[Federal Register Volume 66, Number 66 (Thursday, April 5, 2001)]
[Rules and Regulations]
[Pages 18156-18179]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-8276]



[[Page 18155]]

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Part II





Environmental Protection Agency





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40 CFR Parts 51 and 85



Amendments to Vehicle Inspection Maintenance Program Requirements 
Incorporating the Onboard Diagnostic Check; Final Rule

  Federal Register / Vol. 66, No. 66 / Thursday, April 5, 2001 / Rules 
and Regulations  

[[Page 18156]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51 and 85

[FRL-6962-9]
RIN 2060-AJ03


Amendments to Vehicle Inspection Maintenance Program Requirements 
Incorporating the Onboard Diagnostic Check

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: Today's action revises the Motor Vehicle Inspection/
Maintenance (I/M) requirements to: extend the deadline for beginning 
onboard diagnostic (OBD) inspections from January 1, 2001 to January 1, 
2002; allow areas showing good cause up to an additional 12 months' 
delay; allow for a one-time-only, one-cycle phase-in period for the 
OBD-I/M check; revise and simplify the failure criteria for the OBD-I/M 
check; address State Implementation Plan (SIP) credit modeling for the 
OBD-I/M check; and, allow for limited exemptions from some OBD check 
failure and rejection criteria for certain model year vehicles. Today's 
action also provides additional flexibility to state I/M programs by 
allowing such programs to suspend traditional I/M tests on model year 
(MY) 1996 and newer, OBD-equipped vehicles provided such vehicles are 
subject to a check of the OBD system. Lastly, this action provides 
EPA's guidance regarding certain discretionary elements associated with 
the successful implementation of the OBD check in an I/M environment.

DATES: This rule will take effect May 7, 2001.

ADDRESSES: Materials relevant to this rulemaking are contained in 
Public Docket No. A-2000-16. The docket is located at the Air Docket, 
Room M-1500 (6102), Waterside Mall SW., Washington, DC 20460. The 
docket may be inspected between 8:30 a.m. and 12 noon and between 1:30 
p.m. until 3:30 p.m. on weekdays. A reasonable fee may be charged for 
copying docket material.

FOR FURTHER INFORMATION CONTACT: David Sosnowski, Office of 
Transportation and Air Quality, Transportation and Regional Programs 
Division, 2000 Traverwood, Ann Arbor, Michigan, 48105. Telephone (734) 
214-4823.

SUPPLEMENTARY INFORMATION:
I. Table of Contents
II. Summary of Rule
III. Authority
IV. Public Participation
    A. Extension of the Implementation Deadline
    B. Reducing the Testing Burden: The Continuing Role of 
Traditional I/M Tests
    C. Reducing the Testing Burden: Technical Issues
    D. Reducing the Testing Burden: Legal Issues
    E. Retaining the Gas Cap Test
    F. OBD-I/M Credit Modeling
    G. OBD-I/M Failure Criteria
    H. OBD-I/M Rejection Criteria
    I. Applicability of Repair Waivers for OBD-equipped Vehicles
V. Discussion of Major Issues
    A. Emission Impact of the Proposed Amendments
    B. Impact on Existing and Future I/M Programs
VI. Economic Costs and Benefits
VII. Administrative Requirements
    A. Administrative Designation
    B. Reporting and Recordkeeping Requirement
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Act
    E. Executive Order 13132: Federalism
    F. Consultation and Coordination With Indian Tribal Governments
    G. Executive Order 13045: Protection of Children from 
Environmental Health Risks and Safety Risks
    H. National Technology Transfer and Advancement Act
    I. Congressional Review Act
    J. Judicial Review

II. Summary of Rule

    Under the Clean Air Act as amended in 1990, 42 U.S.C. 7401 et seq., 
states required to implement vehicle inspection and maintenance (I/M) 
programs were further required to incorporate a check of the onboard 
diagnostic (OBD) computer as part of those programs. On November 5, 
1992, the U.S. Environmental Protection Agency (EPA) published in the 
Federal Register (40 CFR part 51, subpart S) a rule related to state 
air quality implementation plans for I/M programs (hereafter referred 
to as the I/M rule; see 57 FR 52950). At the time the 1992 rule was 
published, certification regulations for OBD had not been finalized, 
and so EPA reserved space in the I/M rule to address OBD-I/M 
requirements at some later date. Since 1992, EPA has twice amended the 
I/M rule to address various aspects of the OBD-I/M check--first, on 
August 6, 1996, and again on May 4, 1998. EPA is taking action today to 
further amend the I/M rule and OBD testing requirements to provide 
states with the greater flexibility they need to better meet local 
needs, to update requirements based upon technological advances, and to 
optimize program efficiency and cost effectiveness.
    Today's action will: (1) Extend the current deadline for mandatory 
implementation of the OBD-I/M inspection from January 1, 2001 to 
January 1, 2002; (2) allow states that show good cause to postpone 
program start for up to an additional 12 months (i.e., January 1, 
2003); (3) allow I/M programs a one-test-cycle phase-in period for the 
OBD-I/M check during which OBD-failing vehicles will only be required 
to be repaired if the vehicle also fails a tailpipe emission test; (4) 
clarify that I/M programs may (at their discretion) use periodic checks 
of the OBD system on model year (MY) 1996 and newer OBD-equipped 
vehicles in lieu of (as opposed to in addition to) existing exhaust and 
evaporative system purge and fill-neck pressure tests on those same 
vehicles; \1\ (5) establish the interim modeling methodology to be used 
by states in their State Implementation Plans (SIPs) to account for the 
inclusion of the OBD-I/M check into their existing I/M networks, such 
method to be used prior to mandatory use of the MOBILE6 emission factor 
model as well as subsequent iterations of EPA's mobile source emission 
factor model; (6) revise and simplify the current list of Diagnostic 
Trouble Codes (DTCs) that constitute the OBD-I/M failure criteria to 
include any DTC that leads to the dashboard Malfunction Indicator Light 
(MIL) being commanded on; and (7) provide states the opportunity to 
exempt certain model year, OBD-equipped vehicles from a limited number 
of readiness code rejection criteria, with the number of readiness 
exemptions allowed varying by model year.
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    \1\ It is important to note that OBDII technology is only 
required on MY 1996 and newer vehicles and therefore the OBD-I/M 
check is not an option for MY 1995 and older vehicles. For this and 
other reasons, tailpipe programs and capacity will be needed for 
some time to come.
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    The goal of today's action is to update and streamline requirements 
and to remove regulatory obstacles that would impede the effective 
implementation of the OBD-I/M testing required of all OBD-I/M programs 
under the Clean Air Act as amended in 1990. By extending the deadline 
by which states must begin implementation of OBD-I/M inspections and by 
also allowing a phase-in period for those inspections, EPA hopes to 
provide states the time necessary to better educate both the public and 
the testing and repair industries regarding this important emission 
control technology, and to reduce the potential for start-up 
difficulties. EPA also hopes to help states maximize the efficiency and 
cost effectiveness of their I/M programs by allowing them to streamline 
the overall testing process with regard to MY 1996

[[Page 18157]]

and newer, OBD-equipped vehicles. EPA also wants to make clear that 
states that wish to begin implementation of the OBD-I/M check earlier 
than the deadline(s) established by this action are encouraged to do so 
and may claim credit for the check immediately (per the methodology 
described under ``OBD-I/M Credit Modeling'').
    It should be pointed out that it is not the goal of this action to 
provide comprehensive guidance on how to successfully implement OBD-I/M 
testing in an I/M program. Separate guidance addressing the non-
regulatory aspects of OBD-I/M implementation will be released in 
conjunction with today's action and made available to the public via 
EPA's web site and by request to the FOR FURTHER INFORMATION CONTACT 
person listed above.
    Today's action is based upon EPA's findings gathered during three 
separate OBD-I/M pilot studies, which focused on the following aspects 
of OBD-I/M testing: (1) OBD's effectiveness as compared to existing 
exhaust emission testing; (2) OBD's effectiveness as compared to 
existing evaporative system testing; and (3) the unique implementation 
issues associated with incorporating checks of the OBD system into a 
traditional I/M setting. Elements of today's action are also based upon 
the comments EPA received in response to the September 20, 2000 notice 
of proposed rulemaking (NPRM) associated with today's action (see 65 FR 
56844) as well as on recommendations made by the OBD Workgroup of the 
Mobile Source Technical Review Subcommittee established under the 
Federal Advisory Committee Act (FACA). All public comments, EPA's 
responses to those comments not addressed here, the results of EPA's 
pilot studies, and the FACA workgroup recommendations can be found in 
the docket for this action (Public Docket No. A-2000-16). The detailed 
basis for each amendment was explained in the September 20, 2000 
proposal and will not be repeated here except as appropriate in 
response to comments.

III. Authority

    Authority for today's action is granted to EPA by sections 182, 
202, 207, and 301 of the Clean Air Act as amended (42 U.S.C. 7401, et 
seq.).

IV. Public Participation

    Written comments on the September 20, 2000 NPRM were received from 
14 sources prior to the close of the public comment period on October 
20, 2000, including two requests for an extension of the comment 
period. In response to these requests for an extension, on October 30, 
2000, the public comment period was re-opened for 14 days, and closed 
again on November 13, 2000. Between October 20, 2000 and November 13, 
2000, an additional 35 sets of comments were received. In addition to 
the comments received during the official comment period, EPA also 
received late comments from three sources--two sets from commenters 
that had not submitted comments during either comment period, and a 
third amending comments previously submitted. The commenters fell into 
five main categories: individual states and state organizations (24 
sets of comments); automotive manufacturing, fuel, and service 
industries (eight sets of comments); the I/M testing and equipment 
industries (six sets of comments); environmental and health interests 
(two sets of comments); and private citizens (12 sets of comments). The 
state comments included two state organizations--the Northeast States 
for Coordinated Air Use Management (NESCAUM) and State and Territorial 
Air Pollution Program Administrators/Association of Local Air Pollution 
Control Officials (STAPPA/ALAPCO)--as well as comments from 20 state 
environmental agencies (Oregon, New Jersey, Illinois, New Hampshire, 
Vermont, Wisconsin, Utah, North Carolina, Missouri, Pennsylvania, 
Connecticut, Colorado, Texas, Georgia, Massachusetts, Alaska, Maryland, 
California, New York, and Rhode Island). The commenters from the 
automotive industry included: Alliance of Automobile Manufacturers 
(AAM); Association of International Automobile Manufacturers (AIAM); 
Automotive Parts and Service Alliance (APSA); Motor and Equipment 
Manufacturers Association (MEMA); Ethyl Corporation (Ethyl); Mitsubishi 
Motors of America (Mitsubishi); National Automobile Dealers Association 
(NADA); American Automobile Association (AAA); and Automotive Service 
Association (ASA). Commenters for the I/M testing industry were 
represented by: SPX Corporation (SPX); Environmental System Products, 
Incorporated (ESP); Applied Analysis (AA); Waekon Corporation (Waekon); 
and Donald Stedman (an inventor of remote sensing devices for assessing 
vehicle emissions). Environmental and public health interests were 
represented by the American Lung Association which submitted both 
individual comments and also took the lead in submitting a separate 
letter of comment co-signed by 18 other local health and environmental 
organizations. Of the comments received from private citizens, nine 
were to transmit and/or support an editorial by Donald Stedman opposing 
OBD-I/M testing and EPA's proposal which appeared in the November 6, 
2000 issue of The Rocky Mountain News. The remaining comments from 
private citizens were either not directly relevant to the specific 
issues raised in this rulemaking, or were used to take issue with 
individual I/M programs in individual states (specifically, 
Pennsylvania and Colorado).
    Because of the extensive (and wide-ranging) nature of the comments 
received, EPA has prepared a separate, ``Response to Comments'' 
document which can be found in the docket for this rulemaking (Public 
Docket No. A-2000-16) as well as online at: www.epa.gov/otaq/regs/im/obd/obd-im.htm. In today's action, EPA will summarize and respond to 
those major comments submitted during the comment period which were 
directly responsive to specific, major elements of the September 20, 
2000 NPRM.\2\ Comments which came in after the deadline for public 
comment, address specific aspects of the Technical Support Document 
(TSD) for this action, or which deal with broader issues related to the 
general subjects touched upon in the rulemaking (i.e., I/M- and OBD-
related issues, generally) but which do not focus on specific elements 
of the proposal will be addressed in the separate ``Response to 
Comments'' document.
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    \2\ The September 20, 2000 NPRM also included a technical 
amendment which drew three comments in support and no negative 
public comment. That amendment and the comments associated with it 
are addressed in the separate ``Response to Comments'' document 
associated with today's action.
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A. Extension of the Implementation Deadline

1. Summary of Proposal
    The current I/M rule established January 1, 2001 as the deadline by 
which all areas required to implement 
I/M program(s) under the Clean Air Act as amended in 1990 were to begin 
testing and failing MY 1996 and newer, OBD-equipped vehicles based upon 
a scan of emission control monitoring information stored in the 
vehicle's onboard computer. In its September 20, 2000 NPRM, EPA 
proposed to extend the deadline for passing and failing MY 1996 and 
newer, OBD-equipped vehicles based upon mandatory 
OBD-I/M inspections to January 1, 2002. EPA also solicited comment on 
whether a slightly longer delay is necessary, given the states' 
possible need to revise rules, software, test

[[Page 18158]]

procedures, and SIPs to address the proposed amendments, asking in 
particular that states consider the role that public outreach and 
technician training will play in their preparation for OBD-I/M testing.
2. Summary of Comments
    Of the comments received, only one state (Oregon) opposed delaying 
the start-up of mandatory OBD-I/M inspections beyond the current 
deadline of January 1, 2001. In its comments, the State expressed 
concern over changing OBD-I/M deadlines, and the difficulty that this 
has created for the State in trying to decide whether to move forward 
with OBD-I/M. Oregon further pointed out that it is required by State 
statute to justify any environmental requirement that is more stringent 
than EPA requirements. In addition to Oregon, one private citizen, 
responding to comments made by his home state regarding the need for a 
delay beyond 2002, voiced his opposition for delaying start-up of OBD-
I/M inspections beyond 2001. This commenter also argued against states 
claiming that they cannot begin OBD-I/M inspections before EPA's latest 
deadline, based upon statutes that bar state regulations from being 
``more stringent'' than required by Federal government, pointing out 
that switching to OBD-I/M inspections as soon as possible can be 
considered to save both time and money (in this commenter's opinion).
    Of the nine commenters that supported the proposed delay to January 
1, 2002 but explicitly opposed delays beyond that date, five were state 
environmental agencies (Illinois, Vermont, Wisconsin, Utah, and 
Alaska), four represented the automotive industry (AAM, APSA, AIAM, and 
NADA), and one represented the I/M testing industry (SPX). Among the 
reasons given for opposing delays beyond 2002 was that it penalizes 
and/or hinders states that start OBD-I/M inspections early and is not 
justified for outreach reasons because training and outreach materials 
have already been developed and are available to the states. In its 
comments, SPX indicated that further delays were unnecessary because I/
M testing equipment sold to states like California, New York, 
Pennsylvania, Virginia, New Jersey, Massachusetts, Georgia, and Rhode 
Island are already equipped to perform OBD-I/M inspections and merely 
require a simple software switch to enable that capability. Alaska 
requested that the final rule clarify that states that choose to do so 
may begin OBD-I/M inspections before the mandatory deadline, and NADA 
recommended that EPA provide incentives for early start-up, perhaps by 
offering more SIP credit for OBD-I/M inspections under the MOBILE5 
emission factor model than was proposed in the September 20, 2000 NPRM.
    Six commenters supported a more generic delay in implementing the 
OBD-I/M inspection without specifying a specific date. These commenters 
included four state environmental agencies (New York, Massachusetts, 
Georgia, and Maryland), the American Lung Association (ALA), and the 
American Automobile Association (AAA). Among the states, New York 
supported additional time for implementation if states demonstrated a 
good faith effort toward implementing the OBD-I/M inspection. Maryland 
suggested it would support delays beyond 2002 in particular to allow 
more data to be gathered regarding the effectiveness of OBD-I/M 
inspections and to allow states more time to revise their regulations. 
Georgia indicated that it supported an additional, optional delay to 
allow states more flexibility and to not over-burden equipment 
manufacturers. The ALA indicated that it might support delays beyond 
2002 if states indicated it was needed and to provide more time for 
outreach efforts, while the AAA, citing its prior experience with 
consumer complaints during the early stages of I/M implementation, 
recommended that the OBD-I/M inspection be delayed ``until it is clear 
that motorists will no longer be unnecessarily burdened and 
frustrated.''
    Among the 10 commenters supporting delays beyond 2002 were two 
state organizations (NESCAUM and STAPPA/ALAPCO), and eight individual 
state environmental agencies (Pennsylvania, Texas, Connecticut, 
Missouri, North Carolina, Rhode Island, New Hampshire, and New Jersey). 
Of the two state organizations recommending extensions beyond the 
proposed deadline of January 1, 2002, STAPPA/ALAPCO proposed the more 
modest extension of July 1, 2002 for states making a good faith effort 
toward implementation. Of the individual states supporting an extension 
beyond January 1, 2002, four (North Carolina, Missouri, Connecticut, 
and Texas) either supported STAPPA/ALAPCO's recommendation explicitly, 
or in spirit. Connecticut indicated that a delay to July 2002 is 
desirable to the State because it coincides with the expiration date 
for the State's current I/M contract.
    The second state organization advocating delays beyond January 1, 
2002--NESCAUM--took a hybrid approach, supporting retention of the 
proposed 2002 start date for areas without pre-existing I/M programs 
while proposing a start date of January 1, 2005 for areas with existing 
I/M programs to allow for a more gradual transition to OBD-I/M testing 
(citing prior bad experiences with rushing implementation of I/M 
measures) as well as to allow for more experimentation within the 
programs themselves and to facilitate additional data gathering and 
public outreach efforts. Three states (New Jersey, New Hampshire, and 
Rhode Island) indicated their support for the NESCAUM proposal, either 
by name or by echoing the NESCAUM-proposed deadlines. New Hampshire 
indicated its intention to begin OBD-I/M inspections in 2001, and 
stipulated that while it supports the NESCAUM proposal, it does not 
support delays beyond the dates listed in that proposal. Rhode Island, 
in turn, indicated its support of the NESCAUM proposal by citing the 
relative newness of its own I/M program (which started January 2000) as 
well as the need to amortize equipment costs and its concern that 
changing the program so soon after start-up could negatively impact the 
ultimate success of the program.
    Taking the middle ground between the STAPPA/ALAPCO and NESCAUM 
proposals, Pennsylvania proposed delaying implementation of the 
OBD-I/M inspection requirement until July 2003. The State also raised 
the issue that some states--like Pennsylvania--cannot be more stringent 
than Federal regulations as a point for EPA to consider in making its 
decision. A variation on this theme was suggested by ASA, which 
recommended that the OBD-I/M inspection be offered on a voluntary basis 
by 2002 before becoming mandatory in 2003. ASA suggested that the 
additional time could be used to gather more data to resolve assorted 
issues related to the implementation of OBD-I/M inspections and to do 
more in the area of public outreach.
    Lastly, two commenters--ESP and its consultant, Peter McClintock of 
Applied Analysis--proposed an alternative mechanism for providing 
states flexibility with regard to the implementation deadline for OBD-
I/M inspections. Under the ESP proposal, EPA would allow states to 
phase-in implementation of OBD-I/M inspection beginning January 1, 
2002. Phase-in of the requirement would be achieved by performing the 
OBD-I/M inspection on MY 1996 and newer, OBD-equipped vehicles as a 
method for screening out clean vehicles from additional testing. Under 
this scenario, if an OBD-

