[Federal Register Volume 67, Number 152 (Wednesday, August 7, 2002)]
[Proposed Rules]
[Pages 51402-51420]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-19563]



[[Page 51401]]

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Part III





Environmental Protection Agency





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40 CFR Parts 85 and 86



Motor Vehicle and Engine Compliance Program Fees for: Light-Duty 
Vehicles; Light-Duty Trucks; Heavy-Duty Vehicles and Engines; Nonroad 
Engines and Motorcycles; Proposed Rule

  Federal Register / Vol. 67, No. 152 / Wednesday, August 7, 2002 / 
Proposed Rules  

[[Page 51402]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 85 and 86

[AMS-FRL-7250-1]
RIN 2060-AJ62


Motor Vehicle and Engine Compliance Program Fees for: Light-Duty 
Vehicles; Light-Duty Trucks; Heavy-Duty Vehicles and Engines; Nonroad 
Engines; and Motorcycles

AGENCY: Environmental Protection Agency.

ACTION: Notice of proposed rulemaking.

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SUMMARY: Today's action proposes to update the current Motor Vehicle 
and Engine Compliance Program (MVECP) fees regulation under which fees 
are collected for certification and compliance activities related to 
light-duty vehicles and trucks, heavy-duty highway vehicles and 
engines, and highway motorcycles. Today's action proposes to update the 
fees regulations to reflect increased costs of administering the 
compliance programs already covered within the existing MVECP fee 
program. In addition, EPA is proposing to add a fee program for the 
nonroad compliance programs that have been implemented since the 
initial MVECP fees regulation including certain nonroad compression 
ignition, locomotive, and small spark ignition engines. EPA is also 
proposing to add a fee program for other nonroad categories including 
recreational vehicles (including snowmobiles, off-road motorcycles and 
all-terrain vehicles), recreational marine compression ignition engines 
and the remaining nonroad large spark ignition engines (engines over 37 
kW) compliance programs for which emission standards have been proposed 
but not yet finalized. Also included in this proposal are fees for 
marine spark ignition/ inboard sterndrive engines; the emission 
standards for these engines are under development but not yet proposed.

DATES: Comments: Send written comments on this document by October 
19,2002.
    Hearings: We will hold a public hearing on September 19, 2002. The 
hearing will begin at 10 a.m. and continue until all testimony has been 
presented. If you want to testify at the hearing, notify either contact 
person below by September 12, 2002. See Section VII. A. and B. of the 
SUPPLEMENTARY INFORMATION section of this document for more information 
about public hearings and comment procedures.

ADDRESSES: Comments: You may send written comments in paper form or by 
e-mail. We must receive them by the date indicated under DATES above. 
Send paper copies of written comments (in duplicate, if possible) to 
either contact person listed below or by e-mail to 
``[email protected]''. In your correspondence, refer to Docket A-2001-
09.
    EPA's air docket makes materials related to this rulemaking 
available for review in EPA Air Docket No. A-2001-09. Until August 26, 
2002, the docket is located at The Air Docket, 401 M. Street, SW., 
Washington, DC 20460, and may be viewed in room M1500 between 8 a.m. 
and 5:30 p.m., Monday through Friday. The telephone number is (202) 
260-7548 and the facsimile number is (202) 260-4400. After August 26, 
2002, the Air Docket will be located at room B-108, 1301 Constitution 
Avenue, NW., Washington, DC 20460. A reasonable fee may be charged by 
EPA for copying docket material.
    Hearings: We will hold a public hearing at the Towsley Auditorium, 
Morris Lawrence Building, Washtenaw Community College, Ann Arbor, MI. 
See Section VII. A. and B. for more information about public hearings 
and comment procedures.

FOR FURTHER INFORMATION CONTACT: Lynn Sohacki, Certification and 
Compliance Division, U.S. Environmental Protection Agency, 2000 
Traverwood, Ann Arbor, Michigan 48105, Telephone 734-214-4851, Internet 
e-mail ``[email protected],'' or Trina D. Vallion, 734-214-4449, 
Internet e-mail ``[email protected].''

SUPPLEMENTARY INFORMATION:

Regulated Entities

    Entities potentially regulated by this action are those which 
manufacture or seek certification (``manufacturer'' or 
``manufacturers'') of new motor vehicles and engines (including both 
highway and nonroad). The table below shows the category, North 
American Industry Classification System (NAICS) Codes, Standard 
Industrial Classification (SIC) Codes and examples of the regulated 
entities:

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                                                   NAICS      SIC  Codes     Examples of potentially regulated
                   Category                      Codes \1\       \2\                     entities
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Industry......................................       333111         3523  Farm Machinery and Equipment
                                                                           Manufacturing.
Industry......................................       333112         3524  Lawn and Garden Tractor and Home Lawn
                                                                           and Garden Equipment Manufacturing.
Industry......................................       333120         3531  Construction Machinery Manufacturing.
Industry......................................       333131         3532  Mining Machinery and Equipment
                                                                           Manufacturing.
Industry......................................       333132         3533  Oil & Gas Field Machinery.
Industry......................................       333210         3553  Sawmill & Woodworking Machinery.
Industry......................................       333924         3537  Industrial Truck, Tractor, Trailer,
                                                                           and Stacker Machinery Manufacturing.
Industry......................................       333991         3546  Power Driven Handtool Manufacturing.
Industry......................................       336111         3711  Automotive and Light-Duty Motor
                                                                           Vehicle Manufacturing.
Industry......................................       336120         3711  Heavy Duty Truck Manufacturing.
Industry......................................       336213         3716  Motor Home Manufacturing.
Industry......................................       336311         3592  Motor Vehicle Gasoline Engine and
                                                                           Engine Parts Manufacturing.
Industry......................................       336312         3714  Gasoline Engine & Engine Parts
                                                                           Manufacturing.
Industry......................................       336991         3751  Motorcycle, Bicycle, and Parts
                                                                           Manufacturing.
Industry......................................       336211         3711  Motor Vehicle Body Manufacturing.
Industry......................................       333618         3519  Gasoline, Diesel & dual-fuel engine
                                                                           Manufacturing.
Industry......................................       811310         7699  Commercial & Industrial Engine Repair
                                                                           and Maintenance.
Industry......................................       336999         3799  Other Transportation Equipment
                                                                           Manufacturing.
Industry......................................       421110  ...........  Independent Commercial Importers of
                                                                           Vehicles and Parts.
Industry......................................       333612         3566  Speed Changer, Industrial High-speed
                                                                           Drive and Gear Manufacturing.
Industry......................................       333613         3568  Mechanical Power Transmission
                                                                           Equipment Manufacturing.

[[Page 51403]]

 
Industry......................................       333618         3519  Other Engine Equipment Manufacturing.
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\1\ North American Industry Classification System (NAICS)
\2\ Standard Industrial Classification (SIC) system code.

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities EPA is now aware could potentially 
be regulated by this proposed action. Other types of entities not 
listed in the table could also be regulated. To determine whether your 
product would be regulated by this proposed action, you should 
carefully examine the applicability criteria in title 40 of the Code of 
Federal Regulations, parts 86, 89, 90, 91, 92 and 94; also parts 1045, 
1048, and 1051 when those Parts are finalized. If you have questions 
regarding the applicability of this proposed action to a particular 
product, consult the person listed in the preceding FOR FURTHER 
INFORMATION CONTACT section.

Obtaining Rulemaking Documents Through the Internet

    The preamble and regulatory language of today's proposal, and the 
Motor Vehicle and Engine Compliance Program Cost Analysis document 
(which is an explanation how we determined EPA's costs to conduct the 
MVECP and the proposed fees to cover the program) are also available 
electronically from the EPA Internet Web site. This service is free of 
charge. The official EPA version is made available on the day of 
publication on the primary Web site listed below. The EPA Office of 
Transportation and Air Quality also publishes these notices on the 
secondary Web site listed below.

(1) http://www.epa.gov/docs/fedrgstr/EPA-AIR/ (either select desired 
date or use Search feature)
(2) http://www.epa.gov/OTAQ/ (look in ``What's New'' or under the 
specific rulemaking topic)

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

Table of Contents

I. Introduction
    A. Overview
    B. What Programs Are Covered by the Fees?
II. Background
    A. Basis for Action under the Clean Air Act and Other Legal 
Authority
    B. How Do EPA's Compliance Programs Work?
    C. How Does this Rulemaking Affect the Proposed Recreational 
Vehicles Rule and Future Rules?
    D. How Does the Fuel Economy Program Work?
III. Proposed Fee System
    A. What Agency Costs Are Recoverable by Fees?
    B. What OTAQ Activities Are Not Included in the Agency's 
Proposed Fee Program?
    C. How did the Agency Analyze the Costs of the Compliance 
Programs?
    D. Proposed Fee Schedule
    E. Will the Fees Automatically Increase to Reflect Future 
Inflation?
    F. Comments on the Proposed Fee System
IV. Fee Collection and Transactions
    A. Procedure for Paying Fees
    B. What is the Implementation Schedule for Fees?
    C. What Happens to the Money That Is Collected by the Fees 
Program?
    D. Can I Qualify for a Reduced Fee?
    E. What Is the Refund Policy?
V. What Other Options Were Considered by EPA When Proposing this 
Rule?
    A. Separate Fees for Other ICI Categories Beyond Light-Duty
    B. Start Updating Fees for Cost of Inflation in 2004 Model Year
VI. What Is the Economic Impact of this Proposed Rule?
VII. How Can I Participate in the Rulemaking Process?
    A. How to Make Comments and Use the Public Docket
    B. Public Hearings
VIII. What are the Administrative Requirements for this Proposal?
    A. Executive Order 12866: Administrative Designation and 
Regulatory Analysis
    B. Regulatory Flexibility Act (RFA), as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 USC 
601 et. seq
    C. Paperwork Reduction Act
    D. Unfunded Mandates Reform Act
    E. National Technology Transfer and Advancement Act
    F. Executive Order 13045: Children's Health Protection
    G. Executive Order 13132: Federalism
    H. Executive Order 13211: Energy Effects
    I. Executive Order 13175: Consultation and Coordination with 
Indian Tribal Governments

