnostics (OBD) and other concepts that may prove to be useful 
I/M tools.
    EPA is also committed to working with states and industry to 
implement a voluntary retrofit program aimed at reducing emissions from 
older in-use vehicles that would be modeled after EPA's Urban Bus 
Retrofit/Rebuild Program. Such a program could lead to emission 
reductions from the in-use fleet beyond those required by the 
applicable standards through the retrofit of advanced emission control 
technologies.
    In response to EPA and commenter concerns about the growing number 
of engines which fail SEA testing, EPA believes that a viable long-term 
in-use recall presence will provide the necessary assurances that new 
production engines will comply with applicable standards. In the near-
term, EPA plans to engage the industry in constructive dialogue aimed 
at better understanding production processes and variability, 
manufacturer-based

[[Page 54708]]

production line testing programs, and methodologies used determine 
deterioration factors. Through these discussions, EPA believes that 
incremental improvements in SEA performance can be achieved. EPA is 
committed to further review of its compliance programs, and revisions 
to its regulatory programs if needed.
    EPA believes that these near-term actions will begin to address 
many of the concerns raised by commenters with respect to in-use 
emissions, and that changes in the HDV compliance program could result 
from these near-term actions. In addition, continued long-term study of 
in-use HDV emissions will further enhance our understanding and will 
provide a basis for future programmatic, regulatory, or other changes 
to ensure the emissions reductions from more stringent standards are 
reflected in the in-use emissions from HDV's.

D. Averaging, Banking, and Trading

    As discussed above, EPA proposed a modified ABT program as part of 
the transition to more stringent emissions standards for NOx and NMHC 
in 2004. Many comments were received on the ABT provisions of the NPRM. 
As discussed in the Summary and Analysis of Comments supporting this 
final rule, EPA has considered the comments received on the proposal 
and revised the provisions as appropriate. The ABT program EPA is 
implementing is consistent with the goals of the ABT concept as 
discussed in the NPRM. The modified ABT program being implemented in 
this rule provides the manufacturers the incentive to achieve 
improvements on current technology and pull ahead 2004-era technology 
to generate early emission reductions. These early reductions provide a 
near-term benefit to the environment and the emission credits generated 
provide the manufacturers significant compliance flexibility. As stated 
by the manufacturers, this compliance flexibility is a significant 
factor in the manufacturers' ability to certify a full line of engines 
in 2004 and helps to allow implementation of the new more stringent 
standard as soon as permissible under the Clean Air Act.
1. Applicability
    The NPRM proposed a modified ABT program for both diesel and otto-
cycle engines. However, as noted above, EPA received comment regarding 
whether EPA's proposed otto-cycle standards and ABT provisions were 
appropriate. As a result of EPA's evaluation of these comments, EPA is 
not promulgating final standards for otto-cycle HDEs in this rule. EPA 
is also not finalizing a modified ABT program for otto-cycle HDEs. EPA 
will address such standards and ABT provisions in a Supplemental Notice 
of Proposed Rulemaking in the future. The modified ABT program being 
implemented by EPA for 1998 through 2003 and the modified program 
finalized for 2004 and later apply only to diesel-cycle engines.
2. The Modified ABT Program Diesel-Cycle Engines (1998-2003)
    As will be discussed further below, the current ABT program will be 
retained for credit generation and use by production otto-cycle engines 
and credit use by diesel-cycle engines during the 1998-2003 model 
years. Effective for the 1998 model year, EPA is implementing a 
modified certification ABT program designed to help ensure compliance 
with the NMHC+NOX and PM standards beginning in 2004. The 
provisions of this program are described below.
    Credits generated under the modified program may be used only in 
2004 and later model years. Manufacturers may not use credits generated 
in the current program on engines generating credits under the modified 
program. However, credits generated under the modified program may be 
used before 2004, subject to the regulatory provisions of the current 
ABT program. As was proposed, credits generated between 1998 and 2003 
under this modified program are based on NOX only and are 
calculated against the 4.0 g/bhp-hr NOX emission standard. 
The NMHC levels of most heavy-duty engines are well below the present 
standard and would result in windfall credits if the credit calculation 
included NMHC. Diesel PM credits are based on reductions beyond the 
model year 0.10 g/bhp-hr emission standard for truck engines and the 
0.05 g/bhp-hr emission standard for urban buses.
    In the NPRM, EPA proposed that there be no discounts for credits 
banked under the modified program. However, in response to comments and 
further consideration by EPA on the best way to align this program with 
the general goals of the ABT program and other EPA market incentive 
programs, EPA is finalizing somewhat different provisions. To better 
align the ABT program with the goal of pull-ahead technology, EPA has 
decided to implement a trigger concept as a mechanism to distinguish 
engine families eligible for no discount. For engine families certified 
at NOX levels less than 3.5 g/bhp-hr NOX, no 
discount will be applied to any NOX or PM credits generated 
for banking. The 3.5 g/bhp-hr cut-point was suggested by commenters and 
EPA judges this level to be a reasonable discriminator for pull-ahead 
technology. It is similar in stringency to the California LEV standard 
for these engines and only three federal 1997 heavy-duty diesel 
families are certified below this level. For engine families certified 
at NOX levels above 3.5 g/bhp-hr, a 10 percent discount will 
be applied to all credits generated, both NOX and PM. EPA 
has decided to retain a discount for this portion of the program 
because smaller incremental reductions such as this are less likely to 
represent the pull-ahead technology which ABT is designed to encourage. 
These smaller credits nonetheless represent early reductions and are 
appropriate given the stringency of the model year 2004 standard, 
consistent with the ABT concept.
    As was mentioned above, the modified program includes a 10 percent 
discount for engines certified above the trigger. This level of 
discount was selected based on a combination of factors. Several 
commenters stated that a discount should be retained, some suggesting 
10 percent, some implying the current 20 percent level. Other 
commenters supported the Agency's proposal to eliminate all credit 
discounts. In attempting to design a program which meets all of the 
goals of ABT, the Agency selected 10 percent. The manufacturers 
comments indicated that a 20 percent discount was far too large and 
created a significant disincentive for the introduction of new or 
improved technology. Conversely, EPA believes that eliminating the 
discount for all credits as was proposed would have reduced the 
incentive to develop and implement significantly cleaner technology. A 
10 percent discount for credits generated at FELs above 3.5 g/bhp-hr, 
strikes a balance between these views, and aligns the discount in the 
heavy-duty engine ABT program with others in the mobile source program 
such as the National Low Emission Vehicle program.
    Some commenters opposed allowing PM credits to be generated and 
used in the modified program because the PM standard is not changing. 
In response, EPA believes that it is appropriate to include PM in the 
modified ABT program. For most in-cylinder control technologies, there 
is a strong inverse relationship between NOX and PM which 
makes it difficult to control both pollutants at the same time. The 
control technologies expected to be used to reduce NOX to 
model year 2004 levels are likely to increase PM. Therefore, EPA 
believes that applying the ABT modifications to PM as well as 
NOX allows the manufacturer more flexibility

[[Page 54709]]

in addressing the technology issues involved with reducing 
NOX emissions to the NOX plus NMHC standard being 
finalized in this rule, while maintaining PM emissions at 0.10 g/bhp-
hr. The Agency has decided to apply the NOX trigger to PM 
emissions because engines generating PM credits at NOX 
levels below the trigger in this time frame are likely to employ new, 
or at least significantly improved, PM control technology, because of 
the natural trade-off between NOX and PM emissions.
    EPA proposed that the 3 year credit life restriction in the current 
ABT program not apply in the modified program. After considering 
comments, EPA is finalizing this provision as proposed. Even though 
several commenters believed that the credit life limit should be 
retained, EPA believes that an unlimited credit life is consistent with 
the emission reduction goal of ABT, not only because of the increased 
manufacturer flexibility in meeting the new standards but also because 
it eliminates the ``use or lose'' aspect of the current program's limit 
on credit life, which creates the perverse incentive for manufacturers 
to use credits as quickly as possible. Unused credits are extra 
emission reductions beyond what the EPA regulations require. The only 
concern with unlimited credit life is that a manufacturer could 
stockpile a large number of credits and delay the effectiveness of a 
new standard in the future. This certainly would be a concern in a 
situation where standards are less stringent and not technology-
forcing. However, 2.4 g/bhp-hr NMHC+NOX and 0.10 g/bhp-hr PM 
(0.05 g/bhp-hr for buses) are quite challenging for diesel engines; EPA 
expects most pre-2004 credits will be needed in the first few years of 
the new standard.
3. The Modified ABT Program 2004 and Later
    EPA proposed that the current program be reinstated for 2007 and 
later models years, including the 20 percent discount and 3 year credit 
life. Some commenters who opposed the modified program urged the Agency 
to reinstate the current program beginning in 2004. Manufacturers 
argued that the current program should not be reinstated because the 
current program would remove much of the incentive to pull-ahead 
technology in the post 2004 time-frame.
    EPA considered the comments carefully and decided to implement, 
beginning in 2004, a modified program which will fully and permanently 
replace the current ABT program for diesel-cycle engines, though with 
significant changes from the proposal. Many of the same concepts that 
appear in the 1998-2003 ABT program will be employed beginning in 2004, 
but modifications have been made as appropriate. Beginning in 2004, the 
form of the standard changes from separate HC and NOX 
standards to a combined NMHC+NOX standard. Therefore in 
2004, credits will be based on combined NMHC+NOX values. For 
diesel engines, NMHC+NOX credits will be generated against 
the 2.4 g/bhp-hr standard. Diesel PM credits will continue to be 
generated against the 0.10 g/bhp-hr emission standard for truck engines 
and the 0.05 g/bhp-hr emission standard for urban buses. For the same 
basic reasons as laid out above, the trigger concept will continue to 
be applied to the discount for NMHC+NOX and PM credits. This 
trigger will be set at 1.9 g/bhp-hr NMHC+NOX. There are 
currently no diesel-fueled engines certified even close to this level.
    As above, there will be no limit on credit life. Removing discounts 
and credit life limits for the cleaner engines will provide maximum 
incentive for the development and introduction of petroleum- and 
alternative-fueled diesel-cycle engines with emission levels 
approaching the 1.0 g/bhp-hr NOX and 0.05 g/bhp-hr PM 
research objectives of the 1995 SOP.
    Credit use in 2004 and later years will follow the same pattern as 
under the current program. As proposed, the upper limits for 
NMHC+NOX and PM certification will be 4.5 g/bhp-hr and 0.25 
g/bhp-hr, respectively. That is, no engine family may be certified 
above either of these levels using credits. These limits provide the 
manufacturers adequate compliance flexibility while protecting against 
the introduction of unnecessarily high emitting engines.
4. Other Changes for the Modified ABT Program
    Five other provisions were proposed or were discussed with requests 
for comment which impact the modified ABT program. EPA is implementing 
three of these and not finalizing two of the proposed modifications.
    Of the three being finalized, first, EPA proposed to eliminate the 
``buy high--sell low'' provision of Sec. 86.094-15(c)(2) and to replace 
it with the production-weighted average value. Under this existing 
provision, families generating credits use the lowest horsepower 
configuration factor and those needing credits use the highest 
horsepower configuration factor. In the modified program the 
production-weighted average value will be used in both cases, as 
proposed. There was no adverse comment on this change. The second area 
relates to geographical applicability. The 2004 standards apply in all 
fifty states. California is not included in the current ABT program 
because they have a separate control program. Beginning in 2004 the 
California and federal programs will harmonize and ABT will be 
applicable for all federally certified HDEs without restrictions based 
on geographical limitations on the certificate. Prior to 2004, the 
current ABT program remains limited to HDEs certified for sale outside 
California. There was no adverse comment on this issue.
    The third change EPA is finalizing is related to the ownership of 
credits. EPA requested comment on the concept that manufacturers be 
given the option to make the NOX and PM credits generated by 
their engines available parties other than the manufacturers for use in 
other programs. This provision was supported by those who commented, so 
the regulatory language accompanying the rule includes provisions to 
permit credits to be excluded from the ABT program by the manufacturer 
in order to be used by engine purchasers or other parties, while 
preventing double counting. The ability to transfer credits out of this 
program does not of course imply that these credits can be used without 
restriction in other programs. Credits purchased for use in other 
programs must meet the use requirements of the emission programs for 
which they are purchased. For example, local emission programs will 
likely have limits on their geographic scope which may limit the use of 
emission credits that are used to trade out of local emission 
requirements.
    One provision not being finalized is related to the impact of the 
change in useful life for heavy heavy-duty diesel engines in 2004 on 
credit generation and use. The useful life value is a factor in 
determining the amount of credits earned or used by an engine family. 
Beginning in 2004 for these engines, the minimum useful life increases 
50 percent from 290,000 miles to 435,000 miles. If a manufacturer uses 
the minimum useful life value of 290,000 miles to calculate credits 
generated prior to 2004, 50 percent more credits will be needed in 2004 
to cover an engine certified with a useful life of 435,000 miles. EPA 
sought comments on two options to address this issue for NOX 
and PM. These included for NOX allowing manufacturers to 
base their FEL on an emission level determined from a simple 
extrapolation of the deterioration factor for NOX from 
290,000 miles to 435,000 miles and to

[[Page 54710]]

earn credits up to 435,000 miles. Under such an approach, engine 
families would continue to have a useful life of 290,000 miles and 
manufacturers would be liable for emissions only up to the end of the 
useful life. EPA also sought comment on requiring manufacturers to 
apply for a longer useful life under the provisions of Sec. 86.094-
21(f) if they wanted to earn NOX credits based on a useful 
life of more than 290,000 miles. This second option is allowed under 
the current regulations. For PM, EPA did not propose the use of the 
former approach proposed for NOX credits, only the latter 
approach, due to concerns about the potential for deterioration of PM 
emissions.
    EPA received comments from manufacturers supporting the simple 
extrapolation of the NOX deterioration factor for 
calculating credits and comments arguing that PM deterioration in in-
use vehicles was negligible and predictable and that the extrapolation 
proposed for NOX should be extended to PM. EPA also received 
comments that the Agency should not allow credits to be generated over 
a period where the manufacturer is not liable for emissions control.
    As discussed in the Summary and Analysis of Comments, EPA has 
decided not to finalize the simple deterioration factor extrapolation 
method for either NOX or PM. In general, it would be 
inconsistent with current EPA credit program policy to allow credits 
without accompanying liability, even if the program is transitional. 
Furthermore, for both NOX and PM there is some concern that 
deterioration after the useful life may not be linear, especially for 
engines using EGR or aftertreatment. Therefore, manufacturers desiring 
credits for the longer useful life will have to certify to the longer 
life for those pollutants as allowed under Sec. 86.094-21(f) of the 
current regulations.
    Finally, EPA is not finalizing the mandatory compliance margin 
provisions proposed in the NPRM. EPA had proposed these provisions as a 
means to address concerns that compliance margins (the difference 
between the family emission limit and the certification level) had been 
shrinking over time, and that the modified ABT program could provide an 
incentive to shave margins inappropriately to gather additional 
credits. One commenter provided examples where margins were reduced by 
manufacturers in order to earn additional credits. Commenters 
recommended margins of 10-15 percent due to concerns over margin 
shaving. Other commenters believed that the best way to ensure that 
manufacturers set appropriate margins would be through the use of EPA's 
audit and compliance programs to target suspect engine families. 
Manufacturers noted that they can improve their manufacturing processes 
to allow for small margins while still complying with the FEL and 
should not be penalized with a mandatory compliance margin.
    Valid comments were presented on both sides of this issue, but the 
Agency has concluded that the issue of the size of the compliance 
margin is not solely an ABT issue. Indeed, compliance margins are 
important in non-ABT families as well. Thus, the Agency has concluded 
that any actions to address this issue are better implemented as part 
of improvements in the overall compliance program, discussed above, 
rather than as a regulatory fix in the context of a modified ABT 
program. Moreover, EPA's final regulations, which implement a discount 
on credits earned by engine families that are less than 0.5 g/bhp-hr 
below the applicable NOX or NMHC+NOX standard 
should reduce the concern evidenced in the comments regarding the 
possibility that the modified program will further erode compliance 
margins.

