[Federal Register Volume 63, Number 58 (Thursday, March 26, 1998)]
[Rules and Regulations]
[Pages 14626-14637]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-7767]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 85

[FRL-5986-2]
RIN 2060-AH45


Retrofit/Rebuild Requirements for 1993 and Earlier Model Year 
Urban Buses; Additional Update of Post-Rebuild Emission Levels in 1998

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This final rule amends regulations governing EPA's Urban Bus 
Retrofit/Rebuild Program to provide for the revision of post-rebuild 
particulate levels based on equipment certified by July 1, 1998. This 
amendment allows equipment manufacturers additional time to certify 
equipment capable of influencing compliance under Option 2 (the fleet 
averaging option) of the program. This amendment provides assurance 
that the two compliance options of the program remain equivalent, and 
that urban buses utilize the best retrofit technology reasonably 
achievable as Congress required. In addition, the amendment provides 
assurance that urban areas realize the full PM benefits of this 
program.

DATES: This final rule is effective April 27, 1998.

ADDRESSES: Materials relevant to this amendment are contained in Public 
Docket No. A-91-28 at the address listed below. This docket is located 
in room M-1500, Waterside Mall (Ground Floor), U.S. Environmental 
Protection Agency, 401 M Street SW., Washington, DC 20460. Dockets may 
be inspected from 8 a.m. until 5:30 p.m., Monday through Friday. As 
provided in 40 CFR Part 2, a reasonable fee may be charged by EPA for 
copying docket materials.

FOR FURTHER INFORMATION CONTACT: William Rutledge, Engine Programs and

[[Page 14627]]

Compliance Division (6403-J), U.S. Environmental Protection Agency, 401 
M Street SW., Washington, DC 20460. Telephone: (202) 564-9297.

SUPPLEMENTARY INFORMATION:

I. Regulated Entities

    Entities potentially regulated by this amendment consist of the 
same entities currently regulated by the existing Retrofit/Rebuild 
Requirements of 40 CFR Part 85, Subpart O, and include urban transit 
operators in Metropolitan Statistical Areas (MSA's) and Consolidated 
Metropolitan Statistical Areas (CMSA's) with 1980 populations of 
750,000 or more, and equipment manufacturers who voluntarily seek 
equipment certification pursuant to the program regulations. Regulated 
categories and entities include:

------------------------------------------------------------------------
             Category                  Examples of regulated entities   
------------------------------------------------------------------------
Industry.........................  Equipment manufacturers who          
                                    voluntarily seek equipment          
                                    certification pursuant to the       
                                    program regulations.                
Transit operators................  Transit bus operators in Metropolitan
                                    Statistical Areas (MSA's) and       
                                    Consolidated Metropolitan           
                                    Statistical Areas (CMSA's) with 1980
                                    populations of 750,000 or more, that
                                    operate 1993 and earlier model year 
                                    urban buses.                        
------------------------------------------------------------------------

    This table is not meant to be exhaustive, but rather to provide a 
guide for readers regarding entities regulated by this final rule. This 
table lists the type of entities that EPA is 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 facility or 
company is regulated by this action, you should carefully examine the 
existing urban bus retrofit/rebuild regulations contained in 40 CFR 
Part 85, Subpart O, and the preamble to the final rule (58 FR 21359, 
April 21, 1993). If you have any questions regarding the applicability 
of this action to a particular entity, consult the person listed in the 
preceding FOR FURTHER INFORMATION CONTACT section.

II. Obtaining Electronic Copies of the Rulemaking Documents

    In addition to being available at the location listed above at 
ADDRESSES, copies of the preamble and the regulatory text of this 
rulemaking are available electronically from two EPA internet Web 
locations. This service is free of charge, except for any cost you 
already incur for internet connectivity. An electronic version is made 
available on the day of publication on the primary Web location listed 
below. The EPA Office of Mobile Sources also publishes documents on the 
secondary Web location listed below.
    Primary Web location: http://www.epa.gov/EPA-AIR/ (either select 
desired date or use Search feature).
    Secondary Web location: 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, minor changes in format, pagination, etc. may occur.

III. Contents

IV. Background
    A. Legal Authority
    B. General Program Background
    C. Potential Inequality Between Compliance Options
V. Requirements of Today's Amendment to the Urban Bus Retrofit/
Rebuild Regulations
    A. Equipment Certification
    B. TLF Calculations; Use of Pre- and Post-Rebuild PM Levels
VI. Public Participation
    A. Public Hearing
    B. Public Comment and Agency Response
VII. Environmental Impact
VIII. Economic Impact
IX. Administrative Requirements
    A. Reporting and Recordkeeping Requirements
    B. Impact on Small Entities
    C. Executive Order 12866
    D. Unfunded Mandates Act
    E. Submission to Congress and the General Accounting Office

IV. Background

A. Legal Authority

    Authority for the actions promulgated in this final rule is granted 
to EPA by Sections 202, 206, 207, 219, and 301 of the Clean Air Act as 
amended in 1990. This final rule was promulgated in accordance with 
Section 307(d) of the Clean Air Act.

B. General Program Background

    Section 219(d) of the Clean Air Act as amended in 1990 requires EPA 
to promulgate regulations that require certain 1993 and earlier model 
year urban buses, having engines which are replaced or rebuilt after 
January 1, 1995, to comply with an emission standard or control 
technology reflecting the best retrofit technology and maintenance 
practices reasonably achievable. Section 219(d) restricts this 
requirement to 1993 and earlier model year urban buses operating in 
Metropolitan Statistical Areas and Consolidated Metropolitan 
Statistical Areas with 1980 populations of 750,000 or more.
    On April 21, 1993, EPA published final Retrofit/Rebuild Regulations 
for 1993 and Earlier Model Year Urban Buses (58 FR 21359). The 
regulations require affected urban bus operators to comply with one of 
two program options, beginning January 1, 1995. Option 1 establishes 
particulate matter (PM) emissions requirements for each urban bus in an 
operator's fleet when the engine is rebuilt or replaced. Option 2 is a 
fleet averaging program that sets out specific annual target levels for 
average PM emissions from urban buses in an operator's fleet. The two 
compliance options are designed to yield equivalent emissions 
reductions for approximately the same cost.
    Option 1 requires affected urban buses to meet a 0.10 g/bhp-hr PM 
standard at the time of engine rebuild or replacement, if equipment has 
been certified by EPA for at least six months as meeting the 0.10 g/
bhp-hr standard for less than a life cycle cost limit of $7,940 (in 
1992 dollars). (The regulation allows a six month lead time before 
requiring such equipment to allow transit operators to plan their 
budgeting and procurement activities, and to help ensure that an 
adequate supply of parts are available from equipment manufacturers.) 
If equipment is not certified as meeting the 0.10 g/bhp-hr standard for 
less than the life cycle cost limit, then affected buses must receive 
equipment which reduces PM emissions by 25 percent, if such equipment 
has been certified by EPA for at least six months as meeting the 25 
percent reduction standard for less than a life cycle cost limit of 
$2,000 (in 1992 dollars). If no equipment is certified to meet either 
the 0.10 g/bhp-hr standard, or the 25 percent reduction standard, then 
affected bus engines must be rebuilt to the original engine 
configuration, or to an engine configuration certified to have a PM 
level lower than that of the original engine.
    Option 2 is an averaging-based program that requires bus operators 
to meet an annual average fleet PM level, instead of requiring each 
individual rebuilt engine to meet a specific PM level. On an annual 
basis, an operator must reduce its ``actual'' PM emissions