[[Page 18159]]

equipped vehicle passed the OBD-I/M inspection it would complete the 
inspection process and be considered in compliance with the state's I/M 
requirements. If, on the other hand, the vehicle failed the OBD-I/M 
inspection, it would then receive a tailpipe inspection to determine if 
the vehicle qualifies as a gross emitter. If the vehicle fails the 
follow-up tailpipe inspection, it would be required to be repaired to 
correct the DTCs identified by the vehicle's OBD system. If, on the 
other hand, the vehicle passes its follow-up tailpipe inspection, the 
motorist would be allowed to complete the inspection process without 
seeking immediate repairs but would be advised that repairs would be 
required prior to the next inspection cycle. This phase-in option would 
be allowed for one inspection cycle beginning with January 1, 2002. 
Under this scenario, full-fledged OBD-I/M inspections--with repair or 
waiver being required of all OBD-failing vehicles prior to completion 
of the inspection process--would begin no later than January 1, 2003 
for annual inspection programs and January 1, 2004 for biennial 
programs.
3. Response to Comments
    It is clear from the variety of comments received on the start date 
issue that states' interests continue to be as varied on the OBD-I/M 
check as has historically been the case with I/M programs in general. 
The Agency's task in this circumstance is to balance the need to move 
forward on this important environmental measure with the needs and 
desires of states and other interested parties upon whom the success of 
this measure ultimately relies. For example, while EPA has heard from 
many states that additional delays are needed, we have also heard from 
states who wish to take advantage of the benefits of the OBD-I/M check 
as soon as possible, but feel constrained from doing something other 
than what EPA minimally requires.\3\ Furthermore, EPA has also received 
comment from an I/M equipment supplier (i.e., SPX) suggesting that 
states are in many cases already prepared for the OBD-I/M check--at 
least as far as the hardware is concerned. While it is easy to conclude 
based upon comments such as SPX's that many states are more prepared 
for OBD-I/M testing than their comments suggest, the Agency must also 
consider the substantial hurdle software development and installation 
has proven to be for many operating I/M programs during their start-up 
phase. There is no doubt that for many programs even with OBD-I/M 
hardware in place, successful start-up of the OBD-I/M check may not be 
as easy as characterized by SPX.
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    \3\ Both Oregon and Pennsylvania have brought to EPA's attention 
state legislative provisions which limit each state's ability to do 
more than EPA requires in the area of I/M. In response, the Agency 
notes a state which chooses to begin OBD-I/M checks while 
discontinuing other, more traditional I/M tests on OBD-equipped 
vehicles is arguably reducing rather than increasing the existing 
burden on both the test network and the motorist. Interestingly, a 
citizen from Pennsylvania made this very point in his written 
comments to EPA.
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    In developing its response to the many issues and competing 
interests raised with regard to OBD-I/M program start-up, EPA attempted 
to strike a balance that would provide states as much flexibility as 
possible while not constraining those areas that want to move forward 
as soon as possible. The Agency has concluded that allowing states the 
flexibility provided by the following three options will strike the 
balance needed.
    The first option echoes the September 20, 2000 NPRM: States 
choosing to do so may delay implementation of the OBD-I/M test from the 
existing deadline of January 1, 2001 to January 1, 2002.\4\ 
Furthermore, any I/M program that chooses to do so is free to begin the 
OBD-I/M check before January 1, 2002 and may credit the OBD-I/M-tested 
portion of their fleet using the methodology described under the 
section of today's action entitled, ``OBD-I/M Credit Modeling.'' For 
states wanting to start earlier than January 1, 2002, EPA encourages 
them to do so. Nothing in this rule is intended to prohibit or 
discourage a state from incorporating OBD-I/M testing into its I/M 
program before January 1, 2002. The Agency rejected a longer, blanket 
delay for introducing the OBD-I/M check in part due to the fact that 
even those states arguing for more time have regulations, contracts, 
and equipment in place which have at minimum begun to prepare these 
areas for the eventual incorporation of the OBD-I/M check. In fact, the 
Agency relied on these preparations in granting SIP approvals to the I/
M programs in these states. The Agency does recognize, however, the 
significant difference between having these things on paper and being 
prepared to move smoothly forward with implementation. In recognition 
of these issues EPA provides today for two additional options for 
extending the full implementation of the OBD-I/M check beyond January 
1, 2002.
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    \4\ An I/M program will be considered to have fully incorporated 
the OBD-I/M check once all MY 1996 and newer, OBD-equipped vehicles 
subject to the program are required to receive the OBD-I/M check and 
are also required to be repaired and retested upon failure of the 
OBD-I/M check.
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    The first of these additional options allows states up to an extra 
12 months to begin implementation of the OBD- 
I/M check, provided they can show just cause to the Agency that up to 
12 months later than January 1, 2002 is ``the best a state can 
reasonably do'' in terms of implementing OBD-I/M tests into their I/M 
program. Such requests for extension will be subject to approval by the 
EPA Administrator and approval or disapproval of these requests will be 
subject to notice-and-comment rulemaking. The factors to be considered 
by a state in concluding that only a late start will allow for 
successful implementation include but are not limited to:
     Contractual impediments,
     Significant hardware and/or software deficiencies,
     Data management software deficiencies,
     The need for additional training in the testing and repair 
communities, and
     The need for additional outreach and public education.
    The second of these additional options (which can be adopted 
separately or in addition to the up to 12 months' extension discussed 
above) allows a state with an existing tailpipe program to adopt a 
phase-in approach to help ease the introduction of full-fledged OBD-I/M 
testing on MY 1996 and newer, OBD-equipped vehicles. This phase-in 
option can be used for one complete test cycle (i.e., for one year in 
annual programs and for two years in biennial programs). In this option 
the OBD-I/M test is effectively used as a screen to help identify 
vehicles that are clean and for which no additional testing will be 
required beyond the OBD-I/M test.\5\ However, once the vehicle is 
identified as failing the OBD-I/M check, it would then be given a 
second-chance tailpipe test to determine if the fault identified by the 
OBD-I/M check has reached a point

[[Page 18160]]

where the vehicle's current emission performance is adversely effected. 
If the vehicle fails this second-chance tailpipe test, then the vehicle 
must be fixed and return for a retest using the OBD-I/M check; if the 
vehicle passes the second-chance tailpipe test, then it would be 
granted a one-test-cycle grace period during which to seek repairs to 
correct the initial OBD-I/M failure. After the first cycle of this 
phase-in, however, all MY 1996 and newer, OBD-equipped subject vehicles 
would be required to be tested and, if they fail, repaired in 
compliance with the OBD-I/M test results.
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    \5\ Elsewhere in today's action, EPA concludes that, at its 
option, a state may suspend traditional I/M tests like the IM240, 
ASM, purge, and fill-neck pressure tests on MY 1996 and newer, OBD-
equipped vehicles once OBD-I/M testing is fully incorporated into 
the state's operating program. States concerned that the Agency's 
data and analysis of OBD effectiveness are too limited are free to 
continue parallel testing of these OBD-equipped vehicles with both 
the OBD-I/M and traditional I/M tests. The Agency acknowledges that 
engineering principles and design aspects of OBD might lead one to 
conclude that the combination of OBD-I/M testing and tailpipe tests 
provides additive emission reduction benefits. Such potential 
benefits are not currently quantified. EPA will work with states to 
develop such credits as appropriate. See the discussion later in 
this notice under ``Reducing the Testing Burden.''
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    During the phase-in period described above, the test procedure for 
MY 1996 and newer, OBD-equipped vehicles shall work as follows: (1) The 
vehicle is presented for I/M testing and is given a complete OBD-I/M 
test (i.e., the MIL, readiness, and DTC checks); (2) if the vehicle 
passes this check it shall be considered a pass for I/M purposes and 
the vehicle can be registered (or get a sticker as the case may be); 
(3) if the vehicle fails the OBD-I/M check it will then receive the 
traditional I/M test(s) used for MY 1996 and newer vehicles prior to 
the introduction of the OBD- 
I/M check; (4) if the vehicle passes the tailpipe check it can be 
registered (or stickered) until the next test cycle when failure of the 
OBD-I/M test will result in repairs being required, regardless of the 
results of any other test(s) that may be conducted at that time; \6\ 
and, (5) if the vehicle fails the tailpipe test (again after also 
failing the OBD-I/M check) it must be repaired and retested using the 
OBD-I/M check for the retest (i.e., it shall be repaired to turn off 
the MIL and meet the applicable readiness requirements).
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    \6\ During this phase-in cycle, it is recommended that the 
motorist be advised to seek repairs to correct the cause of MIL 
illumination prior to returning for testing during the next testing 
cycle, when such repairs will be mandatory.
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    This phase-in approach provides the benefit of faster test times 
for clean cars (as determined by the OBD-I/M check) by getting them 
successfully through the system very quickly. In addition, the use of 
traditional I/M test(s) in tandem with the OBD-I/M check on a subset of 
the OBD-equipped fleet failing the initial OBD-I/M check allows the 
program to focus on getting the dirtiest OBD-I/M test failures fixed 
during this initial, phase-in cycle. In concept, this phase-in approach 
is very similar to the use of phase-in cutpoints in a traditional I/M 
tailpipe program. Both approaches have the same goal: to keep overall 
failure rates low while targeting the dirtiest vehicles for earliest 
repair.
    Even without a phase-in like the one allowed by today's action, EPA 
does not expect the difference between failure rates for the existing 
tailpipe test and the OBD-I/M check to be significant. Based upon its 
pilot testing, EPA expects an overall increase in failure rate of 
approximately 0-4% for the state's entire in-use fleet (at this time, 
and depending upon the I/M tailpipe test currently in place for MY 1996 
and newer vehicles). It is notable that during this same period of time 
older model year vehicles which normally have a higher failure rate on 
average and are not equipped with OBD technology will be retiring from 
the fleet and largely offsetting the increase on a program-wide basis.
    States which choose to use the phase-in option described above may 
claim full OBD-I/M credit toward an attainment demonstration \7\ 
provided the phase-in cycle has been completed and mandatory repair is 
required of all OBD-I/M failing vehicles for at least one full test 
cycle prior to the I/M area's CAA-established attainment date for the 
pollutants for which the I/M program is required. States which do not 
complete the phase-in of the OBD-I/M check at least one full test cycle 
prior to their attainment deadline may not claim additional credit for 
the OBD-I/M test toward their attainment demonstration, but may 
continue to claim the level of credit applicable to the tailpipe test 
used to second-chance pass OBD-equipped vehicles during the phase-in 
period.
---------------------------------------------------------------------------

    \7\ See discussion of the interim methodology for modeling OBD-
I/M credit under ``OBD-I/M Credit Modeling'' later in this action.
---------------------------------------------------------------------------

    To summarize, in today's action, EPA is offering states three types 
of flexibility with regard to start-up of the OBD-I/M testing 
requirement. States may: (1) Delay mandatory implementation until 
January 1, 2002; (2) take up to an additional 12 months beyond January 
1, 2002 to January 1, 2003 upon a showing of just cause and substantial 
need; and/or (3) take up to one additional test cycle to phase-in the 
OBD-I/M testing requirement in conjunction with traditional I/M 
testing, following the steps described above. These three start-up 
options are intended to balance competing goals and provide sufficient 
flexibility to the states. The end result of offering these options is 
that depending on the length of its cycle, a state may postpone the 
date for full OBD-I/M implementation (i.e., mandatory repair of all 
subject OBD-equipped vehicles that fail the OBD-I/M check) to as late 
as January 1, 2005 (i.e., January 1, 2002 plus one 12 month delay in 
addition to a biennial cycle of dual, phase-in testing).
    Although the second and third options for extending and/or phasing-
in the full implementation of the OBD-I/M check were not included in 
the original NPRM for this rulemaking, EPA believes that these two 
additional options represent a logical outgrowth of the comments 
received. The Agency further maintains that it is therefore justified 
in finalizing these options without re-proposing this element of the 
original proposal to address these additional options.

B. Reducing the Testing Burden: The Continuing Role of Traditional I/M 
Tests

1. Summary of Proposal
    Based upon EPA-led pilot studies that showed the OBD-I/M check to 
be at least as effective as traditional tailpipe, purge, and fill-neck 
pressure tests when it comes to identifying vehicles in need of repair, 
EPA proposed to insert clarifying text into the current I/M rule 
indicating that states may reduce the existing testing burden on MY 
1996 and newer, OBD-equipped vehicles by relying on the OBD-I/M check 
alone. This would replace the current program that required a state to 
conduct both its current I/M test(s) as well as the OBD-I/M check, once 
the latter becomes mandatory. Such clarifying text would be inserted 
into those sections of the 
I/M rule currently addressing OBD-I/M testing requirements, such as the 
performance standards, test procedure requirements, and data reporting 
requirements.
2. Summary of Comments
    Many of the comments received regarding the proposal to allow OBD- 
I/M-only testing on MY 1996 and newer, OBD-equipped vehicles were aimed 
at clarifying and articulating the continuing role of traditional 
tailpipe and/or evaporative system tests in I/M programs in light of 
EPA's proposal. Three commenters (Massachusetts, NESCAUM, and ESP) 
requested that EPA clarify its support for continuing use of existing 
I/M tests on MY 1995 and older vehicles, while two commenters (ALA and 
ESP) wanted the Agency to stress the need to retain the current I/M 
program infrastructure in states--even if the OBD-I/M check alone is 
used on a portion of the subject vehicle population. One commenter 
(STAPPA/ALAPCO) wanted EPA to clarify that states may add an OBD-I/M 
check to the continued operation of their tailpipe program, while 
another commenter (ESP) argued that the OBD-I/M check and traditional 
tailpipe tests

[[Page 18161]]

are largely complementary with regard to the vehicles they fail and 
should therefore be used together. ESP then went on to suggest that EPA 
``has determined that it must choose one test or the other, but not 
both,'' and that the NPRM reflected EPA's bias in favor of OBD.
    Three commenters (AAA, Pennsylvania, and ESP) requested that EPA 
provide states flexibility in incorporating the OBD-I/M check into 
their I/M programs, while six commenters (Illinois, Vermont, New 
Hampshire, Missouri, Georgia, and AAA) advocated the exclusive use of 
OBD-I/M testing on MY 1996 and newer, OBD-equipped vehicles (although a 
subset of these commenters also suggested that traditional I/M testing 
might be appropriate as a fallback to address vehicles with OBD 
readiness problems, a comment which will be addressed under the 
discussion addressing ``OBD-I/M Rejection Criteria''). Five commenters 
(AAMA, AIAM, Mitsubishi, NADA, and one private citizen) voiced their 
support for complete replacement of traditional I/M tests on MY 1996 
and newer, OBD-equipped vehicles in favor of the OBD-I/M check, 
indicating further their opposition to dual-testing options, such as 
fallback testing to address readiness monitoring issues.
    Several commenters--ALA, ESP, New Jersey, and others--expressed 
concern that discontinuing the I/M tailpipe inspection on MY 1996 and 
newer, OBD-equipped vehicles would eliminate a valuable source of 
information for overseeing vehicle manufacturers and for triggering 
emission-related recalls. Several of these commenters suggested that 
EPA's proposal would effectively allow ``the fox to guard the hen 
house,'' particularly if dealerships are allowed to test and repair 
their affiliated manufacturer's product line. Citing recent OBD-related 
recalls of Honda and Toyota model vehicles, ALA states: ``The 
manufacturer's self-generated OBD data will launch potentially costly 
(and embarrassing) recalls. As a result, a manufacturer--and its 
affiliated dealers--may have an incentive to cheat.''
3. Response to Comments
    It is not EPA's intention to suggest that the use of the OBD-I/M 
check on MY 1996 and newer vehicles will or should affect how MY 1995 
and older vehicles are tested. These vehicles--which are not equipped 
with standardized OBD systems--must continue to be tested using the 
tailpipe and/or evaporative system tests currently in place for as long 
as necessary for states to meet their CAA goals. Furthermore, EPA 
believes that the current I/M testing infrastructure is highly valuable 
and necessary to test the MY 1995 and older vehicles in a state's 
fleet, at a minimum. EPA also believes that the need to test MY 1995 
and older vehicles using traditional I/M testing mechanisms will 
continue for many more years to come, though the states themselves 
remain the ultimate judge concerning their I/M program needs, based 
upon local conditions and fleet age distributions.
    In addition, commenters have expressed concerns with regard to the 
OBD system's long term durability, and the appropriateness of the OBD 
system's failure threshold over the full life of a vehicle. While EPA 
is optimistic about the success of OBD systems, until real world aging 
of these systems occurs it will not be possible to evaluate the 
question of OBD durability. EPA encourages states to take account of 
this uncertainty as they consider their I/M infrastructure needs for 
future testing of MY 1996 and newer, OBD-equipped vehicles. EPA will be 
monitoring these and other issues such as the performance of OBD 
systems both during the emissions warranty period of up to 8 years/
80,000 miles as well as during the full useful life of vehicles.
    With regard to providing flexibility to the states to dual test 
OBD-equipped vehicles, EPA hereby clarifies states are free to utilize 
both the OBD-I/M and traditional I/M tests on OBD-equipped vehicles. 
The purpose of this action is to provide states more--not less--
flexibility with regard to how they comply with the CAA's requirement 
to perform OBD-I/M inspections on OBD-equipped vehicles as part of 
their I/M programs. Prior to today's action, the requirement was to 
perform both OBD-I/M and traditional I/M tests on MY 1996 and newer, 
OBD-equipped vehicles, beginning no later than January 1, 2001. Today's 
action merely allows states that wish to do so to suspend the 
traditional I/M test on the segment of their fleets that are OBD-
equipped in conjunction with the start-up of OBD-I/M checks on those 
same vehicles. States are not obligated by today's action to switch to 
OBD-only testing on the OBD-equipped portion of their subject vehicle 
fleet; states that choose to do so may continue to perform whatever I/M 
inspection they want on OBD-equipped vehicles--provided they also 
comply with the minimum, CAA requirement to perform the OBD-I/M check 
on these same vehicles as well.
    Concerning the suggestion that the OBD-I/M check and traditional 
tailpipe tests like the IM240 are complementary, based on the 
observation that the two tests tend to fail different universes of 
vehicles during the Wisconsin pilot program, it must be pointed out 
that the vehicles which pass both tests (approximately 95% of the 
fleet) overlap entirely. To argue that the two tests do not agree 
focuses on the small fraction which fail one or the other test and not 
the overwhelming majority which pass both tests. However, in focusing 
on the small fraction of vehicles that fail the IM240 or the OBD-I/M 
check but not both, EPA recognizes that both programs will have some 
vehicles which could be considered ``false'' failures. For example, a 
vehicle in an IM240 program could fail if not fully preconditioned but 
would pass on an immediate retest without any intervening repairs. 
Similarly, an OBD system could detect a non-recurring problem and store 
a DTC which could be detected as a failure in an I/M program but would 
self-clear with continued operation of the vehicle. The pilot program 
data suggested that at most only 1 to 2 percent of the vehicles tested 
had such ``false'' failures. EPA does not expect this false failure 
rate to increase with the age or mileage of the fleet. In contrast, we 
do expect that the number of real failures detected by either test will 
increase with the age and mileage of the fleet and the number of real 
failing vehicles detected by both tests will also increase. 
Consequently, the percent of failures (real and false) detected by both 
tests will increase substantially as the OBD-equipped fleet ages.
    With regard to the characterization that it determined in advance 
that only one or the other test would prevail as a result of its OBD-I/
M test effectiveness pilots, EPA objects. The Agency received approval 
for the design of its OBD tailpipe pilot from the Mobile Sources 
Technical Review Subcommittee\8\ prior to beginning its pilot testing 
program. The Subcommittee was kept informed with quarterly reports 
during the two year test period and an OBD workgroup under the 
Subcommittee monitored the entire testing program. The OBD workgroup 
was an open workgroup