V. Economic Impact and Cost-effectiveness

    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. EPA's analysis of the costs 
of complying with the new standards anticipates a significant degree of 
technological development during this period.
    The technologies described in the RIA together show a good deal of 
promise for controlling emissions, but also make clear that much effort 
remains to optimize 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 $270 million (net 
present value in 1995) 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 program review provides an opportunity to 
reassess EPA's projected costs in light of new information. EPA will 
revisit the analysis of the full life-cycle costs as part of the 1999 
review. EPA and manufacturers will then confirm whether or not 
technology development is progressing as needed to meet the 2004 model 
year emission standards.
    In assessing the economic impact of changing the emission 
standards, EPA has used a current best judgement of the combination of 
technologies that an engine manufacturer might use to meet the new 
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. EPA 
received a variety of comments on the cost analysis, either stating 
generally that the estimated costs were too low or recommending changes 
to specific details of the analysis. EPA made several minor changes to 
the analysis in response to comments received on the proposal. The most 
significant change was to include a broader use of EGR cooling. Further 
investigation of the EGR and EGR cooling led to revised cost estimates 
for those technologies. All the comments related to the cost 
projections and the associated changes are described in the Summary and 
Analysis of Comments.
    Estimated cost increases are broken into purchase price and total 
life-cycle operating 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 
operating costs include any expected increases in 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. All 
costs are presented in 1995 dollars. Life-cycle costs have been 
discounted to the year of sale.

[[Page 54711]]

A. Engine Costs

    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. This is because several NOX 
control methods such as the use of EGR can have negative impacts on 
these items for which the manufacturer must then compensate. 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 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 is not clear at this time 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 2004 model year emission standards. The fact that manufacturers 
have several years before implementation of the new standards virtually 
ensures that the technologies used to comply with the 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 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 
while at least holding PM levels below 0.10 g/bhp-hr. 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 
cool EGR that is carefully tailored to an engine's different operating 
modes.
    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 for EGR-related maintenance and 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 both as a 
maintenance item and as a fixed cost. An additional maintenance cost is 
anticipated 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. An EGR 
cooler, which EPA expects to be commonly used, would alone mitigate 
much of the potential increase in fuel consumption caused by 
recirculating exhaust gases. In light of the potential fuel economy 
improvements from some technologies and the anticipated use of cooled 
EGR systems, it would not be appropriate to include a penalty for 
increased fuel consumption as part of the cost analysis at this time. 
EPA will reexamine this issue as part of the 1999 review analysis.
    Meeting the new NOX+NMHC standard will somewhat increase 
the challenge to control particulate emissions from diesel engines. 
Manufacturers might use a variety of 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 while meeting the target levels 
for NOX and NMHC. 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 2004 model year 
standards are itemized in the Regulatory Impact Analysis and summarized 
in Table 2. For light heavy-duty vehicles, the cost of a new 2004 model 
year engine is estimated to increase by $258; operating costs over a 
full life-cycle increase by about $7. For medium heavy duty vehicles 
the purchase price of a new engine is estimated to increase by $397, 
with life-cycle operating costs increasing $62. Similarly, for heavy 
heavy-duty engines, the initial purchase price is expected to increase 
by $467, while estimated additional life-cycle operating costs are 
$131.
    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

[[Page 54712]]

complexity of component parts.30 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 are not included in the 
analysis after the first five model years. Table 2 lists the projected 
schedule of costs for each category of vehicle over time.
---------------------------------------------------------------------------

    \30\ ``Learning Curves in Manufacturing,'' Linda Argote and 
Dennis Epple, Science, February 23, 1990, Vol. 247, pp. 920-924.

                            Table 2--Projected Diesel Engine Cost and Price Increases                           
                                    [1995 dollars discounted to year of sale]                                   
----------------------------------------------------------------------------------------------------------------
                                                                                       Purchase     Life-cycle  
               Vehicle class                               Model year                   price     operating cost
----------------------------------------------------------------------------------------------------------------
Light heavy-duty..........................  2004...................................          258               7
                                            2009 and later.........................          109               7
Medium heavy-duty.........................  2004...................................          397              62
                                            2009 and later.........................          136              62
Heavy heavy-duty..........................  2004...................................          467             131
                                            2009 and later.........................          180             131
----------------------------------------------------------------------------------------------------------------

B. 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 new emission standards in any year. The result of this analysis is 
a projected total cost starting at $270 million in 2004. Per-vehicle 
costs savings over time reduce projected costs to a minimum value of 
$140 million in 2009, after which the growth in truck population leads 
to an increase in costs to $205 million in 2020. Total costs for these 
years are presented by vehicle class in Table 3. 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 3--Estimated Annual Costs for Improved Heavy-Duty Vehicles    
                          [Millions of dollars]                         
------------------------------------------------------------------------
             Category                  2004         2009         2020   
------------------------------------------------------------------------
Light heavy-duty.................           71           41           49
Medium heavy-duty................           64           26           38
Heavy heavy-duty.................          107           56           93
                                  --------------------------------------
    Total........................          242          123          180
------------------------------------------------------------------------

C. Cost-effectiveness

    EPA has estimated the per-vehicle cost-effectiveness (i.e., the 
cost per ton of emission reduction) of the NOX plus NMHC 
standard over the typical lifetime of heavy-duty diesel vehicles 
covered by today's rule. The RIA contains a more detailed discussion of 
the cost-effectiveness analyses. No significant comments were received 
on the cost-effectiveness analysis presented in the proposal and the 
methodology for estimating the cost-effectiveness remains the same as 
used in the proposal.
    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.31
---------------------------------------------------------------------------

    \31\ 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 new engine standards are expected to have 
beneficial impacts with respect to crop damage, secondary particulate, 
acid deposition, eutrophication, visibility, and forests.32 
Due to the difficulty in accurately quantifying the monetary value of 
these societal benefits, the cost-effectiveness values presented do not 
assign any numerical value to these additional benefits. However, based 
on an analysis of existing studies that have estimated the value of 
such benefits in the past, the Agency believes that the actual monetary 
value of the multiple environmental and public health benefits produced 
by the large NOX reductions under this action will likely be 
greater than the estimated compliance costs.33
---------------------------------------------------------------------------

    \32\ For further discussion of these benefits, the reader is 
directed to Chapter 2 of the RIA.
    \33\ ``Benefits of Reducing Mobile Source NOX 
Emissions,'' prepared by ICF Incorporated for Office of Mobile 
Sources, U.S. EPA, Draft Final, September 30, 1996.
---------------------------------------------------------------------------

    As described above in the cost section, the cost of complying with 
the 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 standards are shown in Table 4 for the same 
model years discussed above in the cost section. The cost-effectiveness 
results contained in Table 4 present the range in cost-effectiveness 
resulting from the two cost-effectiveness scenarios described above.

[[Page 54713]]



 Table 4--Discounted Per-Vehicle Costs, Emission Reductions and Cost-Effectiveness of the NOX Plus NMHC Standard
----------------------------------------------------------------------------------------------------------------
                                                                           Discounted lifetime                  
                                                              Discounted    reductions (tons)   Discounted cost-
         Vehicle class                   Model year           lifecycle  ----------------------   effectiveness 
                                                                costs        NOX        NMHC         ($/ton)    
----------------------------------------------------------------------------------------------------------------
Light--Heavy-Duty Diesel         2004......................         $265      0.242      0.003     $1,100-$1,200
 Vehicles.                                                                                                      
                                 2009 and later............          117                                     500
Medium--Heavy-Duty Diesel        2004......................          459      1.002      0.014               500
 Vehicles.                                                                                                      
                                 2009 and later............          198                                     200
Heavy--Heavy-Duty Diesel         2004......................          598      3.059      0.043               200
 Vehicles.                                                                                                      
                                 2009 and later............          311                                     100
All--Heavy-Duty Diesel Vehicles  2004......................          422      1.377      0.019               300
                                 2009 and later............          202                                 100-200
----------------------------------------------------------------------------------------------------------------

VI. Administrative Requirements

A. 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 rule is a ``significant regulatory action'' because the 
standards and other regulatory provisions 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 rule.

B. 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.
    The Agency has determined that it is not necessary to prepare a 
regulatory flexibility analysis in connection with this final rule. The 
Agency has also determined that the new emission standards and related 
provisions 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 (see Chapter 3 of the 
Final Regulatory Impact Analysis for the rule).
    This action also contains provisions clarifying what would and 
would not be considered a prohibited act (tampering) under CAA Section 
203 during the heavy-duty engine rebuilding processes. Also, the rule 
contains basic recordkeeping requirements for rebuilders which are 
consistent with current customary rebuilding practices. Small 
businesses are integral to the heavy-duty engine rebuilding industry as 
noted in comments provided by the Automotive Engine Rebuilders 
Association.34 However, EPA does not believe that the 
requirements related to engine rebuilding will have a significant 
impact on a substantial number of these small entities for the 
following reasons. EPA is defining how a broad existing requirement 
(CAA Section 203) applies specifically to the process of rebuilding/
remanufacturing engines, but EPA is not creating a new program. These 
requirements are consistent with current customary practices in this 
industry. 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. Furthermore, organizations representing small rebuilders 
submitted only supportive comments during the public comment period for 
the rulemaking. Finally, an EPA contractor conducted an industry 
characterization which further supports that engine rebuilding 
practices are consistent with the requirements and would not be changed 
as a result of the requirements 35.
---------------------------------------------------------------------------

    \34\ EPA Docket A-95-27, II-D-41.
    \35\ ``Industry Characterization: On-road Heavy-duty Diesel 
Engine Rebuilders'', ICF Incorporated, Contract number 68-C5-0010, 
Work assignment 102, January 3, 1997, Docket A-95-27.
---------------------------------------------------------------------------

C. Compliance With Paperwork Reduction Act

    The Office of Management and Budget (OMB) has approved the 
information collection requirements contained in this rule under the 
provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and 
has assigned OMB control number 2060-0104.
    EPA is finalizing requirements to collect certification results, 
durability, maintenance, and averaging, banking and trading 
information, and is formalizing recordkeeping procedures for engine 
rebuilding companies which are consistent with current industry 
practices. 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

[[Page 54714]]

information is mandatory. The confidentiality of any information 
submitted to EPA will be protected to the full extent provided in 40 
CFR Part 2.
    EPA estimates the average first year hours burden per response to 
be 4,670, the 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. EPA is 
amending the table in 40 CFR Part 9 of currently approved ICR control 
numbers issued by OMB for various regulations to list the information 
requirements contained in this final rule.

D. 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 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 program represents the least costly, most cost-effective 
approach to achieving the air quality goals of the rule. EPA has 
performed the required analyses. The reader is directed to the 
Regulatory Impact Analysis for further information regarding these 
analyses.

E. Submission to Congress and the General Accounting Office

    Under 5 U.S.C. 801(a)(1)(A) as added by the Small Business 
Regulatory Enforcement Reform Act of 1996, EPA submitted a report 
containing this rule and other required information to the U.S. Senate, 
the U.S. House of Representatives, and the Comptroller General of the 
General Accounting Office prior to publication of the rule in today's 
Federal Register. OMB has designated this a ``major rule'' as defined 
in 5 U.S.C. 804(2).

VII. 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. Pursuant to Sections 202(a)(1) and 
202(d), these emissions standards apply for the useful life period 
established by the Agency. See 42 U.S.C. 7521(a)(1), 7521(d). Other 
provisions of Title II of the Act, along with Section 301, are 
additional authority for the measures finalized in this action.

VIII. Judicial Review

    Under section 307(b)(1) of the Act, EPA hereby finds that these 
regulations are of national applicability. Accordingly, judicial review 
of this action is available only by filing of a petition for review in 
the United States Court of Appeals for the District of Columbia Circuit 
within 60 days of publication in the Federal Register. Under section 
307(b)(2) of the Act, the requirements which are the subject of today's 
Notice may not be challenged later in judicial proceedings brought by 
EPA to enforce these requirements. This rulemaking and any petitions 
for review are subject to the provisions of section 307(d) of the Clean 
Air Act.

IX. Copies of Rulemaking Documents

    Copies of documents related to this rulemaking are available in the 
public docket for the rule and over the internet as described in the 
ADDRESSES section above.

List of Subjects

40 CFR Part 9

    Environmental protection, Reporting and recordkeeping requirements.

40 CFR Part 86

    Administrative practice and procedure, Confidential business 
information, Incorporation by reference, Labeling, Motor vehicle 
pollution, Reporting and recordkeeping requirements.

    Dated: October 6, 1997.
Carol M. Browner,
Administrator.

[[Page 54715]]



            Appendix to the Preamble--Table of Changes Made to Part 9 and Subparts A and N of Part 86           
----------------------------------------------------------------------------------------------------------------
             Section                                   Change                                  Reason           
----------------------------------------------------------------------------------------------------------------
1. Sec.  9.1.....................  Revised to add OMB approval numbers...........  New OMB approval numbers.    
1. Authority.....................  None..........................................                               
2. Sec.  86.1....................  Revised to add document reference.............  Updated ASTM methodology for 
                                                                                    significant digits.         
3. Sec.  86.098-3................  Revised to include new abbreviations..........  Add abbreviations for terms  
                                                                                    averaging, banking and      
                                                                                    trading and heavy-duty      
                                                                                    engines.                    
4. Sec.  86.098-10...............  Revision of references........................  Revise references to         
                                                                                    averaging, banking, and     
                                                                                    trading programs.           
5. Sec.  86.098-11...............  Revision of references........................  Revise references to         
                                                                                    averaging, banking, and     
                                                                                    trading programs.           
6. Sec.  86.098-15...............  Add Sec.  86.098-15...........................  Incorporation of revisions to
                                                                                    NOX and particulate         
                                                                                    averaging, banking and      
                                                                                    trading programs.           
7. Sec.  86.098-23...............  Revise Sec.  86.098-23........................  Incorporate changes due to   
                                                                                    new standards and ABT       
                                                                                    programs.                   
8. Sec.  86.098-30...............  Revise Sec.  86.098-30........................  Incorporate changes due to   
                                                                                    new ABT programs.           
9. Sec.  86.099-11...............  Revise Sec.  86.099-11........................  Revise references to         
                                                                                    averaging, banking, and     
                                                                                    trading programs.           
10. Sec.  86.001-23..............  Revise Sec.  86.001-23........................  Incorporate references to    
                                                                                    Sec.  98.098-23.            
11. Sec.  86.001-30..............  Revise Sec.  86.001-30........................  Incorporate references to    
                                                                                    Sec.  98.098-30.            
12. Sec.  86.004-2...............  Add Sec.  86.004-2............................  Incorporation of new useful  
                                                                                    life for heavy heavy-duty   
                                                                                    diesel engines.             
13. Sec.  86.004-11..............  Add Sec.  86.004-11...........................  Incorporation of new NOX plus
                                                                                    NMHC standards for diesel   
                                                                                    heavy-duty engines.         
14. Sec.  86.004-15..............  Add Sec.  86.004-15...........................  Incorporation of revisions to
                                                                                    NOX and particulate         
                                                                                    averaging, banking and      
                                                                                    trading program.            
15. Sec.  86.004-21..............  Add Sec.  86.004-21...........................  Incorporate changes due to   
                                                                                    new standards and ABT       
                                                                                    programs.                   
16. Sec.  86.004-25..............  Add Sec.  86.004-25...........................  Incorporation of revisions to
                                                                                    maintenance requirements.   
17. Sec.  86.004-28..............  Revise Sec.  86.004-28........................  Incorporate changes in       
                                                                                    deterioration factors due to
                                                                                    new standards and allow     
                                                                                    options to NMHC measurement 
                                                                                    for diesel engines.         
18. Sec.  86.004-30..............  Revise Sec.  86.004-30........................  Incorporate changes due to   
                                                                                    new standards and ABT       
                                                                                    programs.                   
19. Sec.  86.004-38..............  Add Sec.  86.004-38...........................  Incorporation of maintenance 
                                                                                    instruction requirements.   
20. Sec.  86.004-40..............  Add Sec.  86.004-40...........................  Incorporation of engine      
                                                                                    rebuild practices           
                                                                                    provisions.                 
21. Sec.  86.1311-94.............  Revise Section 86.004-40(3)...................  Incorporate allowance for    
                                                                                    direct NMHC measurement     
                                                                                    using a GC for NGVs.        
22. Sec.  86.1344-94.............  Revise Section 86.1344-94(e)(22)..............  Incorporation of NMHC test   
                                                                                    data requirement.           
----------------------------------------------------------------------------------------------------------------

    For the reasons set out in the preamble, chapter I, title 40 is 
amended as follows:


Part 9  [Amended]

    1. The authority citation for part 9 continues to read as follows:

    Authority: 7 U.S.C. 135 et seq., 136-136y; 15 U.S.C. 2001, 2003, 
2005, 2006, 2601-2671; 21 U.S.C. 331j, 346a, 348; 31 U.S.C. 9701; 33 
U.S.C. 1251 et seq., 1311, 1313d, 1314, 1318, 1321, 1326, 1330, 
1342, 1344, 1345 (d) and (e), 1361; E.O. 11735, 38 FR 21243, 3 CFR, 
1971-1975 Comp. p. 973; 42 U.S.C. 241, 242b, 243, 246, 300f, 300g, 
300g-1, 300g-2, 300g-3, 300g-4, 300g-5, 300g-6, 300j-1, 300j-2, 
300j-3, 300j-4, 300j-9, 1857 et seq., 6901-6992k, 7401-7671q, 7542, 
9601-9657, 11023, 11048.