[[Page 14628]]

from its buses to a level no greater than its annual target level for 
the fleet (TLF). The operator calculates the TLF for each year of the 
program, beginning calendar year 1996, based on actual fleet 
composition, an assumed engine rebuild and retirement schedule, and 
EPA's determination of expected PM levels for each engine model. As an 
engine in a fleet is assumed to be rebuilt in a particular calendar 
year, the TLF calculations ``switch'' from a ``pre-rebuild'' PM 
emission level to a lower ``post-rebuild'' level that reflects the 
assumed use of lower-emitting, certified equipment. Over the years of 
the program, as the engines in a fleet are assumed to be rebuilt, this 
``switching'' results in numerically lower TLF values. As discussed 
further below, EPA established pre-rebuild levels in the final rule of 
April 21, 1993, and has established post-rebuild levels based on 
equipment certified for each engine model. The operator also calculates 
its ``actual'' fleet level attained (FLA) for each year of the program, 
which must not exceed its TLF. The FLA is a fleet weighted average PM 
level based on the ``actual'' PM level of each affected engine. The 
``actual'' PM level of each engine is determined by the certification 
PM level of the equipment used to rebuild or retrofit the engine. If no 
retrofit equipment is installed on an engine, or if no retrofit 
equipment is certified for the engine, then the actual PM level is the 
pre-rebuild PM level.
    In the final rule of April 21, 1993, EPA established pre-rebuild PM 
levels for all engine models, but could only estimate the post-rebuild 
PM levels because no equipment had been certified. EPA recognized that 
estimated PM levels may not accurately reflect future equipment 
certifications, therefore, the final rule contained provisions for EPA 
to revise the post-rebuild PM levels based on equipment that is 
actually certified by certain points in time. The final rule provides 
for review of retrofit/rebuild equipment and for revision of post-
rebuild PM emission levels based on equipment certified by July 1, 
1994, and again by July 1, 1996. In Federal Register documents of 
September 2, 1994 (59 FR 45626) and August 16, 1996 (61 FR 42764), EPA 
published post-rebuild PM levels based on equipment that was certified 
as of July 1, 1994, and July 1, 1996, respectively.
    Certification activity under the retrofit program has lagged 
substantially behind the schedule anticipated by EPA when the final 
rule of April 21, 1993 was promulgated. No equipment was certified when 
EPA revised post-rebuild levels based on equipment certified by July 1, 
1994. That revision is based on default provisions of the regulation 
(40 CFR 85.1403(c)(1)(iii)). The first certification for the program 
occurred on May 31, 1995 (60 FR 28402), almost a year after the post-
rebuild levels were revised the first time. Several rebuild/retrofit 
kits were certified by July 1, 1996, but none were certified to the 
0.10 g/bhp-hr PM standard. Therefore, the revision of the post-rebuild 
levels based on equipment certified by July 1, 1996 is based only on 
equipment certified to reduce PM by 25 percent, or on no equipment (for 
those engine models for which no equipment was certified as meeting 
emissions and cost requirements).
    EPA's assumption that certification activity would begin early was 
incorrect, and more importantly, EPA's assumption that certification 
activity would be complete by mid-1996 was incorrect. For example, EPA 
recently certified equipment manufactured by Engelhard Corporation (see 
62 FR 12166; March 14, 1997) that triggers the 0.10 g/bhp-hr standard 
for 1979 through 1989 model year Detroit Diesel Corporation (DDC) 
6V92TA MUI engines. Additionally, Johnson Matthey Incorporated has 
submitted an application to certify equipment to the same standard and 
applicable to these, and other, DDC engines (see 62 FR 4528; January 
30, 1997). As discussed below, EPA is also aware of other plans for 
certifying equipment to the 0.10 g/bhp-hr standard for several more 
engine models. For these reasons, EPA expects equipment to be certified 
that will trigger the 0.10 g/bhp-hr standard for a large segment of the 
affected engine population.

C. Potential Inequality Between Compliance Options

    As noted above, the post-rebuild levels based on equipment 
certified by July 1, 1996, are based only on equipment certified to 
reduce PM by 25 percent, or on no equipment in some cases. Absent 
today's amendment, transit operators complying with Option 2 would 
determine their TLFs based only on equipment reflective of those post-
rebuild levels. On the other hand, transit operators choosing to comply 
with Option 1 are required to use equipment certified to the 0.10 g/
bhp-hr standard, when this standard is triggered. For example, under 
Option 1 the above-mentioned Engelhard certification (62 FR 12166; 
March 14, 1997) means that equipment certified to the 0.10 g/bhp-hr 
standard must be used when applicable urban bus engines are rebuilt or 
replaced six months or more after the effective date of the 
certification (that is, on rebuilds or replacements performed after 
September 14, 1997). Without today's amendment, this and other such 
equipment certified to the 0.10 g/bhp-hr standard would result in 
Option 2 producing less emission reductions than Option 1, and Option 1 
becoming more costly than Option 2.
    Given the current level of certification activity and continued 
interest from equipment manufacturers, certification of additional 0.10 
g/bhp-hr technology is likely. Without today's amendment to the program 
regulations, transit operators, the majority of whom EPA currently 
believes are complying with Option 1, would have significant incentive 
to switch to Option 2. As a result, PM reductions would be 
significantly reduced in those cities where transit operators switch to 
Option 2. Furthermore, such a loophole is in direct conflict with the 
Clean Air Act language that urban buses use the best retrofit 
technology reasonably achievable.
    To ensure equivalent compliance options, a notice of proposed 
rulemaking (NPRM) was published on November 12, 1996 (61 FR 58022) to 
maintain the continued link between the requirements of Option 2 and 
Option 1. That notice proposed amending the program regulations to 
provide for EPA's review of equipment certified by July 1, 1997, and 
revision of the post-rebuild levels as necessary. The notice requested 
comments on several aspects of the proposal, including the effect on 
the Urban Bus Retrofit/Rebuild Program, transit operators, equipment 
manufacturers, and the timing of a third revision.
    Today's action amends the program regulations to provide for EPA to 
review equipment certified by July 1, 1998, and to revise the post-
rebuild levels for Option 2 TLF calculations, as appropriate. EPA is 
using July 1, 1998 as the appropriate cut-off instead of the proposed 
date of July 1, 1997 because, based on comments from an equipment 
certifier (Johnson Matthey, Incorporated, in comments dated December 9, 
1996), EPA expects equipment to be certified at a level of 0.10 g/bhp-
hr for additional engine models by mid-1998. These additional engine 
models comprise a significant portion of the affected fleet. EPA thus 
believes that providing one more year for review of certified equipment 
will allow Option 1 and Option 2 to remain equivalent compliance 
options.

[[Page 14629]]

V. Requirements of Today's Amendment to the Urban Bus Retrofit/
Rebuild Regulations

    As discussed below, today's action amends 40 CFR 85.1403(c)(1) to 
allow the Agency to include equipment certified by July 1, 1998 to the 
0.10 g/bhp-hr standard for less than the life cycle cost ceiling of 
$7,940 (1992 dollars) in the Option 2 fleet average program for the 
purpose of setting post-rebuild levels. Thereafter, the Agency will 
publish in the Federal Register the post-rebuild emissions levels that 
will be required to be used under Option 2 for calculating the target 
levels for the fleet (TLF). Post-rebuild levels revised as a result of 
this amendment may be more stringent for calculating TLFs than the 
post-rebuild levels published on August 16, 1996 (61 FR 42764).
    EPA will base the final revision of post-rebuild PM levels on 
equipment certified by July 1, 1998. This date provides six months lead 
time prior to January 1, 1999, when the rebuild schedule in section 
85.1403(c)(1) will begin to take into account the revisions in post-
rebuild levels resulting from any new certifications. Only the TLFs for 
year 2000 and later are affected by today's amendment.
    Also discussed below is a minor correction to the post-rebuild 
levels used in the TLF calculations for certain model years.

A. Equipment Certification

    Today's amendment does not limit the ability of equipment 
manufacturers to certify equipment. Equipment manufacturers can still 
certify equipment after July 1, 1998. However, EPA will not consider 
equipment certified after July 1, 1998 in determining the appropriate 
post-rebuild levels under Option 2. No additional revisions of post-
rebuild levels under Option 2 will occur beyond July 1998 because such 
revisions would not be expected to impact a significant number of 
rebuilds under this program.