[[Page 18162]]

which included members from the state I/M agencies, I/M testing 
contractors (including ESP), testing equipment manufacturers, the 
automotive manufacturing industry, and academic representatives. EPA 
believes that conducting the design of the test program and the program 
itself in the public view with stakeholder involvement provided greater 
objectivity than this comment alleges.
---------------------------------------------------------------------------

    \8\ The Mobile Source Technical Review Subcommittee (MSTRS) is a 
subcommittee of the Clean Air Act Advisory Committee, established 
under the 1972 Federal Advisory Committee Act (FACA). The MSTRS 
advises EPA regarding mobile source related issues and includes a 
wide-range of members representing interested stakeholders from the 
mobile source community as well as experts in the field.
---------------------------------------------------------------------------

    Concerning the ``fox guarding the hen house'' issue generally, EPA 
independently determines the quality of the OBD system, both during the 
certification process and as part of EPA's in-use compliance program; 
we do not leave this determination to the manufacturers and their 
associated dealerships. With regard to dealerships testing their 
affiliated manufacturer's product line in decentralized, test-and-
repair based I/M programs, the introduction of OBD-I/M testing does not 
change the dynamics of this testing scenario substantively from the 
situation that currently exists with decentralized I/M programs in 
operation now where dealers and other service providers are allowed to 
both test and repair vehicles (albeit with tailpipe and other 
traditional I/M testing techniques as opposed to the OBD-I/M check). 
The existing I/M rule requires that states conduct covert audits of all 
stations in the program's test network with vehicles set to fail the 
inspection--specifically to identify fraud arising from the potential 
for conflict of interest when testing and repair are performed by a 
single entity. There is nothing in today's action that will weaken 
these existing requirements. Furthermore, even in a decentralized, 
test-and-repair program, not all subject vehicles will go to 
dealerships to be tested and fixed. Other service providers will also 
participate in the program--service providers without the specific type 
of conflict the commenters suggest exist with dealerships. A problem 
significant enough to warrant a recall presumably would come to the 
program's attention through routine analysis of test results. Should 
any abuse occur, it would become obvious to auditors looking at dealer 
X's test records that dealer X is failing its brand-name vehicles at a 
lower rate than when the same makes and models are tested by other 
stations in the test network. Therefore, while the potential for abuse 
exists, EPA believes that there are currently mechanisms in place to 
detect and correct it.
    Concerning the implication that a dealership has an incentive to 
withhold OBD-I/M test information that could potentially trigger a 
recall, EPA believes the same incentive exists under traditional 
tailpipe testing. As indicated above, decentralized I/M programs 
currently allow dealerships to test their affiliated manufacturer's 
product line. This practice has not stopped EPA or California from 
identifying vehicles in need of recall.
    It should also be pointed out that the Honda and Toyota cases cited 
were not triggered as a result of I/M testing. While I/M tests are 
helpful in identifying individual gross polluters in need of repair, 
traditional I/M tailpipe tests are not rigorous enough to use as the 
basis for a recall of an entire class of vehicles. EPA's (and CARB's) 
enforcement efforts with regard to vehicle manufacturers and their 
products involve a three-pronged approach. First, the vehicle prototype 
is tested as part of the new car certification process. As part of our 
certification program, each manufacturer is required to submit 
extensive data on their OBD systems. This data is available for review 
and taken into consideration by EPA prior to issuing the certificate of 
conformity. Second, at EPA's discretion, manufacturers can be subjected 
to Selective Enforcement Audits (SEAs) which involve enforcement 
quality, end-of-the-line testing to ensure that vehicles are meeting 
their certification standards once they actually go into production. 
Lastly, there is in-use compliance testing which involves the 
independent recruitment and enforcement quality testing of vehicles to 
determine if they continue to meet their certification standards in 
actual use (which includes a specific evaluation of the OBD system for 
vehicles so equipped). Nothing in today's action will weaken or lessen 
these current, and ongoing, enforcement efforts. Additionally, EPA 
finalized its compliance assurance (CAP 2000) regulations in 1999 (40 
CFR 23906) to further emphasize EPA's commitment to ensuring compliance 
with the Agency's certification regulations--including OBD--throughout 
the useful life of the vehicle.
    Nevertheless, EPA wants to acknowledge the concerns that have been 
raised by some environmental advocates, some state agencies and other 
OBD stakeholders that OBD-I/M testing may raise new and qualitatively 
different compliance issues in contrast to traditional tailpipe I/M 
testing unanticipated by today's action and existing enforcement and 
oversight mechanisms. Some of these concerns focus on conflict-of-
interest issues that could arise if automotive dealerships are allowed 
to conduct OBD-I/M testing. EPA acknowledges that the many advantages 
of the computerized OBD testing approach could bring with them the need 
for some different requirements to ensure the integrity of the overall 
program. Therefore, EPA will undertake a public process that includes 
stakeholder involvement and continued monitoring by EPA so that the 
Agency can ensure program integrity and successful implementation. If 
information develops suggesting the need to revise this program, EPA 
will consider amending these regulations as appropriate.

C. Reducing the Testing Burden: Technical Issues

1. Summary of Proposal
    See ``Summary of Proposal'' for section IV (B)(1) above.
2. Summary of Comments
    Many commenters addressing EPA's proposal to reduce the testing 
burden on OBD-equipped vehicles raised technical concerns with regard 
to EPA's assessment of the effectiveness of OBD-I/M testing as well as 
with the OBD system itself. Though many of the issues raised will be 
summarized and addressed in the separate ``Response to Comments'' 
document discussed earlier, EPA nevertheless believes that several of 
the more frequently raised issues warrant being discussed here. The 
following, therefore, is a subset of the technical issues raised with 
regard to EPA's proposal to reduce the testing burden on OBD-equipped 
vehicles.
    Six commenters (MEMA, ASA, New Jersey, ALA, ESP, and Peter 
McClintock of Applied Analysis) stated that there is a need for 
continued data gathering on OBD-I/M effectiveness, particularly with 
regard to assessing the OBD system's long-term durability. Based upon 
the lack of available data on the long-term durability of the OBD 
system itself, three commenters (New Jersey, ESP, and ALA) suggested 
that EPA warn states that choose to suspend traditional I/M tests on MY 
1996 and newer, OBD-equipped vehicles in favor of the OBD-I/M check 
that they may need to revert to traditional I/M testing of these 
vehicles in the future, depending upon the long-term durability of the 
OBD system itself.
    Four commenters (ESP, Applied Analysis, New Jersey, and ALA) 
expressed concern that the OBD system itself may miss high emitting 
vehicles that might be caught if the OBD-I/M check was coupled to a 
traditional I/M tailpipe test, like the ASM or IM240. Conversely, 
several commenters expressed the opposite concern--that the OBD-I/M 
check would fail vehicles that are actually clean. Among the

[[Page 18163]]

technical concerns expressed by commenters with regard to the OBD 
system itself, the following four were cited most often:
    (1) Several commenters expressed the concern that the OBD system 
itself is too sensitive. According to these commenters, the fear of 
possible vehicle recalls creates an incentive for manufacturers to 
design OBD systems that set DTCs too often and frequently well before 
the vehicle's emissions have become a problem. In other words, the 
concern is that the OBD-I/M check might allegedly falsely fail vehicles 
that are clean. Based upon this premise, the commenters maintained that 
the tailpipe test should be used to confirm that OBD-I/M failures 
really deserve to be failed.
    (2) Several of the same commenters that voiced the first concern 
also expressed the opposite concern (i.e., that the OBD system itself 
is not sensitive enough). These commenters focused on the fact that the 
OBD catalyst monitor is optimized for detecting catalyst malfunctions 
leading to excess HC emissions, and concluded from this that the OBD 
catalyst monitor is unable to detect malfunctions which only increase 
non-HC emissions, like CO and/or NOX. Furthermore, because 
the CAA requires that enhanced I/M programs achieve NOX 
reductions, a few of these commenters maintained that this omission on 
the part of OBD is not only a technical problem, but an allegedly legal 
one as well.
    (3) Several commenters expressed concern that the OBD system itself 
is too frequently ``not ready'' (i.e., some monitors have not been run 
to determine whether certain components or systems are functioning 
properly). Furthermore, because the emission status of an OBD-equipped 
vehicle with unset readiness codes is technically unknown, these 
commenters expressed the belief that some high-emitting vehicles may 
escape detection without a back-up tailpipe test.
    (4) Lastly, several commenters maintained that the OBD system 
itself is too simplistic. Because the OBD system does not monitor for 
the synergistic impact of multiple, marginal component deterioration, 
these commenters raised the possibility that the OBD system may miss 
problems that cumulatively result in high emissions.
    Regarding the third issue--high emitters missed because of unset 
readiness codes--many commenters cited claims made by Peter McClintock 
of Applied Analysis (an ESP consultant) based upon data from Wisconsin 
and Colorado which reportedly found that vehicles with unset readiness 
flags had statistically significant higher levels of emissions. Lastly, 
New Jersey expressed concern that relying on OBD-I/M testing would make 
it difficult to evaluate the effectiveness of I/M programs.
3. Response to Comments
    EPA agrees that the technology of on-board diagnostics needs to be 
monitored continually both as the systems age and as new technology is 
introduced. Although the current studies used to support this 
rulemaking were performed on relatively new vehicles (i.e., six years 
old or newer), EPA found nothing in these studies to suggest that an 
inherent problem exists in the technology which will be exacerbated 
with age or mileage. Furthermore, the Agency has already begun testing 
high mileage, OBD-equipped vehicles and the findings of this study 
suggest that the OBD system remains durable even at mileages well 
beyond 100,000 miles. It should also be pointed out that the onboard 
computer which makes the decision as to whether or not to light a MIL 
and/or set a DTC is a solid state system and contains no ``triggers'' 
that change the computer's pass/fail decision-making logic based upon 
vehicle age and/or mileage. In fact, incorporation of such a 
``trigger'' system would violate both 40 CFR 86.000-16 and section 
203(a)(3)(B) of the Clean Air Act. Both sections explicitly prohibit 
manufacturers from installing devices on vehicles which would have the 
effect of reducing emission control effectiveness. Section 205(a) of 
the Act allows for such violations to be fined at the rate of $2,500 
for each part or component affected.
    Although EPA is optimistic about the durability of OBD-equipped 
vehicles, the Agency cannot say that MY 1996 and newer, OBD-equipped 
vehicles will never need some form of follow-up tailpipe testing at 
some point in the future. Reverting to more traditional 
I/M testing of OBD-equipped vehicles could prove a useful and cost 
effective backstop to the OBD-I/M check. While EPA does not currently 
believe that this is a likely outcome with regard to the OBD-I/M check 
based upon the testing done to date on advanced mileage, OBD-equipped 
vehicles,\9\ the fact of the matter is that there is no reliable 
surrogate for natural vehicle aging that will allow the Agency to 
predict with any certainty what will actually happen to OBD-equipped 
vehicles as they become significantly older than the vehicles studied 
to date. Therefore, EPA plans to continue recruiting and testing OBD-
equipped vehicles as they age, and will revisit its OBD-I/M testing 
recommendations and requirements based upon this testing, if and when 
such becomes warranted. Furthermore, although EPA is committed to 
continuing its study of OBD technology in the future, the Agency does 
not believe this should preclude states from taking advantage of this 
technology at this time.
---------------------------------------------------------------------------

    \9\ In recognition of the potential impact of high mileage on 
OBD effectiveness, EPA recently completed testing and has begun 
analyzing the results from a study of 43 OBD-equipped vehicles with 
mileages of approximately 100,000 miles to as high as 273,000 miles. 
Early indications suggest that high mileage does not have a 
noticeable impact on the effectiveness of the OBD system to detect 
needed repairs.
---------------------------------------------------------------------------

    Concerning the issue of OBD's potential ``over-sensitivity,'' EPA 
points out that it is the job of OBD to ensure that precise fuel 
control is maintained to keep the engine operating near or at peak 
performance and to ensure that fuel economy and emission targets are 
met. All critical emissions-related components must operate within 
acceptable tolerances to maintain fuel control and to ensure the 
durability of the catalyst and engine components. Otherwise, degraded 
driveability, fuel economy, and emissions performance may occur. 
Therefore, what may be perceived as ``over-sensitivity'' is actually a 
result of OBD's attempt to ensure that such degradation in 
driveability, fuel economy, and emission performance does not occur. 
This perceived ``over-sensitivity'' is also a sign of one of OBD's 
strengths--namely, its ability to identify minor, lower-cost repairs 
prior to their becoming more costly repairs. The perception of over-
sensitivity arises from the fact that these repairs are frequently 
identified before they have a significant impact on the emission 
performance of the vehicle, when they are still capable of preserving 
more costly emission control components like the catalyst, which can be 
damaged if these early warnings from the vehicle's OBD system are not 
heeded.
    Concerning OBD's perceived ``under-sensitivity'' (i.e., its current 
failure to monitor for NOX- and/or CO-only catalyst 
malfunctions as well as its inability to detect the synergistic impact 
of minor, but multiple component malfunctions) EPA acknowledges that no 
I/M test identifies all of the vehicles in the fleet which are either 
broken or which have high emissions. Based on this fact it is possible 
that combining different identification methods in an 
I/M program through the use of dual testing may increase the ability of 
the program to identify some vehicles for repair that would otherwise 
be missed under a single test scenario. At this point, however, the 
magnitude of such

[[Page 18164]]

a benefit from dual testing remains unknown and EPA does not currently 
know what increased value this form of testing may offer. What is 
known--based upon EPA's pilot testing--is that repairs identified by 
the OBD system as it is currently designed led to NOX 
reductions at least as great as those achieved from repairs triggered 
by the IM240 test at final cutpoints. Furthermore, EPA believes that 
the current OBD catalyst monitoring strategy is adequate to detect most 
forms of catalyst deterioration, and that the vast majority of 
NOX-related failures will also eventually result in HC-
related failures (and thus will eventually be identified under the 
current monitoring strategy). Nevertheless, EPA will continue to assess 
the potential for additional credit for dual testing, and will work 
with states to develop such credits as appropriate.
    Concerning the argument that because the CAA requires enhanced I/M 
programs to reduce NOX emissions, allowing states to rely on 
OBD-I/M only represents a violation of the Act, EPA disagrees. While it 
is true that based on catalyst monitoring alone, OBD-I/M testing may 
miss a portion of NOX catalyst failures (i.e, those catalyst 
failures which produce only increases in NOX emissions 
without also increasing HC emissions), EPA is confident (based upon the 
results of the Agency's pilot testing) that OBD's comprehensive 
monitoring of all emission control systems and engine operation (such 
as the Exhaust Gas Recirculation (EGR) valve, et cetera) is adequate to 
identify many other NOX failures. Therefore, EPA concludes 
that OBD-I/M testing satisfies the statutory requirement to get 
NOX reductions, as well as HC and CO reductions. 
Furthermore, even if the OBD catalyst monitor does not currently check 
directly for NOX increases, it is still capable of yielding 
NOX reductions. In many cases, a catalyst failing for HC 
will also produce excessive NOX emissions--emissions which 
are then reduced as a by-product of correcting the underlying HC 
failure. EPA's pilot studies have confirmed that OBD-I/M testing does 
in fact achieve HC, CO, and NOX reductions on a fleet-wide 
basis which equal or exceed the reductions currently obtainable from 
tailpipe tests such as the IM240. It should also be noted that CARB has 
proposed adding monitoring requirements for NOX-only 
catalyst malfunctions to be phased-in for MY 2004-2007 vehicles meeting 
Low-Emitting Vehicle (LEV) II standards in their upcoming regulatory 
amendments (Mail-Out #MSC 99-12, May 26, 1999). EPA agrees with this 
proposal and may include a similar proposal as part of its future OBD 
regulations.
    Concerning the possible use of traditional I/M testing as a 
fallback for OBD-equipped vehicles with unset readiness codes, EPA 
believes that the readiness issue can be adequately addressed without 
resorting to fallback testing by employing the exemptions from the 
readiness rejection criteria allowed by today's action (i.e., two or 
fewer unset readiness codes for MY 1996-2000 vehicles, and one unset 
readiness code for MY 2001 and newer--see discussion under ``OBD-I/M 
Rejection Criteria'' later in this action). At this time, the Agency 
believes that the technical evaluation that it has performed (and its 
review of other evaluations) is consistent with this conclusion. With 
regard to the use of tailpipe testing in the case of vehicles which 
exceed the readiness exemptions allowed by today's action, the Agency 
believes that an exceedingly small number of vehicles will fall into 
this category. Review of data from the Wisconsin pilot indicates that 
at most 1 to 2 percent of the OBD-equipped fleet may qualify as 
exceeding the readiness exemption allowed by today's action; the 
percent of vehicles exceeding this readiness exemption is expected to 
decrease as improvements to the OBD system are made. The Agency 
believes that the best method for dealing with vehicles exceeding the 
readiness exemption is to reject them and require that the unset 
readiness monitors be set prior to testing as this will maximize the 
usefulness of the OBD-I/M system check. However, a state's 
discretionary use of limited fallback testing to address this issue is 
clearly not prohibited by today's action. Successful programs which 
choose to use this type of fallback testing will monitor the rate at 
which vehicles exceed the readiness code exemption. An increasing 
pattern of vehicles being presented as ``not ready'' at the time of 
initial testing may suggest attempts to clear OBD problem codes by 
disconnecting and reconnecting the battery without completing 
appropriate repairs. EPA expects states to take appropriate action to 
address such issues should they arise.
    Concerning the claim that OBD not-ready vehicles show a 
statistically significant higher rate of emission problems, neither Dr. 
McClintock nor the other commenters citing his study supplied EPA with 
the data upon which this statistical conclusion was reportedly based. 
Nevertheless, EPA is aware that the study used ``fast pass'' tailpipe 
emissions data to represent the full IM240 emission levels of 
individual vehicles. EPA disagrees with this methodology based upon the 
conclusion that so-called ``fast pass'' emission levels are only valid 
for establishing gross indicators of whether the vehicle is likely to 
be clean or dirty, but cannot be used to identify an actual, absolute 
emission measurement that is representative of the vehicle in question. 
EPA is aware of an unpublished analysis \10\ which shows that if the 
McClintock analysis was performed properly using full-length as opposed 
to fast-pass IM240's, then no statistical difference would be found 
between the failure rates of ``ready'' versus ``not ready'' vehicles.
---------------------------------------------------------------------------