I. Introduction

A. Overview

    EPA is proposing to update the current MVECP fees regulation which 
assesses fees for the EPA's certification and compliance activities 
related to highway vehicles and engines and to incorporate new fees for 
certification and compliance activities related to nonroad \1\ engines. 
Currently, fees are collected for certification and compliance 
activities related to light-duty vehicles and trucks, heavy-duty 
highway vehicles and engines, and highway motorcycles. Today's action 
proposes to update the fees regulations to reflect the increased costs 
of administering the compliance programs already covered within the 
existing MVECP fee program and to add a fee program for the nonroad 
compliance programs we have implemented since the initial MVECP fees 
regulation including nonroad compression ignition, marine spark 
ignition outboard/personal-water-craft, locomotive, and small spark 
ignition (less than or equal to 19 kW) engines. We are also proposing 
to add a fee program for recreational vehicles (including, but not 
limited to, snowmobiles, off-road motorcycles and all terrain 
vehicles), recreational marine compression ignition engines and large 
spark ignition nonroad engines (over 19 kW) compliance programs. Also 
included in this proposal are fees for marine spark ignition/inboard-
sterndrive engines. Hence, under this new proposal all manufacturers 
and Independent Commercial Importers (ICIs) of light-duty vehicles 
(LDVs), light-duty trucks (LDTs), heavy-duty vehicles (HDVs), heavy-
duty highway engines (HDEs), nonroad spark and compression ignition 
engines (NR), marine compression and spark ignition engines (including 
recreational applications), locomotives, highway and off-road 
motorcycles (MCs), and recreational vehicles would be subject to fees. 
Table II-B.1 below lists the vehicle and engine classes that are 
affected by today's proposed action.
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    \1\ Nonroad engines are defined in 40 CFR 89.2. It is a general 
term which encompasses all the regulated subclasses including, but 
not limited to, both CI and SI engines used in: farm and 
construction equipment, marine applications, recreation 
applications, and locomotives.
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    A certificate of conformity is generally required when a 
manufacturer \2\ decides to market new vehicles or engines in the 
United States (see discussion below for complete discussion of when a 
certificate of conformity is required).

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Before issuing that certificate, EPA must perform certain activities 
necessary to ensure compliance with regulations implemented within the 
Motor Vehicle and Engine Compliance Program (MVECP). The MVECP includes 
all activities conducted by EPA that are associated with certification, 
fuel economy, Selective Enforcement Auditing (SEA), and in-use 
compliance monitoring and audits. Such MVECP activities include: 
Providing certification assistance during the pre-production phase; 
pre-certification confirmatory testing of vehicles; laboratory 
correlation; certification compliance audits and investigations; 
conducting fuel economy selection, testing, and labeling; selective 
enforcement audits (SEA); providing manufacturers and ICIs with CAFE 
calculations; monitoring of in-use vehicles and engines; monitoring/
data review of mandatory production line (PLT) and in-use testing; and 
Agency-run in-use surveillance and/or recall tests.
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    \2\ Manufacturer, as used in this NPRM, means all entities or 
individuals requesting certification, including, but not limited to, 
Original Equipment Manufacturers, ICIs, and vehicle or engine 
converters.
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    In accordance with the Clean Air Act, as amended in 1990 (CAA), and 
the Independent Office of Appropriations Act (IOAA), EPA is authorized 
to collect fees for specific services it provides to manufacturers. 
Section 217 of the CAA (42 U.S.C. 7552) permits the EPA to establish 
fees to recover all reasonable costs associated with (1) new vehicle or 
engine certification under section 206(a) or part C,\3\ (2) new vehicle 
or engine compliance monitoring and testing under section 206(b) or 
part C, and (3) in-use vehicle or engine compliance monitoring under 
section 207(c) or part C. Secondly, the authority to collect fees is 
also provided by the IOAA (31 U.S.C. 9701) which permits a government 
agency to establish fees for a service or thing of value provided by 
the agency to an identifiable recipient. Finally, Office of Management 
and Budget (OMB) Circular No. A-25 Revised, establishes Federal policy 
regarding fees assessed for Government services and for the sale or use 
of Government goods or resources and provides guidance for agency 
implementation of charges and the deposition of collections.
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    \3\ Part C of the CAA, as amended, pertains to Clean Fuel 
Vehicles.
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    The MVECP fees have been in existence since 1992. The first fees 
regulations (57 FR 30055) were published on July 7, 1992, establishing 
MVECP fees to recover all reasonable costs associated with 
certification and compliance programs within the Office of 
Transportation and Air Quality (OTAQ), then called Office of Mobile 
Sources (OMS). In 1999, under the Compliance Assurance Program (CAP 
2000) regulations (64 FR 23906), the provisions for fees were updated 
to reflect several changes in the costs of the MVECP. The fees 
regulations were further modified by a regulatory amendment published 
on March 7, 2000 (65 FR 11904). This amendment, which is applicable to 
original equipment manufacturers (OEMs) and aftermarket conversion 
manufacturers, allows a fee waiver for small volume engine families of 
alternatively fueled vehicles that are certified to the Clean-Fuel 
Vehicle standards for model years (MY) 2000 through 2003. Since the 
initial MVECP fees regulation, EPA has incurred additional costs and 
will continue to incur cost in supporting these current light-duty and 
heavy-duty compliance programs (including Tier 2 and new heavy-duty 
engine regulations), and new compliance programs and testing 
requirements for nonroad. Today's action proposes to update the MVECP 
fee provisions to reflect these changes.
    Manufacturers receive certification and compliance services by 
initiating a certification request and an application for 
certification.\4\ By determining the EPA activities and associated 
costs within the MVECP, we calculated a fee for each certification 
request type. The certification request types are described in more 
detail later in this proposal. Each request for a certificate of 
conformity within a certification request type is potentially subject 
to an equal amount of EPA expenditure related to the applicable 
certification, fuel economy, SEA, and in-use compliance monitoring and 
audit programs, thus EPA believes it is fair and equitable to calculate 
fees in a manner whereby the cost for each certificate within a 
certification request type is the same.
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    \4\ A certification request is defined as a manufacturer's 
request for certification evidenced by the submission of an 
application for certification, Engine System Information (ESI) data 
sheet, or ICI Carry-Over data sheet.
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    In summary, today we are proposing to collect fees under the 
authority of the IOAA and section 217 of the CAA to ensure that the 
MVECP is self-sustaining to the extent possible. In essence, this 
proposed regulation will require those manufacturers specially 
benefitting from the services provided under the MVECP to bear the 
EPA's cost of administering the program on their behalf.

B. What Programs Are Covered by the Fees?

    EPA has a number of different services it provides under the MVECP. 
Under the MVECP, fees are collected to recover the cost of services 
associated with: (1) New vehicle or engine certification; (2) new 
vehicle or engine compliance monitoring (including selective 
enforcement auditing (SEA) and production line testing (PLT)); (3) in-
use vehicle or engine compliance monitoring and testing; and (4) the 
fuel economy program. These services include: pre-production 
certification assistance; confirmatory testing of vehicles; laboratory 
correlation; certification compliance audits and investigations; 
conducting fuel economy selection, testing, and labeling; selective 
enforcement audits (SEA); providing manufacturers and ICIs with CAFE 
calculations; monitoring of in-use vehicles and engines; monitoring/
data review of mandatory production line and in-use testing; and 
Agency-run in-use surveillance and/or recall tests. The proposed fees 
reflect the cost of these activities.
    In addition to those services just mentioned, EPA also conducts 
activities for which a fee is not being proposed at this time. These 
activities include regulation development and policy, emission factors 
determination, air quality assessment and analysis, air quality 
initiatives, and support of state inspection and maintenance (I/M) 
programs. Under the currentMVECP fees regulation these activities are 
not covered.

II. Background

A. Basis for Action Under the Clean Air Act and Other Legal Authority

    We are amending current fees and setting new fees within the MVECP 
fees regulation under the authority of section 217 of the Clean Air Act 
(CAA). EPA is authorized under section 217 of the CAA, as amended by 
Public Law 101-549, section 225, to establish fees for specific 
services it provides to vehicle and engine manufacturers. The CAA 
provides in pertinent part:
    (a) Fee Collection.--Consistent with section 9701 of title 31, 
United
    States Code, the Administrator may promulgate (and from time to 
time revise) regulations establishing fees to recover all reasonable 
costs to the Administrator associated with--
    (1) New vehicle or engine certification under section 206(a) or 
part C,
    (2) New vehicle or engine compliance monitoring and testing under 
section 206(b) or part C, and
    (3) In-use vehicle or engine compliance monitoring and testing 
under section 207(c) or part C;
    The Administrator may establish for all foreign and domestic 
manufacturers a fee schedule based on such factors as the Administrator 
finds appropriate and equitable and nondiscriminatory,