B. TLF Calculations; Use of Pre- and Post-Rebuild PM Levels

    The final rule of April 21, 1993, describes modeling used to 
calculate, on an annual basis, the target level for a fleet using 
Option 2. The target level for a fleet (TLF) establishes the maximum 
average emissions from a fleet, and as such is a compliance standard 
for a fleet, but it does not establish requirements on any specific bus 
engine. In general, the model is based on an ``adjusted'' rebuild 
schedule that predicts (i.e., ``assumes'') when each model year engine 
in a fleet will be rebuilt. The model assumes that certified equipment 
is applied at the time of an assumed rebuild occurring after program 
start (January 1, 1995). (Each bus engine is assumed to receive several 
rebuilds during its lifetime.) When an engine is assumed to be rebuilt 
in a particular calendar year, the TLF calculations for subsequent 
calendar years ``switch'' from one PM emission level to a lower ``post-
rebuild'' level that reflects the assumed use of lower-emitting, 
certified equipment. This switch results in numerically lower TLF 
values over the years of the program.
    For the TLF calculations, engines in original configurations are 
assumed to emit at pre-rebuild PM emissions levels. After an assumed 
rebuild, engines are assumed to emit at post-rebuild levels reflecting 
use of equipment certified to one of two emissions standards (depending 
on what equipment is certified): a reduction in PM of at least 25 
percent, or a more stringent 0.10 g/bhp-hr standard. Numerical values 
for the pre-rebuild PM levels are established in the final rule of 
April 21, 1993 (58 FR 21359). The post-rebuild levels have been 
established in Federal Register documents of September 2, 1994 (59 FR 
45626) based on equipment certified by July 1, 1994, and August 16, 
1996 (61 FR 42764) based on equipment certified by July 1, 1996. 
Pursuant to today's amendment, revised post-rebuild levels based on 
equipment certified by July 1, 1998, may affect TLFs for year 2000 and 
beyond, depending on a particular fleet's composition.
    Crucial to TLF model is the adjusted rebuild schedule, which is 
described in the final rule of April 21, 1993, and found as a table in 
the regulations at 40 CFR 85.1403(c)(1)(iv). The adjusted schedule 
predicts when each model year engine is assumed to be rebuilt. This 
schedule is shown below pictorially as Figure 1. For purposes of 
calculating the TLF for each year of the program, the date at which the 
emission level for a model year engine switches from one PM level to 
another is January 1st of the year following a rebuild assumed to occur 
subsequent to program start (January 1, 1995). Today's amendment does 
not change either the adjusted rebuild schedule or the year of a switch 
from one PM level to another.
    Today's amendment also includes a minor correction regarding the 
post-rebuild levels used for several year's TLF calculations. This 
correction to the regulation will prevent overly stringent TLF values 
for calendar years 1998, 1999, and 2000 (TLF98, 
TLF99, and TLF2000, respectively) for operators 
of fleets having 1984 and/or 1985 model year buses, that otherwise 
might result from application of the original regulation promulgated on 
April 21, 1993. The original regulation incorrectly assigns post-
rebuild levels, based on equipment certified by July 1996, to these two 
model year engines for the TLF calculations for calendar years 1998, 
1999, and 2000. This assignment is not correct because it is not 
consistent with the adjusted rebuild schedule, which predicts that the 
1984 and 1985 model year engines are rebuilt for the last time in 1995 
and 1996, respectively. It therefore is not reasonable that the TLF 
calculations (for these three calendar years) reflect post-rebuild 
levels established after the last rebuilds of engines are assumed to 
occur. (Post-rebuild levels were lowered for many engine models based 
on equipment certified by July 1996.) Today's action corrects the 
regulation at Sec. 85.1403(c)(1) so that the TLF calculations for these 
three calendar years use post-rebuild levels based on equipment 
certified by July 1, 1994, until any 1984 and 1985 model year engines 
in a fleet is assumed to be retired (see Figure 1).
    In general, for TLF calculations, the post-rebuild level used for a 
particular engine in a fleet is the post-rebuild level effective at the 
time the engine is assumed to be rebuilt, according to the adjusted 
rebuild schedule. For the years subsequent to the assumed rebuild, the 
post-rebuild level remains unchanged until the next rebuild is 
predicted, at which point the same or a different post-rebuild level 
may be effective, depending on whether it has been revised. The TLF 
calculation for a given calendar year is based on engines no older than 
15 years of age. (As noted previously, Option 2, as an averaging 
program, places no specific requirements on individual engines. As a 
result, the actual date that an engine is rebuilt is not relevant to 
TLF calculations.)
    Additionally, due to today's amendment and for reasons analogous to 
those described in the preceding paragraphs, it is necessary to clarify 
what post-rebuild levels are used for calendar year 2000 and later. For 
fleets having any 1986, 1987, and 1988 model year engines, the TLF 
calculations must use the post-rebuild levels based on equipment 
certified by July 1, 1996, until the engines are assumed to be retired 
(see Figure 1). This is consistent with the adjusted rebuild schedule, 
which assumes 1986 model year engines are rebuilt for the last time in 
calendar year 1997 and, 1987 and 1988 model year engines are both 
assumed to be rebuilt for the last time in 1998. These model year 
engines cannot reasonably

[[Page 14630]]

be expected to be equipped subsequent to their last presumed rebuild, 
with equipment certified by July 1, 1998. Therefore, the TLF for year 
2000 and later must be performed using post-rebuild levels that are in 
effect for these three model year engines during the year that the last 
rebuild is performed.
    As a result, in accordance with the adjusted rebuild schedule, only 
engines of model year 1989 through 1993 are assumed to have rebuilds in 
1999 or later. Engines assumed to be rebuilt in 1999 are the first that 
could employ applicable equipment certified by July 1, 1998. Therefore, 
only 1989 through 1993 model year engines may have revised post-rebuild 
PM levels based on equipment certified by July 1, 1998. The post-
rebuild PM levels for only these engines may be more stringent (based 
on equipment certified by July 1, 1998) for calculating the TLFs for 
year 2000 and thereafter.
    For purposes of calculating the TLF for each year of the program, 
section 85.1403(c)(1)(iv) of the regulation states when to use pre- or 
post-rebuild PM levels. Today's rule revises the chart at 40 CFR 
85.1403(c)(1)(iv) to clarify which emissions levels are used for 
calculating the TLF for each year of the program (that is, whether to 
use the pre- rebuild PM level, or the post-rebuild level based on 
equipment certified by July 1, 1994; July 1, 1996; or July 1, 1998).
    Figure 2 below is developed from Figure 1 and indicates what PM 
emissions level is used, for each model year engine in a fleet, to 
calculate the TLF for a given calendar year. Figure 2 is a pictorial 
representation of the chart at 40 CFR 85.1403(c)(1)(iv), and as such, 
indicates which emissions level to use--that is, whether to use the 
pre- rebuild level; or the post-rebuild level based on equipment 
certified by July 1, 1994; July 1, 1996; or July 1, 1998. For the 
purpose of calculating TLFs, the date at which the emissions level for 
each model year engine switches from one PM level to another is January 
1st of the year following a rebuild assumed to occur (as shown in 
Figure 1) subsequent to program start (January 1, 1995). For example, 
for TLF2000, only 1985 and later model year engines in a 
fleet are considered, all of which are assumed to be operating at an 
appropriate post-rebuild level. For TLF2000, operators must 
use the post-rebuild levels based on equipment certified by July 1, 
1994 (59 FR 45626, September 2, 1994) for any 1985 model year engines, 
the post-rebuild levels based on equipment certified by July 1, 1996 
(61 FR 42764, August 16, 1996) for any 1986 through 1988, and 1991 
through 1993 model year engines, and the post-rebuild levels based on 
equipment certified by July 1, 1998, for any 1989 and 1990 model year 
engines in their fleets.
    As many followers of the Urban Bus Retrofit/Rebuild Program are 
aware, the Agency developed a computer spreadsheet (also known as 
``URBAN7.WK1'') to assist operators by calculating TLFs and FLAs. With 
today's action, it becomes apparent for a couple reasons, that 
operators using URBAN7 may need to determine TLFs separately for 
several distinct time periods. First, and obvious, some TLFs cannot be 
determined until post-rebuild levels, based on equipment certified by 
July 1, 1998, are known. Second, due to limitations in spreadsheet 
design, URBAN7 accommodates only two PM emissions levels for each model 
year engine--a pre- rebuild level and one post-rebuild level. URBAN7 
does not have provisions for the engine model years that have more than 
one post-rebuild level. (Some engines experience two assumed rebuilds 
during the program, each of which may have associated with it a 
different post-rebuild level.)
    For such situations, the user must re-enter the post-rebuild levels 
for such engines, and ``re-run'' URBAN7 to determine the TLFs for the 
appropriate time period(s). It may be necessary to determine TLFs 
separately for several distinct periods, depending on fleet composition 
and post-rebuild levels based on equipment certified by July 1, 1998. 
Presently, given that post-rebuild levels have been established at two 
points in time (based on equipment certified by July 1, 1994, and July 
1, 1996), URBAN7 can calculate the TLFs for calendar years 1996 through 
1999. Once the post-rebuild levels based on equipment certified by July 
1, 1998 are known, the TLFs for all periods can be calculated, although 
possibly not in one ``run''. The Agency will revise the instructions 
for URBAN7, but does not expect to revise the URBAN7 spreadsheet. 
Revised instructions will be made available upon request to the person 
listed above under FOR FURTHER INFORMATION CONTACT.
    Irrespective of today's amendment, it is worthwhile to remind fleet 
operators that it becomes increasingly difficult to keep buses older 
than 15 years in their fleets, because the TLF for a particular 
calendar year is calculated without consideration of buses that are 
past 15 years of age. As a result, the TLF for a fleet becomes 
numerically zero (0.00) when the youngest pre-1994 model year engine is 
more than 15 years old. On the other hand, operators are able to retain 
bus engines older than 15 years that have been retrofit with equipment 
certified to the 0.10 g/bhp-hr standard or, that were originally 
certified to a 0.10 g/bhp-hr standard, because emissions from these 
buses are not included in the FLA.