    \10\ The results of this unpublished analysis were presented by 
Robert Klausmeier, an OBD consultant, to a gathering of states and 
other interested parties sponsored by NESCAUM. A copy of this 
presentation has been included in the docket for today's action.
---------------------------------------------------------------------------

    EPA also believes that its own pilot testing provides a basis for 
refuting the claim made by Dr. McClintock that current I/M tailpipe 
data gathered from I/M test lanes can be used to show that OBD is 
failing to identify a large number of high emitting vehicles. As part 
of its OBD tailpipe pilot testing, EPA recruited a small number of 
vehicles with no MIL illuminated but which appeared to have high 
tailpipe emissions based upon testing performed in I/M test lanes in 
both Arizona and Colorado. EPA found that of the 17 vehicles procured 
meeting these criteria 15 passed a subsequent, quality-controlled IM240 
test performed under more consistent, laboratory-controlled conditions 
without receiving any repairs. Furthermore, EPA is aware of a test 
program which is ongoing in the state of Colorado which has recruited 
an additional 12 MIL-off, high lane-based emission vehicles. Of these 
12 potential high emitters ``missed'' by OBD, EPA has found that six 
were false lane failures \11\ based upon subsequent, laboratory-
controlled confirmatory testing. Among the remaining six vehicles, EPA 
has found four trucks which have an OBD design deficiency which the 
Agency was aware of prior to this test program and which is a matter of 
discussion with the manufacturer. Of the two remaining vehicles, one 
was not able to have its emissions verified through Federal Test 
Procedure (FTP)

[[Page 18165]]

testing due to the lack of a four-wheel drive dynamometer at the 
laboratory performing confirmatory testing and the other vehicle lacked 
sufficient documentation to determine the cause of the emissions 
problem.
---------------------------------------------------------------------------

    \11\ It should be noted that the lane recruitment criteria in 
the Colorado study included looser IM240 cutpoints than were used in 
the EPA OBD tailpipe pilot and that second-chance testing was also 
used to lower the potential for lane-based false failures. EPA 
believes these differences in lane recruitment criteria account for 
the lower percentage of false failures among the lane-performed 
IM240's included in the Colorado study as compared to EPA's sample 
of 17 vehicles.
---------------------------------------------------------------------------

    Lastly, with regard to a state's ability to perform program 
evaluations after switching to OBD-only testing on MY 1996 and newer, 
OBD-equipped vehicles, EPA does not believe that switching to an OBD-
based inspection for I/M prevents a state from evaluating the I/M 
program's overall effectiveness. EPA has guidance available (EPA420-S-
98-015, October 1998, ``I/M Program Effectiveness Methodologies'') 
which describes methodologies which may be used to evaluate an 
operating I/M program. Currently available techniques include the use 
of remote sensing technologies and the random, independent sampling of 
the fleet with appropriate tailpipe testing. EPA believes that these 
techniques are adequate to evaluate OBD-based testing as well as more 
traditional I/M programs. Additionally, EPA is willing to work with 
states to develop methodologies which they feel are more appropriate 
for use on an OBD-and/or non-OBD-tested fleet.

D. Reducing the Testing Burden: Legal Issues

1. Summary of Proposal
    See ``Summary of Proposal'' for section IV (B)(1) above.
2. Summary of Comments
    Three commenters (ESP, ALA, and Applied Analysis) argued that 
Congress meant for enhanced I/M programs to use both tailpipe and OBD-
I/M testing on MY 1996 and newer, OBD-equipped vehicles. ESP further 
commented that the CAA requires ``the measurement of tailpipe 
emissions'' which means that EPA cannot allow states to suspend 
tailpipe testing in favor of OBD-I/M checks because the OBD system does 
not measure emissions, but merely infers the potential for increased 
emissions by monitoring individual components and systems. To 
substantiate its claim that the OBD-I/M check does not qualify as an 
``emission test,'' ESP cites Mail-Out #96-34a from the California Air 
Resources Board (CARB) which states that OBD systems do not ``measure 
tailpipe emissions directly.'' Because EPA's OBD requirements reflect 
those adopted by CARB, ESP concludes that CARB's statements regarding 
OBD's status as an emission test apply equally to the Federally 
certified OBD system.
    Citing a DC Circuit Court ruling (Natural Resources Defense 
Council, Inc. v. EPA, 22 F.3d 1125, 1143--D.C. Cir. 1994) that found 
EPA was required by the CAA to include two tests per covered vehicle in 
its enhanced I/M performance standard (i.e., an emission test and a 
visual component check), ESP concluded that EPA's proposal to require 
only OBD-I/M testing on MY 1996 and newer, OBD-equipped vehicles was in 
violation of the DC Circuit Court's ruling. ESP also maintained that 
EPA's proposal violates the CAA's requirement that I/M programs be 
centralized, based upon ESP's interpretation of the OBD system as being 
inherently decentralized (i.e., the actual monitoring system is 
installed on each individual vehicle) even if the scan of the OBD 
computer is performed at a centralized testing facility. ESP further 
argued that the National Highway System Designation Act of 1995 (which 
barred EPA from automatically discounting the SIP credit afforded 
decentralized I/M programs as compared to centralized I/M programs) did 
not change the CAA's requirement that I/M programs be centralized 
unless decentralized programs could be proven to be equally effective.
    ESP also maintained that Congress indicated its understanding that 
OBD is not an emission test by listing both emission testing and 
inspection of the onboard diagnostic system as separately required 
elements among the minimum program elements to be included in an 
enhanced I/M program (see CAA sections 182(c)(3)(C)(v) and (vii), 
``Serious Areas--Enhanced Vehicle Inspection Program--State Program''). 
ESP further suggested that this separate listing of emission testing 
versus OBD inspection prevents EPA from finalizing its proposal to 
allow states to reduce the testing burden on OBD-equipped vehicles.
    Lastly, two commenters (ESP and Ethyl Corporation) raised 
objections regarding the proprietary nature of the OBD monitoring 
strategies employed by individual manufacturers. Both commenters argued 
that without a full, public disclosure of information claimed as 
confidential business information by the vehicle manufacturers when it 
was supplied to EPA during the certification process, the public cannot 
comment on the adequacy of EPA's proposal to allow the OBD- 
I/M check to replace traditional I/M tests on OBD-equipped vehicles.
3. Response to Comments
    EPA disputes ESP's claim that the DC Circuit Court ruling cited is 
applicable to the issue of whether or not individual enhanced I/M 
programs are required to perform both tailpipe emission tests and the 
OBD-I/M check on MY 1996 and newer, OBD-equipped vehicles. The cited 
ruling addressed the minimum program elements that were to be included 
in EPA's enhanced I/M performance standard under CAA section 
182(c)(3)(B)(i) but did not address the minimum program elements or 
model year coverage required of individual state programs under section 
182(c)(3)(C). The performance standard itself does not establish 
minimally required program elements; instead, when taken as a whole and 
run through the MOBILE emission factor model (along with local area 
data for such variables as fleet age distribution, average temperature, 
local fuel characteristics, et cetera) the performance standard 
generates an area-specific emission reduction target for the state to 
meet or beat. It is not unusual for a state's program to differ 
substantially from the applicable performance standard with regard to 
individual program elements and parameters. For example, while all the 
performance standards in the I/M rule include annual testing, the 
majority of programs adopted by the states employ biennial testing. 
Furthermore, while the DC Circuit Court ruling required EPA to include 
emission testing and visual component checks on all subject model years 
in its enhanced I/M performance standards (i.e., no model year 
exemptions), it made no such finding with regard to individual state 
programs. The court certainly did not say that all state programs must 
include both OBD-I/M and tailpipe testing on all model years. In fact, 
the majority of operating I/M programs include some form of model year 
exemption for new and/or older vehicles. It is also routine practice 
for a state program to use different test types and standards on 
different vehicles, based upon model year and vehicle type. As long as 
the state program can get the same or better emission reductions as 
would the program assumed in the relevant performance standard, the 
state has a great deal of flexibility in defining the specific 
combination of program elements it will adopt--provided it meets the 
statutory minimum in CAA section 182(c)(3)(C). EPA therefore maintains 
that states that exercise their discretion to suspend existing I/M 
tests on MY 1996 and newer, OBD-equipped vehicles in favor of the OBD-
I/M check on those same vehicles are merely employing the same sort of 
flexibility they currently use with regard to model year exemptions, 
test frequency, and

[[Page 18166]]

test type coverage, and that such exemptions are fully consistent with 
section 182(c)(3)(C).
    Regarding the CAA's intention to require enhanced I/M programs to 
include both tailpipe emission testing and OBD-I/M inspections because 
``emission testing'' and ``onboard diagnostics'' are listed separately 
in the list of mandated elements for enhanced I/M programs--EPA again 
disputes ESP's interpretation. First, the CAA does not specify 
``tailpipe'' emission testing at any point--just ``emission testing.'' 
It is EPA's contention that a test to detect emissions from the 
vehicle's evaporative system qualifies as an ``emission test'' under 
the Act's requirements. Therefore, a state program which chooses to 
cover its MY 1996 and newer, OBD-equipped vehicles with the OBD-I/M 
check and a separate gas cap evaporative emission test can be 
considered to be conducting both an ``emission test'' and an OBD-I/M 
check on that particular class of vehicle. Furthermore, the Act does 
not state that an emission test is required of every vehicle subject to 
the I/M program, merely that the program include some level of emission 
testing. To test this interpretation, EPA points to the separate 
requirement for OBD-I/M testing. If ESP is correct in maintaining that 
the OBD-I/M and emission testing requirements are separate and equal 
requirements under the CAA because they are listed separately, and if 
ESP further maintains that emission testing is required of all subject 
vehicles, then it naturally follows that OBD-I/M testing should be 
applicable to all subject model years as well. Though this conclusion 
flows from the logic of ESP's argument, it is obviously absurd because 
it is impossible to perform an OBD-I/M inspection on vehicles that are 
not equipped with an OBD system to begin with (i.e., MY 1995 and older 
vehicles). By the same token, EPA maintains that the Act does not 
mandate emission testing on all subject vehicles, just that the 
enhanced I/M program include emission testing among the program 
elements employed.
    Regarding ESP's claim that the OBD-I/M check itself is not an 
emission test, EPA acknowledges that this is an available 
interpretation with regard to the CARB definitions and requirements 
cited, but disputes the conclusion that this has any bearing on the 
flexibility states may exercise in their development of I/M programs, 
per the above discussion. Furthermore, EPA does not agree that allowing 
a test such as the OBD-I/M check to replace tests such as the tailpipe, 
fill-neck pressure, and purge tests reflects a ``weakening'' of Federal 
requirements, but believes it is more appropriately an available 
flexibility for states. Based upon its pilot testing, EPA believes that 
it has demonstrated that the OBD-I/M check is at least equivalent to 
the currently available I/M tailpipe and evaporative fill-neck and 
purge tests in terms of reducing emissions and identifying vehicles in 
need of repair.
    Regarding the Act's requirement for centralized testing, EPA 
believes that the OBD-I/M check is a test type and not a network 
design. Furthermore, the OBD-I/M check itself is clearly conducted at 
the test facility--whether centralized or decentralized--and not in 
each vehicle as the MIL is illuminated.
    Lastly, with regard to the claim that full disclosure of OBD 
certification information is necessary for the public to evaluate EPA's 
proposal and for the successful implementation of OBD-I/M in general, 
EPA points out that it finalized its Service Information Rule on August 
9, 1995 (60 FR 40474). This rule requires that vehicle manufacturers 
make available to aftermarket service providers any and all information 
needed to make use of a vehicle's emission control diagnostic system. 
EPA is currently drafting an NPRM to propose changes to the 1995 
regulations to further improve the accessibility of service and repair 
information for the automotive aftermarket and I/M programs. We expect 
the proposal to be issued in the Spring of 2001. Furthermore, while it 
is true that there is some variance from manufacturer to manufacturer 
in the design of their systems, EPA believes that all of the 
information needed to make use of or comment on the OBD system is or 
will be covered under EPA's Service Information Rule as described 
above.
    In response to the comments EPA received from Ethyl Corporation, 
which alleged that a greater volume of information than is currently 
available is required for the public to comment on EPA's OBD-I/M 
proposal, the Agency does not believe that OBD technology's use in I/M 
raises information availability issues separate from our obligations 
under the Service Information Rule described above. Furthermore, 
today's action does not introduce the OBD-I/M check as an 
I/M test; rather, today's action provides states greater flexibility 
with regard to the OBD-I/M requirements originally established in 1996. 
Arguably, Ethyl's comments would have been more appropriate to that 
rulemaking, as opposed to the current action. In addition, in a 
separate action Ethyl has petitioned the Agency regarding our CAP 2000 
and Heavy-Duty diesel rulemakings to compel the availability of 
information similar to the OBD certification information requested here 
on similar (if not identical) issues. It is EPA's intention to consider 
this comment in its response to that petition and in the context of a 
planned NPRM in the Spring of 2001 which will address service 
information availability.
    Additionally, EPA is working with automobile manufacturers and 
Weber State University to develop a Web Site designed specifically for 
use by I/M programs that will provide easy access for states to obtain 
manufacturer information of particular interest to I/M programs. 
Examples of the information that will be found on this Web site when it 
is launched include (but is not limited to) diagnostic link connector 
locations and technical service bulletins for vehicles with readiness 
problems.
    It should be noted that as with any new testing element, additional 
issues may be identified in the course of implementation. EPA is 
committed to continually address new issues regarding OBD-I/M 
implementation after this rulemaking goes into effect, and as 
appropriate. EPA will also continue to work with manufacturers and I/M 
programs to ensure that the information needed by states to 
successfully implement the OBD-I/M check is available to them.

E. Retaining the Gas Cap Test

1. Summary of Proposal
    While EPA's pilot testing supports allowing states to streamline 
their testing programs with regard to MY 1996 and newer, OBD-equipped 
vehicles, it also supports EPA's recommendation that states currently 
performing the gas cap pressure test on MY 1996 and newer vehicles 
retain that test, even after mandatory OBD-I/M inspections are begun.
2. Summary of Comments
    Seven commenters (New Jersey, Illinois, Pennsylvania, Missouri, 
Colorado, Texas, and ESP) supported retaining a separate gas cap check 
that is conducted in addition to the OBD- 
I/M check. Two commenters (AIAM and a private citizen) maintained that 
the gas cap test should be suspended because: (1) It is redundant on 
vehicles equipped with OBD evaporative emission monitors; (2) there 
have been documented instances of problems with gas cap testing 
equipment; and (3) EPA does not have data to quantify the benefits of 
conducting the gas cap check in addition to the conventional OBD- 
I/M check.

[[Page 18167]]

3. Response to Comments
    EPA's decision to recommend that states retain the gas cap check in 
conjunction with the OBD-I/M inspection is based on three factors:
    (1) The gas cap pressure test is designed to find leaking gas caps 
with an equivalent hole size of less than 0.010 inches in diameter 
which is considerably more stringent than the 0.040 inch leak that OBD 
is designed to monitor. Although a stricter OBD evaporative leak 
detection threshold of 0.020 inches in diameter will be phased-in by MY 
2002, this is still less stringent than the current gas cap pressure 
test.
    (2) Data from the 30 vehicle evaporative emission pilot study shows 
that vehicles with an induced leak in the gas cap of 0.020 inches in 
diameter emitted significantly more evaporative emissions than the 
certification standard. This leaking cap was not detected with an OBD 
leak monitor designed to meet the 0.040 inch diameter leak detection 
standard.
    (3) Data from the Wisconsin I/M program shows a much higher 
incidence of gas caps which failed the I/M gas cap check than were 
detected by the OBD evaporative emission monitor.
    EPA acknowledges that more test data would be desirable to 
determine the cost effectiveness of conducting the gas cap test in 
conjunction with the OBD-I/M check. If more data are collected which 
suggest that the newest OBD evaporative emission monitors (i.e., the 
0.020 inch leak monitors) are capable of adequately detecting the vast 
majority of leaking gas caps detected by the gas cap pressure test, 
then EPA may recommend that states discontinue the separate gas cap 
pressure test. However, at present, EPA finds the gas cap pressure test 
to be a simple, accurate, and time-efficient supplement to the OBD-I/M 
check. Therefore, EPA stands by its original recommendation that states 
currently conducting the gas cap pressure test on MY 1996 and newer, 
OBD-equipped vehicles continue to conduct this test, even after the 
OBD-I/M check becomes mandatory. To claim gas cap testing credit under 
MOBILE5, therefore, states will need to continue conducting the gas cap 
test, or adjust their credit claims accordingly. In addition, MOBILE6, 
when it is released, will allow states that retain the gas cap test on 
OBD-equipped vehicles to model additional emission reduction credit for 
the gas cap pressure test in addition to that assessed for the OBD-I/M 
check alone.
    Lastly, concerning the comment that there have been documented 
instances of problems with the gas cap test: this comment is based on a 
single instance of a flawed design for a single gas cap adapter and was 
limited to a single manufacturer's vehicles. The adapter has 
subsequently been redesigned and proven to be acceptable for the 
vehicles in question.