    2. Section 9.1 is amended by adding the new entries in numerical 
order under the indicated heading to the table to read as follows:


Sec. 9.1  OMB approvals under the Paperwork Reduction Act.

* * * * *

------------------------------------------------------------------------
          40 CFR citation                      OMB control No.          
------------------------------------------------------------------------
                                                                        
*                  *                  *                  *              
                  *                  *                  *               
------------------------------------------------------------------------

Control of Air Pollution From New and In-Use Motor Vehicles and New and 
In-Use Motor Vehicle Engines: Certification and Test Procedures
86.004.38.....................................................2060-0104
86.004.40.....................................................2060-0104
* * * * *

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

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

    Authority: 42 U.S.C. 7401-7671q.

    2. In Sec. 86.1 the table in paragraph (b)(1) is amended by adding 
a new entry to the end of the table to read as follows:


Sec. 86.1  Reference materials.

* * * * *
    (b) * * *
    (1) * * *

------------------------------------------------------------------------
            Document No. and name               40 CFR part 86 reference
------------------------------------------------------------------------
                                                                        
*                  *                  *                  *              
                  *                  *                  *               
ASTM E29-93a, Standard Practice for Using                               
 Significant Digits in Test Data to Determine                           
 Conformance with Specifications.............       86.098-15, 86.004-15
------------------------------------------------------------------------


[[Page 54716]]

* * * * *
    3. Section 86.098-3 is revised to read as follows:


Sec. 86.098-3  Abbreviations.

    (a) The abbreviations in Sec. 86.096-3 continue to apply. The 
abbreviations in this section apply beginning with the 1998 model year.
    (b) The abbreviations of this section apply to this subpart, and 
also to subparts B, E, F, G, K, M, N, and P of this part, and have the 
following meanings:

TD--Dispensed fuel temperature
ABT--Averaging, banking, and trading
HDE--Heavy-duty engine

    4. Section 86.098-10 is amended by revising the first sentence in 
paragraphs (a)(1)(i)(C)(2), (a)(1)(i)(C)(3), (a)(1)(ii)(C)(2), 
(a)(1)(ii)(C)(3), (a)(1)(iii)(C)(2), (a)(1)(iv)(C)(2), (a)(1)(v)(C)(2), 
(a)(1)(vi)(C)(2) to read as follows:


Sec. 86.098-10  Emission standards for 1998 and later model year Otto-
cycle heavy-duty engines and vehicles.

* * * * *
    (a)(1) * * *
    (i) * * *
    (C) * * *
    (2) A manufacturer may elect to include any or all of its gasoline-
fueled Otto-cycle HDE families in any or all of the NOX or 
NOX plus NMHC ABT programs for HDEs, within the restrictions 
described in Sec. 86.098-15 as applicable. * * *
    (3) A manufacturer may elect to include any or all of its liquified 
petroleum gas-fueled Otto-cycle HDE families in any or all of the 
NOX or NOX plus NMHC ABT programs for HDEs, 
within the restrictions described in Sec. 86.098-15 as applicable. * * 
*
* * * * *
    (ii) * * *
    (C) * * *
    (2) A manufacturer may elect to include any or all of its gasoline-
fueled Otto-cycle HDE families in any or all of the NOX or 
NOX plus NMHC ABT programs for HDEs, within the restrictions 
described in Sec. 86.098-15 as applicable. * * *
    (3) A manufacturer may elect to include any or all of its liquified 
petroleum gas-fueled Otto-cycle HDE families in any or all of the 
NOX or NOX plus NMHC ABT programs for HDEs, 
within the restrictions described in Sec. 86.098-15 as applicable. * * 
*
* * * * *
    (iii) * * *
    (C) * * *
    (2) A manufacturer may elect to include any or all of its methanol-
fueled Otto-cycle HDE families in any or all of the NOX or 
NOX plus NMHC ABT programs for HDEs, within the restrictions 
described in Sec. 86.098-15 as applicable. * * *
* * * * *
    (iv) * * *
    (C) * * *
    (2) A manufacturer may elect to include any or all of its methanol-
fueled Otto-cycle HDE families in any or all of the NOX or 
NOX plus NMHC ABT programs for HDEs, within the restrictions 
described in Sec. 86.098-15 as applicable. * * *
* * * * *
    (v) * * *
    (C) * * *
    (2) A manufacturer may elect to include any or all of its natural 
gas-fueled Otto-cycle HDE families in any or all of the NOX 
or NOX plus NMHC ABT programs for HDEs, within the 
restrictions described in Sec. 86.098-15 as applicable. * * *
* * * * *
    (vi) * * *
    (C) * * *
    (2) A manufacturer may elect to include any or all of its natural 
gas-fueled Otto-cycle HDE families in any or all of the NOX 
or NOX plus NMHC ABT programs for HDEs, within the 
restrictions described in Sec. 86.098-15 as applicable. * * *
* * * * *
    5. Section 86.098-11 is amended by revising the first sentence in 
paragraphs (a)(3)(ii) and (a)(4)(iii) introductory text to read as 
follows:


Sec. 86.098-11  Emission standards for 1998 and later model year diesel 
heavy-duty engines and vehicles.

    (a) * * *
    (3) * * *
    (ii) A manufacturer may elect to include any or all of its diesel 
HDE families in any or all of the NOX or NOX plus 
NMHC ABT programs for HDEs, within the restrictions described in 
Sec. 86.098-15 as applicable. * * *
* * * * *
    (4) * * *
    (iii) A manufacturer may elect to include any or all of its diesel 
HDE families in any or all of the particulate ABT programs for HDEs, 
within the restrictions described in Sec. 86.098-15 as applicable. * * 
*
* * * * *
    6. A new Sec. 86.098-15 is added to subpart A to read as follows:


Sec. 86.098-15  NOX and particulate averaging, trading, and 
banking for heavy-duty engines.

    Section 86.098-15 includes text that specifies requirements that 
differ from Sec. 86.094-15. Where a paragraph in Sec. 86.094-15 is 
identical and applicable to Sec. 86.098-15, this may be indicated by 
specifying the corresponding paragraph and the statement ``[Reserved]. 
For guidance see Sec. 86.094-15.''
    (a) through (b) [Reserved] For guidance see Sec. 86.094-15.
    (c)(1) For each participating engine family, NOX and 
particulate emission credits (positive or negative) are to be 
calculated according to one of the following equations and rounded, in 
accordance with ASTM E29-93a, to the nearest one-tenth of a Megagram 
(MG). Consistent units are to be used throughout the equation.
    (i) For determining credit need for all engine families and credit 
availability for engine families generating credits for averaging 
programs only:

Emission credits = (Std-FEL)  x  (CF)  x  (UL)  x  (Production)  x  
(10-6)

    (ii) For determining credit availability for engine families 
generating credits for trading or banking programs:

Emission credits = (Std-FEL)  x  (CF)  x  (UL)  x  (Production)  x  
(10-6)  x  (Discount)

    (iii) For purposes of the equations in paragraphs (c)(1)(i) and 
(ii) of this section:

Std = the current and applicable heavy-duty engine NOX or 
particulate emission standard in grams per brake horsepower hour or 
grams per Megajoule.
FEL = the NOX or particulate family emission limit for 
the engine family in grams per brake horsepower hour or grams per 
Megajoule.
CF = a transient cycle conversion factor in BHP-hr/mi or MJ/mi, as 
given in paragraph (c)(2) of this section.
UL = the useful life, or alternative life as described in paragraph 
(f) of Sec. 86.094-21, for the given engine family in miles.
Production = the number of engines produced for U.S. sales within 
the given engine family during the model year. Quarterly production 
projections are used for initial certification. Actual production is 
used for end-of-year compliance determination.
Discount = a one-time discount applied to all credits to be banked 
or traded within the model year generated. The discount applied here 
is 0.8. Banked credits traded in a subsequent model year will not be 
subject to an additional discount. Banked credits used in a 
subsequent model year's averaging program will not have the discount 
restored.

    (2)(i) The transient cycle conversion factor is the total 
(integrated) cycle brake horsepower-hour or Megajoules, divided by the 
equivalent mileage of the applicable transient cycle. For Otto-cycle 
heavy-duty engines, the equivalent mileage is 6.3 miles. For

[[Page 54717]]

diesel heavy-duty engines, the equivalent mileage is 6.5 miles.
    (ii) When more than one configuration is chosen by EPA to be tested 
in the certification of an engine family (as described in Sec. 86.085-
24), the conversion factor used is to be based upon a production 
weighted average value of the configurations in an engine family to 
calculate the conversion factor.
    (d) through (i) [Reserved] For guidance see Sec. 86.094-15.
    (j) Optional program for early banking. Provisions set forth in 
paragraphs (a) through (i) of this section apply except as specifically 
stated otherwise in paragraph (j) of this section.
    (1) To be eligible for the optional program described in paragraph 
(j) of this section, the following must apply:
    (i) Credits are generated from diesel cycle heavy-duty engines.
    (ii) During certification, the manufacturer shall declare its 
intent to include specific engine families in the program described in 
this paragraph (j). Separate declarations are required for each program 
and no engine families may be included in both programs in the same 
model year.
    (2) Credit generation and use. (i) Credits shall only be generated 
by 1998 and later model year engine families.
    (ii) Credits may only be used for 2004 and later model year heavy-
duty diesel engines. When used with 2004 and later model year engines, 
NOX credits may be used to meet the NOX plus NMHC 
standard, except as otherwise provided in Sec. 86.004-11(a)(1)(i)(D).
    (iii) If a manufacturer chooses to use credits generated under 
paragraph (j) of this section prior to model year 2004, the averaging, 
trading, and banking of such credits shall be governed by the program 
provided in paragraphs (a) through (i) of this section and shall be 
subject to all discounting, credit life limits and all other provisions 
contained therein. In the case where the manufacturer can demonstrate 
that the credits were discounted under the program provided in 
paragraph (j) of this section, that discount may be accounted for in 
the calculation of credits described in paragraph (c) of this section.
    (3) Program flexibilities. (i) NOX and PM credits that 
are banked until model year 2004 under this paragraph (j) may be used 
in 2004 or any model year thereafter without being forfeited due to 
credit age. This supersedes the requirement in paragraph (f)(2)(i) of 
this section.
    (ii) There are no regional category restraints for averaging, 
trading, and banking of credits generated under the program described 
in paragraph (j) of this section. This supersedes the regional category 
provisions described in the opening text of paragraphs (d) and (e) of 
this section.
    (iii) Credit discounting. (A) For NOX and PM credits 
generated under this paragraph (j) from engine families with 
NOX certification levels greater than 3.5 grams per brake 
horsepower-hour for oxides of nitrogen, a Discount value of 0.9 shall 
be used in place of 0.8 in the credit availability equation in 
paragraph (c)(1) of this section.
    (B) For NOX and PM credits generated under this 
paragraph (j) from engine families with NOx certification levels less 
than or equal to 3.5 grams per brake horsepower-hour for oxides of 
nitrogen, a Discount value of 1.0 shall be used in place of 0.8 in the 
credit availability equation in paragraph (c)(1) of this section.
    (iv) Credit apportionment. At the manufacturers option, credits 
generated under the provisions described in this section may be sold to 
or otherwise provided to another party for use in programs other than 
the averaging, trading and banking program described in this section.
    (A) The manufacturer shall pre-identify two emission levels per 
engine family for the purposes of credit apportionment. One emission 
level shall be the FEL and the other shall be the level of the standard 
that the engine family is required to certify to under Sec. 86.098-11. 
For each engine family, the manufacturer may report engine sales in two 
categories, ``ABT-only credits'' and ``nonmanufacturer-owned credits''.
    (1) For engine sales reported as ``ABT-only credits'', the credits 
generated must be used solely in the ABT program described in this 
section.
    (2) The engine manufacturer may declare a portion of engine sales 
``nonmanufacturer-owned credits'' and this portion of the credits 
generated between the standard and the FEL, based on the calculation in 
paragraph (c)(1) of this section, would belong to another party. For 
ABT, the manufacturer may not generate any credits for the engine sales 
reported as ``nonmanufacturer-owned credits''. Engines reported as 
``nonmanufacturer-owned credits'' shall comply with the FEL and the 
requirements of the ABT program in all other respects.
    (B) Only manufacturer-owned credits reported as ``ABT-only 
credits'' shall be used in the averaging, trading, and banking 
provisions described in this section.
    (C) Credits shall not be double-counted. Credits used in the ABT 
program may not be provided to an engine purchaser for use in another 
program.
    (D) Manufacturers shall determine and state the number of engines 
sold as ``ABT-only credits'' and ``nonmanufacturer-owned credits'' in 
the end-of-model year reports required under Sec. 86.098-23.
    7. Section 86.098-23 is amended by revising paragraphs (a), (b)(1), 
(b)(3), (b)(4)(i), (b)(4)(ii), (c) through (e)(2), (f) through (l), the 
first sentence of (m)(1), paragraphs (m)(2)(i) and (m)(2)(iv) to read 
as follows:


Sec. 86.098-23  Required data.

* * * * *
    (a) The manufacturer shall perform the tests required by the 
applicable test procedures and submit to the Administrator the 
information described in paragraphs (b) through (m) of this section, 
provided, however, that if requested by the manufacturer, the 
Administrator may waive any requirement of this section for testing of 
a vehicle (or engine) for which emission data are available or will be 
made available under the provisions of Sec. 86.091-29.
    (b) Durability data. (1)(i) The manufacturer shall submit exhaust 
emission durability data on such light-duty vehicles tested in 
accordance with applicable test procedures and in such numbers as 
specified, which will show the performance of the systems installed on 
or incorporated in the vehicle for extended mileage, as well as a 
record of all pertinent maintenance performed on the test vehicles.
    (ii) The manufacturer shall submit exhaust emission deterioration 
factors for light-duty trucks and HDEs and all test data that are 
derived from the testing described under Sec. 86.094-21(b)(5)(i)(A), as 
well as a record of all pertinent maintenance. Such testing shall be 
designed and conducted in accordance with good engineering practice to 
assure that the engines covered by a certificate issued under 
Sec. 86.098-30 will meet each emission standard (or family emission 
limit, as appropriate) in Sec. 86.094-9, Sec. 86.098-10, Sec. 86.098-11 
or superseding emissions standards sections as appropriate, in actual 
use for the useful life applicable to that standard.
* * * * *
    (3) For heavy-duty vehicles equipped with gasoline-fueled or 
methanol-fueled engines, the manufacturer shall submit evaporative 
emission deterioration factors for each evaporative emission family-
evaporative emission control system combination identified in 
accordance with Sec. 86.094-21(b)(4)(ii).