                                                                                                  Figure 1.--Adjusted Rebuild Schedule                                                                                                  
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                           Calendar year                                                                                
                    Engine model year                    -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             1993       1994      1995*       1996       1997       1998       1999       2000       2001       2002       2003       2004       2005       2006       2007       2008  
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1993....................................................  .........  .........  .........  .........  .........        R1   .........  .........        R2   .........  .........        R3   .........  .........  .........    RETIRE 
1992....................................................  .........  .........  .........  .........  .........        R1   .........  .........  .........  .........        R3   .........  .........  .........    RETIRE            
1991....................................................  .........  .........  .........  .........        R1   .........  .........  .........  .........        R3   .........  .........  .........    RETIRE                       
1990....................................................  .........        R1   .........  .........  .........  .........        R2   .........  .........        R3   .........  .........    RETIRE                                  
1989....................................................  .........        R1   .........  .........  .........  .........        R3   .........  .........  .........  .........    RETIRE                                             
1988....................................................        R1   .........  .........  .........  .........        R3   .........  .........  .........  .........    RETIRE                                                        
1987....................................................  .........  .........        R2   .........  .........        R3   .........  .........  .........    RETIRE                                                                   
1986....................................................  .........        R2   .........  .........        R3   .........  .........  .........    RETIRE                                                                              
1985....................................................        R2   .........  .........        R3   .........  .........  .........    RETIRE                                                                                         
1984....................................................  .........  .........        R3   .........  .........  .........    RETIRE                                                                                                    
1983....................................................  .........        R3   .........  .........  .........    RETIRE                                                                                                               
1982....................................................        R3   .........  .........  .........    RETIRE                                                                                                                          
1981....................................................  .........  .........  .........    RETIRE                                                                                                                                     
1980....................................................  .........  .........    RETIRE                                                                                                                                                
1979....................................................  .........   RETIRE                                                                                                                                                            
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
*January 1, 1995 is the start of the program.                                                                                                                                                                                           
R1, R2, R3 = First, second, and third engine rebuild, respectively.                                                                                                                                                                     


[[Page 14631]]


                                                                                           Figure 2.--PM Emissions Levels for TLF Calculations                                                                                          
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                           ``TLF-Year''                                                                                 
                    Engine model year                    -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             1993       1994      1995*      1996**      1997       1998       1999       2000       2001       2002       2003       2004       2005       2006       2007       2008  
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1993....................................................  .........  .........  .........       pre        pre        pre   post \2\   post \2\   post \2\   post \3\   post \3\   post \3\   post \3\   post \3\   post \3\   post \3\ 
1992....................................................  .........  .........  .........       pre        pre        pre   post \2\   post \2\   post \2\   post \2\   post \2\   post \3\   post \3\   post \3\   post \3\            
1991....................................................  .........  .........  .........       pre        pre   post \2\   post \2\   post \2\   post \2\   post \2\   post \3\   post \3\   post \3\   post \3\                       
1990....................................................  .........  .........  .........       pre        pre        pre        pre   post \3\   post \3\   post \3\   post \3\   post \3\   post \3\                                  
1989....................................................  .........  .........  .........       pre        pre        pre        pre   post \3\   post \3\   post \3\   post \3\   post \3\                                             
1988....................................................  .........  .........  .........       pre        pre        pre   post \2\   post \2\   post \2\   post \2\   post \2\                                                        
1987....................................................  .........  .........  .........  post \1\   post \1\   post \1\   post \2\   post \2\   post \2\   post \2\                                                                   
1986....................................................  .........  .........  .........       pre        pre   post \2\   post \2\   post \2\   post \2\                                                                              
1985....................................................  .........  .........  .........       pre   post \1\   post \1\   post \1\   post \1\                                                                                         
1984....................................................  .........  .........  .........  post \1\   post \1\   post \1\   post \1\                                                                                                    
1983....................................................  .........  .........  .........       pre        pre        pre                                                                                                               
1982....................................................  .........  .........  .........       pre        pre                                                                                                                          
1981....................................................  .........  .........  .........       pre                                                                                                                                     
1980....................................................                                                                                                                                                                                
1979....................................................                                                                                                                                                                                
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
*January 1, 1995 is the start of the program.                                                                                                                                                                                           
**First ``TLF-Year'' of the program.                                                                                                                                                                                                    
``pre'' Pre-rebuild levels established in the final rule of April 21, 1993, pursuant to (c)(1)(iii)(A).                                                                                                                                 
\1\ Post-rebuild level established pursuant to (c)(1)(iii)(B), that is, based on equipment certified by July 1, 1994.                                                                                                                   
\2\ Post-rebuild level established pursuant to (c)(1)(iii)(C), that is, based on equipment certified by July 1, 1996.                                                                                                                   
\3\ Post-rebuild level established pursuant to (c)(1)(iii)(D), that is, based on equipment certified by July 1, 1998.                                                                                                                   

VI. Public Participation

A. Public Hearing

    The NPRM of November 12, 1996, stated that EPA would hold a public 
hearing on the proposal on December 6, 1996 if any requests to testify 
were received by November 22, 1996. EPA received no requests.

B. Public Comment and Agency Response

    In the NPRM of November 12, 1996, EPA solicited written comments on 
the proposed amendment and its effect on the Urban Bus Retrofit/Rebuild 
Program, transit operators and equipment manufacturers. In particular, 
EPA asked for comments on the need to add a third revision of post-
rebuild PM levels, the timing of a third revision, the consistency of 
the amendment with the original regulations, the need to address the 
potential compliance loophole that may exist, how to ensure the same 
compliance loophole issue addressed by the amendment does not happen 
again, and any other aspects of the amendment.
    EPA received comments on the NPRM from six parties, consisting of 
the Manufacturers of Emission Controls Association (MECA), New York 
State Department of Environmental Conservation (NYSDEC), and four 
equipment certifiers. The four certifiers are Detroit Diesel 
Corporation, Twin Rivers Technologies, Engelhard Corporation, and 
Johnson Matthey, Incorporated. All comments are available in the public 
docket at the above address. No comments were received from transit 
operators.
    Four commenters support the proposal of November 1996 to amend the 
regulations: NYSDEC, MECA, Engelhard and Johnson Matthey. NYSDEC states 
that it is aware of upcoming changes to the National Ambient Air 
Quality Standard for particulate matter, and that today's amendment 
will help New York State in its efforts to maintain compliance with 
those air quality standards. MECA notes that the pace of certification 
activity under the program has not occurred within the time frame 
envisioned by EPA when it originally finalized the rule, that the 
proposed change is needed to ensure that the two compliance programs 
remain equivalent, and that the change is consistent with the intent of 
Congress.
    Two equipment certifiers support the amendment. Engelhard believes 
that future revision to post-rebuild PM levels are necessary to 
maintain equivalence between the two program compliance options. 
Engelhard states that there is growing public concern about the health 
effects of diesel particulates, and applauds EPA's efforts in trying to 
ensure that the Urban Bus Program provides the maximum benefit and is 
equally applicable to all municipalities. Engelhard fully supports 
revisions to the post-rebuild PM levels that will ensure that the best 
available control technology is an option for urban transits operating 
under either compliance option.
    JMI supports EPA's proposal to allow additional time for 
manufacturers to certify equipment that would influence compliance 
under Option 2, in order to eliminate the unintended, current disparity 
between Option 1 and Option 2. JMI also notes its submittal to EPA of 
an application to certify equipment (see 62 FR 4528; January 30, 1997) 
applicable to two engine models that complies with the 0.10 g/bhp-hr 
standard. JMI also states that additional testing is being conducted on 
other engine models, expected to be completed in 1997, and requests 
that EPA extend the program deadline for equipment certification to 
January 1, 1998, to allow for the broadest range of engine models to be 
included.
    EPA expects equipment to be certified that will trigger the 0.10 g/
bhp-hr standard for a large segment of the affected engine population. 
For example, EPA recently certified equipment manufactured by Engelhard 
(62 FR 12166; March 14, 1997) that triggers the 0.10 g/bhp-hr standard 
for 1979 through 1989 model year DDC 6V92TA MUI engines. Also, the 
above-noted comments received from JMI indicate its intent to certify 
equipment to this standard for these and additional DDC engines. 
Moreover, EPA is aware, through its review of confidential test plans, 
of two other equipment manufacturers intending to certify equipment to 
the 0.10 g/bhp-hr standard for these and other engine models. EPA 
discussed non-confidential information regarding the equipment of these 
two manufacturers (Turbodyne Systems Incorporated and A-55 Limited 
Partnership) during an EPA presentation at an American Public Transit 
Association Conference in Anaheim, California, on October 10, 1996. (An 
overview of the EPA presentation, dated October 10, 1996, is located in 
the public docket). Certification of these equipment cannot occur prior 
to July 1, 1997. As a result, EPA believes it appropriate to revise 
post-rebuild levels on equipment certified by July 1, 1998 instead of 
the July 1, 1997 date