F. OBD-I/M Credit Modeling

1. Summary of Proposal
    EPA proposed to revise the OBD sections of the I/M performance 
standards to indicate that for modeling purposes, the OBD-I/M testing 
segment of the performance standard overlaps but does not add to the 
credit already assessed for testing MY 1996 and newer vehicles. 
Furthermore, prior to release of MOBILE6, the credit from OBD-I/M 
testing would utilize (as opposed to being added to) the credit already 
assessed for the testing of MY 1996 and newer vehicles in the states' 
I/M SIPs. Therefore, with the exception of the gas cap test, 
traditional I/M tests could be dropped on MY 1996 and newer vehicles in 
favor of OBD-I/M testing on those same vehicles without affecting an 
area's ability to meet the applicable performance standard. 
Effectively, this meant that for areas currently performing IM240 on MY 
1996 and newer vehicles, the credit for OBD-I/M testing would equal 
IM240 (at whatever cutpoint the state was using on MY 1996 and newer 
vehicles prior to the switch to OB--I/M testing), while for areas using 
the idle test on these same vehicles, the credit for OBD-I/M testing 
would equal the idle test (again, at applicable cutpoints). This ``no 
net increase/no net loss'' credit approach was specifically intended to 
be an interim modeling methodology, to be used only with the MOBILE5 
model (which does not include the capability to model OBD-I/M checks 
directly), prior to mandatory use of MOBILE6 and subsequent mobile 
source emission factor models (which will include the OBD-I/M check as 
a separate, credited I/M program element).
2. Summary of Comments
    A significant number of comments were received on the issue of how 
much SIP credit should be accorded to the OBD-I/M test prior to release 
and mandatory use of the MOBILE6 emission factor model. The minority of 
commenters on this issue (five states) supported the proposed policy 
and the degree of their support varied. Three of those five--Illinois, 
Missouri, and New York--unequivocally supported no credit loss for the 
OBD-I/M check being performed in lieu of tailpipe testing as an interim 
modeling methodology prior to release and mandatory use of the MOBILE6 
emission factor model. New York stated that the policy rewards states 
which elected to use more stringent tests. Two other states--Utah and 
Colorado--tied their support for the policy to MOBILE6. Utah only 
supported the credit if MOBILE6 is released on time (i.e., by late 
January 2001), but otherwise supported OBD- 
I/M testing being afforded an IM240 level of credit for all programs to 
use when performing SIP and conformity modeling. Colorado supported the 
proposed credit policy but only until enough new data is gathered to 
substantiate a more specific level of OBD-I/M credit. Colorado is 
concerned that MOBILE6's OBD-I/M credit assumptions are inflated 
because of the State's findings from its own studies of OBD-I/M 
effectiveness (see discussion of this issue under ``Reducing the 
Testing Burden'').
    The majority of comments on OBD- 
I/M credit were adverse to EPA's proposed approach. Most supported OBD-
I/M credit at a level higher than proposed. Eight states and STAPPA/
ALAPCO commented explicitly that the OBD-I/M check should be given more 
credit, with the majority citing credit equivalent to that afforded the 
IM240 tailpipe test as being an appropriate level of credit for 
consideration for all I/M programs. Several commenters noted that the 
proposed ``no net gain/no net loss'' policy is inequitable because 
certain areas have no base I/M tailpipe test upon which to base credit, 
and those with idle tests would receive no NOX credit, 
although EPA's own pilot testing confirms that OBD-I/M testing does, 
indeed, produce NOX emission reduction benefits. One state 
commenter even suggested that credit exceeding the IM240 level might be 
afforded states which use anti-tampering (ATP) checks in addition to 
the OBD-I/M check on MY 1996 and newer, OBD-equipped vehicles. Another 
state commenter noted that not only IM240 credit, but also full 
evaporative system testing credit should be given for doing the OBD-I/M 
check. In addition to the state commenters, two automotive industry 
groups also submitted adverse comments to the credit proposal. AAM and 
NADA noted that the OBD-I/M check should be given ``enhanced'' or IM240 
level credit. One felt this was necessary for equity reasons because 
many areas will not actually use MOBILE6 for several years while the 
other noted that interim credit may not be necessary if MOBILE6 is 
released on schedule. Only one private citizen submitted comment, 
noting that OBD- 
I/M testing should be given up to two

[[Page 18168]]

times the IM240 level of credit (though the reason for this claim was 
unclear).
    Miscellaneous comments were also submitted on the OBD-I/M credit 
proposal which neither supported nor contested the proposed ``no net 
gain/no net loss'' interim modeling methodology proposed for use under 
MOBILE5. Comments by three states and NESCAUM reflected concerns about 
various modeling issues. NESCAUM expressed concern that MOBILE6 will 
not allow the user the option of applying traditional tailpipe testing 
to model MY 1996 and newer, OBD-equipped vehicles because the default 
I/M option for those vehicles is either the OBD-I/M check, the gas cap 
test, or both. California wanted EPA to confirm that it can continue to 
use the OBD credit assumptions already included in its alternative, 
California-specific EMFAC emission factor model. New Jersey expressed 
concern that the proposal is arbitrary and would like to use OBD-I/M 
testing solely for its evaporative system testing capabilities, which 
the State argues should receive full evaporative system credit. New 
Jersey further maintained that EPA's OBD-I/M SIP crediting proposal 
should not be finalized until after MOBILE6 has been fully reviewed and 
modified (if necessary). Alaska indicated that it read the proposal to 
mean that states which begin OBD-I/M testing earlier than required are 
not allowed to claim credit for such testing unless they also perform 
tailpipe and evaporative system testing. Maryland expressed concern 
about the time it is taking to release MOBILE6 and the impact the 
release schedule is having on states' ability to develop SIPs.
    With regard to evaporative system testing and credits, ESP 
supported the proposed retention of gas cap testing, and added that it 
also wanted EPA to consider the potential for future, additional credit 
for as-yet-undefined, non-OBD-based, alternative evaporative system 
tests. Waekon also expressed concern with EPA's crediting of OBD-I/M 
inspections and its implications for non-OBD-based evaporative system 
testing of OBD-equipped vehicles. In particular, Waekon was concerned 
that EPA's crediting proposal and the MOBILE6 emission factor model do 
not take into account the fact that the OBD evaporative system 
monitoring requirement was phased in over MY 1996-99, so that not all 
MY 1996 and newer, OBD-equipped vehicles actually monitor for 
evaporative system deficiencies. Waekon argued that the amount of 
credit afforded OBD-I/M testing for evaporative system monitoring 
should either be reduced, or that additional credit should be allowed 
for states that conduct non-OBD-based evaporative system testing of MY 
1996 and newer, OBD-equipped vehicles in conjunction with the OBD-I/M 
check (based upon the evaporative system monitoring phase-in issue 
discussed above).
3. Response to Comments
    While some commenters supported the proposal that states see ``no 
net gain/no net loss'' of credit for OBD-I/M testing in the interim 
period before MOBILE6 is available and required, the majority of 
commenters supported providing OBD-I/M testing a higher level of credit 
which could be claimed equally by all states performing the OBD-I/M 
check. Most of those commenters advocating more credit for the OBD-I/M 
check expressed the belief that credit equivalent to that granted to 
the IM240 tailpipe test would be an appropriate level of credit for the 
OBD-I/M check. EPA was particularly interested to learn of two 
potential issues with the current credit proposal: (1) That it does not 
account for areas which have no previous tailpipe program upon which to 
base the ``no net gain/no net loss'' credit approach, and (2) the 
inequity that arises with regard to states doing idle testing, which 
would be effectively denied NOX credit for their OBD-I/M 
testing (at least until MOBILE6 is available for state use).
    In its September 20, 2000 NPRM, the Agency noted that the proposed 
``no net gain/no net loss'' credit proposal was intentionally 
conservative and designed to anticipate changes in I/M program 
assumptions such as in-use deterioration which will be reflected in 
MOBILE6. Based upon the equity concerns raised by many of the 
commenters, the Agency now believes that it is reasonable to allow 
states to claim IM240, fill-neck pressure, and purge test credit under 
MOBILE5 during the interim period between the release of MOBILE6 and 
its mandated use. While it is known that modeling total I/M performance 
with MOBILE6 is expected to show a net credit loss from I/M compared to 
what MOBILE5 currently shows (due to numerous changes in in-use 
deterioration rates), we acknowledge that trying to anticipate some of 
the MOBILE6 change outside the context of the other changes included in 
the model is contrary to previous policy with regard to transitioning 
between models and leads to inequitable results. Furthermore, separate 
from the in-use deterioration issue cited above, the Agency believes 
that its pilot testing demonstrates that OBD-I/M testing is at least 
equal to the IM240, fill-neck pressure, and purge tests in terms of 
comparative emission reduction potential.
    It should be stressed that EPA's original proposal was not based 
upon any concern with the OBD-I/M check's performance relative to other 
I/M tests; we are confident that the OBD-I/M check will reliably 
achieve significant emissions reductions (in addition to serving as a 
pollution prevention measure, as discussed elsewhere). It is also 
important to note that STAPPA/ALAPCO indicated in its comments that a 
reconciliation of overall I/M credit should be done once MOBILE6 is 
released.\12\ In response to comments received, EPA believes it would 
be inappropriate to begin to phase-in one aspect of MOBILE6's many 
changes ahead of others and agrees that a separate process (such as the 
one STAPPA/ALAPCO suggests) is a more appropriate venue which will 
place I/M changes in context with other changes incorporated in the 
MOBILE6 model. Therefore, considering that MOBILE6 is expected to be 
released soon after this rule takes effect--and considering the 
majority of commenters requesting higher, and more generally applicable 
credit--EPA has decided it is appropriate to allow states to claim 
credit equivalent to IM240,\13\ fill-neck pressure, and purge test 
credit for the OBD-I/M check as modeled under MOBILE5.
---------------------------------------------------------------------------

    \12\ EPA agrees with STAPPA/ALAPCO's observation, and wishes to 
further stress that states will ultimately have to account for this 
credit adjustment between MOBILE5 and MOBILE6 in their attainment 
and Rate-of-Progress SIPs.
    \13\ By ``IM240'' EPA means IM240 at final cutpoints for MY 1996 
and newer vehicles.
---------------------------------------------------------------------------

    With respect to commenters' requests that the OBD-I/M check also be 
assigned credit under MOBILE5 comparable to that received for gas cap, 
fill-neck pressure, and/or purge evaporative system testing, EPA agrees 
that credit under MOBILE5 is justified for the evaporative system fill-
neck pressure test and the evaporative system purge test, but believes 
that the gas cap pressure test should still be performed by those areas 
wishing to claim credit for the gas cap pressure test (for reasons 
explained under the discussion of ``Retaining the Gas Cap Test''). 
Furthermore, the gas cap pressure test credit will be additive to the 
OBD-I/M credit under both MOBILE5 and MOBILE6.
    With regard to the request that the OBD-I/M check also be assigned 
the credit associated with the ATP check under MOBILE5 in addition to 
the tailpipe and evaporative system credit already discussed, EPA finds 
that such additional credit is not warranted.

[[Page 18169]]

While the OBD-I/M check has been demonstrated to be sufficiently 
rigorous to identify the failed or missing components that would be 
covered by a typical ATP check, the MOBILE5 model already assumes that 
the IM240 has the same ability to detect missing components, and 
therefore already factors ATP check credit into the credit assigned the 
IM240. Allowing states to credit the OBD-I/M check under MOBILE5 as 
being equal to the IM240 plus the ATP check would result in double-
counting credit. EPA therefore rejects the request to include ATP 
credit in addition to the credit otherwise allowed the OBD-I/M check 
under MOBILE5.
    With respect to the miscellaneous comments received regarding OBD-
I/M crediting under MOBILE6, EPA is working to address many of the 
commenters' concerns separate from this action. For example, the Agency 
is considering the need states may have for modeling tailpipe testing 
of MY 1996 and newer, OBD-equipped vehicles under MOBILE6. Special 
procedures may be approved after the release of MOBILE6 to deal with 
this concern. Concerning California's request that EPA address whether 
the State can use the OBD credit assumptions contained in its 
alternative, California-specific EMFAC emission factor model series, 
EPA has a separate approval process in place to address the EMFAC model 
issue and will address this request in the appropriate forum. 
Concerning Alaska's reading of the proposal as somehow disallowing OBD-
I/M credit for states that start OBD-I/M testing earlier than required 
who also suspend or do not add traditional I/M testing of OBD-equipped 
vehicles, EPA concludes that this belief is based upon a 
misunderstanding of the proposal. Today's action affirmatively allows 
states to suspend traditional I/M tests on MY 1996 and newer, OBD-
equipped vehicles in favor of OBD-only testing on those same vehicles 
even before required to do so by today's action. Furthermore, such 
states may claim IM240, fill-neck pressure, and purge test credit under 
MOBILE5 or the OBD-I/M credit that will be available under MOBILE6.
    Waekon Corporation and others have suggested that states should 
receive additional credit if they conduct non-OBD-based evaporative 
system tests in addition to the gas cap pressure test on OBD-equipped 
vehicles that are either ``not ready'' for the evaporative system 
monitor or those vehicles for which the OBD evaporative system 
monitoring requirement does not apply due to phase-in issues. 
Alternatively, it has been suggested that the level of evaporative 
emission credit afforded the OBD-I/M check under either MOBILE5 or 
MOBILE6 should be reduced to account for the fact that some MY 1996-98 
light-duty vehicles and trucks are not equipped with evaporative 
emission monitors during the 20, 40, 90 percent phase-in allowance 
period that covers those model years. In response to this, EPA points 
out that the MOBILE6 model will take the phase-in of the OBD 
evaporative system monitoring requirement into account in assessing the 
evaporative credit attributable to the OBD-I/M test. MOBILE6 will also 
allow states to claim additional credit for conducting the fill-neck 
pressure test on that portion of the OBD-equipped fleet that can be 
tested in this manner. However, while EPA does not prohibit any I/M 
program from conducting functional evaporative system checks on OBD-
equipped vehicles, the Agency also does not believe it is reasonable to 
require such alternative tests for vehicles which are ``not ready'' for 
the evaporative system monitor at the time of the OBD-I/M test, or for 
vehicles which do not have OBD evaporative emission monitors, 
particularly during the phase-in model years of 1996-98. The rationale 
for this position is based on the minimal air quality benefits gained 
from testing a small subset of vehicles, and the untestable nature of 
these vehicles. These concerns are discussed below. If a state wishes 
to conduct a functional test they should consult the Agency who will in 
turn determine the acceptability of the functional test in the I/M 
environment and credit it appropriately.
    EPA does not require functional tests on OBD-equipped vehicles for 
two reasons:
    (1) The incremental emission reduction benefit resulting from 
testing a fraction of MY 1996-98 vehicles not equipped with evaporative 
emission monitors, or those vehicles ``not ready'' for the evaporative 
system monitor at the time of the OBD-I/M test, is likely to be 
extremely small given the low likelihood of evaporative emission 
failures for this small subset of vehicles. Since the introduction of 
vehicles manufactured to comply with the enhanced evaporative emission 
standard in 1996, and the Onboard Refueling Vapor Recovery (ORVR) 
standard in 1998, vehicles have better and more reliable purge systems, 
better component durability obtained through material changes, and 
better engineered component connectors, making them less likely to 
fail.
    (2) With the exception of the gas cap pressure test, most I/M 
programs do not currently conduct functional evaporative emission tests 
on non-OBD-equipped vehicles because of the intrusive and time-
consuming nature of the test(s). EPA therefore believes that--with the 
exception of the gas cap pressure test--it is very unlikely non-OBD-
based functional evaporative system testing will be well received for 
OBD-equipped vehicles, where the practical hurdles to performing the 
test are even higher. Specifically, unless an OBD-equipped vehicle has 
an evaporative emission ``service port,'' MY 1996 and later vehicles 
which are designed to meet the enhanced evaporative emission standard 
are even more difficult to conduct a functional 
I/M evaporative emission test on than pre-1996 model year vehicles. 
Should an alternative method be developed to conduct I/M evaporative 
emission tests on MY 1996 and newer, OBD-equipped vehicles, EPA will 
examine the viability of the alternative and make credit determinations 
appropriately.
    Concerning New Jersey's suggestion that states be allowed to use 
the OBD-I/M test exclusively as a replacement for an evaporative system 
test before full OBD-I/M testing is otherwise required of the OBD-
equipped fleet, EPA again points out that nothing in today's action 
prohibits such an approach. However, because the MIL will illuminate as 
a result of problems related to exhaust emission performance as well as 
evaporative emission performance, such a program would only selectively 
correct problems causing the MIL to illuminate. In some instances, if 
not corrected by the traditional I/M program repairs, the MIL may 
remain illuminated. We expect programs making early, partial use of the 
OBD system will need to provide consumers with extra information 
describing this partial use during a phase-in period so that, once the 
mandatory program is fully implemented, it will be clear that all 
problems causing MIL illumination need to be corrected.

G. OBD-I/M Failure Criteria

1. Summary of Proposal
    EPA proposed to simplify the DTC-based OBD-I/M failure criteria to 
include any DTC that results in the MIL being commanded on. 
Additionally, in the event that the OBD scan reveals DTCs that have 
been set but for which the MIL has not been commanded on, EPA 
recommended that the motorist be advised that a problem may be pending 
but we did not propose to require that the vehicle be failed (unless 
other, non-DTC-based failure criteria have been met, such as a failed 
bulb check).