[[Page 54718]]

Furthermore, a statement that the test procedure(s) used to derive the 
deterioration factors includes, but need not be limited to, a 
consideration of the ambient effects of ozone and temperature 
fluctuations, and the service accumulation effects of vibration, time, 
and vapor saturation and purge cycling. The deterioration factor test 
procedure shall be designed and conducted in accordance with good 
engineering practice to assure that the vehicles covered by a 
certificate issued under Sec. 86.098-30 will meet the evaporative 
emission standards in Secs. 86.096-10 and 86.098-11 or superseding 
emissions standards sections as applicable in actual use for the useful 
life of the engine. Furthermore, a statement that a description of the 
test procedure, as well as all data, analyses, and evaluations, is 
available to the Administrator upon request.
    (4)(i) For heavy-duty vehicles with a Gross Vehicle Weight Rating 
of up to 26,000 lbs and equipped with gasoline-fueled or methanol-
fueled engines, the manufacturer shall submit a written statement to 
the Administrator certifying that the manufacturer's vehicles meet the 
standards of Sec. 86.098-10 or Sec. 86.098-11 or superseding emissions 
standards sections as applicable as determined by the provisions of 
Sec. 86.098-28. Furthermore, the manufacturer shall submit a written 
statement to the Administrator that all data, analyses, test 
procedures, evaluations, and other documents, on which the requested 
statement is based, are available to the Administrator upon request.
    (ii) For heavy-duty vehicles with a Gross Vehicle Weight Rating of 
greater than 26,000 lbs and equipped with gasoline-fueled or methanol-
fueled engines, the manufacturer shall submit a written statement to 
the Administrator certifying that the manufacturer's evaporative 
emission control systems are designed, using good engineering practice, 
to meet the standards of Sec. 86.096-10 or Sec. 86.098-11 or 
superseding emissions standards sections as applicable as determined by 
the provisions of Sec. 86.098-28. Furthermore, the manufacturer shall 
submit a written statement to the Administrator that all data, 
analyses, test procedures, evaluations, and other documents, on which 
the requested statement is based, are available to the Administrator 
upon request.
* * * * *
    (c)(1) [Reserved] For guidance see Sec. 86.095-23.
    (c)(2) Certification engines. (i) The manufacturer shall submit 
emission data on such engines tested in accordance with applicable 
emission test procedures of this subpart and in such numbers as 
specified. These data shall include zero-hour data, if generated, and 
emission data generated for certification as required under 
Sec. 86.098-26(c)(4). These data shall also include, where there is a 
combined standard (e.g., NMHC + NOx), emissions data for the 
individual pollutants as well as for the pollutants when combined. In 
lieu of providing emission data on idle CO emissions or particulate 
emissions from methanol-fueled diesel-cycle certification engines, or 
on CO emissions from petroleum-fueled or methanol-fueled diesel 
certification engines the Administrator may, on request of the 
manufacturer, allow the manufacturer to demonstrate (on the basis of 
previous emission tests, development tests, or other information) that 
the engine will conform with the applicable emission standards of 
Sec. 86.094-11 or superseding emissions standards sections as 
applicable. In lieu of providing emission data on smoke emissions from 
methanol-fueled or petroleum-fueled diesel certification engines, the 
Administrator may, on the request of the manufacturer, allow the 
manufacturer to demonstrate (on the basis of previous emission tests, 
development tests, or other information) that the engine will conform 
with the applicable emissions standards of Sec. 86.098-11 or 
superseding emissions standards sections as applicable, except for 
engines with a particulate matter certification level exceeding 0.25 
grams per brake horsepower-hour. In lieu of providing emissions data on 
smoke emissions from petroleum-fueled or methanol-fueled diesel engines 
when conducting Selective Enforcement Audit testing under 40 CFR part 
86, subpart K, the Administrator may, on separate request of the 
manufacturer, allow the manufacturer to demonstrate (on the basis of 
previous emission tests, development tests, or other information) that 
the engine will conform with the applicable smoke emissions standards 
of Sec. 86.098-11 or superseding emissions standards sections as 
applicable, except for engines with a particulate matter certification 
level exceeding 0.25 grams per brake horsepower-hour.
    (ii) For heavy-duty diesel engines, a manufacturer may submit hot-
start data only, in accordance with subpart N of this part, when making 
application for certification. However, for confirmatory, Selective 
Enforcement Audit, and recall testing by the Agency, both the cold-
start and hot-start test data, as specified in subpart N of this part, 
will be included in the official results.
    (d) The manufacturer shall submit a statement that the vehicles (or 
engines) for which certification is requested conform to the 
requirements in Sec. 86.090-5(b), and that the descriptions of tests 
performed to ascertain compliance with the general standards in 
Sec. 86.090-5(b), and that the data derived from such tests, are 
available to the Administrator upon request.
    (e)(1) The manufacturer shall submit a statement that the test 
vehicles (or test engines) for which data are submitted to demonstrate 
compliance with the applicable standards (or family emission limits, as 
appropriate) of this subpart are in all material respects as described 
in the manufacturer's application for certification, that they have 
been tested in accordance with the applicable test procedures utilizing 
the fuels and equipment described in the application for certification, 
and that on the basis of such tests the vehicles (or engines) conform 
to the requirements of this part. If such statements cannot be made 
with respect to any vehicle (or engine) tested, the vehicle (or engine) 
shall be identified, and all pertinent data relating thereto shall be 
supplied to the Administrator. If, on the basis of the data supplied 
and any additional data as required by the Administrator, the 
Administrator determines that the test vehicles (or test engine) were 
not as described in the application for certification or were not 
tested in accordance with the applicable test procedures utilizing the 
fuels and equipment as described in the application for certification, 
the Administrator may make the determination that the vehicle (or 
engine) does not meet the applicable standards (or family emission 
limits, as appropriate). The provisions of Sec. 86.098-30(b) shall then 
be followed.
    (2) For evaporative and refueling emission durability, or light-
duty truck or HDE exhaust emission durability, the manufacturer shall 
submit a statement of compliance with paragraph (b)(1)(ii),(b)(2), 
(b)(3) or (b)(4) of this section, as applicable.
* * * * *
    (f) through (g) [Reserved] For guidance see Sec. 86.095-23.
    (h) Additionally, manufacturers participating in any of the 
emissions ABT programs under Sec. 86.098-15 or superseding ABT sections 
for HDEs shall submit for each participating family the items listed in 
paragraphs (h) (1) through (3) of this section.
    (1) Application for certification. (i) The application for 
certification will

[[Page 54719]]

include a statement that the engines for which certification is 
requested will not, to the best of the manufacturer's belief, when 
included in any of the ABT programs, cause the applicable emissions 
standard(s) to be exceeded.
    (ii) The application for certification will also include 
identification of the section of this subpart under which the family is 
participating in ABT (i.e., Sec. 86.098-15 or superseding ABT 
sections), the type (NOX, NOX+NMHC, or particulate) and the 
projected number of credits generated/needed for this family, the 
applicable averaging set, the projected U.S. (49-state or 50 state, as 
applicable) production volumes, by quarter, NCPs in use on a similar 
family and the values required to calculate credits as given in the 
applicable ABT section. Manufacturers shall also submit how and where 
credit surpluses are to be dispersed and how and through what means 
credit deficits are to be met, as explained in the applicable ABT 
section. The application must project that each engine family will be 
in compliance with the applicable emission standards based on the 
engine mass emissions and credits from averaging, trading and banking.
    (2) [Reserved]
    (3) End-of-year report. The manufacturer shall submit end-of-year 
reports for each engine family participating in any of the ABT 
programs, as described in paragraphs (h)(3)(i) through (iv) of this 
section.
    (i) These reports shall be submitted within 90 days of the end of 
the model year to: Director, Engine Programs and Compliance Division 
(6405J), U.S. Environmental Protection Agency, 401 M Street, SW., 
Washington, DC 20460.
    (ii) These reports shall indicate the engine family, the averaging 
set, the actual U.S. (49-state or 50-state, as applicable) production 
volume, the values required to calculate credits as given in the 
applicable ABT section, the resulting type and number of credits 
generated/required, and the NCPs in use on a similar NCP family. 
Manufacturers shall also submit how and where credit surpluses were 
dispersed (or are to be banked) and how and through what means credit 
deficits were met. Copies of contracts related to credit trading must 
also be included or supplied by the broker if applicable. The report 
shall also include a calculation of credit balances to show that net 
mass emissions balances are within those allowed by the emission 
standards (equal to or greater than a zero credit balance). Any credit 
discount factor described in the applicable ABT section must be 
included as required.
    (iii) The production counts for end-of-year reports shall be based 
on the location of the first point of retail sale (e.g., customer, 
dealer, secondary manufacturer) by the manufacturer.
    (iv) Errors discovered by EPA or the manufacturer in the end-of-
year report, including changes in the production counts, may be 
corrected up to 180 days subsequent to submission of the end-of-year 
report. Errors discovered by EPA after 180 days shall be corrected if 
credits are reduced. Errors in the manufacturer's favor will not be 
corrected if discovered after the 180 day correction period allowed.
    (i) Failure by a manufacturer participating in the ABT programs to 
submit any quarterly or end-of-year report (as applicable) in the 
specified time for all vehicles and engines that are part of an 
averaging set is a violation of section 203(a)(1) of the Clean Air Act 
(42 U.S.C. 7522(a)(1)) for each such vehicle and engine.
    (j) Failure by a manufacturer generating credits for deposit only 
in the HDE banking programs to submit their end-of-year reports in the 
applicable specified time period (i.e., 90 days after the end of the 
model year) shall result in the credits not being available for use 
until such reports are received and reviewed by EPA. Use of projected 
credits pending EPA review will not be permitted in these 
circumstances.
    (k) Engine families certified using NCPs are not required to meet 
the requirements outlined in paragraphs (f) through (j) of this 
section.
    (l) [Reserved]. For guidance see Sec. 86.095-23.
    (m) * * *
    (1) In the application for certification the projected sales volume 
of evaporative families certifying to the respective evaporative test 
procedure and accompanying standards as set forth or otherwise 
referenced in Secs. 86.090-8, 86.090-9, 86.091-10 and 86.094-11 or as 
set forth or otherwise referenced in Secs. 86.096-8, 86.096-9, 86.096-
10 and 86.098-11 or as set forth or otherwise referenced in superseding 
emissions standards sections. * * *
    (2) * * *
    (i) These end-of-year reports shall be submitted within 90 days of 
the end of the model year to: For heavy-duty engines--Director, Engine 
Programs and Compliance Divisions (6403J), For vehicles--Director, 
Vehicle Compliance and Programs Division (6405J), U.S. Environmental 
Protection Agency, 401 M Street, SW., Washington, DC 20460.
* * * * *
    (iv) Failure by a manufacturer to submit the end-of-year report 
within the specified time may result in certificate(s) for the 
evaporative family(ies) being voided ab initio plus any applicable 
civil penalties for failure to submit the required information to the 
Agency.
* * * * *
    8. Section 86.098-30 is amended by revising paragraphs 
(a)(4)(iv)(A) through (a)(12) to read as follows:


Sec. 86.098-30  Certification.

* * * * *
    (a)(4)(iv)(A) through (a)(9) [Reserved]. For guidance see 
Sec. 86.094-30.
    (a)(10)(i) For diesel-cycle light-duty vehicle and diesel-cycle 
light-duty truck families which are included in a particulate averaging 
program, the manufacturer's production-weighted average of the 
particulate emission limits of all engine families in a participating 
class or classes shall not exceed the applicable diesel-cycle 
particulate standard, or the composite particulate standard defined in 
Sec. 86.090-2 as appropriate, at the end of the model year, as 
determined in accordance with this part. The certificate shall be void 
ab initio for those vehicles causing the production-weighted FEL to 
exceed the particulate standard.
    (ii) For all heavy-duty diesel-cycle engines which are included in 
the particulate ABT programs under Secs. 86.094-15, 86.098-15, or 
superseding ABT sections, the provisions of paragraphs (a)(10)(ii) (A) 
through (C) of this section apply.
    (A) All certificates issued are conditional upon the manufacturer 
complying with all applicable ABT provisions and the ABT related 
provisions of other applicable sections, both during and after the 
model year production.
    (B) Failure to comply with all applicable ABT provisions will be 
considered to be a failure to satisfy the conditions upon which the 
certificate was issued, and the certificate may be deemed void ab 
initio.
    (C) The manufacturer shall bear the burden of establishing to the 
satisfaction of the Administrator that the conditions upon which the 
certificate was issued were satisfied or excused.
    (11)(i) For light-duty truck families which are included in a 
NOX averaging program, the manufacturer's production-
weighted average of the NOX emission limits of all such 
engine families shall not exceed the applicable NOX emission 
standard, or the composite NOX emission standard defined in 
Sec. 86.088-2, as appropriate, at the end of the model year, as 
determined in accordance with this

[[Page 54720]]

part. The certificate shall be void ab initio for those vehicles 
causing the production-weighted FEL to exceed the NOX 
standard.
    (ii) For all HDEs which are included in the NOX or 
NOX plus NMHC ABT programs under Sec. 86.098-15 or 
superseding ABT sections, the provisions of paragraphs (a)(11)(ii) (A) 
through (C) of this section apply.
    (A) All certificates issued are conditional upon the manufacturer 
complying with all applicable ABT provisions and the ABT related 
provisions of other applicable sections, both during and after the 
model year production.
    (B) Failure to comply with all applicable ABT provisions will be 
considered to be a failure to satisfy the conditions upon which the 
certificate was issued, and the certificate may be deemed void ab 
initio.
    (C) The manufacturer shall bear the burden of establishing to the 
satisfaction of the Administrator that the conditions upon which the 
certificate was issued were satisfied or excused.
    (a)(12) [Reserved]. For guidance see Sec. 86.094-30.
* * * * *
    9. Section 86.099-11 is amended by revising the first sentence of 
paragraphs (a)(3)(ii) and (a)(4)(iii) introductory text to read as 
follows:


Sec. 86.099-11  Emission standards for 1999 and later model year diesel 
heavy-duty engines and vehicles.

    (a) * * *
    (3) * * *
    (ii) A manufacturer may elect to include any or all of its diesel 
HDE families in any or all of the NOX or NOX plus 
NMHC ABT programs for HDEs, within the restrictions described in 
Sec. 86.098-15 as applicable. * * *
* * * * *
    (4)* * *
    (iii) A manufacturer may elect to include any or all of its diesel 
HDE families in any or all of the particulate ABT programs for HDEs, 
within the restrictions described in Sec. 86.098-15 as applicable. * * 
*
* * * * *
    10. Section 86.001-23 is amended by revising paragraphs (a) through 
(b)(1), (b)(3), (b)(4), (c), (d), (e)(1), (e)(2), and (f) through (m) 
to read as follows:


Sec. 86.001-23  Required data.

* * * * *
    (a) through (b)(1) [Reserved]. For guidance see Sec. 86.098-23.
* * * * *
    (b)(3) and (b)(4) [Reserved]. For guidance see Sec. 86.098-23.
    (c)(1) [Reserved]. For guidance see Sec. 86.095-23.
    (c)(2) through (e)(1) [Reserved]. For guidance see Sec. 86.098-23.
    (e)(2) For evaporative and refueling emissions durability, or 
light-duty truck or HDE exhaust emissions durability, a statement of 
compliance with paragraph (b)(2) of this section or Sec. 86.098-23 
(b)(1)(ii), (b)(3), or (b)(4) as applicable.
* * * * *
    (f) and (g) [Reserved]. For guidance see Sec. 86.095-23.
    (h) through (m) [Reserved]. For guidance see Sec. 86.098-23.
    11. Section 86.001-30 is amended by revising paragraphs 
(a)(4)(iv)(A) through (a)(12) to read as follows:


Sec. 86.001-30  Certification.

* * * * *
    (a) * * *
    (4) * * *
    (a)(4)(iv)(A) through (a)(9) [Reserved]. For guidance see 
Sec. 86.094-30.
    (a)(10) and (a)(11) [Reserved]. For guidance see Sec. 86.098-30.
    (a)(12) [Reserved]. For guidance see Sec. 86.094-30.
* * * * *
    12. A new Sec. 86.004-2 is added to subpart A to read as follows:


Sec. 86.004-2  Definitions.