[[Page 14632]]

proposed in the November 12, 1996 notice. The July 1998 date will 
permit a significant portion of the affected engine population to be 
covered and lessen the likelihood that an inequality will occur again 
in the future. In addition, use of July 1, 1998 as suggested by JMI, 
rather than January 1, 1998, allows bus operators to continue to 
calculate averages using full years, while remaining consistent with 
the six month lead time that has been used for the urban bus program.
    Prospective equipment certifiers and transit operators should note 
that the ``cut-off'' date (July 1, 1998) does not preclude subsequent 
equipment certifications. Additionally, the cut-off date does not 
prevent any operator from using any equipment certified under the Urban 
Bus Program, to the extent the operator is otherwise in compliance with 
program requirements.
    Detroit Diesel Corporation (DDC) and Twin Rivers Technologies, L.P. 
(TRT), provided comments in opposition to today's amendment. DDC 
comments that the amendment will retroactively and unfairly deny 
transit operators the compliance flexibility originally provided under 
the program. Specifically, DDC argues that some operators may have 
adopted an initial strategy of complying with both options until the 
post-rebuild PM levels were established based on equipment certified by 
July 1, 1996. Operators then may have taken irrevocable actions to 
pursue only Option 2 because of lower compliance costs due to TLFs 
assumed to be known and fixed. DDC states that an amendment would 
disadvantage these operators in three ways. First, rebuild costs would 
be increased if new, more costly equipment is certified. Second, 
operators would be unable to avoid unknown durability, reliability and 
operational issues that are likely to occur if equipment is certified 
without adequate field experience. Third, having relied on the existing 
rule, an operator's commitment to one option would now result in 
sacrificing the flexibility to continue compliance under the other 
option. DDC contends that all of this unfairly penalizes such 
operators.
    With regard to the first concern, EPA agrees that rebuild costs for 
compliance will be increased if, or when, new equipment is certified, 
but this is entirely consistent with the original rule. It is an 
unmistakable expectation clearly spelled out in the final rule of April 
21, 1993 that equipment triggering the 0.10 g/bhp-hr standard can be 
more expensive than equipment designed to reduce PM by 25 percent. For 
reasons explained in the 1993 final rule, EPA believed, and believes, 
that such extra costs are appropriate given the extra emissions 
reductions produced and given the requirements of the statute. The 1993 
final rule contemplated that technologies for at least some engines 
would be certified to meet the 0.10 g/bhp-hr standard. Moreover, 
today's amendment merely helps assure that compliance Options 1 and 2 
are equivalent. Today's amendment will result in no cost increase with 
respect to the cost evaluation of the original rule. Bus operators 
complying with Option 2 will still enjoy additional flexibility, 
because requirements of the option are not engine-specific.
    DDC's second contention, that operators will be unable to avoid 
unknown durability, reliability and operational issues that are likely 
to occur if equipment is certified without adequate field experience, 
is not specifically related to either Option 1 or 2, or to this 
amendment. Generally speaking, these issues may be important for any 
equipment, and EPA continues to encourage equipment manufacturers, 
transit operators, and others, to address such concerns during the 
equipment certification process to assure that they are addressed. 
Durability, reliability, and operational issues can apply regardless of 
the standard to which equipment is designed. To the extent that such 
concerns arise after certification, the program regulations provide 
remedy in two ways. First, liability for durability of equipment is 
provided by the emissions warranties required to be provided by 
certifiers in accordance with 40 CFR 85.1409. Additionally, pursuant to 
40 CFR 85.1413, EPA has authority to decertify equipment that fails to 
comply with 40 CFR 85.1405 through 85.1414.
    The final contention noted by DDC, that operators having relied on 
the final rule and committing to one of the options may have sacrificed 
the flexibility to continue compliance under the other option, appears 
speculative. The Federal Register notice of August 16, 1996 (61 FR 
42764) clearly provides notice that EPA was aware of potential 
inequality between the options and was considering appropriate action 
to ensure program integrity. In fact, the notice mentions the 
possibility of a rulemaking to add a third post-rebuild PM level 
revision (Id. at 42766).
    Moreover, no transit operators have commented adversely to the 
NPRM, or claimed to have lost flexibility retroactively as a result of 
today's amendment. The final rule of April 21, 1993, states that an 
operator may switch between compliance options if it is in compliance 
with all requirements of the newly chosen option at all times since the 
beginning of the program. Today's amendment does not change this 
flexibility.
    Twin Rivers Technologies, L.P. (TRT) states that the amendment is 
ill-advised and improper for several reasons. The following discussion 
presents each of these issues, and responds to each in turn. First, TRT 
indicates that the amendment will create a moving compliance target, 
and that the potential that no technology would be certified at 0.10 g/
bhp-hr was ``* * * a scenario completely envisioned by the rule's 
authors'' and that ``Program 1 and 2 disparity * * * is the very fabric 
of the program * * *''.
    EPA agrees that today's amendment will create a compliance target 
that is more variable than expected by the authors of the 1993 final 
rule. However, the amendment does not present operators using Option 2 
with more rigorous compliance requirements, in the aggregate, than 
those presented to operators using Option 1. The two options were 
expected in the 1993 rule to provide equivalent emissions reductions. 
Today's amendment is fully consistent with that original intent, and 
follows the original expectation that Option 2 levels would be based on 
equipment certified to the emissions reduction and life cycle cost 
requirements of Option 1.
    EPA never intended ``flexibility'' to include switching between two 
grossly unequal compliance options. Any contention that environmental 
disparity between the compliance options was envisioned by the final 
rule, or is the fabric of the program, is inaccurate. To the contrary, 
the very fabric of the urban bus program is that the two options 
provide equivalent emissions reductions, and today's amendment is 
intended to assure this. As stated in the preambles to both the 
original final rule (58 FR 21359; April 21, 1993) and the proposal 
preceding it (57 FR 33141; July 27, 1992), EPA bases its legal 
authority to develop an averaging program on meeting the statutory 
standard-setting test of reflecting ``* * * the best retrofit 
technology and maintenance practices reasonably achievable'' (section 
219(d) of the Clean Air Act). In the absence of today's amendment, no 
clear authority for the averaging option exists. Therefore, today's 
amendment is consistent with the constraint that the fleet averaging 
option be equivalent, in terms of emission reductions, to the engine-
specific option, and is completely appropriate given EPA's 
responsibilities under section 219(d) of the Clean Air Act.
    Regarding the concern that the amendment raises serious issues 
among