[[Page 51405]]

including the number of vehicles or engines produced under a 
certificate of conformity. In the case of heavy-duty and vehicle 
manufacturers, fees shall not exceed a reasonable amount to recover an 
appropriate portion of such reasonable costs.
    EPA is also authorized under the Independent Offices Appropriation 
Act of 1952 to establish fees for Government services and things of 
value that it provides. This provision, originally designated as 31 
U.S.C. 483(a), was codified into law on September 13, 1982, at 31 
U.S.C. 9701. This provision encourages Federal regulatory agencies to 
recover, to the fullest extent possible, costs provided to identifiable 
recipients. The relevant text states:
    (a) It is the sense of Congress that each service or thing of value 
provided by an agency * * * to a person * * * is to be self-sustaining 
to the extent possible.
    (b) The head of an agency * * * may prescribe regulations 
establishing the charge for a service or thing of value provided by the 
agency. Regulations prescribed by the heads of executive agencies are 
subject to policies prescribed by the President and shall be uniform as 
practicable. Each charge shall be--
    (1) Fair; and
    (2) Based on--
    (A) Costs to the Government;
    (B) The value of the service or thing to the recipient;
    (C) Public policy or interest served; and
    (D) Other relevant facts.
    EPA also intends to follow, and is guided by, the Office of 
Management and
    Budget's Circular No. A-25 (Revised),\5\ which establishes Federal 
policy regarding fees assessed for Government services and for the sale 
or use of Government goods or resources and was issued under the 
authority of the IOAA. Included in the Circular's objectives are 
ensuring that each service provided by an agency to a specific 
recipient be self-sustaining, and to promote the efficient allocation 
of the Nation's resources by establishing charges for special benefits 
provided to a recipient that are at least as great as costs to the 
Government of providing the special benefits.
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    \5\ See http://www.whitehouse.gov/omb/circulars/a025/a025.html 
the text of which is also contained in the EPA Air Docket No. A-
2001-09.
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    Subsequent to EPA's initial rulemaking that set forth the fees for 
the MVECP,\6\ the U.S. Court of Appeals for the D.C. Circuit, upon 
reviewing EPA's authority to collect fees under the IOAA and section 
217, held that for the regulated industry, a certificate of conformity 
is deemed a benefit specific to the recipient, for purposes of the 
provision of the Independent Offices Appropriation Act (IOAA); thus 
authorizing a federal agency to collect fees from a beneficiary of 
service or thing of value the federal agency provides in order to make 
the service self-sustaining to the extent possible.\7\ The court held 
that because the Compliance Program confers a specific, private benefit 
upon the manufacturers, the EPA can lawfully recoup from them the 
reasonable cost of the program.
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    \6\ See 57 FR 30055 (July 7, 1992).
    \7\ See Engine Manufacturers Association v. EPA, 20 F.3d 1177 
(D.C. Cir. 1994).
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    Court decisions have also provided guidance on the criteria to be 
used in implementing fee schedules under the IOAA when user fees are 
being charged for special benefits. See National Cable Television Ass'n 
v. Federal Communications Comm'n, 554 F.2d 1094 (D.C. Cir. 1976); 
Electronic Industries Association v. Federal Communications Comm'n, 554 
F.2d 1109 (D.C. Cir. 1976); and Capital Cities Communications, Inc. v. 
Federal Communications Comm'n, 554 F.2d 1135 (D.C. Cir. 1976). These 
decisions indicate the following factors are relevant in developing a 
fee program:
    1. An agency may impose a reasonable charge on recipients for an 
amount of work from which the recipients benefit. The fees must be for 
specific services to specific persons.
    2. The fees may not exceed the cost to the agency in rendering the 
service.
    3. An agency may recover the full cost of providing a service to an 
identifiable beneficiary regardless of the incidental public benefits 
which may flow from the service.
    An agency, when it proposes a fee pursuant to the IOAA to recover 
special benefits, should also address the following matters set out in 
Electronic Industries Ass'n v. Federal Communications Comm'n, 554 F.2d 
at 1117:
    1. The agency must justify the assessment of a fee by a clear 
statement of the particular service or benefit for which it seeks 
reimbursement.
    2. The agency must calculate the cost basis for each fee by:
    a. Allocating specific expenses of the cost basis of the fee to the 
smallest practical unit;
    b. Excluding expenses that serve an independent public interest; 
and
    c. Providing public explanation of the specific expenses included 
in the cost basis for a particular fee, and an explanation of the 
criteria used to include or exclude a particular item.
    3. The fee must be set to return the cost basis at a rate that 
reasonably reflects the cost of the services performed and valued 
conferred on the payor.
    As detailed in today's proposal and in the Motor Vehicle and Engine 
Compliance Program Cost Analysis, EPA believes it has fulfilled all of 
these aims in developing this proposal.
    EPA believes that all the fees included in this proposal are 
justified based on the tests for fee recovery relating to special 
benefits applicable under IOAA. In addition, EPA believes that CAA 
section 217 gives EPA additional support for imposing fees for the 
programs specified in that section. Section 217 authorizes EPA to 
establish fees ``[c]onsistent'' with the IOAA ``to recover all 
reasonable costs to the Administrator associated'' with certification, 
SEA testing and in-use compliance programs. This section establishes 
Congress' position that the specified programs provide the type of 
benefit and have the type of costs that are appropriately recoverable 
under the IOAA.
    In addition to collecting fees for new highway vehicles and 
engines, EPA believes section 217 also authorizes the collection of 
fees for EPA certification and compliance activities related to new 
nonroad vehicles and engines. As noted above, section 217 sets forth 
the authority for EPA to collect fees for: new vehicle or engine 
certification activities conducted under section 206(a) of the CAA, new 
vehicle or engine compliance monitoring and testing under section 
206(b) of the CAA (including such activities as SEA and PLT testing), 
and in-use vehicle or engine compliance monitoring and testing under 
section 207(c) of the CAA. Section 213 of the CAA \8\ creates a 
statutory program which mirrors that Congress created for the 
regulation of new highway vehicles and engines. The nonroad standards 
created under section 213 are in fact subject to the same requirements 
(e.g., sections 206, 207, 208, and 209) and implemented in the same 
manner (including certification, SEA, and in-use testing) under the 
same sections (as those referenced in section 217) as regulations for 
new highway vehicles and engines under section 202 (with modifications 
to the implementing nonroad regulations as the Administrator deems 
appropriate). Therefore, because EPA's certification and compliance 
activities related to new nonroad vehicles and engines are

[[Page 51406]]

pursuant to sections 206 and 207 and because the text of section 217 
authorizes the collection of fees for activities under such sections 
without limiting it to new highway vehicles and engines, EPA believes 
collecting fees for new nonroad vehicles and engines certification and 
compliance activities under section 217 is appropriate as an additional 
compliance requirement. EPA also believes that the IOAA creates an 
additional and independent authority for EPA to collect such fees due 
to the same special and unique benefits that manufacturers of both new 
highway and nonroad vehicle and engine manufacturers receive from EPA 
under the certification and compliance services.
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    \8\ 42 U.S.C. 7547.
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    Moreover, by providing authority to recover ``all reasonable costs 
* * * associated'' with the programs, Congress has given EPA authority 
to impose fees on a basis that can extend beyond the specific criteria 
used in interpreting the IOAA. See Florida Power & Light Co. v. United 
States, 846 F.2d 765 (DC Cir. 1988), cert denied, 109 S. Ct. 1952 
(1989). If any commenters believe that any fee proposed by EPA for 
recovery for the programs identified in CAA section 217 is not 
recoverable under the IOAA, the commenters are requested to discuss 
whether, in their view, the fees would be recoverable under the ``all 
reasonable costs associated'' test found in section 217 and should do 
so in light of the court decision noted above. Additionally, if any 
commenters believe that any fee proposed by EPA for recovery is not 
identified or authorized by section 217, the commenters are requested 
to identify which portions of the fee program are not identified or 
authorized and why the provisions of the IOAA would not provide such 
authorization. As noted in more detail in the reduced fee section of 
today's preamble, EPA also believes that section 217 and the IOAA allow 
the Agency to set fees for specific small volume engine families and 
invites comments on this as well.

B. How Do EPA's Compliance Programs Work?

Certification
    Section 203(a) \9\ of the CAA requires that a manufacturer of new 
motor vehicles and new motor vehicle engines obtain a certificate of 
conformity prior to the distribution into commerce, sale, or offering 
for sale, or the introduction, or delivery for introduction, into 
commerce, within the United States of such new motor vehicles or 
engines. The certificate of conformity covers a defined group of 
vehicles or engines and has a specified duration referred to as the 
model year (MY).
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    \9\ CAA Sec. 213(d) requires that the standards for nonroad 
engines or vehicles under Sec. 213 be enforced in the same manner as 
standards prescribed under section 202. As such, EPA applies the 
provisions of Sec. 203 to nonroad vehicles and engines.
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    ``Model year'' is defined in the CAA \10\ to be the manufacturer's 
annual production period (as determined by the Administrator) which 
includes January 1 of the calendar year. If the manufacturer has no 
annual production period, the term ``model year'' means the calendar 
year. For some industries, such as the light duty vehicle industry, the 
model year typically begins before the calendar year; for example, the 
2003 model year might run from August 1, 2002 to July 31, 2003. For 
other industries it is synonymous with the calendar year and runs from 
January 1 to December 31. In some cases a model year may be longer than 
twelve months. However, in all cases the model year refers to an annual 
production period. Consequently new certificates must be issued each 
year.
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    \10\ See CAA Sec. 202(b)(3). It is also defined in the 
applicable Title 40 regulations for the applicable class of vehicle 
or engine covered.
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    For marine vessels covered under the voluntary IMO program, a 
letter of compliance is issued instead of a certificate of compliance. 
For purposes of the fee rulemaking, the letter of compliance will be 
treated the same as a certificate of compliance. In this case a request 
for certification shall mean a request for the voluntary IMO letter of 
compliance. Although such letters of compliance are not a requirement 
under title II of the CAA, EPA believes that it provides special and 
unique benefits to the manufacturers of marine vessels that seek and 
receive EPA services in order to receive letters of compliance. As 
explained above, EPA believes that the IOAA provides the basis by which 
to collect fees for this activity. As further discussed below, EPA is 
also considering and inviting comment on whether to finalize fees for 
industry categories that may not yet have final emission standards 
regulations, as part of the overall final fees regulation promulgated 
from today's proposal or to issue such fees requirements at the time 
the emission standards themselves become final. EPA anticipates 
promulgating fees for marine vessels covered under the voluntary IMO 
program as part of final fees regulation associated with today's 
proposal.
    The group of vehicles or engines covered by a certificate of 
conformity is called either an ``engine family'' or a ``test group'' 
depending on the applicable class of vehicles or engines. While the 
terminology changes between classes, the basic certification unit (or 
group) is designed to accomplish the same purpose. Only vehicles or 
engines which are expected to exhibit similar emission characteristics 
and deterioration are combined together into a single group.
    Table II.B-1, below, summarizes the name of these basic 
certification groups, the location of the general certification and 
compliance program rules, and the typical number of certificates which 
are issued for each class of vehicles and engines covered by this 
proposal. The number of certificates in the following table are 
projections. If there is a certification program currently active for 
the class, the number of certificates are based on latest actual 
numbers. For other industries, the number of certificates is based on 
projections gathered from the discussions with manufacturers and 
information presented when the Agency proposed and/or finalized the 
rules pertaining to the industry.