    The definitions of Sec. 86.001-2 continue to apply to 2001 and 
later model year vehicles. The definitions listed in this section apply 
beginning with the 2004 model year.
    Useful life means:
    (1) For light-duty vehicles, and for light light-duty trucks not 
subject to the Tier 0 standards of Sec. 86.094-9(a), intermediate 
useful life and/or full useful life. Intermediate useful life is a 
period of use of 5 years or 50,000 miles, whichever occurs first. Full 
useful life is a period of use of 10 years or 100,000 miles, whichever 
occurs first, except as otherwise noted in Sec. 86.094-9. The useful 
life of evaporative and/or refueling emission control systems on the 
portion of these vehicles subject to the evaporative emission test 
requirements of Sec. 86.130-96, and/or the refueling emission test 
requirements of Sec. 86.151-98, is defined as a period of use of 10 
years or 100,000 miles, whichever occurs first.
    (2) For light light-duty trucks subject to the Tier 0 standards of 
Sec. 86.094-9(a), and for heavy light-duty truck engine families, 
intermediate and/or full useful life. Intermediate useful life is a 
period of use of 5 years or 50,000 miles, whichever occurs first. Full 
useful life is a period of use of 11 years or 120,000 miles, whichever 
occurs first. The useful life of evaporative emission and/or refueling 
control systems on the portion of these vehicles subject to the 
evaporative emission test requirements of Sec. 86.130-96, and/or the 
refueling emission test requirements of Sec. 86.151-98, is also defined 
as a period of 11 years or 120,000 miles, whichever occurs first.
    (3) For an Otto-cycle HDE family:
    (i) For hydrocarbon and carbon monoxide standards, a period of use 
of 10 years or 110,000 miles, whichever first occurs.
    (ii) For the oxides of nitrogen standard, a period of use of 10 
years or 110,000 miles, whichever first occurs.
    (iii) For the portion of evaporative emission control systems 
subject to the evaporative emission test requirements of Sec. 86.1230-
96, a period of use of 10 years or 110,000 miles, whichever first 
occurs.
    (4) For a diesel HDE family:
    (i) For light heavy-duty diesel engines, for carbon monoxide, 
particulate, and oxides of nitrogen plus non-methane hydrocarbons 
emissions standards, a period of use of 10 years or 110,000 miles, 
whichever first occurs.
    (ii) For medium heavy-duty diesel engines, for carbon monoxide, 
particulate, and oxides of nitrogen plus non-methane hydrocarbons 
emission standards, a period of use of 10 years or 185,000 miles, 
whichever first occurs.
    (iii) For heavy heavy-duty diesel engines, for carbon monoxide, 
particulate, and oxides of nitrogen plus non-methane hydrocarbon 
emissions standards, a period of use of 10 years or 435,000 miles, or 
22,000 hours, whichever first occurs, except as provided in paragraphs 
(4)(iv) and (4)(v) of this definition.
    (iv) The useful life limit of 22,000 hours in paragraph (4)(iii) of 
this definition is effective as a limit to the useful life only when an 
accurate hours meter is provided by the manufacturer with the engine 
and only when such hours meter can reasonably be expected to operate 
properly over the useful life of the engine.
    (v) For an individual engine, if the useful life hours limit of 
22,000 hours is reached before the engine reaches 10 years or 100,000 
miles, the useful life shall become 10 years or 100,000 miles, 
whichever occurs first, as required under Clean Air Act section 202(d).
    (5) As an option for both light-duty trucks under certain 
conditions and HDE families, an alternative useful life period may be 
assigned by the Administrator under the provisions of Sec. 86.094-
21(f).
    Warranty period, for purposes of HDE emissions defect warranty and 
emissions performance warranty, shall

[[Page 54721]]

be a period of 5 years/50,000 miles, whichever occurs first, for Otto-
cycle HDEs and light heavy-duty diesel engines. For all other heavy-
duty diesel engines the aforementioned period shall be 5 years/100,000 
miles, whichever occurs first. However, in no case may this period be 
less than the basic mechanical warranty period that the manufacturer 
provides (with or without additional charge) to the purchaser of the 
engine. Extended warranties on select parts do not extend the emissions 
warranty requirements for the entire engine but only for those parts. 
In cases where responsibility for an extended warranty is shared 
between the owner and the manufacturer, the emissions warranty shall 
also be shared in the same manner as specified in the warranty 
agreement.
    13. A new Sec. 86.004-11 is added to subpart A to read as follows:


Sec. 86.004-11  Emission standards for 2004 and later model year diesel 
heavy-duty engines and vehicles.

    (a)(1) Exhaust emissions from new 2004 and later model year diesel 
HDEs shall not exceed the following:
    (i)(A) Oxides of Nitrogen plus Non-methane Hydrocarbons (NOX 
+ NMHC) for engines fueled with either petroleum fuel, natural gas, or 
liquefied petroleum gas, 2.4 grams per brake horsepower-hour (0.89 gram 
per megajoule), as measured under transient operating conditions.
    (B) Oxides of Nitrogen plus Non-methane Hydrocarbon Equivalent 
(NOX + NMHCE) for engines fueled with methanol, 2.4 grams 
per brake horsepower-hour (0.89 gram per megajoule), as measured under 
transient operating conditions.
    (C) Optional Standard. Manufacturers may elect to certify to an 
Oxides of Nitrogen plus Non-methane Hydrocarbons (or equivalent for 
methanol-fueled engines) standard of 2.5 grams per brake horsepower-
hour (0.93 gram per megajoule), as measured under transient operating 
conditions, provided that Non-methane Hydrocarbons (or equivalent for 
methanol-fueled engines) do not exceed 0.5 grams per brake horsepower-
hour (0.19 gram per megajoule) NMHC (or NMHCE for methanol-fueled 
engines), as measured under transient operating conditions.
    (D) A manufacturer may elect to include any or all of its diesel 
HDE families in any or all of the emissions ABT programs for HDEs, 
within the restrictions described in Sec. 86.004-15 or superseding 
applicable sections. If the manufacturer elects to include engine 
families in any of these programs, the NOX plus NMHC (or 
NOX plus NMHCE for methanol-fueled engines) FELs may not 
exceed 4.5 grams per brake horsepower-hour (1.7 grams per megajoule). 
This ceiling value applies whether credits for the family are derived 
from averaging, banking, or trading programs. Additionally, families 
certified to the optional standard contained in paragraph (a)(1)(i)(C) 
of this section shall not exceed 0.50 grams per brake horsepower-hour 
(0.19 gram per megajoule) NMHC (or NMHCE for methanol-fueled engines) 
through the use of credits.
    (E) No later than December 31, 1999, the Administrator shall review 
the emissions standards set forth in paragraph (a)(1)(i) of this 
section and determine whether these standards continue to be 
appropriate under the Act.
    (ii) Carbon monoxide. (A) 15.5 grams per brake horsepower-hour 
(5.77 grams per megajoule), as measured under transient operating 
conditions.
    (B) 0.50 percent of exhaust gas flow at curb idle (methanol-, 
natural gas-, and liquefied petroleum gas-fueled diesel HDEs only).
    (iii) Particulate. (A) For diesel engines to be used in urban 
buses, 0.05 gram per brake horsepower-hour (0.019 gram per megajoule) 
for certification testing and selective enforcement audit testing, and 
0.07 gram per brake horsepower-hour (0.026 gram per megajoule) for in-
use testing, as measured under transient operating conditions.
    (B) For all other diesel engines, 0.10 gram per brake horsepower-
hour (0.037 gram per megajoule), as measured under transient operating 
conditions.
    (C) A manufacturer may elect to include any or all of its diesel 
HDE families in any or all of the particulate ABT programs for HDEs, 
within the restrictions described in Sec. 86.004-15 or superseding 
applicable sections. If the manufacturer elects to include engine 
families in any of these programs, the particulate FEL may not exceed 
0.25 gram per brake horsepower-hour (0.093 gram per megajoule).
    (2) The standards set forth in paragraph (a)(1) of this section 
refer to the exhaust emitted over the operating schedule set forth in 
paragraph (f)(2) of appendix I to this part, and measured and 
calculated in accordance with the procedures set forth in subpart N or 
P of this part, except as noted in Sec. 86.098-23(c)(2) or superceding 
sections.
    (b)(1) The opacity of smoke emission from new 2004 and later model 
year diesel HDEs shall not exceed:
    (i) 20 percent during the engine acceleration mode.
    (ii) 15 percent during the engine lugging mode.
    (iii) 50 percent during the peaks in either mode.
    (2) The standards set forth in paragraph (b)(1) of this section 
refer to exhaust smoke emissions generated under the conditions set 
forth in subpart I of this part and measured and calculated in 
accordance with those procedures.
    (3) Evaporative emissions (total of non-oxygenated hydrocarbons 
plus methanol) from heavy-duty vehicles equipped with methanol-fueled 
diesel engines shall not exceed the following standards. The standards 
apply equally to certification and in-use vehicles. The spitback 
standard also applies to newly assembled vehicles.
    (i) For vehicles with a Gross Vehicle Weight Rating of up to 14,000 
lbs:
    (A)(1) For the full three-diurnal test sequence described in 
Sec. 86.1230-96, diurnal plus hot soak measurements: 3.0 grams per 
test.
    (2) For the supplemental two-diurnal test sequence described in 
Sec. 86.1230-96, diurnal plus hot soak measurements: 3.5 grams per 
test.
    (B) Running loss test: 0.05 grams per mile.
    (C) Fuel dispensing spitback test: 1.0 gram per test.
    (ii) For vehicles with a Gross Vehicle Weight Rating of greater 
than 14,000 lbs:
    (A)(1) For the full three-diurnal test sequence described in 
Sec. 86.1230-96, diurnal plus hot soak measurements: 4.0 grams per 
test.
    (2) For the supplemental two-diurnal test sequence described in 
Sec. 86.1230-96, diurnal plus hot soak measurements: 4.5 grams per 
test.
    (B) Running loss test: 0.05 grams per mile.
    (iii)(A) For vehicles with a Gross Vehicle Weight Rating of up to 
26,000 lbs, the standards set forth in paragraph (b)(3) of this section 
refer to a composite sample of evaporative emissions collected under 
the conditions and measured in accordance with the procedures set forth 
in subpart M of this part. For certification vehicles only, 
manufacturers may conduct testing to quantify a level of nonfuel 
background emissions for an individual test vehicle. Such a 
demonstration must include a description of the source(s) of emissions 
and an estimated decay rate. The demonstrated level of nonfuel 
background emissions may be subtracted from emission test results from 
certification vehicles if approved in advance by the Administrator.
    (B) For vehicles with a Gross Vehicle Weight Rating of greater than 
26,000 lbs., the standards set forth in paragraph

[[Page 54722]]

(b)(3)(ii) of this section refer to the manufacturer's engineering 
design evaluation using good engineering practice (a statement of which 
is required in Sec. 86.091-23(b)(4)(ii)).
    (iv) All fuel vapor generated during in-use operations shall be 
routed exclusively to the evaporative control system (e.g., either 
canister or engine purge). The only exception to this requirement shall 
be for emergencies.
    (4) Evaporative emissions from 2004 and later model year heavy-duty 
vehicles equipped with natural gas-fueled or liquefied petroleum gas-
fueled HDEs shall not exceed the following standards. The standards 
apply equally to certification and in-use vehicles.
    (i) For vehicles with a Gross Vehicle Weight Rating of up to 14,000 
pounds for the full three-diurnal test sequence described in 
Sec. 86.1230-96, diurnal plus hot soak measurements: 3.0 grams per 
test.
    (ii) For vehicles with a Gross Vehicle Weight Rating of greater 
than 14,000 pounds for the full three-diurnal test sequence described 
in Sec. 86.1230-96, diurnal plus hot soak measurements: 4.0 grams per 
test.
    (iii)(A) For vehicles with a Gross Vehicle Weight Rating of up to 
26,000 pounds, the standards set forth in paragraph (b)(4) of this 
section refer to a composite sample of evaporative emissions collected 
under the conditions set forth in subpart M of this part and measured 
in accordance with those procedures.
    (B) For vehicles with a Gross Vehicle Weight Rating greater than 
26,000 pounds, the standards set forth in paragraphs (b)(3)(ii) and 
(b)(4)(ii) of this section refer to the manufacturer's engineering 
design evaluation using good engineering practice (a statement of which 
is required in Sec. 86.091-23(b)(4)(ii)).
    (c) No crankcase emissions shall be discharged into the ambient 
atmosphere from any new 2004 or later model year methanol-, natural 
gas-, or liquefied petroleum gas-fueled diesel, or any naturally-
aspirated diesel HDE. For petroleum-fueled engines only, this provision 
does not apply to engines using turbochargers, pumps, blowers, or 
superchargers for air induction.
    (d) Every manufacturer of new motor vehicle engines subject to the 
standards prescribed in this section shall, prior to taking any of the 
actions specified in section 203(a)(1) of the Act, test or cause to be 
tested motor vehicle engines in accordance with applicable procedures 
in subpart I or N of this part to ascertain that such test engines meet 
the requirements of paragraphs (a), (b), (c), and (d) of this section.
    14. A new Sec. 86.004-15 is added to subpart A to read as follows:


Sec. 86.004-15  NOX and particulate averaging, trading, and 
banking for heavy-duty engines.

    (a)(1) Heavy-duty engines eligible for NOX, 
NOX plus NMHC, and particulate averaging, trading and 
banking programs are described in the applicable emission standards 
sections in this subpart. All heavy-duty engine families which include 
any engines labeled for use in clean-fuel vehicles as specified in 40 
CFR part 88 are not eligible for these programs. Participation in these 
programs is voluntary.
    (2)(i) Engine families with FELs exceeding the applicable standard 
shall obtain emission credits in a mass amount sufficient to address 
the shortfall. Credits may be obtained from averaging, trading, or 
banking, within the averaging set restrictions described in this 
section.
    (ii) Engine families with FELs below the applicable standard will 
have emission credits available to average, trade, bank or a 
combination thereof. Credits may not be used for averaging or trading 
to offset emissions that exceed an FEL. Credits may not be used to 
remedy an in-use nonconformity determined by a Selective Enforcement 
Audit or by recall testing. However, credits may be used to allow 
subsequent production of engines for the family in question if the 
manufacturer elects to recertify to a higher FEL.
    (iii) Credits scheduled to expire in the earliest model year shall 
be used, prior to using other available credits, to offset emissions of 
engine families with FELs exceeding the applicable standard.
    (b) Participation in the NOX, NOX plus NMHC, 
and/or particulate averaging, trading, and banking programs shall be 
done as follows.
    (1) During certification, the manufacturer shall:
    (i) Declare its intent to include specific engine families in the 
averaging, trading and/or banking programs. Separate declarations are 
required for each program and for each pollutant (i.e., NOX, 
NOX plus NMHC, and particulate).
    (ii) Declare an FEL for each engine family participating in one or 
more of these three programs.
    (A) The FEL must be to the same level of significant digits as the 
emission standard (one-tenth of a gram per brake horsepower-hour for 
NOX, NOX plus NMHC, emissions and one-hundredth 
of a gram per brake horsepower-hour for particulate emissions).
    (B) In no case may the FEL exceed the upper limit prescribed in the 
section concerning the applicable heavy-duty engine NOX, 
NOX plus NMHC, and particulate emission standards.
    (iii) Calculate the projected emission credits (positive or 
negative) based on quarterly production projections for each 
participating family and for each pollutant, using the applicable 
equation in paragraph (c) of this section and the applicable factors 
for the specific engine family.
    (iv)(A) Determine and state the source of the needed credits 
according to quarterly projected production for engine families 
requiring credits for certification.
    (B) State where the quarterly projected credits will be applied for 
engine families generating credits.
    (C) Credits may be obtained from or applied to only engine families 
within the same averaging set as described in paragraph (d) or (e) of 
this section. Credits available for averaging, trading, or banking as 
defined in Sec. 86.090-2, may be applied exclusively to a given engine 
family, or reserved as defined in Sec. 86.091-2.
    (2) Based on this information each manufacturer's certification 
application must demonstrate:
    (i) That at the end of model year production, each engine family 
has a net emissions credit balance of zero or more using the 
methodology in paragraph (c) of this section with any credits obtained 
from averaging, trading or banking.
    (ii) The source of the credits to be used to comply with the 
emission standard if the FEL exceeds the standard, or where credits 
will be applied if the FEL is less than the emission standard. In cases 
where credits are being obtained, each engine family involved must 
state specifically the source (manufacturer/engine family) of the 
credits being used. In cases where credits are being generated/
supplied, each engine family involved must state specifically the 
designated use (manufacturer/engine family or reserved) of the credits 
involved. All such reports shall include all credits involved in 
averaging, trading or banking.
    (3) During the model year manufacturers must:
    (i) Monitor projected versus actual production to be certain that 
compliance with the emission standards is achieved at the end of the 
model year.
    (ii) Provide the end-of-model year reports required under 
Sec. 86.001-23.
    (iii) For manufacturers participating in emission credit trading, 
maintain the quarterly records required under Sec. 86.091-7(c)(8).