[[Page 14633]]

transit operators, EPA does not believe this to be an accurate 
assessment. EPA notes that no transit operators commented on the 
amendment.
    The second reason put forth by TRT is that the amendment is unfair 
because it deprives the soundly managed transit the benefit of 
selection of compliance option after completing the dual compliance 
necessary to exercise that right. Additionally, TRT states that the 
amendment ``* * * is an egregious example of * * * ex post facto 
regulation'', and is improper because it is inconsistent with 
regulatory law that require rules to be made on a prospective basis. 
TRT also notes the matter of fairness to equipment certifiers that have 
planned manufacturing and marketing around the regulation.
    EPA recognizes that some transit operators may have maintained 
compliance with both options with intentions of making a selection 
based on equipment certified by July 1, 1996. The August 16, 1996 
Federal Register notice revised post-rebuild PM levels, based on 
equipment certified by July 1, 1996, and also provided notice of the 
potential inequality between the compliance options and that EPA was 
considering appropriate action to ensure program integrity. Today's 
amendment ensures program integrity, but does not change the 
flexibility of the original rule. Operators, otherwise in compliance 
with both options, are not prevented from selecting to comply with only 
one of the options.
    EPA disagrees with the claim that today's amendment constitutes 
``ex post facto'' regulation or is improper, because the changes of the 
amendment solely effect the requirements of transit operators using 
Option 2 for TLFs calculated after 1999. No violations of the 
amendments promulgated today can occur prior to the year 2000. Nor 
would any of the requirements for rebuilds scheduled to be performed 
prior to 1999 be made more stringent because of these amendments. 
Moreover, the comment misapprehends EPA's responsibilities under the 
Act. EPA is permitted to amend its regulations in order to account for 
new developments. Moreover, such amendments are completely appropriate 
where, as here, failure to do so would lead to regulations that no 
longer meet the technology requirements of the statute. Today's 
amendments are fully consistent with the legislative requirement to use 
the ``* * * best retrofit technology * * * reasonably achievable'', and 
the original program design. The design of the original program 
accomplishes the legislative requirement by providing for equivalent 
emissions reductions from Option 1 and 2. Today's amendment assures 
that emissions reductions from the two options remain equivalent.
    With regard to the matter of fairness to transit operators, EPA 
believes that selection between two compliance options that are not 
equivalent is not the proper test of ``fairness''. As discussed above, 
the intent of the original regulation is equivalent emissions reduction 
from both Option 1 and Option 2. The test for fairness, therefore, is 
relevant to switching between compliance options that are otherwise 
equivalent. Indeed, ``fairness'' would not exist in the absence of 
today's amendment to the program regulations, because the two 
compliance options would be clearly and significantly unequal in terms 
of emissions reductions and costs to operators.
    With regard to the matter of fairness to equipment certifiers, the 
regulation is clear that one level of technology (that is, equipment 
certified to reduce PM by at least 25 percent) is meant to be 
superseded by a more effective technology (equipment certified to the 
0.10 g/bhp-hr standard), if such technology is certified. Though 
equipment certifiers and transit operators may have different 
expectations of final fleet requirements based on this rule, such 
parties were always subject to possible changes in fleet requirements 
based on certification of 0.10 g/bhp-hr technology. That certification 
of such technology will be recognized in Option 2 two years later than 
originally expected is not a fundamental change in the possible 
outcomes regarding technology and fleet requirements that were always 
inherent in the retrofit/rebuild program. Finally, as discussed above, 
this amendment will only affect post-rebuild expected levels for bus 
engines manufactured in at most five model years. Moreover, more 
stringent post-rebuild levels for three of these model years (1991 
through 1993) would not go into place until, at the earliest, 
TLF2002.
    Third, TRT notes EPA's assessments in the preamble to the original 
rulemaking that limiting the number of revisions of the post-rebuild 
levels is important to provide stability in the averaging program, and 
that having more than two revisions could lead to a ``moving target'' 
for operators. TRT expresses concern for continued revisions to post-
rebuild levels in the future.
    EPA recognizes the concern related to the ``moving target'' nature 
of several revisions. However, a revision based on equipment certified 
by July 1, 1998, will be only the second revision of substance, because 
no equipment was certified for the ``first'' revision. This ``second'' 
revision is necessary to maintain Option 2 equivalent to Option 1. EPA 
expects that the 0.10 g/bhp-hr standard will be triggered for a 
significant portion of the affected fleet by July 1, 1998. Therefore, 
there is not expected to be further need to revise post-rebuild levels 
subsequent to July 1, 1998.
    Fourth, TRT indicates that there is no disparity in emissions 
reductions between the two options, and expresses the following several 
contentions in support of this point. Each is accompanied by EPA's 
response.
    In support, TRT first suggests that if the post-rebuild level for 
only the 1979 through 1987 6V92TA engines are reduced from 0.30 to 0.10 
g/bhp-hr, then TLFs for fleets with buses later than model year 1987 
could increase after the year 2002, which could increase PM emissions. 
This suggestion is not persuasive for several reasons. First, it 
presumes that no technology will be certified for engines manufactured 
from 1988 through 1993, which is by no means certain. Second, if in 
fact technology is not certified for later engines, then this 
regulatory amendment will have little effect because, as explained 
above, Option 2 post-rebuild levels for engines manufactured prior to 
1989 will not be affected by this amendment. Finally, TRT does not 
explain how lowering the target post-rebuild level (TLF) for even a 
subset of a fleet can ever increase actual emission levels (that is, 
the FLA) for the fleet, compared with the actual levels that would 
result from the fleet having to meet a less stringent target level. 
Reluctance to retire engines seems irrelevant to the target level 
calculation, because the emissions from any higher emitting engine, 
even one that is greater than fifteen years old, must be counted as 
part of a fleet's actual emissions, which will always create an 
incentive to retire more polluting buses, whether they are older or 
newer.
    Also in support, TRT notes that only fleets that have maintained 
simultaneous Option 1 and Option 2 compliance can currently choose to 
comply with either Option 1 or 2 in the future. TRT believes that many 
fleets have most likely lost their ability to claim Option 2 
compliance. (Therefore, few fleets are currently using Option 2.) EPA 
does not know the number of fleets complying with either or both 
options, and TRT provides no data or information in support of its 
statements. However, as stated above, EPA believes that today's 
amendment is necessary to assure equivalent reductions from both

[[Page 14634]]