           Table II.B-1.--Classes of Certificates, Their Unit, Number of Certificates and Regulations
----------------------------------------------------------------------------------------------------------------
                                     Basic certification   Number of     Location or future location of general
     Class of vehicles/engines              unit             certs             certification regulations
----------------------------------------------------------------------------------------------------------------
Light Duty Vehicles & Trucks (LD).  Test Group..........          411  40 CFR Part 86, Subpart S.
Highway motorcycles (MC)..........  Engine Family.......          174  40 CFR Part 86, Subpart E
Heavy-duty Highway Engines........  Engine Family.......          130  40 CFR Part 86, Subpart A.
Nonroad CI Engines................  Engine Family.......          603  40 CFR Part 89.
Heavy-duty Vehicle Evap...........  Evap Family.........           42  40 CFR Part 86, Subpart M.
Marine SI Outboard/PWC............  Engine Family.......          155  40 CFR Part 91.

[[Page 51407]]

 
Marine CI \a\ > 37 kW.............  Engine Family.......           40  40 CFR Part 94.
International Maritime              Engine Family.......            9
 Organization \b\.
Small Nonroad SI..................  Engine Family.......          546  40 CFR Part 90
Locomotives & Locomotive Engines..  Engine Family.......           10  40 CFR Part 92.
Large Nonroad SI (>19 kW) \c\.....  Engine Family.......           50  40 CFR Part 1048.
Recreational Marine CI>37 kW \c\..  Engine Family.......           25  40 CFR Part 94.
Marine SI Inboard /Sterndrive \d\.  Engine Family.......           50  40 CFR Part 1045.
Recreational \c\ (including Off-    Engine Family.......          100  40 CFR Part 1051.
 road MC, ATV's, Snowmobiles).
----------------------------------------------------------------------------------------------------------------
(a) The rules for these classes are finalized but not yet implemented; numbers are estimates.
(b) The International Maritime Organization (IMO) has established procedures for obtaining a letter of
  compliance with the MARPOL 73/78 Annex 6 which have not yet been ratified by the U.S.A. Manufacturers of such
  engines may voluntarily comply with these requirements. EPA has agreed to issue a letter of compliance for
  such manufacturers who voluntarily comply with the MARPOL 73/78 Annex 6 emission requirements.
(c) The rules for these classes are proposed but not yet finalized; numbers are estimates.
(d) The rules for these classes are under development but not yet finalized; numbers are estimates.

    To obtain a certificate, the manufacturers must perform the 
required testing and fulfill other requirements specified in the 
applicable regulations listed in the above table. When the manufacturer 
has satisfied itself that it has complied with all the requirements, it 
submits an application for certification for review by the Agency. EPA 
processes these applications and makes a determination of conformance 
with the CAA and the applicable regulations. If the vehicle or engine 
satisfies the prescribed emission standards and otherwise complies with 
the applicable provisions of the regulations, EPA issues a certificate 
of conformity for the group (e.g., engine family).
    The certification process includes, but is not limited to, review 
of the application for certification, review of the manufacturer's 
durability and deterioration determination, review of emission-data for 
test engine selection, review of the manufacturer's justification that 
auxiliary emission control devices (AECDs) are not defeat devices, and 
certification request processing and computer support. Other activities 
related to the certification process include auditing the applicant's 
testing and data collection procedures, laboratory correlation, and EPA 
confirmatory testing and compliance inspections and investigations 
related to certification. The certification program also covers ICI 
manufacturers review and processing and approval for final importation 
of vehicles and engines.
SEA and PLT
    EPA conducts new vehicle or engine compliance monitoring in the 
form of Agency-conducted Selective Enforcement Audits (SEA) or 
manufacturer-conducted production line testing (PLT) programs. The 
purpose of these programs is to assure that the vehicles that are 
actually being produced comply with the emission standards. The 
certification portion of the MVEPC demonstrates that the vehicles are 
designed to pass the standards for the vehicles' useful life through 
testing of pre-production prototype vehicles or engines. The SEA or PLT 
testing also serves as some additional proof of in-use compliance for 
certain programs (where in-use testing is more difficult) by addressing 
the prototype to production effects on emissions.
    SEA activities include the selection and testing of vehicles and 
engines off the assembly line at various production plants around the 
world to determine compliance with emission standards. PLT programs 
require the manufacturer (rather than EPA) to test a percentage of 
engines as they leave the production line. In either case, if a 
substantial number of vehicles or engines fail to meet the emission 
standards the manufacturer could be required to cease production of the 
failing vehicles until the manufacturer had demonstrated that a new 
version of the vehicle complied with the standard. The manufacturer may 
also be required to recall (see discussion below for the meaning of a 
recall) failing vehicles or engines which have been introduced into 
commerce.
In-Use Programs
    EPA further ensures compliance with the CAA through a variety of 
in-use testing and in-use defect investigations.
    These activities include investigations into potential emission-
related defects vehicles and engines and various types of in-use 
compliance programs. In-use compliance activities ensure that vehicles 
and engines continue to meet emission standards throughout their useful 
life.
    The type of in-use programs conducted by the Agency vary between 
the classes of vehicles and engines. These variations contribute to the 
different fee amounts which the Agency is proposing for different 
classes. (See Section IV of the Motor Vehicle and Engine Compliance 
Program Cost Analysis, available in the docket, for details of how the 
Agency calculated the fee amounts). In all cases, should the 
Administrator of EPA determine, by whatever means, that a substantial 
number of any class or category of vehicles or engines, although 
properly maintained and used, do not comply with their applicable 
regulations when in actual use throughout their useful life, the Agency 
requires the manufacturer to submit a plan to remedy the nonconformity 
of the vehicles or engines. The implementation of the plan to remedy 
vehicles is called a recall.
    The Agency uses data from Selective Enforcement Audits (SEA), 
manufacturer-supplied production line testing (PLT), Agency-run in-use 
surveillance and/or recall tests conducted on a dynamometer and/or on 
the road , manufacturer-run in-use verification program (IUVP) testing, 
manufacturer-run engine testing and manufacturer-supplied defect 
reports to evaluate in-use emissions performance for the various 
classes of engines and vehicles which are certified.
    For recall and surveillance testing, the Agency recruits vehicles 
from their owners and conducts tests either on a dynamometer or on the 
road using mobile emission measurement equipment. The IUVP program only 
applies to light-duty vehicles and medium-duty passenger vehicles; it 
requires manufacturers to conduct a specified amount of testing on in-
use vehicles which they procure from

[[Page 51408]]

owners. Defect reporting (DR) generally requires manufacturers to 
notify the Agency when an emission related defect occurs on more than 
25 vehicles or engines in use.
    The specific programs currently employed by the Agency to assure 
in-use compliance for the various classes of vehicles and engines are 
summarized in the following paragraphs. This list is being provided to 
document the activities considered in the analysis for proposed fees. 
The Agency may at any time perform other investigations and/or use 
other sources of data to make compliance determinations of in use 
vehicles and engines.
    The selection of which in-use tools are used by the Agency for each 
industry is based on the in-use compliance needs. Each of the 
industries are subject to different regulations which establish 
different requirements. When the applicable regulations require the 
manufacturer to supply some form of in-use data, production line data, 
or aged engine testing; this information makes it easier for the Agency 
to monitor compliance in actual use. Consequently for those industries 
the Agency can spend less of its own effort to collect data.
    For the light-duty and highway motorcycle programs, the Agency 
conducts an in-use surveillance and recall program where individual 
owner's vehicles are recruited and tested by the Agency. This data is 
augmented by manufacturer-run in-use data to fulfill the requirements 
of the in-use verification program (IUVP) for light duty vehicles. The 
Agency also reviews defect reports submitted by the manufacturers for 
potential in-use problems. Although there is authority for the Agency 
to conduct SEA testing, EPA does not currently conduct SEA testing for 
light-duty vehicles.
    For heavy-duty highway vehicles and nonroad vehicles, the Agency 
conducts SEAs and on-the-road emission measurements of engines 
installed in in-use vehicles. EPA may also remove engines from heavy-
duty highway and nonroad vehicles for laboratory testing when problems 
are found using on-vehicle measurement equipment.
    For other classes of engines such as marine SI outboards and 
personal water craft (PWC), manufacturers are required to age engines 
in fleets and then perform testing on the engine.