    (4) Projected credits based on information supplied in the 
certification

[[Page 54723]]

application may be used to obtain a certificate of conformity. However, 
any such credits may be revoked based on review of end-of-model year 
reports, follow-up audits, and any other compliance measures deemed 
appropriate by the Administrator.
    (5) Compliance under averaging, banking, and trading will be 
determined at the end of the model year. Engine families without an 
adequate amount of NOX, NOX plus NMHC, and/or 
particulate emission credits will violate the conditions of the 
certificate of conformity. The certificates of conformity may be voided 
ab initio for engine families exceeding the emission standard.
    (6) If EPA or the manufacturer determines that a reporting error 
occurred on an end-of-year report previously submitted to EPA under 
this section, the manufacturer's credits and credit calculations will 
be recalculated. Erroneous positive credits will be void. Erroneous 
negative balances may be adjusted by EPA for retroactive use.
    (i) If EPA review of a manufacturer's end-of-year report indicates 
a credit shortfall, the manufacturer will be permitted to purchase the 
necessary credits to bring the credit balance for that engine family to 
zero, using the discount specified in paragraph (c)(1) of this section 
on the ratio of credits purchased for every credit needed to bring the 
balance to zero. If sufficient credits are not available to bring the 
credit balance for the family in question to zero, EPA may void the 
certificate for that engine family ab initio.
    (ii) If within 180 days of receipt of the manufacturer's end-of-
year report, EPA review determines a reporting error in the 
manufacturer's favor (i.e., resulting in a positive credit balance) or 
if the manufacturer discovers such an error within 180 days of EPA 
receipt of the end-of-year report, the credits will be restored for use 
by the manufacturer.
    (c)(1) For each participating engine family, NOX, 
NOX plus NMHC, and particulate emission credits (positive or 
negative) are to be calculated according to one of the following 
equations and rounded, in accordance with ASTM E29-93a, to the nearest 
one-tenth of a Megagram (Mg). Consistent units are to be used 
throughout the equation.
    (i) For determining credit need for all engine families and credit 
availability for engine families generating credits for averaging 
programs only:

Emission credits = (Std - FEL)  x  (CF)  x  (UL)  x  (Production)  x  
(10-6)

    (ii) For determining credit availability for engine families 
generating credits for trading or banking programs:

Emission credits = (Std - FEL)  x  (CF)  x  (UL)  x  (Production)  x  
(10-6)  x  (Discount)

    (iii) For purposes of the equations in paragraphs (c)(1) (i) and 
(ii) of this section:

Std = the current and applicable heavy-duty engine NOX, 
NOX plus NMHC, or particulate emission standard in grams per 
brake horsepower hour or grams per Megajoule.
FEL = the NOX, NOX plus NMHC, or particulate 
family emission limit for the engine family in grams per brake 
horsepower hour or grams per Megajoule.
CF = a transient cycle conversion factor in BHP-hr/mi or MJ/mi, as 
given in paragraph (c)(2) of this section.
UL = the useful life described in Sec. 86.004-2, or alternative life as 
described in paragraph (f) of Sec. 86.004-21, for the given engine 
family in miles.
Production = the number of engines produced for U.S. sales within the 
given engine family during the model year. Quarterly production 
projections are used for initial certification. Actual production is 
used for end-of-year compliance determination.
Discount = a one-time discount applied to all credits to be banked or 
traded within the model year generated. Except as otherwise allowed in 
paragraph (k) of this section, the discount applied here is 0.9 for 
diesel-cycle engines. The discount applied here is 0.8 for all Otto-
cycle engines. Banked credits traded in a subsequent model year will 
not be subject to an additional discount. Banked credits used in a 
subsequent model year's averaging program will not have the discount 
restored.

    (2)(i) The transient cycle conversion factor is the total 
(integrated) cycle brake horsepower-hour or Megajoules, divided by the 
equivalent mileage of the applicable transient cycle. For Otto-cycle 
heavy-duty engines, the equivalent mileage is 6.3 miles. For diesel 
heavy-duty engines, the equivalent mileage is 6.5 miles.
    (ii) When more than one configuration is chosen by EPA to be tested 
in the certification of an engine family (as described in Sec. 86.085-
24), the conversion factor used is to be based upon a production 
weighted average value of the configurations in an engine family to 
calculate the conversion factor.
    (d) Averaging sets for NOX and for NOX plus 
NMHC emission credits. The averaging and trading of NOX 
emission credits for Otto-cycle engines and NOX plus NMHC 
emission credits for diesel-cycle engines will only be allowed between 
heavy-duty engine families in the same averaging set. The averaging 
sets for the averaging and trading of NOX and NOX 
plus NMHC emission credits for heavy-duty engines are defined as 
follows:
    (1) For NOX credits from Otto-cycle heavy-duty engines:
    (i) Otto-cycle heavy-duty engines constitute an averaging set. 
Averaging and trading among all Otto-cycle heavy-duty engine families 
is allowed. There are no subclass restrictions.
    (ii) Gasoline-fueled heavy-duty vehicles certified under the 
provisions of Sec. 86.085-1(b) may not average or trade with gasoline-
fueled heavy-duty Otto-cycle engines, but may average or trade credits 
with light-duty trucks.
    (iii) The averaging and trading of NOX emission credits 
will only be allowed between heavy-duty engine families in the same 
regional category. Otto-cycle engines produced for sale in California 
constitute a separate regional category than engines produced for sale 
in the other 49 states. Banking and trading are not applicable to 
engines sold in California.
    (2) For NOX plus NMHC credits from diesel-cycle heavy-
duty engines:
    (i) Each of the three primary intended service classes for heavy-
duty diesel engines, as defined in Sec. 86.004-2, constitute an 
averaging set. Averaging and trading among all diesel-cycle engine 
families within the same primary service class is allowed.
    (ii) Urban buses are treated as members of the primary intended 
service class where they otherwise would fall.
    (e) Averaging sets for particulate emission credits. The averaging 
and trading of particulate emission credits will only be allowed 
between diesel cycle heavy-duty engine families in the same averaging 
set. The averaging sets for the averaging and trading of particulate 
emission credits for diesel cycle heavy-duty engines are defined as 
follows:
    (1) Engines intended for use in urban buses constitute a separate 
averaging set from all other heavy-duty engines. Averaging and trading 
between diesel cycle bus engine families is allowed.
    (2) For heavy-duty engines, exclusive of urban bus engines, each of 
the three primary intended service classes for heavy-duty diesel cycle 
engines, as defined in Sec. 86.004-2, constitute an averaging set. 
Averaging and trading between diesel-cycle engine families within the 
same primary service class is allowed.

[[Page 54724]]

    (3) Otto cycle engines may not participate in particulate 
averaging, trading, or banking.
    (f) Banking of NOX, NOX plus NMHC, and 
particulate emission credits. (1) Credit deposits. (i) NOX, 
NOX plus NMHC, and particulate emission credits may be 
banked from engine families produced in any model year.
    (ii) Manufacturers may bank credits only after the end of the model 
year and after actual credits have been reported to EPA in the end-of-
year report. During the model year and before submittal of the end-of-
year report, credits originally designated in the certification process 
for banking will be considered reserved and may be redesignated for 
trading or averaging.
    (2) Credit withdrawals. (i) After being generated, banked 
NOX credits shall be available for use within three model 
years following the model year in which they were generated. 
NOX credits from Otto-cycle HDE families not used within the 
period specified above shall be forfeited. NOX plus NMHC and 
particulate credits from diesel-cycle HDE families do not expire.
    (ii) Manufacturers withdrawing banked NOX, 
NOX plus NMHC, and/or particulate credits shall indicate so 
during certification and in their credit reports, as described in 
Sec. 86.091-23.
    (3) Use of banked emission credits. The use of banked credits shall 
be within the averaging set and other restrictions described in 
paragraphs (d) and (e) of this section, and only for the following 
purposes:
    (i) Banked credits may be used in averaging, or in trading, or in 
any combination thereof, during the certification period. Credits 
declared for banking from the previous model year but not reported to 
EPA may also be used. However, if EPA finds that the reported credits 
can not be proven, they will be revoked and unavailable for use.
    (ii) Banked credits may not be used for NOX, 
NOX plus NMHC, or particulate averaging and trading to 
offset emissions that exceed an FEL. Banked credits may not be used to 
remedy an in-use nonconformity determined by a Selective Enforcement 
Audit or by recall testing. However, banked credits may be used for 
subsequent production of the engine family if the manufacturer elects 
to recertify to a higher FEL.
    (iii) Banked NOX credits from 2003 and prior may be used 
in place of NOX plus NMHC credits after 2003 provided that 
they are used in the correct averaging set and the NOX 
credits have not expired.
    (g)(1) For the purposes of paragraph (g) of this section, the 
following paragraphs assume NOX, NOX plus NMHC, 
and particulate nonconformance penalties (NCPs) will be available for 
the 2004 and later model year HDEs.
    (2) Engine families using NOX, NOX plus NMHC, 
and/or particulate NCPs but not involved in averaging:
    (i) May not generate NOX, NOX plus NMHC, or 
particulate credits for banking and trading.
    (ii) May not use NOX, NOX plus NMHC, or 
particulate credits from banking and trading.
    (3) If a manufacturer has any engine family to which application of 
NCPs and banking and trading credits is desired, that family must be 
separated into two distinct families. One family, whose FEL equals the 
standard, must use NCPs only while the other, whose FEL does not equal 
the standard, must use credits only.
    (4) If a manufacturer has any engine family in a given averaging 
set which is using NOX, NOX plus NMHC, and/or 
particulate NCPs, none of that manufacturer's engine families in that 
averaging set may generate credits for banking and trading.
    (h) In the event of a negative credit balance in a trading 
situation, both the buyer and the seller would be liable.
    (i) Certification fuel used for credit generation must be of a type 
that is both available in use and expected to be used by the engine 
purchaser. Therefore, upon request by the Administrator, the engine 
manufacturer must provide information acceptable to the Administrator 
that the designated fuel is readily available commercially and would be 
used in customer service.
    (j) Credit apportionment. At the manufacturers option, credits 
generated from diesel-cycle heavy-duty engines under the provisions 
described in this section may be sold to or otherwise provided to the 
another party for use in programs other than the averaging, trading and 
banking program described in this section.
    (1) The manufacturer shall pre-identify two emission levels per 
engine family for the purposes of credit apportionment. One emission 
level shall be the FEL and the other shall be the level of the standard 
that the engine family is required to certify to under Sec. 86.004-11. 
For each engine family, the manufacturer may report engine sales in two 
categories, ``ABT-only credits'' and ``nonmanufacturer-owned credits''.
    (i) For engine sales reported as ``ABT-only credits'', the credits 
generated must be used solely in the ABT program described in this 
section.
    (ii) The engine manufacturer may declare a portion of engine sales 
``nonmanufacturer-owned credits'' and this portion of the credits 
generated between the standard and the FEL, based on the calculation in 
(c)(1) of this section, would belong to the engine purchaser. For ABT, 
the manufacturer may not generate any credits for the engine sales 
reported as ``nonmanufacturer-owned credits''. Engines reported as 
``nonmanufacturer-owned credits'' shall comply with the FEL and the 
requirements of the ABT program in all other respects.
    (2) Only manufacturer-owned credits reported as ``ABT-only 
credits'' shall be used in the averaging, trading, and banking 
provisions described in this section.
    (3) Credits shall not be double-counted. Credits used in the ABT 
program may not be provided to an engine purchaser for use in another 
program.
    (4) Manufacturers shall determine and state the number of engines 
sold as ``ABT-only credits'' and ``nonmanufacturer-owned credits'' in 
the end-of-model year reports required under Sec. 86.001-23.
    (k) Additional Flexibility. If a diesel-cycle engine family meets 
the conditions of either paragraph (k)(1) or (2) of this section, a 
Discount of 1.0 may be used in the trading and banking calculation, for 
both NOX plus NMHC and for particulate, described in 
paragraph (c)(1) of this section.
    (1) The engine family certifies with a certification level of 1.9 
g/bhp-hr NOX plus NMHC or lower for all diesel-cycle engine 
families.
    (2) All of the following must apply to the engine family:
    (i) Diesel-cycle engines only;
    (ii) 2004, 2005, and 2006 model years only;
    (iii) Must be an engine family using carry-over certification data 
from prior to model year 2004 where the NOX plus the HC 
certification level prior to model year 2004 is below the 
NOX plus NMHC or NOX plus NMHCE standard set 
forth in Sec. 86.004-11. Under this option, the NOX credits 
generated from this engine family prior to model year 2004 may be used 
as NOX plus NMHC credits.
    15. A new Sec. 86.004-21 is added to subpart A to read as follows:


Sec. 86.004-21  Application for certification.

    Section 86.004-21 includes text that specifies requirements that 
differ from Sec. 86.094-21 or Sec. 86.096-21. Where a paragraph in 
Sec. 86.094-21 or Sec. 86.096-21 is identical and applicable to 
Sec. 86.004-21, this may be indicated by specifying the corresponding 
paragraph and the statement ``[Reserved]. For guidance see Sec. 86.094-
21.'' or ``[Reserved]. For guidance see Sec. 86.096-21.''.

[[Page 54725]]

    (a) through (b)(3) [Reserved]. For guidance see Sec. 86.094-21.
    (b)(4)(i) For light-duty vehicles and light-duty trucks, a 
description of the test procedures to be used to establish the 
evaporative emission and/or refueling emission deterioration factors, 
as appropriate, required to be determined and supplied in Sec. 86.001-
23(b)(2).
    (b)(4)(ii) through (b)(5)(iv) [Reserved]. For guidance see 
Sec. 86.094-21.
    (b)(5)(v) For light-duty vehicles and applicable light-duty trucks 
with non-integrated refueling emission control systems, the number of 
continuous UDDS cycles, determined from the fuel economy on the UDDS 
applicable to the test vehicle of that evaporative/ refueling emission 
family-emission control system combination, required to use a volume of 
fuel equal to 85% of fuel tank volume.
    (6) Participation in averaging programs--(i) Particulate averaging. 
(A) If the manufacturer elects to participate in the particulate 
averaging program for diesel light-duty vehicles and/or diesel light-
duty trucks or the particulate averaging program for heavy-duty diesel 
engines, the application must list the family particulate emission 
limit and the projected U.S. production volume of the family for the 
model year.
    (B) The manufacturer shall choose the level of the family 
particulate emission limits, accurate to hundredth of a gram per mile 
or hundredth of a gram per brake horsepowerhour for HDEs.
    (C) The manufacturer may at any time during production elect to 
change the level of any family particulate emission limit(s) by 
submitting the new limit(s) to the Administrator and by demonstrating 
compliance with the limit(s) as described in Secs. 86.090-2 and 86.094-
28(b)(5)(i).
    (ii) NOX and NOX plus NMHC averaging. (A) If 
the manufacturer elects to participate in the NOX averaging 
program for light-duty trucks or otto-cycle HDEs or the NOX 
plus NMHC averaging program for diesel-cycle HDEs, the application must 
list the family emission limit and the projected U.S. production volume 
of the family for the model year.
    (B) The manufacturer shall choose the level of the family emission 
limits, accurate to one-tenth of a gram per mile or to one-tenth of a 
gram per brake horsepower-hour for HDEs.
    (C) The manufacturer may at any time during production elect to 
change the level of any family emission limit(s) by submitting the new 
limits to the Administrator and by demonstrating compliance with the 
limit(s) as described in Secs. 86.088-2 and 86.094-28(b)(5)(ii).
    (b)(7) and (b)(8) [Reserved]. For guidance see Sec. 86.094-21.
    (b)(9) For each light-duty vehicle, light-duty truck, evaporative/
refueling emission family or heavy-duty vehicle evaporative emission 
family, a description of any unique procedures required to perform 
evaporative and/or refueling emission tests, as applicable, (including 
canister working capacity, canister bed volume, and fuel temperature 
profile for the running loss test) for all vehicles in that evaporative 
and/or evaporative/refueling emission family, and a description of the 
method used to develop those unique procedures.
    (10) For each light-duty vehicle or applicable light-duty truck 
evaporative/refueling emission family, or each heavy-duty vehicle 
evaporative emission family:
    (i) Canister working capacity, according to the procedures 
specified in Sec. 86.132-96(h)(1)(iv);
    (ii) Canister bed volume; and
    (iii) Fuel temperature profile for the running loss test, according 
to the procedures specified in Sec. 86.129-94(d).
    (c) through (j) [Reserved]. For guidance see Sec. 86.094-21.
    (k) and (l) [Reserved]. For guidance see Sec. 86.096-21.
    16. A new Sec. 86.004-25 is added to subpart A to read as follows:


Sec. 86.004-25  Maintenance.