[[Page 18170]]

2. Summary of Comments
    Nine commenters supported the simplified failure criteria proposed 
in the NPRM (Vermont, Missouri, Georgia, AAM, NADA, ASA, ESP, and ALA) 
while three commenters (Vermont, Illinois, and MEMA) expressed 
reservations regarding various aspects of the proposal. While Vermont 
generally supported the proposal, the State opposed EPA's 
recommendation that pending DTCs be printed on the test report of 
vehicles that otherwise pass the test, indicating the possible 
confusion this would cause the motorist. Illinois opposed failing 
vehicles based upon the bulb check, fearing that lane inspectors would 
confuse the MIL with other dashboard lights. MEMA suggested that EPA's 
proposed simplified failure criteria would result in failing vehicles 
for non-emission related malfunctions.
    Two additional commenters (New York and New Hampshire) also 
supported the simplified failure criteria, but pointed out potential 
conflicts with other aspects of the OBD-I/M check requirements. 
Specifically, EPA was asked to determine: (1) Whether the bulb check 
conflicts with 40 CFR 85.2222 (a) which requires that the OBD-I/M check 
be conducted with the key-on/engine-running; and, (2) whether 40 CFR 
51.357(d), which suggests that a damaged DLC would be grounds for 
rejecting a vehicle, conflicts with 40 CFR 85.2207(b), which indicates 
that a damaged DLC shall be grounds for failing the OBD-I/M check.
3. Response to Comments
    Concerning Illinois' objection to the bulb check, although EPA 
recognizes that poorly trained lane personnel may become confused by 
the number of possible dashboard lights, the Agency does not believe 
this is likely provided training of lane personnel is adequate. 
Furthermore, EPA believes that allowing lane personnel to ignore 
whether or not the MIL is working establishes a bad precedent with 
regard to how seriously the general public responds to MIL-related 
issues and could diminish the emission control potential of the OBD 
system. Therefore, at this time, EPA has decided to require that the 
bulb check remain mandatory as described in the NPRM.
    Regarding MEMA's claim that EPA's simplified failure criteria will 
result in vehicles being failed for non-emission related malfunctions, 
EPA does not believe that such will be the case. The whole purpose of 
the OBD system is to monitor components and systems which, should they 
deteriorate or malfunction, may result in emissions exceeding 1.5 times 
the vehicle's certification standards. When a DTC is set and a MIL 
illuminated, that is an indication that the deterioration or 
malfunction detected--if not corrected--may lead to emissions exceeding 
1.5 times the certification standards. DTCs and MIL illumination are, 
by definition, indicators that emission-related repairs are needed. 
Furthermore, the OBD system, by warning the motorist of conditions that 
may lead to elevated emissions, can itself be considered an emission 
control device. Checks of the OBD system via the bulb check and 
electronic scan of the onboard computer are therefore necessary to 
ensure that the OBD system itself is operating properly.
    Concerning whether or not the printing of pending DTCs would result 
in confusing the motorist, neither EPA nor Vermont has experience in 
this area. Because we do not know the likelihood of this potential 
confusion occurring, the Agency is revising its recommendation to allow 
individual states to determine for themselves whether or not to provide 
the motorist with a printout of pending DTCs.
    Concerning the possible conflicts identified in the regulatory 
text, EPA has considered both of these comments and the rule text has 
been modified to ensure that there is no conflict in the final 
regulation on either of these issues.

H. OBD-I/M Rejection Criteria

1. Summary of Proposal
    In reviewing data from Wisconsin's OBD-I/M program, EPA found that 
a small number of vehicles arriving at the test lane (between 1-6% of 
the OBD-equipped fleet, depending upon model year) were presented for 
testing with unset readiness codes which would normally be grounds for 
rejection under existing OBD-I/M rejection criteria. In investigating 
the issue, EPA found that the majority of vehicles with unset readiness 
codes were limited to the earliest of the OBD-equipped model years, and 
that the cause of the vehicle's unreadiness was largely beyond the 
control of the motorist. To avoid unnecessarily inconveniencing 
motorists as EPA works with manufacturers to resolve the readiness 
issues with these vehicles, the Agency proposed to allow states the 
flexibility to permit MY 1996-2000 vehicles with two or fewer unset 
readiness codes, and MY 2001 and newer vehicles with only one unset 
readiness code to complete their full OBD-I/M inspection without being 
rejected. These vehicles would not be exempt from other elements of the 
OBD-I/M check. EPA specified that the complete MIL check and scan would 
still be run in all cases, and that the vehicle would still be failed 
if the MIL was commanded on or any other failure criteria were met. 
Furthermore, under the proposal, the vehicle would continue to be 
rejected if it was MY 1996-2000 and had three or more unset readiness 
codes or was MY 2001 or newer and had two or more unset readiness 
codes. The proposal reflected a FACA OBD workgroup recommendation.
    The proposed readiness exemptions were intended to reduce the 
potential for customer inconvenience during OBD-I/M testing. The 
environmental impact of the proposal was deemed negligible, based upon 
the small number of vehicles anticipated to be involved (i.e., the 
subset of OBD-equipped vehicles in I/M programs with no DTCs and two or 
fewer unset readiness codes at the time of testing), the likelihood 
that at least some of the readiness codes will be set in time for 
subsequent OBD-I/M checks, and the fact that an unset readiness code is 
not itself an indication of high emissions.
    It should be pointed out that a certain level of unset readiness 
codes are a part of normal OBD operation. For example, when a battery 
is disconnected during battery replacement or other repair, all 
readiness monitors are temporarily reset to ``not ready.'' One of the 
purposes of the readiness code for I/M programs is to help determine 
whether an attempt has been made to fraudulently clear DTCs by 
disconnecting the battery prior to testing. EPA does not believe that 
the limited readiness exemptions allowed by today's action will 
interfere with OBD's ability to signal such activity because the number 
of unset readiness codes in instances of attempted fraud would almost 
certainly exceed the limited number allowed under the exemption.
    In conjunction with the proposal, EPA also solicited public comment 
on alternative approaches to addressing the readiness issue--in 
particular, whether vehicles with unset readiness flags should receive 
a traditional tailpipe and/or evaporative system test and whether 
different tests should be required in lieu of the OBD-I/M test 
depending upon which readiness flag has not been set.
2. Summary of Comments
    Comments on the readiness exemption proposal were received from 11 
state agencies, five organized associations, one automobile 
manufacturer, one private citizen, and one I/M test industry 
representative. Of

[[Page 18171]]

the 19 commenters, seven supported the proposal for readiness 
exemptions but explicitly opposed back-up testing of vehicles with 
unset readiness codes: three states (New Hampshire, Vermont, and 
Georgia), three organized associations (AAMA, AIAM, and NADA), and one 
automobile manufacturer (Mitsubishi).
    Four commenters (Illinois, Missouri, Pennsylvania, and AAA) 
supported the proposal for readiness code exemptions but expressed a 
desire for back-up testing for vehicles that exceed the proposed 
exemption limit. In its specific comments, Missouri indicated that it 
only supported the use of the IM240 and gas cap test as back-up tests, 
but did not support the use of other test types as back-up tests unless 
such tests were discounted based upon their poor correlation to the 
certification test. Missouri also suggested the possible use of back-up 
testing for vehicles with unset catalyst codes as a means for ensuring 
consumer protection, especially with regard to warranty coverage. AAA 
expressed concern about the rejection of vehicles with unset readiness 
codes that are not covered under the readiness exemption, citing the 
inconvenience and expense associated with having a dealership perform 
driving to set the readiness codes. Pennsylvania expressed the desire 
that states be allowed the discretion to conduct back-up testing to 
address the readiness issue with the following caveats: (1) Such back-
up testing should not be applied to decentralized programs, and (2) 
there should be no loss of credit for those states that opt not to 
perform back-up testing.
    Five commenters (New Jersey, Colorado, California, ALA, and Peter 
McClintock of Applied Analysis) opposed the readiness exemption 
proposal and supported the use of back-up testing for all vehicles with 
unset readiness codes. In its specific comments, New Jersey supported 
dual testing and using the OBD-I/M check as an enhancement to 
traditional tailpipe tests, identifying the readiness issue as a reason 
why the OBD-I/M check alone cannot be used to replace tailpipe tests. 
Specific comments from Colorado called for more flexibility and for the 
final rule to address: (1) The readiness on retest issue, and (2) the 
potential use of back-up IM240 testing at the time of retest. ALA cited 
manufacturer-to-manufacturer OBD strategy differences with regard to 
readiness as a deficiency with the OBD concept. Peter McClintock of 
Applied Analysis claimed that unready vehicles have statistically 
higher emissions (see discussion and response under ``Reducing the 
Testing Burden'' earlier in this action) and called for EPA to study 
the difference between advisory-only versus mandatory-repair OBD-I/M 
programs with regard to readiness variance and the emission impact of 
exempting some not-ready vehicles. McClintock also requested that data 
collection requirements proposed for deletion be restored and that EPA 
add additional requirements to track readiness data.
    Lastly, two commenters (Alaska and Maryland) raised more general 
issues related to the rejection criteria for the OBD-I/M check. In its 
specific comments, Alaska called the proposed readiness exemption a 
``one-size-fits-all'' approach and indicated that it wants the 
flexibility to do a tailpipe-only test on MY 1996-97 vehicles due to 
DLC location and readiness inconsistencies among vehicles in those 
model years. The State also indicated that it wants the flexibility to 
tailor the OBD-I/M check based upon the pollutant a state needs to 
address (citing as an example the desire that CO-only areas be allowed 
to ignore evaporative system readiness). Maryland, in turn, requested 
more information and guidance with regard to drive cycles, exercising 
monitors, and setting readiness codes, while also claiming that most 
unset readiness flags are for evaporative system and catalyst monitors, 
which means that states could ultimately have problems meeting their 
clean air goals. Maryland also requested information concerning the 
names and numbers of vehicles that have readiness problems being 
addressed by the manufacturers.
3. Response to Comments
    As a preface for the discussion to follow, EPA wants to make clear 
that the flexibility allowed by today's action is intended exclusively 
to avoid inconveniencing motorists for vehicle conditions that are 
beyond their control, and that are currently the subject of discussion 
between EPA and various manufacturers and in some cases may result in 
potential enforcement action. The purpose of today's action is not to 
relieve manufacturers of their responsibility to design and market OBD 
systems that comply with existing OBD certification requirements. To 
help emphasize this point, EPA clarifies here that the obligations of 
the automobile manufacturers with regard to OBD equipment are specified 
in regulatory section 40 CFR 86.094-17(e)(1): ``Control of Air 
Pollution From New Motor Vehicles and New Motor Vehicle Engines: 
Regulations Requiring On-Board Diagnostic Systems on 1994 and Later 
Model Year Light-Duty Vehicles and Light-Duty Trucks,'' which imposes, 
among other things, the obligation to design, build and certify OBD 
systems that: ``record code(s) indicating the status of the emission 
control system. Absent the presence of any fault codes, separate status 
codes shall be used to identify correctly functioning emission control 
systems and those emission control systems which need further vehicle 
operation to be fully evaluated.'' In promulgating these requirements 
on February 19, 1993 the Agency stated: ``The readiness code will 
ensure I/M testing personnel and service technicians that malfunction 
codes have not been cleared since the last OBD check of the vehicle's 
emission-related control systems. This code will be essential * * * 
since I/M personnel must be sure that the OBD system has sufficient 
time to completely check all components and systems. The readiness code 
is also crucial for indicating to service personnel whether any repairs 
have been conducted properly.'' Nothing in today's action in any way 
changes or otherwise impacts these obligations on the part of vehicle 
manufacturers. In fact, EPA has already initiated several 
investigations which may result in enforcement actions related to these 
requirements.
    In addition to the certification requirements for OBD systems 
discussed above, EPA separately promulgated test procedures to be used 
by state I/M programs when conducting the OBD-I/M check. These I/M-
centered OBD requirements were originally promulgated back in 1996, and 
are the requirements that are being amended by today's action. With 
regard to readiness, the procedures promulgated back in 1996 required 
that all readiness codes be set to ``ready'' prior to conducting a 
valid OBD-I/M inspection. At the time this requirement was established, 
the earliest OBD-equipped model years were just entering the market and 
EPA had no experience with regard to how practical this readiness 
requirement would be in practice. Since that time, however, EPA has 
conducted several studies of OBD-I/M effectiveness and assorted 
implementation issues (as discussed in the preamble to the September 
20, 2000 NPRM and the TSD for today's action) and has found that 
flexibility is needed with regard to the readiness requirement to help 
prevent needlessly inconveniencing motorists. Although the number of 
OBD-equipped vehicles with unset readiness codes at the time of initial 
testing is small even without the flexibility allowed by

[[Page 18172]]

today's action (i.e., 1-6% of the OBD-equipped fleet, depending on 
model year), as a policy matter, EPA finds it reasonable to provide 
states with the limited flexibility proposed in its September 20, 2000 
NPRM and finalized by today's action. This flexibility applies to I/M 
programs only, and does not explicitly or implicitly impact 
manufacturers or their obligations with regard to OBD equipment. As 
noted above, manufacturers continue to have any and all liabilities 
previously established before today's action with regard to the 
performance of their OBD systems.
    With regard to the use of back-up testing in the case of vehicles 
which do not meet the revised readiness criteria, the agency believes 
that proper use of this option is limited. Review of the Wisconsin 
pilot data indicates that at most 1 to 2 percent of the OBD-equipped 
fleet would qualify as exceeding the ``not ready'' criteria promulgated 
in today's final rule, and that number is declining. While the Agency 
believes that the best method for dealing with these vehicles is to 
reject them and allow the unset readiness monitors to be subsequently 
set, the use of state discretion in dealing with this issue is allowed. 
However, the Agency advises areas adopting back-up testing to address 
the readiness issue that they need to monitor the frequency of such 
back-up testing to ensure that motorists are not purposefully clearing 
codes prior to testing in an attempt to avoid the OBD-I/M inspection.
    EPA emphasizes that the purpose of today's action is to provide 
some flexibility to vehicle owners and state programs without impairing 
the overall environmental benefits achieved by OBD implementation in I/
M programs. Because manufacturers are still required to certify their 
vehicles as meeting all readiness code requirements, and are equally 
responsible for the proper operation of their OBD systems in-use, EPA 
does not believe that the flexibility added by today's rule will affect 
the value of the OBD system for both the vehicle owner and State I/M 
programs. It is recognized that fully functional OBD systems may 
periodically display not-ready codes when presented at an 
I/M test. Nevertheless, EPA believes that a fully functional system 
will eventually detect any problems in vehicle emission control systems 
and that such problems would certainly be detected during the next I/M 
inspection. If the system is not functional as a result of an inherent 
defect within the particular vehicle model or engine family then EPA 
anticipates such functional issues will be corrected either by a 
manufacturer or through EPA's enforcement programs.
    In response to commenters supporting the readiness exemption 
proposal but opposing the use of back-up tailpipe testing, the Agency 
agrees. EPA believes that many of the current issues associated with 
implementation of the OBD-I/M check reflect a learning curve with 
respect to OBD, given that OBDII has only been a universal requirement 
for light-duty vehicles and trucks sold in this country since 1996. The 
Agency believes that increased familiarity with the technology on the 
part of the testing and repair communities as well as public education 
and outreach efforts will go a long way toward mitigating many of these 
issues. EPA therefore hopes that the states and I/M testing contractors 
will perform diligently in executing OBD-I/M programs and resolve 
manageable issues in consultation with EPA and the manufacturers.
    In response to Missouri and other commenters advocating the use of 
back-up testing for vehicles exceeding the proposed readiness exemption 
criteria, EPA reiterates its position that states may use discretion in 
dealing with this issue and, thus, the flexibility exists for a state 
to use back-up testing with no change in credit. However, if a state 
feels it should receive additional credit for conducting back-up 
testing of any type, the state must make the case to EPA for additional 
credit by demonstrating and determining the amount of additional credit 
it claims, which EPA will evaluate through the SIP approval process.
    In response to specific comments from AAA concerning the 
inconvenience of setting readiness codes for non-exempted, ``not 
ready'' vehicles, EPA has attempted to identify those vehicles that may 
have specific issues with readiness setting and is working with 
manufacturers to address those vehicles. Those vehicles which fall 
outside of the category of identified problem vehicles should 
experience proper readiness setting during normal vehicle operation and 
should not require special exemptions beyond those already proposed. 
Furthermore, although it is still possible that some vehicles may 
arrive for testing with unset readiness codes due to factors such as 
vehicle operation and the timing of repairs in relation to the OBD-I/M 
check, EPA believes proper outreach encouraging appropriate repair 
verification and sufficient lead time in seeking repairs should 
alleviate this problem. In addition, many technicians are trained or 
encouraged to perform proper repair verification by driving the vehicle 
before returning it to the customer to check whether readiness codes 
have been set and whether any of the DTCs leading to the original MIL 
illumination recur, post-repair. However, since this kind of repair 
verification is not a required practice, consumers should insist that 
service facilities follow best practices in performing repairs or seek 
repair facilities that will follow best practices.
    In response to the commenters who oppose the readiness exemption 
proposal and want back-up testing for all vehicles with unset readiness 
codes, the Agency believes that the use of the OBD-I/M check 
exclusively for MY 1996 and newer vehicles is an acceptable means of 
evaluating this segment of the vehicle fleet and that use of back-up 
tailpipe testing has limited applicability. However, the Agency does 
not prohibit states from using their discretion in addressing this 
issue and the other issues mentioned by these commenters.
    In response to specific comments from New Jersey, EPA's review of 
pilot data from Wisconsin indicate that at most 1 to 2 percent of the 
OBD-equipped fleet may qualify as exceeding the not-ready exemption 
criteria established by today's action, and that number is declining. 
Therefore, the readiness issue applies only to a small part of the 
fleet and there is little basis to support the claim that the OBM-I/M 
check cannot replace traditional I/M testing for OBD-equipped vehicles. 
Furthermore, it should be pointed out that traditional I/M tests also 
have known problems with regard to the testability of certain vehicles. 
For example, four wheel drive vehicles and vehicles with traction 
control cannot be tested on loaded-mode tests that use two wheel drive 
dynamometers, and some vehicles with automatic transmission cannot be 
tested using the two-speed idle test. Despite these testability issues, 
however, states have nevertheless successfully implemented traditional 
I/M programs. The number of vehicles involved in these cases equal or 
exceed the number of vehicles identified as having unset readiness 
codes at the time of initial testing. EPA therefore does not believe 
that readiness and its implications for testability represent a unique 
issue with regard to the OBM-I/M check.
    In response to Alaska's request to exclude MY 1996-97 vehicles from 
OBM-I/M testing because of concerns regarding DLC location and 
readiness issues associated with those model years, EPA believes the 
concerns at the base of this request have been largely addressed by the 
flexibility allowed

[[Page 18173]]

under today's rule. Furthermore, study has shown that the readiness 
issue diminishes with time as more vehicles set their readiness 
monitors in normal operation. Regarding DLC locations issues, 
experience has shown that this issue diminishes quickly as inspectors 
and technicians become proficient. Additionally, comprehensive 
databases on DLC locations have been made available and are already 
proving to significantly reduce DLC location problems in the field. It 
is also important to note that the CAA requires the use of OBM-I/M 
checks of vehicles so equipped, and EPA does not see a supportable 
justification for excluding these earlier OBD-equipped model years from 
the statutory OBM-I/M testing requirement. EPA therefore expects that 
states which perform OBM-I/M testing will use the OBD scan for 1996 and 
1997 vehicles as required.
    Regarding Alaska's desire to ignore DTCs and/or readiness codes not 
directly related to the particular pollutant for which an area has been 
designated non-attainment, EPA does not believe the CAA's requirement 
that OBD systems be inspected and that malfunctions and/or 
deterioration identified by such systems be repaired allows for this 
kind of discretion. Furthermore, allowing such discretion would largely 
invalidate the early-warning capacity of OBD through the MIL eclipsing 
effect discussed elsewhere, and would also send mixed signals with 
regard to responding to the MIL. Lastly, the emission control systems 
on OBD-equipped vehicles are complex, integrated, and inter-related 
systems; malfunction in one area can quickly lead to malfunctions in 
other areas, so that what starts as an HC problem can rapidly become a 
CO problem if not dealt with in a timely manner. Assuming that vehicle 
malfunctions can be segregated into pollutant-specific bins grossly 
over-simplifies what is, in fact, a complex and inter-dependent system.
    In response to comments from Maryland on several vehicle-specific 
issues, EPA has identified those vehicles that currently have readiness 
issues and has included a list of these vehicles as an appendix to the 
guidance document entitled ``Performing Onboard Diagnostic System 
Checks as Part of a Vehicle Inspection and Maintenance Program'' (which 
is available online at the following web address: www.epa.gov/otaq/regs/im/obd/obd-im.htm). In addition, the manufacturers that have 
identified readiness issues have already been required to make publicly 
available technical service bulletins detailing the specific issue, 
model year coverage, specific makes and models, and any available 
diagnostic information (i.e., driving cycle or operational information) 
to aid in setting the readiness codes. Also, EPA is currently drafting 
a separate NPRM to propose changes to the Service Information Rule (40 
CFR 40474, August, 1995) that will include requirements for 
manufacturers to provide diagnostic drive cycles in their service 
manuals to aid technicians in exercising monitors and setting readiness 
codes. Finally, in response to concern that readiness exemptions could 
lead to difficulty in meeting clean air goals, EPA reiterates that the 
number of OBD-equipped vehicles with unset readiness codes is quite 
small, and is declining. Furthermore, the subset of OBD-equipped 
vehicles with unset readiness codes which actually have emission 
problems that go unidentified because of these unset readiness codes is 
expected to be even smaller, and will eventually be identified once the 
readiness codes in question are set.
    Lastly, in response to the request from Peter McClintock of Applied 
Analysis that the data collection items proposed for deletion be 
restored in the final rule, EPA has restored those data collection 
elements that would be applicable to those areas that opt to include 
some form of dual testing, whether as a back-up test for vehicles with 
unset readiness codes, or as a potential source of additional credit 
(per earlier discussion under ``Reducing the Testing Burden''). EPA has 
added a caveat, however, that these elements are to be gathered only 
where applicable.