C. How Does This Rulemaking Affect the Proposed Recreational Vehicles 
Rule and Future Rules?

    We are proposing fees for Large Nonroad SI (>19 kW), Recreational 
Marine CI, Marine SI Inboard and Sterndrive engines, Recreational 
engines (including Off-Road Motorcycles (MC), All-terrain Vehicles 
(ATVs), and Snowmobiles) even though emission regulations currently do 
not exist for those classes. As discussed previously, the Agency has 
proposed and is in the process of finalizing emission standards (See 66 
FR 51098, (October 10, 2001)) or is in the process of preparing to 
propose emission standards for these industries. The fees listed in the 
Table III.D-1, below, will apply only after the applicable regulations 
are effective for these classes of engines. The fees are due only when 
a manufacturer is making a request for certification.
    We are proposing fees for these classes at this time because enough 
is known of the anticipated Agency costs for the MVECP for these 
programs and the projected number of certificates to accurately 
calculate proposed fees. The fees proposed for these programs represent 
a reasonable but somewhat conservative and low estimate Agency cost and 
assume either low levels of EPA monitoring or monitoring through 
manufacturer-run PLT and in-use testing. In the event that the programs 
for these classes of engines significantly change, the Agency will 
revise the applicable fee by a separate regulation.
    Today's proposal of potential fees for these classes in no way 
prejudges the outcome of the ongoing emission standards rulemakings.

D. How Does the Fuel Economy Program Work?

    The Agency is proposing to continue the current provisions which 
incorporate the fuel economy program costs into a single fee due at the 
time of certification for light duty vehicles.
    The fuel economy program applies to light duty vehicles only. There 
are three separate programs: fuel economy labeling and Guide 
publication, gas guzzler tax, and corporate average fuel economy 
(CAFE).
    The fuel economy labeling program is a public information program 
which is designed to provide the public accurate fuel economy 
information for comparison purposes. All light duty vehicles are 
required to have a fuel economy label before they can be introduced 
into commerce. The label values are also published in the Fuel Economy 
Guide (a joint publication with the Department of Energy, DOE) and 
published on the internet on two web sites (http://www.fueleconomy.gov 
and http://www.epa.gov/autoemissions). EPA reviews manufacturers' 
testing, conducts confirmatory testing, audits the manufacturers' label 
calculations, and determines the classification of vehicles. EPA 
receives approximately 1000 label calculations in a typical model year. 
The fuel economy label program is mandated by the Energy Policy and 
Conservation Act (EPCA), 42 U.S.C. 620, and is codified in regulations 
in 40 CFR part 600.
    The gas guzzler tax program is designed to discourage the purchase 
of vehicles with particularly poor fuel economy through a tax program 
administered by the Internal Revenue Service (IRS). Vehicles with a 
combined fuel economy value below 22.5 mpg must pay a tax which starts 
at the rate of $1000 per vehicle. EPA determines potential gas guzzlers 
as part of the labeling process; the final determination of the tax 
liability is made by the IRS. The gas guzzler program is mandated by 
the Gas Guzzler Tax Law and is codified in regulations in 40 CFR part 
600.
    The CAFE program is designed to reduce fuel consumption, reduce 
dependence on foreign oil, and to reduce greenhouse gas emissions from 
new light duty vehicles. Manufacturers are required to meet specified 
average fuel economy values. Separate values are specified for cars and 
trucks.\11\ If manufacturers fail to meet the specified standards they 
are required to pay a fine.\12\ The Department of Transportation (DOT) 
administers the CAFE program and collects the fines. Many additional 
vehicle tests are required to calculate the CAFE values. EPA reviews 
manufacturers' testing and conducts confirmatory testing as necessary. 
EPA also calculates the CAFE values; typically 50 CAFE are processed 
each year. The CAFE program is mandated by the Energy Policy and 
Conservation Act (EPCA), 42 U.S.C. 620, and is codified in regulations 
in 40 CFR part 600.
---------------------------------------------------------------------------

    \11\ Current CAFE standards are 27.5 mpg for cars and 20.7 mpg 
for trucks.
    \12\ Current fines are $5.50 per tenth of an mpg beneath the 
standard multiplied by the total number of vehicles in the fleet 
average. Manufacturers are allowed to carry-forward or carry-back 
credits up to three years to offset short falls calculated in other 
years.
---------------------------------------------------------------------------

    The fuel economy and light-duty certification program have 
substantial overlap. Both programs collect fuel economy and emissions 
data. Emission-data vehicles provide both emissions and fuel economy 
data on engine families for which the manufacturer submits a 
certification request. Further, fuel economy-data vehicles are tested 
for emissions and must comply with the emission standards. Only then 
can the fuel economy data be used in the fuel economy program. Thus, 
each program generates data to support the other and to support 
decisions on both

[[Page 51409]]

certification and fuel economy. This interrelationship has allowed EPA 
to streamline the certification program and procedures, thereby 
minimizing costs directly incurred by the industry as well as by EPA. 
Every vehicle that is certified must also receive a fuel economy label 
and will ultimately be included in the CAFE for that manufacturer.
    For these reasons, it is unnecessary, for fee purposes, to 
distinguish between the efforts expended on fuel economy and 
certification. Consequently, the Agency is proposing to continue its 
current practice of assessing light duty vehicle fees based on 
certification of test groups and including the costs for the fuel 
economy activities in that single fee.

III. Proposed Fee System

A. What Agency Costs Are Recoverable by Fees?

    Today's notice proposes a fee program to recover those costs 
incurred by EPA in conducting the MVECP as authorized under the CAA and 
the IOAA. These costs, incurred by EPA while conducting new vehicle and 
engine certification which includes EPA pre-certification testing, 
certification compliance audits and investigations, fuel economy 
labeling, CAFE calculations and certificate processing; new vehicle and 
engine compliance monitoring and testing which includes SEAs and review 
of manufacturer production line test data; and in-use vehicle or engine 
compliance monitoring which includes testing of in-use vehicles and 
engines, in-use audits and reviewing manufacturers' in-use test data. 
The proposed fees are based on all recoverable direct and indirect 
costs associated with administering these activities. Recoverable costs 
include all labor, operating and program costs associated with the 
activities listed above. Direct labor costs consist of the personnel 
compensation or pay and benefits for the people that directly 
administer the MVECP. Indirect labor costs consist of the personnel 
compensation or pay and benefits for the people that support the 
employees that directly administer the MVECP. This includes support 
staff, computer technicians in the lab, managers, etc.
    Operating costs include all costs for contracts, parts, supplies 
and infrastructure, excluding labor costs that are used to support the 
MVECP. Examples of these costs include travel costs, building space, 
computer support and training for people who work directly on the 
MVECP.
    Program Costs are those of specific compliance activities conducted 
for individual industries. These include the costs of testing either at 
the NVFEL or at a contracted facility, engine procurement for testing, 
equipment for testing and equipment used in analyzing the test data.
    The overall EPA overhead cost is also included in the analysis. The 
overall EPA overhead costs are costs incurred by other parts of the EPA 
that support the people working directly on the MVECP. See the Motor 
Vehicle and Engine Compliance Program Cost Analysis \13\ for further 
discussion.
---------------------------------------------------------------------------

    \13\ The Motor Vehicle and Engine Compliance Program cost is 
contained the EPA Air docket No. A-2001-09 and is on the EPA OTAQ 
website.
---------------------------------------------------------------------------

    These costs are all costs of providing a certificate of conformity 
and the related compliance activities which allows vehicle and engine 
manufacturers an opportunity to introduce such vehicles and engines 
into commerce within the United States, and are, therefore, recoverable 
by fees as stated in the Independent Offices Appropriation Act and the 
Office of Management and Budget's Circular No. A-25 discussed in 
Section II.A above. A more complete description of the agency costs 
that are recoverable by fees is in the Motor Vehicle and Engine 
Compliance Program Cost Analysis, Section III.A.

B. What OTAQ Activities Are Not Included in the Agency's Proposed Fee 
Program?

    EPA conducts numerous activities related to certification and 
mobile source air pollution control, in general, for which it is not 
proposing to charge a fee at this time. These activities include but 
are not limited to: regulation development, emission factor testing, 
air quality assessment, support of state inspection and maintenance 
programs and research. For a more complete description of OTAQ's 
programs, see Section II.D of the Motor Vehicle and Engine Compliance 
Program Cost Analysis.

C. How Did the Agency Analyze the Costs of the Compliance Programs?

    The proposed fees were based on the Agency's projected costs of 
providing certification and related compliance programs to 
manufacturers in the 2003 model year. To determine these projected 
costs, we conducted an in-depth analysis and detailed all of the direct 
and indirect costs incurred by EPA to operate the MVECP. Budget data 
from 2001 was used as a baseline since it is the most current data 
available. Cost estimates for future compliance programs are based on 
estimates for the equipment, labor and contract needs required to 
support new compliance-related programs and regulations and was 
collected through discussions with senior management. The full 
discussion of the methods and numbers used in the analysis is contained 
in the ``Motor Vehicle and Engine Compliance Program Fees Cost 
Analysis.''
    EPA determined that by 2003, significant laboratory equipment 
modernization will be required to satisfactorily test vehicle and 
engines at the lower emission levels associated with Tier 2 and new 
diesel engine emission standards. Consequently, an appropriate portion 
of the cost of this laboratory upgrade ($10 million dollars of the 
total $14 million dollar upgrade) was included in the cost analysis 
that supports this proposal. The 10 million dollar projected, 
recoverable cost was amortized over 10 years for an annual cost of 1 
million dollars. Refer to the Motor Vehicle and Engine Compliance 
Program Fees Cost Analysis for a complete discussion of the laboratory 
upgrade costs.
    EPA is exploring the possibility of a partnership with industry 
through a Cooperative Research and Development Agreement (CRADA) that 
would fully develop and deploy the National Low Emission Vehicle 
Compliance/Correlation Test Site at the National Vehicle and Fuel 
Emissions Laboratory. A CRADA agreement may reduce the cost of the 
laboratory modernization. In the event the EPA enters into such a CRADA 
and the agreement results in a significant cost savings, EPA may adjust 
the fees in a future rulemaking. However, at this time EPA believes it 
is appropriate to include in the costs to be recovered by today's 
proposal, those projected actual costs associated with the laboratory 
equipment modification, as such modification is necessary to conduct 
the MVECP.
    Another cost that was projected for 2003 is the cost of a robust 
highway and nonroad engine compliance program, discussed in more detail 
in Section V.B of Motor Vehicle and Engine Compliance Program Cost 
Analysis available in the docket. These costs and the laboratory 
modernization costs were projected for 2003 and are included in the 
cost study because they will be incurred by the EPA as part of the 
MVECP in 2003.