    Section 86.004-25 includes text that specifies requirements that 
differ from Sec. 86.094-25 or Sec. 86.098-25. Where a paragraph in 
Sec. 86.094-25 or Sec. 86.098-25 is identical and applicable to 
Sec. 86.004-25, this may be indicated by specifying the corresponding 
paragraph and the statement ``[Reserved]. For guidance see Sec. 86.094-
25.'' or ``[Reserved]. For guidance see Sec. 86.098-25.''.
    (a)(1) Applicability. This section applies to light-duty vehicles, 
light-duty trucks, and HDEs.
    (2) Maintenance performed on vehicles, engines, subsystems, or 
components used to determine exhaust, evaporative or refueling emission 
deterioration factors, as appropriate, is classified as either 
emission-related or non-emission-related and each of these can be 
classified as either scheduled or unscheduled. Further, some emission-
related maintenance is also classified as critical emission-related 
maintenance.
    (b) Introductory text through (b)(3)(ii) [Reserved]. For guidance 
see Sec. 86.094-25.
    (b)(3)(iii) For otto-cycle heavy-duty engines, the adjustment, 
cleaning, repair, or replacement of the items listed in paragraphs 
(b)(3)(iii) (A) through (E) of this section shall occur at 50,000 miles 
(or 1,500 hours) of use and at 50,000-mile (or 1,500-hour) intervals 
thereafter.
    (A) Positive crankcase ventilation valve.
    (B) Emission-related hoses and tubes.
    (C) Ignition wires.
    (D) Idle mixture.
    (E) Exhaust gas recirculation system related filters and coolers.
    (iv) For otto-cycle light-duty vehicles, light-duty trucks and 
otto-cycle heavy-duty engines, the adjustment, cleaning, repair, or 
replacement of the oxygen sensor shall occur at 80,000 miles (or 2,400 
hours) of use and at 80,000-mile (or 2,400-hour) intervals thereafter.
    (v) For otto-cycle heavy-duty engines, the adjustment, cleaning, 
repair, or replacement of the items listed in paragraphs (b)(3)(v) (A) 
through (H) of this section shall occur at 100,000 miles (or 3,000 
hours) of use and at 100,000-mile (or 3,000-hour) intervals thereafter.
    (A) Catalytic converter.
    (B) Air injection system components.
    (C) Fuel injectors.
    (D) Electronic engine control unit and its associated sensors 
(except oxygen sensor) and actuators.
    (E) Evaporative emission canister.
    (F) Turbochargers.
    (G) Carburetors.
    (H) Exhaust gas recirculation system (including all related control 
valves and tubing) except as otherwise provided in paragraph 
(b)(3)(iii)(E) of this section.
    (b)(3)(vi)(A) through (b)(3)(vi)(D) [Reserved]. For guidance see 
Sec. 86.094-25.
    (b)(3)(vi)(E) through (b)(3)(vi)(J) [Reserved]. For guidance see 
Sec. 86.098-25.
    (4) For diesel-cycle light-duty vehicles, light-duty trucks, and 
HDEs, emission-related maintenance in addition to or at shorter 
intervals than that listed in paragraphs (b)(4) (i) through (iv) of 
this section will not be accepted as technologically necessary, except 
as provided in paragraph (b)(7) of this section.
    (i) For diesel-cycle heavy-duty engines, the adjustment, cleaning, 
repair, or replacement of the items listed in paragraphs (b)(4)(i) (A) 
through (C) of this section shall occur at 50,000 miles (or 1,500 
hours) of use and at 50,000-mile (or 1,500-hour) intervals thereafter.
    (A) Exhaust gas recirculation system related filters and coolers.
    (B) Positive crankcase ventilation valve.
    (C) Fuel injector tips (cleaning only).
    (ii) For diesel-cycle light-duty vehicles and light-duty trucks, 
the adjustment, cleaning, repair, or

[[Page 54726]]

replacement of the positive crankcase ventilation valve shall occur at 
50,000 miles of use and at 50,000-mile intervals thereafter.
    (iii) The adjustment, cleaning, repair, or replacement of items 
listed in paragraphs (b)(4)(iii) (A) through (G) of this section shall 
occur at 100,000 miles (or 3,000 hours) of use and at 100,000-mile (or 
3,000-hour) intervals thereafter for light heavy-duty diesel engines, 
or, at 150,000 miles (or 4,500 hours) intervals thereafter for medium 
and heavy heavy-duty diesel engines.
    (A) Fuel injectors.
    (B) Turbocharger.
    (C) Electronic engine control unit and its associated sensors and 
actuators.
    (D) Particulate trap or trap-oxidizer system (including related 
components).
    (E) Exhaust gas recirculation system (including all related control 
valves and tubing) except as otherwise provided in paragraph 
(b)(4)(i)(A) of this section.
    (F) Catalytic converter.
    (G) Any other add-on emissions-related component (i.e., a component 
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 and performance of the engine.)
    (iv) For disel-cycle light-duty vehicles and light-duty trucks, the 
adjustment, cleaning, repair, or replacement shall occur at 100,000 
miles of use and at 100,000-mile intervals thereafter of the items 
listed in paragraphs (b)(4)(iv) (A) through (G) of this section.
    (A) Fuel injectors.
    (B) Turbocharger.
    (C) Electronic engine control unit and its associated sensors and 
actuators.
    (D) Particulate trap or trap-oxidizer system (including related 
components).
    (E) Exhaust gas recirculation system including all related filters 
and control valves.
    (F) Catalytic converter.
    (G) Superchargers.
    (5) [Reserved]
    (6)(i) The components listed in paragraphs (b)(6)(i) (A) through 
(H) of this section are currently defined as critical emission-related 
components.
    (A) Catalytic converter.
    (B) Air injection system components.
    (C) Electronic engine control unit and its associated sensors 
(including oxygen sensor if installed) and actuators.
    (D) Exhaust gas recirculation system (including all related 
filters, coolers, control valves, and tubing).
    (E) Positive crankcase ventilation valve.
    (F) Evaporative and refueling emission control system components 
(excluding canister air filter).
    (G) Particulate trap or trap-oxidizer system.
    (H) Any other add-on emissions-related component (i.e., a component 
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 and performance of the engine.)
    (ii) All critical emission-related scheduled maintenance must have 
a reasonable likelihood of being performed in-use. The manufacturer 
shall be required to show the reasonable likelihood of such maintenance 
being performed in-use, and such showing shall be made prior to the 
performance of the maintenance on the durability data vehicle. Critical 
emission-related scheduled maintenance items which satisfy one of the 
conditions defined in paragraphs (b)(6)(ii) (A) through (F) of this 
section will be accepted as having a reasonable likelihood of the 
maintenance item being performed in-use.
    (A) Data are presented which establish for the Administrator a 
connection between emissions and vehicle performance such that as 
emissions increase due to lack of maintenance, vehicle performance will 
simultaneously deteriorate to a point unacceptable for typical driving.
    (B) Survey data are submitted which adequately demonstrate to the 
Administrator that, at an 80 percent confidence level, 80 percent of 
such engines already have this critical maintenance item performed in-
use at the recommended interval(s).
    (C) A clearly displayed visible signal system approved by the 
Administrator is installed to alert the vehicle driver that maintenance 
is due. A signal bearing the message ``maintenance needed'' or ``check 
engine'', or a similar message approved by the Administrator, shall be 
actuated at the appropriate mileage point or by component failure. This 
signal must be continuous while the engine is in operation and not be 
easily eliminated without performance of the required maintenance. 
Resetting the signal shall be a required step in the maintenance 
operation. The method for resetting the signal system shall be approved 
by the Administrator. For HDEs, the system must not be designed to 
deactivate upon the end of the useful life of the engine or thereafter.
    (D) A manufacturer may desire to demonstrate through a survey that 
a critical maintenance item is likely to be performed without a visible 
signal on a maintenance item for which there is no prior in-use 
experience without the signal. To that end, the manufacturer may in a 
given model year market up to 200 randomly selected vehicles per 
critical emission-related maintenance item without such visible 
signals, and monitor the performance of the critical maintenance item 
by the owners to show compliance with paragraph (b)(6)(ii)(B) of this 
section. This option is restricted to two consecutive model years and 
may not be repeated until any previous survey has been completed. If 
the critical maintenance involves more than one engine family, the 
sample will be sales weighted to ensure that it is representative of 
all the families in question.
    (E) The manufacturer provides the maintenance free of charge, and 
clearly informs the customer that the maintenance is free in the 
instructions provided under Sec. 86.087-38.
    (F) Any other method which the Administrator approves as 
establishing a reasonable likelihood that the critical maintenance will 
be performed in-use.
    (iii) Visible signal systems used under paragraph (b)(6)(ii)(C) of 
this section are considered an element of design of the emission 
control system. Therefore, disabling, resetting, or otherwise rendering 
such signals inoperative without also performing the indicated 
maintenance procedure is a prohibited act under section 203(a)(3) of 
the Clean Air Act (42 U.S.C. 7522(a)(3)).
    (b)(7) through (h) [Reserved]. For guidance see Sec. 86.094-25.
    17. Section 86.004-28 of Subpart A is amended by revising 
paragraphs (c) and (d) to read as follows:


Sec. 86.004-28  Compliance with emission standards.

* * * * *
    (c)(1) Paragraph (c) of this section applies to heavy-duty engines.
    (2) The applicable exhaust emission standards (or family emission 
limits, as appropriate) for Otto-cycle engines and for diesel-cycle 
engines apply to the emissions of engines for their useful life.
    (3) Since emission control efficiency generally decreases with the 
accumulation of service on the engine, deterioration factors will be 
used in combination with emission data engine test results as the basis 
for determining compliance with the standards.
    (4)(i) Paragraph (c)(4) of this section describes the procedure for 
determining compliance of an engine with emission standards (or family 
emission limits, as appropriate), based on deterioration factors 
supplied by the manufacturer. Deterioration factors shall be 
established using applicable emissions test procedures. NOX 
plus NMHC deterioration factors shall be established based on the sum 
of the pollutants. When establishing deterioration factors for 
NOX plus NMHC, a negative deterioration (emissions decrease 
from

[[Page 54727]]

the official exhaust emissions test result) for one pollutant may not 
offset deterioration of the other pollutant. Where negative 
deterioration occurs for NOX and/or NMHC, the official 
exhaust emission test result shall be used for purposes of determining 
the NOX plus NMHC deterioration factor.
    (ii) Separate exhaust emission deterioration factors, determined 
from tests of engines, subsystems, or components conducted by the 
manufacturer, shall be supplied for each engine-system combination. For 
Otto-cycle engines, separate factors shall be established for transient 
NMHC (NMHCE), CO, NOX, NOX plus NMHC, and idle 
CO, for those engines utilizing aftertreatment technology (e.g., 
catalytic converters). For diesel-cycle engines, separate factors shall 
be established for transient NMHC (NMHCE), CO, NOX, 
NOX plus NMHC and exhaust particulate. For diesel-cycle 
smoke testing, separate factors shall also be established for the 
acceleration mode (designated as ``A''), the lugging mode (designated 
as ``B''), and peak opacity (designated as ``C'').
    (iii)(A) Paragraphs (c)(4)(iii)(A) (1) and (2) of this section 
apply to Otto-cycle HDEs.
    (1) Otto-cycle HDEs not utilizing aftertreatment technology (e.g., 
catalytic converters). For transient NMHC (NMHCE), CO, NOX, 
the official exhaust emission results for each emission data engine at 
the selected test point shall be adjusted by the addition of the 
appropriate deterioration factor. However, if the deterioration factor 
supplied by the manufacturer is less than zero, it shall be zero for 
the purposes of this paragraph.
    (2) Otto-cycle HDEs utilizing aftertreatment technology (e.g., 
catalytic converters). For transient NMHC (NMHCE), CO, NOX, 
and for idle CO, the official exhaust emission results for each 
emission data engine at the selected test point shall be adjusted by 
multiplication by the appropriate deterioration factor. However, if the 
deterioration factor supplied by the manufacturer is less than one, it 
shall be one for the purposes of this paragraph.
    (B) Paragraph (c)(4)(iii)(B) of this section applies to diesel-
cycle HDEs.
    (1) Diesel-cycle HDEs not utilizing aftertreatment technology 
(e.g., particulate traps). For transient NMHC (NMHCE), CO, 
NOX, NOX plus NMHC, and exhaust particulate, the 
official exhaust emission results for each emission data engine at the 
selected test point shall be adjusted by the addition of the 
appropriate deterioration factor. However, if the deterioration factor 
supplied by the manufacturer is less than zero, it shall be zero for 
the purposes of this paragraph.
    (2) Diesel-cycle HDEs utilizing aftertreatment technology (e.g., 
particulate traps). For transient NMHC (NMHCE), CO, NOX, 
NOX plus NMHC, and exhaust particulate, the official exhaust 
emission results for each emission data engine at the selected test 
point shall be adjusted by multiplication by the appropriate 
deterioration factor. However, if the deterioration factor supplied by 
the manufacturer is less than one, it shall be one for the purposes of 
this paragraph.
    (3) Diesel-cycle HDEs only. For acceleration smoke (``A''), lugging 
smoke (``B''), and peak smoke (``C''), the official exhaust emission 
results for each emission data engine at the selected test point shall 
be adjusted by the addition of the appropriate deterioration factor. 
However, if the deterioration factor supplied by the manufacturer is 
less than zero, it shall be zero for the purposes of this paragraph.
    (iv) The emission values to compare with the standards (or family 
emission limits, as appropriate) shall be the adjusted emission values 
of paragraph (c)(4)(iii) of this section, rounded to the same number of 
significant figures as contained in the applicable standard in 
accordance with ASTM E 29-93a (as referenced in Sec. 86.094-28 
(a)(4)(i)(B)(2)(ii)), for each emission data engine.
    (5) and (6) [Reserved].
    (7) Every test engine of an engine family must comply with all 
applicable standards (or family emission limits, as appropriate), as 
determined in paragraph (c)(4)(iv) of this section, before any engine 
in that family will be certified.
    (8) For the purposes of setting an NMHC plus NOx 
certification level or FEL for a diesel-fueled engine family, the 
manufacturer may use one of the following options for the determination 
of NMHC for an engine family. The manufacturer must declare which 
option is used in its application for certification of that engine 
family.
    (i) THC may be used in lieu of NMHC for the standards set forth in 
Sec. 86.004-11.
    (ii) The manufacturer may choose its own method to analyze methane 
with prior approval of the Administrator.
    (iii) The manufacturer may assume that two percent of the measured 
THC is methane (NMHC =0.98  x  THC).
    (d)(1) Paragraph (d) of this section applies to heavy-duty vehicles 
equipped with gasoline-fueled or methanol-fueled engines.
    (2) The applicable evaporative emission standards in this subpart 
apply to the emissions of vehicles for their useful life.
    (3)(i) For vehicles with a GVWR of up to 26,000 pounds, because it 
is expected that emission control efficiency will change during the 
useful life of the vehicle, an evaporative emission deterioration 
factor shall be determined from the testing described in Sec. 86.098-
23(b)(3) for each evaporative emission family-evaporative emission 
control system combination to indicate the evaporative emission control 
system deterioration during the useful life of the vehicle (minimum 
50,000 miles). The factor shall be established to a minimum of two 
places to the right of the decimal.
    (ii) For vehicles with a GVWR of greater than 26,000 pounds, 
because it is expected that emission control efficiency will change 
during the useful life of the vehicle, each manufacturer's statement as 
required in Sec. 86.098-23(b)(4)(ii) shall include, in accordance with 
good engineering practice, consideration of control system 
deterioration.
    (4) The evaporative emission test results, if any, shall be 
adjusted by the addition of the appropriate deterioration factor, 
provided that if the deterioration factor as computed in paragraph 
(d)(3) of this section is less than zero, that deterioration factor 
shall be zero for the purposes of this paragraph.
    (5) The emission level to compare with the standard shall be the 
adjusted emission level of paragraph (d)(4) of this section. Before any 
emission value is compared with the standard, it shall be rounded, in 
accordance with ASTM E 29-93a (as referenced in Sec. 86.094-28 
(a)(4)(i)(B)(2)(ii)), to two significant figures. The rounded emission 
values may not exceed the standard.
    (6) Every test vehicle of an evaporative emission family must 
comply with the evaporative emission standard, as determined in 
paragraph (d)(5) of this section, before any vehicle in that family may 
be certified.
* * * * *
    18. Section 86.004-30 is amended by revising paragraphs (a)(3), 
(a)(4)(i), (a)(4)(ii), and (a)(4)(iv)(A) through (a)(12) to read as 
follows:


Sec. 86.004-30  Certification.