I. Applicability of Repair Waivers for OBD-equipped Vehicles

1. Summary of Recommendation
    Currently, both the CAA and the existing I/M rule provide a minimum 
expenditure value for state programs which allow the waiver of vehicles 
failing the I/M inspection from further repair obligation for one test 
cycle once a certain, minimum amount has been spent on relevant 
repairs. For basic I/M programs, these minimum expenditures are $75 for 
pre-1981 model year vehicles, and $200 for MY 1981 and newer vehicles; 
for enhanced I/M programs, the Act specifies a minimum expenditure for 
all vehicles of $450 adjusted to reflect the difference in the Consumer 
Price Index (CPI) between the previous year and 1989. Neither the rule 
nor the Act specifically addresses the OBM-I/M check when it comes to 
qualifying for waivers. However, the Act clearly states that the 
minimum amount to qualify for a waiver applies to any failure. Thus, 
EPA lacks the legal authority to prohibit states from allowing MY 1996 
and newer, OBD-equipped vehicles to qualify for waivers. Nevertheless, 
in its September 20, 2000 NPRM, EPA recommended (but did not require) 
that states not allow MY 1996 and newer, OBD-equipped vehicles to be 
waived prior to receiving repairs to extinguish the MIL and clear any 
DTCs for which the MIL was illuminated. EPA also recommended that 
states consider providing repair subsidies or some other form of 
financial assistance to address hardship cases for OBD-identified 
failures that would otherwise be addressed through the waiver process.
    EPA made this recommendation because of the fundamental difference 
between how OBD-equipped vehicles and non-OBD-equipped vehicles are 
diagnosed and repaired. EPA expressed its belief that the minimum 
expenditure waiver makes sense for traditional tailpipe and/or 
evaporative emission test based repairs because such tests provide 
little concrete information concerning the specific cause of failure. 
Therefore, the waiver helps protect consumers from trial-and-error 
repairs that amount to little more than throwing parts at an 
insufficiently isolated problem. OBD, on the other hand, is 
specifically designed to help limit the opportunity for trial-and-error 
repairs by linking DTCs to specific components and subsystems. OBD does 
not just tell the repair technician that there is a problem, but also 
identifies what kind of problem and approximately where in the overall 
system it is occurring. The Agency also believes that the most 
successful use of the OBD system will result in motorists routinely 
responding to the MIL when first illuminated, as soon as a problem with 
the potential to produce high emissions is detected and before 
successful repair becomes more costly. A program which allows repair 
waivers should take care so as not to discourage this immediate and 
routine motorist response to an illuminated MIL, which could occur if 
motorists postpone necessary repairs in hopes that the subsequent I/M 
program inspection will render such repairs ``unnecessary'' because of 
the waiver option.
2. Summary of Comments
    A total of 15 commenters responded to the Agency's waiver 
recommendations for OBD equipped vehicles--ten supporting the 
recommendation, and five opposing. Four states (New Hampshire, Vermont, 
Missouri, and New York) expressed support for EPA's recommendation, 
while Missouri suggested specific

[[Page 18174]]

waiver flexibility options that meet that state's specific needs. Four 
commenters representing the automobile industry (APSA, AIAM, NADA, and 
ASA) submitted supporting comment with most noting the need for 
hardship exemptions or subsidies where waivers are disallowed. APSA 
also noted the need to actively promote owner response to MILs before 
inspection. Two other commenters (ESP and ALA) also supported EPA's 
recommendation, and suggested that the Agency reconsider its policy 
concerning model year exemptions to encourage prompt motorist response 
to illuminated MILs.
    Four states (Massachusetts, Alaska, Maryland, and California) and 
AAA disagreed with EPA's recommendation. Both Massachusetts and Alaska 
expressed concern that waivers might be necessary for older, high 
mileage vehicles. AAA noted that waivers are a means of consumer 
protection and that although EPA recommends states provide financial 
assistance in hardship cases, there is no guarantee that states will 
offer such assistance.
3. Response to Comments
    EPA's position with regard to waiver policy for OBD vehicles is 
presented only as a recommendation, not a requirement, as noted in the 
proposal for this rule. The CAA clearly provides states the flexibility 
to offer waivers for any failure as long as the minimum expenditure 
requirements are met. Section 51.360 of the I/M rule further clarifies 
waiver issuance criteria and those requirements are not being amended 
in any way with this action today. The Agency's recommendation--that 
states consider prohibiting OBD-equipped vehicles from receiving 
waivers--is based on the inherent differences between how the OBD-I/M 
check and traditional I/M tests identify vehicles in need of repair. 
The basis for that recommendation was detailed in the ``Summary of 
Proposal'' above and will not be restated here. Nevertheless, EPA did 
request comments or suggestions on alternative recommendations. The 
majority of commenters supported EPA's recommendation and concurred 
that special considerations should be made for hardship cases. The 
flexibility options suggested by at least one state are just that--
flexibilities that states may opt to use at their discretion, as long 
as minimum monetary waiver requirements are met. Obviously, states 
opposed to the recommendation may elect to provide waivers, as long as 
statutory and regulatory waiver requirements are met. With regard to 
concerns that OBD induced repairs may not be cost effective or may be 
more inequitable for low income motorists than is the case with 
tailpipe testing, EPA does not agree. Studies have shown that average 
repair costs for OBD-identified failures do not generally differ from 
average repairs that result from tailpipe testing. In fact, the Agency 
maintains that OBD-identified repairs have the potential to be more 
effective because of the targeted diagnosis which the technology 
offers. The Agency asks that states take the above factors into 
consideration in determining how best to address the waiver issue with 
regard to MY 1996 and newer, OBD-equipped vehicles.
    Regarding the suggestion made by ESP and ALA that EPA consider 
eliminating new model year exemptions for OBD-equipped vehicles, the 
Agency does not have the legal authority to establish such a 
restriction. Nevertheless, EPA appreciates the rationale for wanting to 
catch OBD-identified failures as soon as possible and agrees that early 
inspection of OBD-equipped vehicles could serve as an incentive to 
stimulate timely motorist response to illuminated MILs. Furthermore, 
early inspection of OBD-equipped vehicles could help ensure that OBD-
identified failures are addressed within the warranty period for such 
repairs, thus providing not only environmental protection, but also 
consumer protection. Lastly, given the speed with which the OBD-I/M 
check can be performed, the Agency believes the additional testing 
burden could be modest, and may be worth states' reconsidering their 
model year coverage, given the potential benefits discussed above.

V. Discussion of Major Issues

A. Emission Impact of the Proposed Amendments

    Today's action clarifies existing flexibility currently available 
to states with regard to exempting specific model years from specific 
program requirements. It also provides an incentive for states to 
optimize the efficiency and cost effectiveness of their existing 
programs. Based upon its pilot testing, EPA believes that a program 
relying on OBD-I/M checks for MY 1996 and newer, OBD-equipped vehicles 
will just as effectively identify problem vehicles as any existing 
program combining IM240 exhaust testing with evaporative system purge 
and fill-neck pressure tests. However, nothing in today's action bars 
states from continuing their existing I/M tests in conjunction with 
OBD-I/M testing on MY 1996 and newer, OBD-equipped vehicles, should 
they so desire.
    Data and analyses currently available to EPA are insufficient to 
establish any additional HC, CO, or NOX credit due to 
conducting loaded mode tests such as the ASM or IM240 in conjunction 
with the OBD-I/M test. As currently designed, the OBD monitoring 
strategy manufacturers are employing to determine catalyst efficiency 
tends to be optimized for identifying deterioration or malfunctions 
leading to increased HC emissions. EPA believes that the catalyst 
problems which would impact CO or NOX performance would also 
tend to impact HC emission performance. However, some vehicles may be 
more sensitive to CO or NOX deterioration and therefore 
could fail for these pollutants under a traditional I/M exhaust test 
before deterioration of the catalyst's HC conversion efficiency was 
great enough to be detected by current catalyst OBD monitoring 
strategies. Furthermore, it is also possible that states that choose to 
engage in limited dual testing of vehicles with unset readiness 
monitors may also identify some additional high HC, CO, and/or 
NOX emitters that would otherwise be missed by OBD-only 
testing under the limited unset readiness exemption provided in today's 
action. Because we see no good regulatory reason to prohibit a state 
from voluntarily pursuing such additional emission benefits, EPA 
invites interested states to develop the information necessary to 
quantify any additional SIP credit for either full or limited dual 
testing, based upon actual, operating program data. EPA will determine 
the adequacy of these demonstrations through rulemaking on a case-by-
case basis.

B. Impact on Existing and Future I/M Programs

    States with approved I/M SIPs will not have to remodel the emission 
reduction potential of their I/M programs if they choose to exempt MY 
1996 and newer, OBD-equipped vehicles from traditional I/M tests in 
favor of mandatory OBD-I/M checks on those same vehicles, provided no 
other programmatic changes are made. If, however, a state chooses to 
modify its program another way, then a revised 
I/M SIP and new modeling may be necessary. Nevertheless, it is 
important to note that today's action is aimed at lessening the overall 
burden on states while also improving program efficiency and cost 
effectiveness; the action does not increase the existing burden on 
states, provided states do not make other changes to their programs.

[[Page 18175]]

VI. Economic Costs and Benefits

    Today's action provides states with an incentive to increase the 
cost effectiveness and efficiency of their existing I/M programs. The 
action will lessen rather than increase the potential economic burden 
on states. Most significantly, today's action allows states the 
discretion to suspend traditional I/M tests on MY 1996 and newer, OBD-
equipped vehicles in favor of conducting the OBD-I/M check on these 
same vehicles. This constitutes a net lessening of the burden relative 
to the requirement in place prior to today's action (i.e., that MY 1996 
and newer, OBD-equipped vehicles receive both the traditional I/M 
test(s) and the OBD-I/M check). Furthermore, states are under no 
obligation, legal or otherwise, to modify existing plans meeting the 
previously applicable requirements as a result of today's action.

VII. Administrative Requirements

A. Administrative Designation

    It has been determined that these amendments to the I/M rule do not 
constitute a significant regulatory action under the terms of Executive 
Order 12866 and this action is therefore not subject to OMB review. Any 
impacts associated with these revisions do not constitute additional 
burdens when compared to the existing I/M requirements published in the 
Federal Register on November 5, 1992 (57 FR 52950) as amended. Nor do 
these amendments create an annual effect on the economy of $100 million 
or more or otherwise adversely affect the economy or the environment. 
This action is not inconsistent with nor does it interfere with actions 
by other agencies. It does not alter budgetary impacts of entitlements 
or other programs, and it does not raise any new or unusual legal or 
policy issues.

B. Reporting and Recordkeeping Requirement

    There are no additional information requirements in these 
amendments which require the approval of the Office of Management and 
Budget under the Paperwork Reduction Act 44 U.S.C. 3501 et seq.

C. Regulatory Flexibility Analysis

    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. For purposes of assessing 
the impact of today's rule on small entities, small entities are 
defined as including small government jurisdictions, that is, 
``governments of cities, counties, towns, townships, villages, school 
districts, or special districts, with a population of less than 
50,000.'' The basic and enhanced I/M requirements however only apply to 
urbanized areas with population in excess of either 100,000 or 200,000 
depending on location.
    Therefore, after considering the economic impacts of today's final 
rule on small entities, EPA has concluded that this action will not 
have a significant economic impact on a substantial number of small 
entities. This final rule will not impose any requirements on small 
entities, since all jurisdictions effected by the rule exceed the 
definition of small government jurisdictions. Furthermore, the impact 
created by this action does not increase the preexisting burden of the 
existing rules which this action amends.

D. Unfunded Mandates Act

    Under section 202 of the Unfunded Mandates Reform Act of 1995 
(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA 
must prepare a budgetary impact statement to accompany any proposed or 
final rule where the estimated costs to State, local, or tribal 
governments, or to the private sector, will be $100 million or more. 
Under section 205, EPA must select the most cost-effective and least 
burdensome alternative that achieves the objective of the rule and is 
consistent with statutory requirements. Section 203 requires EPA to 
establish a plan for informing and advising any small governments that 
may be significantly impacted by the rule. To the extent that today's 
action would impose any mandate at all as defined in section 101 of the 
Unfunded Mandates Act upon the state, local, or tribal governments, or 
the private sector, as explained above, this rule is not estimated to 
impose costs in excess of $100 million. Therefore, EPA has not prepared 
a statement with respect to budgetary impacts. As noted above, this 
rule offers opportunities to states that enable them to lower economic 
burdens relative to those resulting from the currently existing I/M 
rule which today's action amends.

E. Executive Order 13132: Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' is defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    Under section 6 of Executive Order 13132, EPA may not issue a 
regulation that has federalism implications, that imposes substantial 
direct compliance costs, and that is not required by statute, unless 
the Federal government provides the funds necessary to pay the direct 
compliance costs incurred by State and local governments, or EPA 
consults with State and local officials early in the process of 
developing the proposed regulation. EPA also may not issue a regulation 
that has federalism implications and that preempts State law, unless 
the Agency consults with State and local officials early in the process 
of developing the proposed regulation.
    Today's action does not have federalism implications. It will not 
have substantial direct effects on the States, on the relationship 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government, 
as specified in Executive Order 13132. On the contrary, the intent of 
today's amendments is to provide states greater flexibility with regard 
to pre-existing regulatory requirements for vehicle inspection and 
maintenance (I/M) programs. Thus, the requirements of section 6 of the 
Executive Order do not apply to this proposal.

F. Consultation and Coordination With Indian Tribal Governments

    On November 6, 2000, the President issued Executive Order 13175 (65 
FR 67249) entitled, ``Consultation and Coordination with Indian Tribal 
Governments.'' Executive Order 13175 took effect on January 6, 2001, 
and revokes Executive Order 13084 (Tribal Consultation) as of that 
date. EPA developed this final rule, however, during the period when 
Executive Order 13084 was in effect; thus, EPA addressed tribal 
considerations under Executive Order 13084.
    Under Executive Order 13084, EPA may not issue a regulation that is 
not required by statute, that significantly or uniquely affects the 
communities of Indian tribal governments, and that imposes substantial 
direct compliance costs on those communities, unless the Federal 
government provides the funds necessary to pay the direct compliance 
costs incurred by the tribal

[[Page 18176]]

governments, or EPA consults with those governments. If EPA complies by 
consulting, Executive Order 13084 requires EPA to provide to the Office 
of Management and Budget, in a separately identified section of the 
preamble to the rule, a description of the extent of EPA's prior 
consultation with representatives of affected tribal governments, a 
summary of the nature of their concerns, and a statement supporting the 
need to issue the regulation. In addition, Executive Order 13084 
requires EPA to develop an effective process permitting elected 
officials and other representatives of Indian tribal governments ``to 
provide meaningful and timely input in the development of regulatory 
policies on matters that significantly or uniquely affect their 
communities.'' Today's action does not significantly or uniquely affect 
the communities of Indian tribal governments. Today's action does not 
create a mandate on tribal governments or create any additional burden 
or requirements for tribal government. The action does not impose any 
enforceable duties on these entities. Accordingly, the requirements of 
section 3(b) of Executive Order 13084 do not apply to this proposal.

G. Executive Order 13045: Protection of Children From Environmental 
Health Risks and Safety Risks

    Executive Order 13045 (62 FR 19885, April 23, 1997) applies to any 
rule that: (1) is determined to be economically significant as defined 
under Executive Order 12866, and (2) concerns an environmental health 
or safety risk that EPA has reason to believe may have a 
disproportionate effect on children. If the regulatory action meets 
both criteria, the Agency must evaluate the environmental health or 
safety effects of the planned rule on children, and explain why the 
planned regulation is preferable to other potentially effective and 
reasonably feasible alternatives considered by the Agency. EPA 
interprets Executive Order 13045 as applying only to those regulatory 
actions that are based on health or safety risks, such that the 
analysis required under section 5-501 of the Order has the potential to 
influence the regulation. Today's action is not subject to Executive 
Order 13045 because it is not economically significant under Executive 
Order 12866 and because it is based on technology performance and not 
on health or safety risks.

H. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA) directs all Federal agencies to use voluntary 
consensus standards instead of government-unique standards in their 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., material specifications, test methods, 
sampling and analytical procedures, business practices, etc.) that are 
developed or adopted by one or more voluntary consensus standards 
bodies. Examples of organizations generally regarded as voluntary 
consensus standards bodies include the American Society for Testing and 
Materials (ASTM), the National Fire Protection Association (NFPA), and 
the Society of Automotive Engineers (SAE). The NTTAA requires Federal 
agencies like EPA to provide Congress, through OMB, with explanations 
when an agency decides not to use available and applicable voluntary 
consensus standards.
    Today's action does not involve technical standards. Therefore, EPA 
is not considering the use of any voluntary consensus standards.

I. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit 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 United States prior 
to publication of the rule in the Federal Register. This rule is not a 
``major rule'' as defined by 5 U.S.C. 804 (2).