[[Page 51410]]

D. Proposed Fee Schedule

    Today's action proposes the following fees for each certification 
request:

                  Table III.D-1--Proposed Fee Schedule
------------------------------------------------------------------------
             Category                Certificate type \a\        Fee
------------------------------------------------------------------------
LD, excluding ICIs...............  Fed Certificate.........      $33,911
LD, excluding ICIs...............  Cal-only Certificate....       16,958
MDPV, excluding ICIs.............  Fed Certificate.........       33,911
MDPV, excluding ICIs.............  Cal-only Certificate....       16,958
Complete SI HDVs, excluding ICIs.  Fed Certificate.........       33,911
Complete SI HDVs, excluding ICIs.  Cal-only Certificate....       16,958
ICIs for the following             All Types...............        8,394
 industries: LD, MDPV, or
 Complete SI HDVs.
MC HW, including ICIs............  All Types...............        2,416
HD HW, including ICIs............  Fed Certificate.........       30,437
HD HW, including ICIs............  Cal-only Certificate....          827
HDV (evap), including ICIs.......  Evap Certificate........          827
NR CI, including ICIs, but         All Types...............        2,156
 excluding Locomotives, Marine
 and Recreational engines.
NR SI, including ICIs............  All Types...............          827
All Marine, including ICIs.......  All Types and IMO.......          827
All Recreational \b\, including    All Types...............          827
 ICIs, but excluding marine
 engines.
Locomotives, including ICIs......  All Types...............         827
------------------------------------------------------------------------
\a\ Fed and Cal-only Certificate and IMO is defined in 40 CFR 85.2402
\b\ Recreational means the engines subject to 40 CFR 1051 which includes
  off road motorcycles, all-terrain vehicles and snowmobiles.

    The Agency is proposing fees for Large Nonroad SI (>19 kW), 
Recreational Marine CI, Marine SI Inboard and Sterndrive engines, 
Recreational engines (including Off Road MC, ATV's, and Snowmobiles) 
even though emission regulations currently do not exist for those 
classes. The Agency has proposed (See 66FR 51098, published on October 
5, 2001) or is in the process of proposing regulations for these 
classes.
    The fees listed in the above table will apply only after the 
applicable regulations are effective for these classes of engines. The 
fees are due only when a manufacturer is making a request for 
certification. It may be worth noting again, that we are considering 
whether to finalize the fees for these yet to be regulated industries 
within the final rule based on today's fee proposal or to finalize the 
fees associated with these yet to be regulated industries in the 
emission regulations covering such industries.

E. Will the Fees Automatically Increase To Reflect Future Inflation?

    One factor that could keep EPA from recovering the full cost of 
conducting the MVECP is inflation. To help mitigate the effects of 
inflation, the Agency is proposing that fees be automatically adjusted 
annually by the change in the Consumer Price Index starting with the 
2005 model year. The Agency is proposing a formula for manufacturers to 
use to calculate the applicable calculate beginning with the 2005 model 
year.
    Starting with the 2005 model year, fees will be calculated using 
the following equation:

FeesMY = Feesbase  x  (CPIMY-2/
CPI2002)

Where:

FeesMY is the applicable fee for the model year of the 
certification request.

Feesbase is the applicable fee from paragraph (a) of this 
section.

CPIMY-2 is the consumer price index for all U.S. cities 
using the ``U.S. city average'' area, ``all items'' and ``not 
seasonally adjusted'' numbers calculated by the Department of Labor 
listed for the month of July of the year two years before the model 
year. (e.g., for the 2005 MY the CPI used in the equation will be 
calculated based on the date of July, 2003).
    CPI2002 is the consumer price index for all U.S. cities 
using the ``U.S. city average'' area, ``all items'' and ``not 
seasonally adjusted'' numbers calculated by the Department of Labor for 
December, 2002.
    The applicable CPI results calculated by the Department of Labor 
are currently published on the following internet address: http://stats.bls.gov/cpihome.htm by choosing the data option link for 
``Consumer Price Index--All Urban Consumers (Current Series)'', then 
selecting ``U.S. city average'' area, ``all items'' and ``not 
seasonally adjusted''.
    The Agency invites comment on alternate ways to adjust fees for 
inflation. As a convenience for manufacturers and to avoid errors in 
calculation, the Agency intends to provide, via a guidance letter, a 
listing of applicable fees calculated from the above equation for each 
model year beginning with the 2005 model year. The Agency invites 
comments regarding potential procedures for notification of the new fee 
amounts.

F. Comments on the Proposed Fee System

    The Agency requests comments on the proposed fee system including 
the ``Vehicle and Engine Compliance Program Fees Cost Analysis,'' 
recoverable costs, costs not recovered, the allocation of recoverable 
costs by compliance industry, and the fees per certificate. Comments 
can refer to this preamble, the proposed regulations and the cost 
analysis.

IV. Fee Collection and Transactions

A. Procedure for Paying Fees

    Fees must be paid in advance of receiving a certificate. For each 
certification request, evidenced by an application for certification, 
ESI data sheet, or ICI Carryover data sheet, manufacturers and ICIs 
will submit a MVECP Fee Filing Form (filing form) and the appropriate 
fee in the form of a corporate check, money order, bank draft, 
certified check, or electronic funds transfer [wire or Automated 
Clearing House (ACH)], payable in U.S.

[[Page 51411]]

dollars, to the order of the U.S. Environmental Protection Agency. The 
filing form and accompanying fee will be sent to the address designated 
on the filing form. EPA will not be responsible for fees received in 
other than the designated location. Applicants will continue to submit 
the application for certification to the National Vehicle and Fuel 
Emission Laboratory (NVFEL) in Ann Arbor, Michigan or to the Engine 
Programs Group in Washington, DC.
    To ensure proper identification and handling, the check or 
electronic funds transfer and the accompanying filing form will 
indicate the manufacturer's corporate name, the EPA standardized test 
group or engine family name. The full fee is to accompany the filing 
form. Partial payments or installment payments will not be permitted. 
If submitting a wire or an ACH payment the full fee payment does not 
include the extra fee a banking institution may charge to process the 
wire or ACH. The Agency invites comment on methods of streamlining the 
fee payment process while maintaining the requirement that fees are 
paid in advance of certification services.

B. What Is the Implementation Schedule for Fees?

    The fee schedule proposed today will apply to 2003 and later model 
year vehicles and engines. This proposal will not apply to 2003 model 
year certification requests received by EPA prior to the effective date 
of the regulations, providing that they are complete and include all 
required data.

C. What Happens to the Money That Is Collected by the Fees Program?

    Any fees collected for administering the MVECP will be deposited in 
a special fund in the United States Treasury.

D. Can I Qualify for a Reduced Fee?

    EPA believes that an expansive fee reduction policy could violate 
the very premise underlying section 217 of the CAA: to reimburse the 
government for the specific regulatory services provided to an 
applicant. Nevertheless, EPA recognizes that there may be instances, in 
the case of small engine families, where the full proposed fee may 
represent an unreasonable economic burden. Therefore, EPA is proposing 
to continue the current two part test which, if met, would qualify an 
applicant for a reduction of a portion of the certification fee.
    A reduced fee is available when:
    (1) The certificate is to be used for the sale of vehicles or 
engines within the U.S.; and
    (2) The full fee for the certification request exceeds 1% of the 
projected aggregate retail value of all vehicles or engines covered by 
that certificate.
    The proposed requirement that the certificate request pertain to 
U.S. vehicle/engine sales is intended to exclude fee reductions for 
certificates used to support foreign vehicle or engine sales. This 
provision is carried over from the current fees rules. These 
certificates are not required and represent extra effort expended by 
the Agency beyond that which is mandated in U.S. laws or regulations. 
Further, the Certificate of Conformity does not distinguish between 
U.S. and foreign sales, therefore, although the manufacturer's 
intention may be to certify vehicles for a foreign market, there is 
nothing to prohibit the sale of these vehicles in the U.S. 
Consequently, the Agency is proposing that it is inappropriate to 
reduce the cost of these certificates below the actual cost to the 
Agency.
    For the first time EPA is also proposing that the reduced fee will 
be the larger of 1% of the aggregate retail value of the vehicles and 
engines covered by the certificate or a minimum fee of $300. The $300 
minimum fee represents the lowest level of fee that is cost effective 
for the Agency to collect and still represents actual costs incurred by 
the Agency in providing services. As noted below, the Agency is 
proposing two potential ``pathways'' by which a manufacturer can seek 
to pay a reduced fee. Under either pathway the minimum that a 
manufacturer will be required to pay is $300. The Agency invites 
comment on the concept of a minimum fee and the amount of the minimum 
fee.
    The Agency is proposing two separate pathways by which a 
manufacturer can request and pay a reduced fee amount. One of the 
purposes of these pathways is to clarify when manufacturers are 
required to determine the value of the vehicles or engines actually 
sold under a certificate and to either pay additional fees or seek a 
refund if necessary. Under the first pathway, the Agency is proposing 
that manufacturers seeking a reduced fee include in their certification 
application a statement that the reduced fee is appropriate under the 
criteria and a calculation of the amount of the reduced fee. The 
manufacturer's evaluation and submission of a fee amount under this 
reduced fee provision is subject to EPA review or audit. A 
manufacturer's statement that it is eligible for a reduced fee can be 
rejected by EPA if the Agency finds that manufacturer's evaluation does 
not meet the eligibility requirements for a reduced fee, the amount of 
the reduced fee was improperly calculated, the manufacturer failed to 
meet the requirements to calculate a final reduced fee using actual 
sales data, or the manufacturer failed to pay the net balance due 
between the initial and final reduce fee calculation (see below for 
discussion of the final fee calculation, reporting and payment 
proposals). If the manufacturer's statement of eligibility or request 
of a reduced fee is rejected by EPA then EPA may require the 
manufacturer to pay the full fee normally applicable to it or EPA may 
adjust the amount of the reduced fee that is due or EPA may require the 
manufacturer to utilize the special fee provisions (the second pathway) 
which are explained below. To aid our review, the Agency is proposing 
that the applicant for a reduced fee also provide EPA with a report 
(called a ``report card''). This report shall include the total number 
of vehicles ultimately covered by the certificate (the report card 
shall include information on all certificates held by the manufacturer 
that were issued with a reduced fee), a calculation of the actual final 
reduced fee due for each certificate which is derived by adding up the 
total number of vehicles and their sales prices, a statement of the 
total initial fees paid by the manufacturer and the total final fees 
due for the manufacturer. Manufacturers will be required to submit the 
report card within 30 days of the end of the model year,\14\ EPA 
believes this is reasonable as manufacturers should have final figures 
for each certificate by this time. Manufacturers will be required to 
``true -up'' or submit the final reduced fee due as calculated within 
the report card within 45 days of the end of the model year. The Agency 
is proposing to not require payment of the balance when the amount is 
less than $500 for a manufacturer. (The Agency requests comment on 
these special provisions.)
---------------------------------------------------------------------------