options and to maintain legal authority for the averaging option. 
Moreover, given the minimal requirements of Option 2 following the 
September 2, 1994 update, the notice in the August 16, 1996 update, and 
the short period between the August 16 update and the NPRM, it is 
unlikely that many operators would have lost this opportunity prior to 
the publication of the NPRM.
    Also in support, TRT states that EPA misunderstands both the lack 
of action taken by Option 1 fleets to reduce emissions, and the many 
actions required by Option 2 fleets. TRT states that Option 2 actually 
provides no flexibility toward meeting the TLF. The TLF is never 
approached in a fleet using only Option 1 (regardless of the post-
rebuild levels), because such fleets will rebuild less frequently, and 
might eliminate rebuilding, given the increased cost of complying with 
the 0.10 g/bhp-hr standard. TRT suggests that the retrofit/rebuild 
program is responsible for fleets reducing their engine rebuilds from 
once every seven years to less than half that rate. On the other hand, 
TRT claims that Option 2, by virtue of the calculations that determine 
TLFs based on specific assumed rebuild schedules, and retirement of 
engines at 15 years of age, will provide an ever increasing annual 
reduction in PM emissions. Option 2 reductions are not subject to the 
actual rebuild strategy of a fleet, but to the requirements of 
calculations that force a continual decrease in TLF with time. In 
summary, TRT claims that a compliant operator using Option 2 will 
generate greater emissions reduction than under Option 1. An operator 
using only Option 1 could conceivably create zero emissions reductions, 
regardless of the equipment certified.
    EPA believes that TRT's perception of compliance under the two 
options is somewhat, but not entirely, accurate. Further, TRT provides 
no information to substantiate the statements regarding rebuild 
frequency. No fleet operators commented.
    As discussed in the April 21, 1993 rulemaking, EPA understands that 
operators may eliminate some engine rebuilds, and move others forward 
or back in time in order to minimize costs associated with the cost of 
compliance with the urban bus program. The assumed rebuild schedule, a 
key factor of the calculations used by Option 2 operators, is 
``adjusted'' to reflect the expectation that rebuild schedules may be 
changed. While EPA has only recently begun to audit fleet operators for 
compliance with program requirements, we have no information that fleet 
operators are not performing rebuilds.
    Option 2 is designed to yield fleet-wide equivalent emissions 
reductions with Option 1 based on three factors: an adjusted engine 
rebuild schedule, the availability of certified technology, and an 
assumed retirement schedule. EPA estimated the impact of certified 
equipment technology (and incident costs) on the rebuild schedule of 
each particular model year of engine. The rebuild presumptions include 
elimination of some rebuilds for some model year engines, and moving 
other rebuilds, either forward in time or back, to postpone or avoid 
costs related to applying certified retrofit/rebuild equipment. Under 
either compliance option, engines can be kept in a fleet as long as 
desired. Under Option 1, if an engine is not retired, then rebuild or 
replacement cannot be postponed indefinitely. When rebuild or 
replacement occurs, compliance with the correct PM standard is required 
(which may include the 0.10 g/bhp-hr standard), regardless of when the 
standard has been triggered. For Option 2, the TLF calculation for a 
particular calendar year is based on engines 15 years of age and less. 
Therefore, the TLF for a fleet becomes numerically zero (0.00) when the 
youngest pre-1994 model year engine in the fleet is more than 15 years 
of age. Option 2 encourages, but does not require, retirement of 
engines at 15 years of age and greater. Engines that are older than 15 
years and meet a 0.10 g/bhp-hr standard, do not influence the 
calculations for either the target level of the fleet (TLF) or the 
fleet level attained (FLA). In summary, EPA believes that the two 
compliance options will produce equivalent emissions reductions.
    TRT's final comment is that, if EPA determines to provide 
additional time to certify equipment affecting Option 2, then the 
extension should be longer than January 1, 1998, based on TRT's 
appraisal of the amount of time necessary for certification.
    This comment is consistent with a similar comment from JMI, and EPA 
agrees. With today's amendment, EPA will review equipment certified by 
July 1, 1998, and revise post-rebuild PM levels if necessary. A 
``July'' date provides an operator using Option 2 with approximately 6 
months to plan a rebuild strategy to be taken for the subsequent year.

VII. Environmental Impact

    The environmental impacts expected to result from the retrofit/
rebuild program are outlined in the final Regulatory Support Document 
(RSD) for the final rule of April 21, 1993 and can be found in public 
docket A-91-28 (see ADDRESSES section above). Today's amendment does 
not result in any additional emissions reductions beyond those outlined 
in the RSD. However, today's amendment will help ensure that these 
expected reductions are actually achieved by closing an unintended 
compliance loophole. If transit operators were allowed to take 
advantage of the loophole in the 1993 final rule, then PM reductions 
will not be achieved at the level EPA originally anticipated. In 
addition, to the extent that transit operators can avoid installing 
low-emitting technology on buses, such buses will not reflect the 
``best retrofit technology * * * reasonably achievable'' as Congress 
required.

VIII. Economic Impact

    Today's finalized amendment is expected to have no additional 
economic impact compared to the economic impact described in original 
regulations finalized on April 21, 1993. While failure to take today's 
final action could result in reduced costs for those transit operators 
that could take advantage of the loophole, no additional costs 
unaccounted for in the original regulations would be imposed on any 
transit operators as a result of today's action. In conjunction with 
the final rule of April 21, 1993, the costs associated with the program 
have previously been determined to be reasonable and the program to be 
cost-effective.

IX. Administrative Requirements

A. Reporting and Recordkeeping Requirements

    Under the Paperwork Reduction Act of 1980, 44 U.S.C. 3501 et seq., 
EPA must obtain OMB clearance for any activity that will involve 
collecting substantially the same information from 10 or more non-
Federal respondents.
    Subsequent to the final rule of April 21, 1993, EPA received OMB 
approval of the Information Collection Request (ICR) document having 
EPA ICR number 1702.01 and OMB ICR number 2060-0302. It is approved for 
use through July 31, 1997. That ICR document estimates the public 
reporting, record keeping, and testing burden for collecting 
information necessary to implement and oversee the Urban Bus Retrofit/
Rebuild Program. The public burden is estimated to be a total of 7,214 
hours, and includes estimates of time required of equipment 
manufacturers and transit operators. Equipment manufacturers are

[[Page 14635]]

required to establish and retain for a period of five years after 
equipment certification, information regarding the manufacturing and 
testing of retrofit equipment. This includes such information as 
production drawings, testing results and analysis, a description of 
quality control plans, and in-service data or analyses. Transit 
operators are required to maintain records concerning activities 
associated with retrofitting and rebuilding urban buses, such as 
reviewing program regulations, purchasing retrofit/rebuild equipment, 
engine rebuilds and replacement, and maintaining evidence showing 
compliance with the retrofit/rebuild program. Copies of the ICR 
document may be obtained from Sandy Farmer, Information Policy Branch 
(mail code 2136); EPA; 401 ``M'' Street SW, Washington DC, 20460, or by 
calling (202) 260-2740.
    EPA is preparing an ICR document, to submit for OMB approval, that 
would continue information collection past the July 31, 1997 expiration 
date of the above-mentioned document. Comments regarding the burden 
estimate or any other aspect of this collection of information, 
including suggestions for reducing this burden, may be sent to: Chief, 
Information Policy Branch, EPA, 401 ``M'' Street S.W., Washington DC, 
20460; and to the Office of Information and Regulatory Affairs, Office 
of Management and Budget, Washington DC, 20503, marked ``Attention: 
Desk Officer for EPA.''

B. Impact on Small Entities

    EPA has determined that it is not necessary to prepare a regulatory 
flexibility analysis in connection with this final rule. EPA has also 
determined that this rule will not have a significant economic impact 
on a substantial number of small entities.
    The urban bus operators affected by the program regulations are not 
small businesses. In addition, EPA determined that the original 
regulations of the Urban Bus Retrofit/Rebuild Program (58 FR 21359, 
April 21, 1993) did not have an adverse impact on a substantial number 
of small entities. Today's amendment does not impose any new costs 
above those included in the original rulemaking. Today's action will 
affect only a few businesses using the retrofit fleet averaging program 
and will likely have an effect solely on a small portion of the 
businesses' fleet. There may be benefit to those small business 
entities that manufacture retrofit/rebuild equipment, since urban bus 
operators may be required to use such equipment.

C. Executive Order 12866

    Under Executive Order 12866 (58 FR 51735 (October 4, 1993)), EPA 
must determine whether a regulatory action is ``significant'' and 
therefore subject to OMB review and the requirements of the executive 
order. The order defines ``significant regulatory action as one that is 
likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector, 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 entitlement, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof;
    (4) Raise novel legal policy issues arising out of legal mandate, 
the President's priorities, or the principles set forth in the order.
    EPA has determined that this rule is not a ``significant regulatory 
action'' under the terms of Executive Order 12866 and is therefore not 
subject to OMB review.

D. Unfunded Mandates Act

    Section 202 of the Unfunded Mandates Reform Act of 1995 (signed 
into law on March 22, 1995) requires EPA to prepare a budgetary impact 
statement before promulgating a rule that includes a Federal mandate 
that may result in expenditure by State, local, and tribal governments, 
in aggregate, or by the private sector, of $100 million or more in any 
one year.
    Section 203 of the Unfunded Mandates Reform Act requires EPA to 
establish a plan for obtaining input from and informing, educating and 
advising any small governments that may be significantly or uniquely 
affected by the rule.
    Under section 205 of the Unfunded Mandates Act, EPA must identify 
and consider a reasonable number of regulatory alternatives before 
promulgating a rule for which a budgetary impact statement must be 
prepared. EPA must select from those alternatives the least costly, 
most costly, most cost effective, or least burdensome alternative that 
achieves the objectives of the rule, unless EPA explains why this 
alternative is not selected or the selection of this alternative is 
inconsistent with law.
    Today's amendment contains no Federal mandates that result in 
expenditure by State, local, or tribal governments, in aggregate, or by 
the private sector, of $100 million in any one year. With the April 21, 
1993 promulgation of the urban bus retrofit/rebuild regulations, EPA 
estimated that the nationwide cost would range from $2 million to $37 
million per year, depending upon the year.