* * * * *
    (a)(3)(i) One such certificate will be issued for each engine 
family. For gasoline-fueled and methanol-fueled light-duty vehicles and 
light-duty trucks, and petroleum-fueled diesel cycle light-duty 
vehicles and light-duty trucks not certified under Sec. 86.098-

[[Page 54728]]

28(g), one such certificate will be issued for each engine family-
evaporative/refueling emission family combination. Each certificate 
will certify compliance with no more than one set of in-use and 
certification standards (or family emission limits, as appropriate).
    (ii) For gasoline-fueled and methanol fueled heavy-duty vehicles, 
one such certificate will be issued for each manufacturer and will 
certify compliance for those vehicles previously identified in that 
manufacturer's statement(s) of compliance as required in Sec. 86.098-
23(b)(4) (i) and (ii).
    (iii) For diesel light-duty vehicles and light-duty trucks, or 
diesel HDEs, included in the applicable particulate averaging program, 
the manufacturer may at any time during production elect to change the 
level of any family particulate emission limit by demonstrating 
compliance with the new limit as described in Sec. 86.094-28(a)(6), 
Sec. 86.094-28(b)(5)(i), or Sec. 86.004-28(c)(5)(i). New certificates 
issued under this paragraph will be applicable only for vehicles (or 
engines) produced subsequent to the date of issuance.
    (iv) For light-duty trucks or HDEs included in the applicable 
NOX averaging program, the manufacturer may at any time 
during production elect to change the level of any family 
NOX emission limit by demonstrating compliance with the new 
limit as described in Sec. 86.094-28(b)(5)(ii) or Sec. 86.004-
28(c)(5)(ii). New certificates issued under this paragraph will be 
applicable only for vehicles (or engines) produced subsequent to the 
day of issue.
    (4)(i) For exempt light-duty vehicles and light-duty trucks under 
the provisions of Sec. 86.094-8(j) or Sec. 86.094-9(j), an adjustment 
or modification performed in accordance with instructions provided by 
the manufacturer for the altitude where the vehicle is principally used 
will not be considered a violation of section 203(a)(3) of the Clean 
Air Act (42 U.S.C. 7522(a)(3)).
    (ii) A violation of section 203(a)(1) of the Clean Air Act (42 
U.S.C. 7522(a)(1)) occurs when a manufacturer sells or delivers to an 
ultimate purchaser any light-duty vehicle or light-duty truck, subject 
to the regulations under the Act, under any of the conditions specified 
in paragraph (a)(4)(ii) of this section.
    (A) When a light-duty vehicle or light-duty truck is exempted from 
meeting high-altitude requirements as provided in Sec. 86.090-8(h) or 
Sec. 86.094-9(h):
    (1) At a designated high-altitude location, unless such 
manufacturer has reason to believe that such vehicle will not be sold 
to an ultimate purchaser for principal use at a designated high-
altitude location; or
    (2) At a location other than a designated high-altitude location, 
when such manufacturer has reason to believe that such motor vehicle 
will be sold to an ultimate purchaser for principal use at a designated 
high-altitude location.
    (B) When a light-duty vehicle or light-duty truck is exempted from 
meeting low-altitude requirements as provided in Sec. 86.094-8(i) or 
Sec. 86.094-9(i):
    (1) At a designated low-altitude location, unless such manufacturer 
has reason to believe that such vehicle will not be sold to an ultimate 
purchaser for principal use at a designated low-altitude location; or
    (2) At a location other than a designated low-altitude location, 
when such manufacturer has reason to believe that such motor vehicle 
will be sold to an ultimate purchaser for principal use at a designated 
low-altitude location.
    (a)(4)(iv)(A) through (a)(9) [Reserved]. For guidance see 
Sec. 86.094-30.
    (10)(i) For diesel-cycle light-duty vehicle and diesel-cycle light-
duty truck families which are included in a particulate averaging 
program, the manufacturer's production-weighted average of the 
particulate emission limits of all engine families in a participating 
class or classes shall not exceed the applicable diesel-cycle 
particulate standard, or the composite particulate standard defined in 
Sec. 86.090-2 as appropriate, at the end of the model year, as 
determined in accordance with this part. The certificate shall be void 
ab initio for those vehicles causing the production-weighted FEL to 
exceed the particulate standard.
    (ii) For all heavy-duty diesel-cycle engines which are included in 
the particulate ABT programs under Sec. 86.098-15 or superseding ABT 
sections as applicable, the provisions of paragraphs (a)(10)(ii) (A) 
through (C) of this section apply.
    (A) All certificates issued are conditional upon the manufacturer 
complying with the provisions of Sec. 86.098-15 or superseding ABT 
sections as applicable and the ABT related provisions of other 
applicable sections, both during and after the model year production.
    (B) Failure to comply with all provisions of Sec. 86.098-15 or 
superseding ABT sections as applicable will be considered to be a 
failure to satisfy the conditions upon which the certificate was 
issued, and the certificate may be deemed void ab initio.
    (C) The manufacturer shall bear the burden of establishing to the 
satisfaction of the Administrator that the conditions upon which the 
certificate was issued were satisfied or excused.
    (11)(i) For light-duty truck families which are included in a 
NOX averaging program, the manufacturer's production-
weighted average of the NOX emission limits of all such 
engine families shall not exceed the applicable NOX emission 
standard, or the composite NOX emission standard defined in 
Sec. 86.088-2, as appropriate, at the end of the model year, as 
determined in accordance with this part. The certificate shall be void 
ab initio for those vehicles causing the production-weighted FEL to 
exceed the NOX standard.
    (ii) For all HDEs which are included in the NOX plus 
NMHC ABT programs contained in Sec. 86.098-15, or superseding ABT 
sections as applicable, the provisions of paragraphs (a)(11)(ii) (A) 
through (C) of this section apply.
    (A) All certificates issued are conditional upon the manufacturer 
complying with the provisions of Sec. 86.098-15 or superseding ABT 
sections as applicable and the ABT related provisions of other 
applicable sections, both during and after the model year production.
    (B) Failure to comply with all provisions of Sec. 86.098-15 or 
superseding ABT sections as applicable will be considered to be a 
failure to satisfy the conditions upon which the certificate was 
issued, and the certificate may be deemed void ab initio.
    (C) The manufacturer shall bear the burden of establishing to the 
satisfaction of the Administrator that the conditions upon which the 
certificate was issued were satisfied or excused.
    (a)(12) [Reserved]. For guidance see Sec. 86.094-30.
* * * * *
    19. A new Sec. 86.004-38 is added to subpart A to read as follows:


Sec. 86.004-38  Maintenance instructions.

    Section 86.004-38 includes text that specifies requirements that 
differ from Sec. 86.094-38. Where a paragraph in Sec. 86.094-38 is 
identical and applicable to Sec. 86.004-38 this may be indicated by 
specifying the corresponding paragraph and the statement ``[Reserved]. 
For guidance see Sec. 86.094-38.''.
    (a) The manufacturer shall furnish or cause to be furnished to the 
purchaser of each new motor vehicle (or motor vehicle engine) subject 
to the standards prescribed in Sec. 86.099-8, Sec. 86.004-9, 
Sec. 86.004-10, or Sec. 86.004-11, as applicable, written instructions 
for the proper maintenance and use of the vehicle (or engine), by the 
purchaser consistent with the provisions of

[[Page 54729]]

Sec. 86.004-25, which establishes what scheduled maintenance the 
Administrator approves as being reasonable and necessary.
    (1) The maintenance instructions required by this section shall be 
in clear, and to the extent practicable, nontechnical language.
    (2) The maintenance instructions required by this section shall 
contain a general description of the documentation which the 
manufacturer will require from the ultimate purchaser or any subsequent 
purchaser as evidence of compliance with the instructions.
    (b) Instructions provided to purchasers under paragraph (a) of this 
section shall specify the performance of all scheduled maintenance 
performed by the manufacturer on certification durability vehicles and, 
in cases where the manufacturer performs less maintenance on 
certification durability vehicles than the allowed limit, may specify 
the performance of any scheduled maintenance allowed under Sec. 86.004-
25.
    (c) Scheduled emission-related maintenance in addition to that 
performed under Sec. 86.004-25(b) may only be recommended to offset the 
effects of abnormal in-use operating conditions, except as provided in 
paragraph (d) of this section. The manufacturer shall be required to 
demonstrate, subject to the approval of the Administrator, that such 
maintenance is reasonable and technologically necessary to assure the 
proper functioning of the emission control system. Such additional 
recommended maintenance shall be clearly differentiated, in a form 
approved by the Administrator, from that approved under Sec. 86.004-
25(b).
    (d) Inspections of emission-related parts or systems with 
instructions to replace, repair, clean, or adjust the parts or systems 
if necessary, are not considered to be items of scheduled maintenance 
which insure the proper functioning of the emission control system. 
Such inspections, and any recommended maintenance beyond that approved 
by the Administrator as reasonable and necessary under paragraphs (a), 
(b), and (c) of this section, may be included in the written 
instructions furnished to vehicle owners under paragraph (a) of this 
section: Provided, That such instructions clearly state, in a form 
approved by the Administrator, that the owner need not perform such 
inspections or recommended maintenance in order to maintain the 
emissions defect and emissions performance warranty or manufacturer 
recall liability.
    (e) The manufacturer may choose to include in such instructions an 
explanation of any distinction between the useful life specified on the 
label, and the emissions defect and emissions performance warranty 
period. The explanation must clearly state that the useful life period 
specified on the label represents the average period of use up to 
retirement or rebuild for the engine family represented by the engine 
used in the vehicle. An explanation of how the actual useful lives of 
engines used in various applications are expected to differ from the 
average useful life may be included. The explanation(s) shall be in 
clear, non-technical language that is understandable to the ultimate 
purchaser.
    (f) If approved by the Administrator, the instructions provided to 
purchasers under paragraph (a) of this section shall indicate what 
adjustments or modifications, if any, are necessary to allow the 
vehicle to meet applicable emission standards at elevations above 4,000 
feet, or at elevations of 4,000 feet or less.
    (g) [Reserved]. For guidance see Sec. 86.094-38.
    (h) The manufacturer shall furnish or cause to be furnished to the 
purchaser of each new motor engine subject to the standards prescribed 
in Sec. 86.004-10 or Sec. 86.004-11, as applicable, the following:
    (1) Instructions for all maintenance needed after the end of the 
useful life of the engine for critical emissions-related components as 
provided in Sec. 86.004-25(b), including recommended practices for 
diagnosis, cleaning, adjustment, repair, and replacement of the 
component (or a statement that such component is maintenance free for 
the life of the engine) and instructions for accessing and responding 
to any emissions-related diagnostic codes that may be stored in on-
board monitoring systems;
    (2) A copy of the engine rebuild provisions contained in 
Sec. 86.004-40.
    20. A new Sec. 86.004-40 is added to subpart A to read as follows:


Sec. 86.004-40  Heavy-duty engine rebuilding practices.

    The provisions of this section are applicable to engines subject to 
the standards prescribed in Sec. 86.004-10 or Sec. 86.004-11 and are 
applicable to the process of engine rebuilding (or rebuilding a portion 
of an engine or engine system). The process of engine rebuilding 
generally includes disassembly, replacement of multiple parts due to 
wear, and reassembly, and also may include the removal of the engine 
from the vehicle and other acts associated with rebuilding an engine. 
Any deviation from the provisions contained in this section is a 
prohibited act under section 203(a)(3) of the Clean Air Act (42 U.S.C. 
7522(a)(3)).
    (a) When rebuilding an engine, portions of an engine, or an engine 
system, there must be a reasonable technical basis for knowing that the 
resultant engine is equivalent, from an emissions standpoint, to a 
certified configuration (i.e., tolerances, calibrations, 
specifications) and the model year(s) of the resulting engine 
configuration must be identified. A reasonable basis would exist if:
    (1) Parts installed, whether the parts are new, used, or rebuilt, 
are such that a person familiar with the design and function of motor 
vehicle engines would reasonably believe that the parts perform the 
same function with respect to emissions control as the original parts; 
and
    (2) 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.
    (b) When an engine is being rebuilt and remains installed or is 
reinstalled in the same vehicle, it must be rebuilt to a configuration 
of the same or later model year as the original engine. When an engine 
is being replaced, the replacement engine must be an engine of (or 
rebuilt to) a configuration of the same or later model year as the 
original engine.
    (c) At 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 requirements in 
Sec. 86.004-25 or for other reasons and regardless of form or 
interface. Diagnostic systems must be free of all such codes when the 
rebuilt engine is returned to service. Such signals may not be rendered 
inoperative during the rebuilding process.
    (d) When conducting a rebuild without removing the engine from the 
vehicle, or during the installation of a rebuilt engine, all critical 
emissions-related components listed in Sec. 86.004-25(b) not otherwise 
addressed by paragraphs (a) through (c) of this section must be checked 
and cleaned, adjusted, repaired, or replaced as necessary, following 
manufacturer recommended practices.

[[Page 54730]]

    (e) Records shall be kept by parties conducting activities included 
in paragraphs (a) through (d) of this section. The records shall 
include at minimum the mileage and/or hours at time of rebuild, a 
listing of work performed on the engine and emissions-related control 
components including a listing of parts and components used, engine 
parameter adjustments, emissions-related codes or signals responded to 
and reset, and work performed under paragraph (d) of this section.
    (1) Parties may keep records in whatever format or system they 
choose as long as the records are understandable to an EPA enforcement 
officer or can be otherwise provided to an EPA enforcement officer in 
an understandable format when requested.
    (2) Parties are not required to keep records of information that is 
not reasonably available through normal business practices including 
information on activities not conducted by themselves or information 
that they cannot reasonably access.
    (3) Parties may keep records of their rebuilding practices for an 
engine family rather than on each individual engine rebuilt in cases 
where those rebuild practices are followed routinely.
    (4) Records must be kept for a minimum of two years after the 
engine is rebuilt.
    21. Section 86.1311-94 is amended by revising paragraph (b)(3) to 
read as follows:


Sec. 86.1311-94  Exhaust gas analytical system; CVS bag sample.

* * * * *
    (b) * * *
    (3)(i) Using a methane analyzer consisting of a gas chromatograph 
combined with a FID, the measurement of methane shall be done in 
accordance with SAE Recommended Practice J1151, ``Methane Measurement 
Using Gas Chromatography.'' (Incorporated by reference pursuant to 
Sec. 86.1(b)(2).)
    (ii) For natural gas vehicles, the manufacturer has the option of 
using gas chromatography to measure NMHC through direct quantitation of 
individual hydrocarbon species. The manufacturer shall conform to 
standard industry practices and use good engineering judgement.
* * * * *
    22. Section 86.1344-94 is amended by revising paragraph (e)(22) to 
read as follows:


Sec. 86.1344-94  Required information.

* * * * *
    (e) * * *
    (22) Brake specific emissions (g/BHP-hr) for HC, CO, 
NOX, and, if applicable NMHC, NMHCE, THCE, CH3OH, 
and HCHO for each test phase (cold and hot).
* * * * *
[FR Doc. 97-27494 Filed 10-20-97; 8:45 am]
BILLING CODE 6560-50-P