    \14\ Typically, this will be the first February 15 after a 
certificate expires. Certificates generally expire on December 31 of 
the model year.
---------------------------------------------------------------------------

    In addition, EPA may require that manufacturers submit a report 
card, with the same or similar information as noted above, for previous 
model years. The purpose of such report card would be to give EPA 
assurance that the manufacturer has demonstrated a continuous 
capability of submitting the necessary year to year report cards and 
that appropriate fees have been paid. This will assist EPA in its 
determination as to whether a manufacturer is capable of adequately 
projecting its annual sales for reduced fee purposes and whether

[[Page 51412]]

the manufacturer shall remain eligible for the reduced fee provisions.
    Under the second pathway, EPA is also proposing special provisions 
for fee payment that are available for manufacturers which, due to the 
nature of their business, may be unable to make good estimates of the 
aggregate projected retail value of all the vehicles or engines to be 
covered by the requested certificate. Examples of manufacturers that 
may be unable to estimate the number of vehicles and engines covered by 
a certificate are those that modify customer-owned vehicles (as done by 
some ICIs and after-market alternative fuel converters) that are 
uncertain how many owners will approach them to perform this service. 
Under the special provisions, manufacturers that obtain prior approval 
from the Agency may pay 1.0% of the retail selling price of 5 vehicles, 
engines or conversions when applying for a certificate. Manufacturers 
under this pathway will be required to submit the same report card and 
true-up the actual amount of reduced fee that is due in the same manner 
as described above under the first pathway.
    Under either pathway, if a manufacturer fails to report within 30 
days or pay the balance due by 45 days of the end of the model year, 
then EPA may refuse to approve future reduced fee requests from that 
manufacturer. In addition, if a manufacturer fails to report within 30 
days and pay the balance due by 45 days of the end of the model year as 
noted above then the Agency may deem the applicable certificate as void 
ab initio.
    In the case of vehicles or engines which have originally been 
certified by an OEM but are being modified to operate on an alternative 
fuel, EPA is proposing that the cost basis for the reduced fee amount 
be the value-added by the conversion, not the full cost of the vehicle 
or engine.
    On the other hand, ICI vehicles or engines certificates cover 
vehicles or engines which are imported into the U.S.A. and that were 
not originally certified by an OEM. As such, EPA costs associated with 
proving various MVECP services for these vehicles has not yet been 
recovered. Since the Agency has not received a fee payment for the 
``base vehicle'' or the vehicle imported before its conversion to meet 
U.S. emissions requirements, we are proposing that the cost basis for 
calculating a reduced fee for an ICI certification shall be based upon 
the full cost of the vehicle or engine rather than the cost or value of 
the conversion. As noted above, EPA is already proposing a fee of 
$8,394 for certain types of ICI certificates as EPA has determined the 
costs of MVECP services provided for such certificates regardless of 
the number of vehicles included under such certificates. However, we 
recognize that this fee or the full fee associated with other types of 
certificates may represent an unreasonable economic burden on smaller 
businesses or on the price of vehicles in smaller classes under a 
certificate. Therefore, EPA is proposing to retain its current 
requirement that manufacturers pay a fee based on 1% of the aggregate 
retail sales price (or value) of the vehicles covered by a certificate 
as EPA believes this best represents the proper balance between 
recovering the MVECP costs without imposing an unreasonable economic 
burden. EPA invites comment on the continued use of the 1% multiplier.
    For ICI requests EPA proposes to continue the current requirement 
to calculate the full cost of a vehicle based on a vehicle's average 
retail price listed in the National Automobile Dealer's Association 
(NADA) price guide. By using the NADA price guide to establish a 
vehicle's retail sales price (or value), EPA ensures uniformity and 
fairness in charging fees. Further, it avoids problems associated with 
abuse, such as falsification of entry documents, in particular, sales 
receipts. Where the NADA price guide does not provide the retail price 
of a vehicle, and in the case of engines, the applicant for a reduced 
fee must demonstrate to the satisfaction of the Administrator, the 
actual market value of the vehicle or engine in the United States at 
the time of final importation. When calculating the aggregate retail 
sales price of vehicles or engines under the reduced fee provisions 
such calculation must not only include vehicles and engines actually 
sold but also those modified under the modification and test options in 
40 CFR 85.1509 and 40 CFR 89.609 and those imported on behalf of a 
private or another owner.
    EPA is continuing the current exemption of fees for small volume 
certification requests for vehicles using alternative fuels through the 
2003 model year. EPA believes that this program has completed its 
purpose of providing a short-term relief for alternative fuel 
conversion manufacturers. Therefore, starting with the 2004 model year, 
EPA is no longer including this exemption for alternative fuel 
convertors, and such convertors shall be subject to the same fee 
provisions as other manufacturers. This includes the reduced fee 
provisions.
    We believe that this fee reduction proposal will provide adequate 
relief for small entities that would otherwise have been harmed by a 
standardized fee. It is important to note that this fee reduction does 
not raise the fees for other manufacturers; EPA will simply collect 
less funds. The Agency invites comment on the necessity of a reduced 
fee provision.

E. What Is the Refund Policy?

    Instances may occur in which an applicant submits a filing form 
with the appropriate fee, has an engine-system combination undergo a 
portion of the certification process, but fails to receive a signed 
certificate. Under the current rules, the Agency offers the 
manufacturer a partial refund in those situations. The Agency retains a 
portion of the fee to pay for the work which has already been done. 
This policy has been difficult to administer and required substantial 
Agency oversight. Consequently, we have included a simplified refund 
policy in today's proposal.
    When a certificate has not been issued, the applicant will be 
eligible to receive, upon request, a full refund of the fee paid. 
Optionally, in lieu of a refund, the manufacturer may apply the fee to 
another certification request. The new refund policy will not reduce 
the money collected by the Agency because the fee schedule proposed 
today is based on the number of certificates actually issued rather 
than the number of certification requests.
    The Agency also considered not allowing any refunds if the 
manufacturer overpaid based on their own projections. However, the 
Agency was concerned there could be cases where sales were 
significantly lower than expected and the overpayment amount would be 
significant. Also, the Agency does not want to encourage manufacturers 
to systematically under-project the reduced fees on the fear that they 
might significantly overpay and be unable to obtain a refund. On the 
other hand, processing refunds costs the Agency time and money and 
there is a potential for a large number of small refunds that would be 
not be cost effective for EPA to process or for the manufacturer to 
request. Therefore, the Agency is proposing to only consider refund 
requests for a minimum of $500 overpayment. The Agency invites comment 
on this issue.

V. What Other Options Were Considered by EPA When Proposing This 
Rule?

A. Separate Fees for Other ICI Categories Beyond Light-Duty

    EPA considered continuing the current provisions which charge the

[[Page 51413]]

same fee for ICI and OEM manufacturers. However, when the Agency 
examined the costs associated with ICI and OEM manufacturers, we found 
the costs associated with administering the light-duty ICI program was 
lower than for light-duty OEM manufacturers. Consequently, today's 
proposal includes lower fees for light-duty ICI certificate requests.
    EPA considered calculating separate fees for other ICI industries 
beyond light-duty. Currently, EPA has issued ICI certificates only for 
highway motorcycles in addition to light-duty. In this case, the costs 
to the Agency for the MVECP for motorcycles and ICI motorcycles are 
essentially the same. EPA expects that when other industries have ICI 
certification requests that the Agency will a similar amount of effort 
on the ICI manufacturers as the OEM manufacturers. Consequently, the 
Agency believes that ICI and OEM fees would be similar for all the 
categories other than light-duty. For that reason, today's proposal 
does not establish separate fees for ICI manufacturers other than the 
for the light-duty ICIs.

B. Start Updating Fees for Cost of Inflation in 2004 Model Year

    EPA considered updating MVECP fees for the cost of inflation at the 
start of model year (MY) 2004. We also considered waiting one year to 
apply inflation costs to fees. We are proposing to postpone this update 
for one year and apply inflation costs in 2005 MY. The Agency invites 
comment on updating the fees before the start of MY 2005.