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 Fairness 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. This rule is not ``major rule'' as defined by 5 
U.S.C. 804(2).

List of Subjects in 40 CFR Part 85

    Environmental protection, Confidential business information, 
Imports, Labeling, Motor vehicle pollution, Reporting and recordkeeping 
requirements, Research, Warranties.

    Dated: March 19, 1998.
Carol M. Browner,
Administrator.

    For the reasons set out in the preamble, Part 85 of Title 40 of the 
Code of Federal Regulations is amended as follows:

PART 85--[AMENDED]

    1. The authority citation for part 85 is revised to read as 
follows:

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

    2. Section 85.1403 is amended by revising paragraph (c)(1)(iii)(B) 
introductory text, (c)(1)(iii)(C) introductory text, and (c)(1)(iv); 
removing paragraph (c)(1)(iii)(C)(6); and adding paragraph 
(c)(1)(iii)(D) to read as follows:


Sec. 85.1403  Particulate standard for pre-1994 model year urban buses 
effective at time of engine rebuild or engine replacement.

* * * * *
    (c) * * *
    (1) * * *
    (iii) * * *
    (B) For the TLF calculations as specified in paragraph (c)(1)(iv) 
of this section, post-rebuild particulate emissions levels for a 
specific engine model shall be equal to the following:
* * * * *
    (C) For TLF calculations as specified in paragraph (c)(1)(iv) of 
this section, post-rebuild particulate emission levels

[[Page 14636]]

for a specific engine model shall be equal to the following:
* * * * *
    (D) For TLF calculations as specified in paragraph (c)(1)(iv) of 
this section, post-rebuild particulate emission levels for a specific 
engine model shall be equal to the following:
    (1) 0.10 g/bhp-hr, for any engine model (other than those indicated 
in paragraph (c)(1)(iii)(D)(4) of this section) for which equipment has 
been certified by July 1, 1998 as meeting the emission and cost 
requirements of paragraph (b)(1) of this section for all affected urban 
bus operators;
    (2) For any engine model for which no equipment has been certified 
by July 1, 1998 as meeting the requirements of paragraph (b)(1) of this 
section for all affected urban bus operators, but for which equipment 
has been certified by July 1, 1996 as meeting the emission and cost 
requirements of paragraph (b)(2) of this section for all affected urban 
bus operators, the post-rebuild particulate emission level shall equal 
the lowest emission level (greater than or equal to 0.10 g/bhp-hr) 
certified by July 1, 1998 for any such equipment;
    (3) For any engine model for which no equipment has been certified 
by July 1, 1998 as meeting the emission and cost requirements of 
paragraph (b)(1) or (b)(2) of this section, the post-rebuild 
particulate emission level shall equal the pre-rebuild particulate 
level;
    (4) For any engine model with a pre-rebuild particulate level below 
0.10 g/bhp-hr, the post-rebuild particulate emission level shall equal 
the pre-rebuild particulate level;
    (5) Notwithstanding paragraph (c)(1)(iii)(D)(3) of this section, if 
by July 1, 1998, no equipment has been certified to meet the emission 
requirements of paragraph (b)(1) or (b)(2) of this section for any of 
the engine models listed in the table at paragraph (c)(1)(iii)(A) of 
this section, then the post-rebuild particulate levels shall be the 
pre-rebuild particulate levels specified in the table at paragraph 
(c)(1)(iii)(A) of this section; and
    (6) Notwithstanding paragraph (c)(1)(iii)(D)(3) of this section, if 
by July 1, 1998, equipment has been certified to meet the emissions 
requirements of paragraph (b)(1) or (b)(2) of this section for any of 
the engine models listed in the table at paragraph (c)(1)(iii)(A) of 
this section, but no equipment has been certified by July 1, 1998 to 
meet the life-cycle cost requirements of paragraph (b)(1) or (b)(2) of 
this section, then the post-rebuild particulate levels shall be as 
specified in the following table:

----------------------------------------------------------------------------------------------------------------
                                                                                                        Post-   
                                                                                        Pre-rebuild   rebuild PM
                 Engine model                               Model year sold               PM level    level  (g/
                                                                                         (g/bhp-hr)    bhp-hr)  
----------------------------------------------------------------------------------------------------------------
DDC 6V92TA....................................  1979-1987.............................         0.50         0.30
                                                1988-1989.............................          .30          .30
DDC 6V92TA DDECI..............................  1986-1987.............................          .30          .30
DDC 6V92TA DDECII.............................  1988-1991.............................          .31          .25
                                                1992..................................          .25          .25
                                                1993 (no trap)........................          .25          .25
                                                1993 (trap)...........................          .07          .07
DDC Series 50.................................  1993..................................          .16          .16
DDC 6V71N.....................................  1973-1987.............................          .50          .50
                                                1988-1989.............................          .50          .50
DDC 6V71T.....................................  1985-1986.............................          .50          .50
DDC 8V71N.....................................  1973-1984.............................          .50          .50
DDC 6L71TA....................................  1990..................................          .59          .59
                                                1988-1989.............................          .31          .31
DDC 6L71TA DDEC...............................  1990-1991.............................          .30          .30
Cummins L10...................................  1985-1987.............................          .65          .46
                                                1988-1989.............................          .55          .46
                                                1990-1991.............................          .46          .46
Cummins L10 EC................................  1992..................................          .25          .25
                                                1993 (trap)...........................          .05          .05
Alternatively-fueled Engines..................  Pre-1994..............................          .10          .10
Other Engines.................................  Pre-1988..............................          .50          .50
                                                1988-1993.............................        (\1\)       (\1\) 
----------------------------------------------------------------------------------------------------------------
(\1\) New engine certification level.                                                                           

    (iv) To determine which particulate (PM) emission level from 
paragraph (c)(1)(iii) of this section is used for a particular model 
year engine in a fleet for the TLF of a given calendar year, use the 
following table:

------------------------------------------------------------------------
                       Year for which                                   
   Model year of        TLF is being     Particulate emission level (see
       engine            calculated         Sec.  85.1403(c)(1)(iii))   
------------------------------------------------------------------------
1993...............  1996-1998........  Pre-Rebuild Level.\1\           
                     1999-2001........  Post-Rebuild Level.\3\          
                     2002-thereafter..  Post-Rebuild Level.\4\          
1992...............  1996-1998........  Pre-Rebuild Level.\1\           
                     1999-2003........  Post-Rebuild Level.\3\          
                     2004-thereafter..  Post-Rebuild Level.\4\          
1991...............  1996-1997........  Pre-Rebuild Level.\1\           
                     1998-2002........  Post-Rebuild Level.\3\          
                     2003-thereafter..  Post-Rebuild Level.\4\          
1990...............  1996-1999........  Pre-Rebuild Level.\1\           
                     2000-thereafter..  Post-Rebuild Level.\4\          
1989...............  1996-1999........  Pre-Rebuild Level.\1\           
                     2000-thereafter..  Post-Rebuild Level.\4\          
1988...............  1996-1998........  Pre-Rebuild Level.\1\           

[[Page 14637]]

                                                                        
                     1999-thereafter..  Post-Rebuild Level.\3\          
1987...............  1996-1998........  Post-Rebuild Level.\2\          
                     1999-thereafter..  Post-Rebuild Level.\3\          
1986...............  1996-1997........  Pre-Rebuild Level.\1\           
                     1998-thereafter..  Post-Rebuild Level.\3\          
1985...............  1996.............  Pre-Rebuild Level.\1\           
                     1997-thereafter..  Post-Rebuild Level.\2\          
1984...............  1996-thereafter..  Post-Rebuild Level.\2\          
Pre-1984...........  1996-thereafter..  Pre-Rebuild Level.\1\           
------------------------------------------------------------------------
\1\ The pre-rebuild PM level established in paragraph (c)(1)(iii)(A) of 
  this section.                                                         
\2\ The post-rebuild PM level established pursuant to paragraph         
  (c)(1)(iii)(B) of this section.                                       
\3\ The post-rebuild PM level established pursuant to paragraph         
  (c)(1)(iii)(C) of this section.                                       
\4\ The post-rebuild PM level established pursuant to paragraph         
  (c)(1)(iii)(D) of this section.                                       

* * * * *
[FR Doc. 98-7767 Filed 3-25-98; 8:45 am]
BILLING CODE 6560-50-P