J. 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 
rule 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.

List of Subjects

40 CFR Part 51

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Carbon monoxide, Intergovernmental relations, 
Lead, Nitrogen dioxide, Ozone, Particulate matter, Reporting and 
recordkeeping requirements, Sulfur oxides, Volatile organic compounds, 
Transportation.

40 CFR Part 85

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

    Dated: March 28, 2001.
Christine Todd Whitman,
Administrator.

    For the reasons set out in the preamble, part 51 and 85 of chapter 
I, title 40 of the Code of Federal Regulations are amended to read as 
follows:

PART 51--[AMENDED]

    1. The authority citation for Part 51 continues to read as follows:

    Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671q.

    2. Section 51.351 is amended by revising paragraph (c) to read as 
follows:


Sec. 51.351  Enhanced I/M performance standard.

* * * * *
    (c) On-board diagnostics (OBD). The performance standard shall 
include inspection of all 1996 and later light-duty vehicles and light-
duty trucks equipped with certified on-board diagnostic systems, and 
repair of malfunctions or system deterioration identified by or 
affecting OBD systems as specified in Sec. 51.357. For States using 
some version of MOBILE5 prior to mandated use of the MOBILE6 and 
subsequent versions of EPA's mobile source emission factor model, the 
OBD-I/M portion of the State's program as well as the applicable 
enhanced I/M performance standard may be assumed to be equivalent to 
performing the evaporative system purge test, the evaporative system 
fill-neck pressure test, and the IM240 using grams-per-mile (gpm) 
cutpoints of 0.60 gpm HC, 10.0 gpm CO, and 1.50 gpm NOX on 
MY 1996 and newer vehicles and assuming a start date of January 1, 2002 
for the OBD-I/M portion of the performance standard. This interim 
credit assessment does not add to but rather replaces credit for any 
other test(s) that may be performed on MY 1996 and newer

[[Page 18177]]

vehicles, with the exception of the gas-cap-only evaporative system 
test, which may be added to the State's program to generate additional 
HC reduction credit. This interim assumption shall apply even in the 
event that the State opts to discontinue its current I/M tests on MY 
1996 and newer vehicles in favor of an OBD-I/M check on those same 
vehicles, with the exception of the gas-cap evaporative system test. If 
a State currently claiming the gas-cap test in its I/M SIP decides to 
discontinue that test on some segment of its subject fleet previously 
covered, then the State will need to revise its SIP and I/M modeling to 
quantify the resulting loss in credit, per established modeling policy 
for the gas-cap pressure test. Once MOBILE6 is released and its use 
required, the interim, MOBILE5-based modeling methodology described in 
this section will be replaced by the OBD-I/M credit available from the 
MOBILE6 and subsequent mobile source emission factor models.
* * * * *

    3. Section 51.352 is amended by revising paragraph (c) to read as 
follows:


Sec. 51.352  Basic I/M performance standard.

* * * * *
    (c) On-board diagnostics (OBD). The performance standard shall 
include inspection of all 1996 and later light-duty vehicles equipped 
with certified on-board diagnostic systems, and repair of malfunctions 
or system deterioration identified by or affecting OBD systems as 
specified in Sec. 51.357. For States using some version of MOBILE5 
prior to mandated use of the MOBILE6 and subsequent versions of EPA's 
mobile source emission factor model, the OBD-I/M portion of the State's 
program as well as the applicable I/M performance standard may be 
assumed to be equivalent to performing the evaporative system purge 
test, the evaporative system fill-neck pressure test, and the IM240 
using grams-per-mile (gpm) cutpoints of 0.60 gpm HC, 10.0 gpm CO, and 
1.50 gpm NOX on MY 1996 and newer vehicles and assuming a 
start date of January 1, 2002 for the OBD-I/M portion of the 
performance standard. This interim credit assessment does not add to 
but rather replaces credit for any other test(s) that may be performed 
on MY 1996 and newer vehicles, with the exception of the gas-cap-only 
evaporative system test, which may be added to the State's program to 
generate additional HC reduction credit. This interim assumption shall 
apply even in the event that the State opts to discontinue its current 
I/M tests on MY 1996 and newer vehicles in favor of an OBD-I/M check on 
those same vehicles, with the exception of the gas-cap evaporative 
system test. If a State currently claiming the gas-cap test in its I/M 
SIP decides to discontinue that test on some segment of its subject 
fleet previously covered, then the State will need to revise its SIP 
and I/M modeling to quantify the resulting loss in credit, per 
established modeling policy for the gas-cap pressure test. Once MOBILE6 
is released and its use required, the interim, MOBILE5-based modeling 
methodology described in this section will be replaced by the OBD-I/M 
credit available from the MOBILE6 and subsequent mobile source emission 
factor models.
* * * * *

    4. Section 51.356 is amended by adding a new paragraph (a)(6) to 
read as follows:


Sec. 51.356  Vehicle coverage.

* * * * *
    (a) * * *
    (6) States may also exempt MY 1996 and newer OBD-equipped vehicles 
that receive an OBD-I/M inspection from the tailpipe, purge, and fill-
neck pressure tests (where applicable) without any loss of emission 
reduction credit.
* * * * *

    5. Section 51.357 is amended by revising paragraphs (a)(5), 
(a)(12), (b)(1), (b)(4) and (d) introductory text to read as follows:


Sec. 51.357  Test procedures and standards.

* * * * *
    (a) * * *
    (5) Vehicles shall be rejected from testing if the exhaust system 
is missing or leaking, or if the vehicle is in an unsafe condition for 
testing. Coincident with mandatory OBD-I/M testing and repair of 
vehicles so equipped, MY 1996 and newer vehicles shall be rejected from 
testing if a scan of the OBD system reveals a ``not ready'' code for 
any component of the OBD system. At a state's option it may choose 
alternatively to reject MY 1996-2000 vehicles only if three or more 
``not ready'' codes are present and to reject MY 2001 and later model 
years only if two or more ``not ready'' codes are present. This 
provision does not release manufacturers from the obligations regarding 
readiness status set forth in 40 CFR 86.094-17(e)(1): ``Control of Air 
Pollution From New Motor Vehicles and New Motor Vehicle Engines: 
Regulations Requiring On-Board Diagnostic Systems on 1994 and Later 
Model Year Light-Duty Vehicles and Light-Duty Trucks.'' Once the cause 
for rejection has been corrected, the vehicle must return for testing 
to continue the testing process. Failure to return for testing in a 
timely manner after rejection shall be considered non-compliance with 
the program, unless the motorist can prove that the vehicle has been 
sold, scrapped, or is otherwise no longer in operation within the 
program area.
* * * * *
    (12) On-board diagnostic checks. Beginning January 1, 2002, 
inspection of the on-board diagnostic (OBD) system on MY 1996 and newer 
light-duty vehicles and light-duty trucks shall be conducted according 
to the procedure described in 40 CFR 85.2222, at a minimum. This 
inspection may be used in lieu of tailpipe, purge, and fill-neck 
pressure testing. Alternatively, states may elect to phase-in OBD-I/M 
testing for one test cycle by using the 
OBD-I/M check to screen clean vehicles from tailpipe testing and 
require repair and retest for only those vehicles which proceed to fail 
the tailpipe test. An additional alternative is also available to 
states with regard to the deadline for mandatory testing, repair, and 
retesting of vehicles based upon the OBD-I/M check. Under this third 
option, if a state can show good cause (and the Administrator takes 
notice-and-comment action to approve this good cause showing as a 
revision to the State's Implementation Plan), up to an additional 12 
months' extension may be granted, establishing an alternative start 
date for such states of no later than January 1, 2003. States choosing 
to make this showing will also have available to them the phase-in 
approach described in this section, with the one-cycle time limit to 
begin coincident with the alternative start date established by 
Administrator approval of the showing, but no later than January 1, 
2003. The showing of good cause (and its approval or disapproval) will 
be addressed on a case-by-case basis by the Administrator.
* * * * *
    (b) Test standards--(1) Emissions standards. HC, CO, and 
CO+CO2 (or CO2 alone) emission standards shall be 
applicable to all vehicles subject to the program with the exception of 
MY 1996 and newer OBD-equipped light-duty vehicles and light-duty 
trucks, which will be held to the requirements of 40 CFR 85.2207, at a 
minimum. Repairs shall be required for failure of any standard 
regardless of the attainment status of the area. NOX 
emission standards shall be applied to vehicles subject to a loaded 
mode test in ozone nonattainment areas and in an ozone transport 
region, unless a waiver of NOX controls is provided to the 
State under Sec. 51.351(d).
* * * * *

[[Page 18178]]

    (4) On-board diagnostic test standards. Vehicles shall fail the on-
board diagnostic test if they fail to meet the requirements of 40 CFR 
85.2207, at a minimum. Failure of the on-board diagnostic test need not 
result in failure of the vehicle inspection/maintenance test until 
January 1, 2002. Alternatively, states may elect to phase-in OBD-I/M 
testing for one test cycle by using the OBD- 
I/M check to screen clean vehicles from tailpipe testing and require 
repair and retest for only those vehicles which proceed to fail the 
tailpipe test. An additional alternative is also available to states 
with regard to the deadline for mandatory testing, repair, and 
retesting of vehicles based upon the OBD-I/M check. Under this third 
option, if a state can show good cause (and the Administrator takes 
notice-and-comment action to approve this good cause showing), up to an 
additional 12 months' extension may be granted, establishing an 
alternative start date for such states of no later than January 1, 
2003. States choosing to make this showing will also have available to 
them the phase-in approach described in this section, with the one-
cycle time limit to begin coincident with the alternative start date 
established by Administrator approval of the showing, but no later than 
January 1, 2003. The showing of good cause (and its approval or 
disapproval) will be addressed on a case-by-case basis.
* * * * *
    (d) Applicability. In general, section 203(a)(3)(A) of the Clean 
Air Act prohibits altering a vehicle's configuration such that it 
changes from a certified to a non-certified configuration. In the 
inspection process, vehicles that have been altered from their original 
certified configuration are to be tested in the same manner as other 
subject vehicles with the exception of MY 1996 and newer, OBD-equipped 
vehicles on which the data link connector is missing, has been tampered 
with or which has been altered in such a way as to make OBD system 
testing impossible. Such vehicles shall be failed for the on-board 
diagnostics portion of the test and are expected to be repaired so that 
the vehicle is testable. Failure to return for retesting in a timely 
manner after failure and repair shall be considered non-compliance with 
the program, unless the motorist can prove that the vehicle has been 
sold, scrapped, or is otherwise no longer in operation within the 
program area.
* * * * *

    6. Section 51.358 is amended by revising paragraph (a)(1) to read 
as follows:


Sec. 51.358  Test equipment.

* * * * *
    (a) * * *
    (1) Emission test equipment shall be capable of testing all subject 
vehicles and shall be updated from time to time to accommodate new 
technology vehicles as well as changes to the program. In the case of 
OBD-based testing, the equipment used to access the onboard computer 
shall be capable of testing all MY 1996 and newer, OBD-equipped light-
duty vehicles and light-duty trucks.
* * * * *

    7. Section 51.366 is amended by revising paragraphs (a)(2)(xi), 
(a)(2)(xii), (a)(2)(xiii), (a)(2)(xiv), (a)(2)(xv), (a)(2)(xvi), 
(a)(2)(xvii), and (a)(2)(xviii) to read as follows:


Sec. 51.366  Data analysis and reporting.

* * * * *
    (a) * * *
    (2) * * *
    (xi) Passing the on-board diagnostic check;
    (xii) Failing the on-board diagnostic check;
    (xiii) Failing the on-board diagnostic check and passing the 
tailpipe test (if applicable);
    (xiv) Failing the on-board diagnostic check and failing the 
tailpipe test (if applicable);
    (xv) Passing the on-board diagnostic check and failing the I/M gas 
cap evaporative system test (if applicable);
    (xvi) Failing the on-board diagnostic check and passing the I/M gas 
cap evaporative system test (if applicable);
    (xvii) Passing both the on-board diagnostic check and I/M gas cap 
evaporative system test (if applicable);
    (xviii) Failing both the on-board diagnostic check and I/M gas cap 
evaporative system test (if applicable);
* * * * *

    8. Section 51.373 is amended by revising paragraph (g) to read as 
follows:


Sec. 51.373  Implementation deadlines.

* * * * *
    (g) On-Board Diagnostic checks shall be implemented in all basic, 
low enhanced and high enhanced areas as part of the I/M program by 
January 1, 2002. Alternatively, states may elect to phase-in OBD-I/M 
testing for one test cycle by using the OBD-I/M check to screen clean 
vehicles from tailpipe testing and require repair and retest for only 
those vehicles which proceed to fail the tailpipe test. An additional 
alternative is also available to states with regard to the deadline for 
mandatory testing, repair, and retesting of vehicles based upon the 
OBD-I/M check. Under this third option, if a state can show good cause 
(and the Administrator takes notice-and-comment action to approve this 
good cause showing), up to an additional 12 months' extension may be 
granted, establishing an alternative start date for such states of no 
later than January 1, 2003. States choosing to make this showing will 
also have available to them the phase-in approach described in this 
section, with the one-cycle time limit to begin coincident with the 
alternative start date established by Administrator approval of the 
showing, but no later than January 1, 2003. The showing of good cause 
(and its approval or disapproval) will be addressed on a case-by-case 
basis.

PART 85--CONTROL OF AIR POLLUTION FROM MOBILE SOURCES

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

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


    10. Section 85.2207 is amended by revising paragraph (d) to read as 
follows:


Sec. 85.2207  On-board diagnostics test standards.

* * * * *
    (d) A vehicle shall fail the on-board diagnostics test if the 
malfunction indicator light is commanded to be illuminated for one or 
more OBD diagnostic trouble codes (DTCs), as defined by SAE J2012. The 
procedure shall be done in accordance with SAE J2012 Diagnostic Trouble 
Code Definitions, (MAR92). This incorporation by reference was approved 
by the Director of the Federal Register in accordance with 5 U.S.C. 
552(a) and 1 CFR part 51. Copies of SAE J2012 may be obtained from the 
Society of Automotive Engineers, Inc., 400 Commonwealth Drive, 
Warrendale, PA 15096-0001. Copies may be inspected at the EPA Docket 
No. A-94-21 at EPA's Air Docket, (LE-131) Room 1500 M, 1st Floor, 
Waterside Mall, 401 M Street SW, Washington, DC, or at the Office of 
the Federal Register, 800 North Capitol Street, NW., suite 700, 
Washington, DC.
* * * * *

    11. Section 85.2222 is amended by revising paragraphs (a), (c), 
(d)(1) and (d)(2) and by adding new paragraph (d)(4) to read as 
follows:


Sec. 85.2222  On-board diagnostic test procedures.

* * * * *
    (a) The on-board diagnostic inspection shall be conducted with the 
key-on/engine running (KOER), with the exception of inspecting for MIL 
illumination as required in paragraph

[[Page 18179]]

(d)(4) of this section, during which the inspection shall be conducted 
with the key-on/engine off (KOEO).
* * * * *
    (c) The test system shall send a Mode $01, PID $01 request in 
accordance with SAE J1979 to determine the evaluation status of the 
vehicle's on-board diagnostic system. The test system shall determine 
what monitors are supported by the on-board diagnostic system, and the 
readiness evaluation for applicable monitors in accordance with SAE 
J1979. The procedure shall be done in accordance with SAE J1979 ``E/E 
Diagnostic Test Modes,'' (DEC91). This incorporation by reference was 
approved by the Director of the Federal Register in accordance with 5 
U.S.C. 552(a) and 1 CFR part 51. Copies of SAE J1979 may be obtained 
from the Society of Automotive Engineers, Inc., 400 Commonwealth Drive, 
Warrendale, PA 15096-0001. Copies may be inspected at the EPA Docket 
No. A-94-21 at EPA's Air Docket (LE-131), Room 1500 M, 1st Floor, 
Waterside Mall, 401 M Street SW., Washington, DC, or at the Office of 
the Federal Register, 800 North Capitol Street, NW., suite 700, 
Washington, DC.
    (1) Coincident with the beginning of mandatory testing, repair, and 
retesting based upon the OBD-I/M check, if the readiness evaluation 
indicates that any on-board tests are not complete the customer shall 
be instructed to return after the vehicle has been run under conditions 
that allow completion of all applicable on-board tests. If the 
readiness evaluation again indicates that any on-board test is not 
complete the vehicle shall be failed.
    (2) An exception to paragraph (c)(1) of this section is allowed for 
MY 1996 to MY 2000 vehicles, inclusive, with two or fewer unset 
readiness monitors, and for MY 2001 and newer vehicles with no more 
than one unset readiness monitor. Vehicles from those model years which 
would otherwise pass the OBD inspection, but for the unset readiness 
code(s) in question may be issued a passing certificate without being 
required to operate the vehicle in such a way as to activate those 
particular monitors. Vehicles from those model years with unset 
readiness codes which also have diagnostic trouble codes (DTCs) stored 
resulting in a lit malfunction indicator light (MIL) must be failed, 
though setting the unset readiness flags in question shall not be a 
prerequisite for passing the retest.
    (d) * * *
    (1) If the malfunction indicator status bit indicates that the 
malfunction indicator light (MIL) has been commanded to be illuminated 
the test system shall send a Mode $03 request to determine the stored 
diagnostic trouble codes (DTCs). The system shall repeat this cycle 
until the number of codes reported equals the number expected based on 
the Mode 1 response. All DTCs resulting in MIL illumination shall be 
recorded in the vehicle test record and the vehicle shall fail the on-
board diagnostic inspection.
    (2) If the malfunction indicator light bit is not commanded to be 
illuminated the vehicle shall pass the on-board diagnostic inspection, 
even if DTCs are present.
* * * * *
    (4) If the malfunction indicator light (MIL) does not illuminate at 
all when the vehicle is in the key-on/engine-off (KOEO) condition, the 
vehicle shall fail the on-board diagnostic inspection, even if no DTCs 
are present and the MIL has not been commanded on.

    12. Section 85.2223 is amended by revising paragraph (a) and 
removing and reserving paragraph (b) to read as follows:


Sec. 85.2223  On-board diagnostic test report.

    (a) Motorists whose vehicles fail the on-board diagnostic test 
described in Sec. 85.2222 shall be provided with the on-board 
diagnostic test results, including the codes retrieved, the name of the 
component or system associated with each fault code, the status of the 
MIL illumination command, and the customer alert statement as stated in 
paragraph (c) of this section.
    (b) [Reserved]
* * * * *


Sec. 85.2231  [Removed]

    13. Section 85.2231 is amended by removing and reserving paragraph 
(d).

[FR Doc. 01-8276 Filed 4-4-01; 8:45 am]
BILLING CODE 6560-50-P