VI. What Is the Economic Impact of This Proposed Rule?

    This proposed rule will not have a significant impact on the 
majority of vehicle and engine manufacturers. The cost to industry will 
be a relatively small value per unit manufactured for most engine-
system combinations.
    EPA expects to collect about 18 million dollars annually. This 
averages out to approximately 50 cents per vehicle or engine sold 
annually. However, for engine-system combinations with low annual sales 
volume, the cost per unit could be higher. To remove the possibility of 
serious financial harm on companies producing only low sales volume 
designs, the regulations adopted today include a reduced fee provision 
for small volume engine families to reduce the burden of fees. These 
provisions should alleviate concerns about undue economic hardship on 
small volume manufacturers. Refer to the Regulatory Flexibility Act 
section, Section VIII.B, below, for more discussion on this topic.

VII. How Can I Participate in the Rulemaking Process?

A. How To Make Comments and Use the Public Docket

    EPA welcomes comments on all aspects of this proposed rulemaking. 
Commenters are especially encouraged to give suggestions for changing 
any aspects of the proposal. All comments, with the exception of 
proprietary information should be addressed to the EPA Air Docket 
Section, Docket No. A-2001-09 (see ADDRESSES).
    Commenters who wish to submit proprietary information for 
consideration should clearly separate such information from other 
comments by (1) labeling proprietary information ``Confidential 
Business Information'' and (2) sending proprietary information directly 
to the contact person listed (see FOR FURTHER INFORMATION CONTACT) and 
not to the public docket. This will help insure that proprietary 
information is not inadvertently placed in the docket. If a commenter 
wants EPA to use a submission labeled as confidential business 
information as part of the basis for the final rule, then a 
nonconfidential version of the document, which summarizes the key data 
or information, should be sent to the docket. Information covered by a 
claim of confidentiality will be disclosed by EPA only to the extent 
allowed and by the procedures set forth in 40 CFR part 2. If no claim 
of confidentiality accompanies the submission when EPA receives it, the 
submission may be made available to the public without notifying the 
commenters.

B. Public Hearings

    Anyone wishing to present testimony about this proposal at the 
public hearing (see DATES) should, if possible, notify the contact 
person (see FOR FURTHER INFORMATION CONTACT) by September 12, 2002. The 
contact person should be given an estimate of the time required for the 
presentation of testimony and notification of any need for audio/visual 
equipment. Testimony will be scheduled on a first-come, first-serve 
basis. A sign-up sheet will be available at the registration table the 
morning of the hearing for scheduling those who have not notified the 
contact earlier. This testimony will be scheduled on a first-come, 
first-serve basis to follow the previously scheduled testimony.
    EPA requests that approximately 50 copies of the statement or 
material to be presented be brought to the hearing for distribution to 
the audience. In addition, EPA would find it helpful to receive an 
advanced copy of any statement or material to be presented at the 
hearing at least one week before the scheduled hearing date. This is to 
give EPA staff adequate time to review such material before the 
hearing. Such advanced copies should be submitted to the contact person 
listed.
    The comment period will be kept open until October 19, 2002, and 
therefore will remain open for 30 days following the hearing. All such 
submittals should be directed to the Air Docket Section, Docket No. A-
2001-09 (see ADDRESSES). The hearing will be conducted informally, and 
technical rules of evidence will not apply. A written transcript of the 
hearing will be placed in the above docket for review. Anyone desiring 
to purchase a copy of the transcript should make individual 
arrangements with the court reporter recording the proceedings.

VIII. What Are the Administrative Requirements for This Proposal?

A. Executive Order 12866: Administrative Designation and Regulatory 
Analysis

    Under Executive Order 12866 (58 FR 51735 October 4, 1993), EPA must 
determine whether this proposed regulatory action is ``significant'' 
and therefore subject to Office of Management and Budget (OMB) review 
and the requirements of this Executive Order. The Order defines a 
``significant regulatory action'' as one that is likely to result in a 
rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, Local, or Tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs, or the rights and obligations of 
recipients thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    Pursuant to the terms of the Executive Order 12866, it has been 
determined that this rule is a ``significant regulatory action'' 
because this rulemaking materially alters user fees. As such, this 
action was submitted to OMB for review. Changes made in response to OMB 
suggestions or recommendations

[[Page 51414]]

will be documented in the public record.

B. Regulatory Flexibility Act (RFA), as Amended by the Small Business 
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et 
seq

    The RFA generally requires an agency to prepare a regulatory 
flexibility analysis of any rule subject to notice and comment 
rulemaking requirements under the Administrative Procedures Act or any 
other statute unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
Small entities include small businesses, small organizations, and small 
governmental jurisdictions. For purposes of assessing the impacts of 
today's proposed rule on small entities, small entity is defined as: 
(1) A small business that meets the definition for business based on 
SBA size standards; (2) a small governmental jurisdiction that is a 
government of a city, county, town, school district or special district 
with a population of less than 50,000; and (3) a small organization 
that is any not-for-profit enterprise which is independently owned and 
operated and is not dominant in its field. Table VIII.B-1 provides an 
overview of the primary SBA small business categories potentially 
affected by this regulation. This list is not intended to be 
exhaustive, but rather provides a guide regarding entities likely to be 
regulated by this proposed action.

   Table VIII.B-1.--Primary SBA Small Business Categories Potentially
                  Affected by This Proposed Regulation
------------------------------------------------------------------------
                                 NAICS \a\    Defined by SBA as a  small
           Industry                Codes           business If: \b\
------------------------------------------------------------------------
Farm Machinery and Equipment         333111  500 employees.
 Manufacturing.
Lawn and Garden Tractor and          333112  500 employees.
 Home Lawn and Garden
 Equipment Manufacturing.
Construction Machinery               333120  750 employees.
 Manufacturing.
Mining Machinery and Equipment       333131  500 employees.
 Manufacturing.
Turbine and Turbine Generator        333611  1,000 employees.
 Set Unit Manufacturing.
Speed Changer, Industrial High-      333612  500 employees.
 speed Drive and Gear
 Manufacturing.
Mechanical Power Transmission        333613  500 employees.
 Equipment Manufacturing.
Other Engine Equipment               333618  1,000 employees.
 Manufacturing.
Nonroad SI engines............       333618  1,000 employees.
Internal Combustion Engines...       333618  1,000 employees.
Industrial Truck, Tractor,           333924  750 employees.
 Trailer, and Stacker
 Machinery.
Power-Driven Handtool                333991  500 employees.
 Manufacturing.
Automobile Manufacturing......       336111  1000 employees.
Light Truck and Utility              336112  1000 employees.
 Vehicle Manufacturing.
Heavy-Duty Truck Manufacturing       336120  1000 employees.
Fuel Tank Manufacturers.......       336211  1000 employees.
Gasoline Engine and Engine           336312  750 employees.
 Parts Manufacturing.
Aircraft Engine and Engine           336412  1000 employees.
 Parts Manufacturing.
Railroad Rolling Stock               336510  1000 employees.
 Manufacturing.
Boat Building and Repairing...       336612   500 employees.
Motorcycles and motorcycle           336991  500 employees.
 parts manufacturers.
Snowmobile and ATV                   336999  500 employees.
 manufacturers.
Independent Commercial               421110  100 employees.
 Importers of Vehicles and
 parts.
Engine Repair and Maintenance.       811310  $5 million annual receipts.
 
------------------------------------------------------------------------
Notes:
a North American Industry Classification System.
b According to SBA's regulations (13 CFR part 121), businesses with no
  more than the listed number of employees or dollars in annual receipts
  are considered ``small entities'' for purposes of a regulatory
  flexibility analysis.

    After considering the economic impacts of today's proposed rule on 
small entities, I certify that this proposed action will not have a 
significant economic impact on a substantial number of small entities.
    A review of rulemakings that set emissions standards for the 
industries affected by today's proposed rule, including those 
manufacturers affected by the recreational vehicle proposed rule, 
showed that approximately 108 small businesses that will be paying 
fees. EPA examined the cost of the proposed fees and determined that 
the average cost for manufacturers of all sizes, across industry 
sectors, is approximately $.41 per vehicle or engine.\15\ In addition, 
under the reduced fee provisions described above in Section IV.D., the 
fee a manufacturer would pay will not exceed 1.0 percent of the 
aggregate retail sales price of the vehicles or engines covered by a 
certificate request or a minimum fee of $300. The reduced fee provision 
limits the impact of this proposed rule on small entities to 1.0 
percent of the aggregate retail sales price or a minimum fee of $300.
---------------------------------------------------------------------------

    \15\ The average costs of the fees per vehicle or engine (fee 
per unit) for the specific fee categories of Highway Motorcycle, 
Light-Duty, Light-Duty ICI, Heavy-Duty Highway CI and SI and Nonroad 
CI categories are shown in Worksheet 2, Appendix C, of the Motor 
Vehicle and Engine Compliance Program Cost Analysis available in EPA 
Air Docket No. A-2001-09.
---------------------------------------------------------------------------

    EPA believes that in a very small number of cases, the 1.0 percent 
reduced fee amount will be less than the $300 minimum fee. The minimum, 
$300 fee is a modest amount and will only be required when engine 
families have less than $30,000 aggregate retail sales price. While the 
minimum fee would represent an impact greater than 1.0 percent of the 
aggregate retail sales price, the $300 amount will not have a 
significant economic impact on the manufacturers that pay it. This 
amount would represent a modest cost of doing business.
    The following is an example of a reduced fee calculation: If a 
light-duty vehicle manufacturer has an engine family of 2 vehicles that 
are sold for $35,000 per vehicle, under the proposed fee schedule the 
full fee would be $33,911, or $16,958 per engine family ($16,956 or 
$8,479 per vehicle, respectively), depending upon whether the engine 
family is certified as a Federal vehicle or California-only engine 
family. Under the proposal, the

[[Page 51415]]

reduced fee would be 1.0 percent of the aggregate retail sales price of 
the vehicles ($70,000), or $700 (or $350 per vehicle) as shown below:

2 * $35,000 * 0.01 = $700

    In another example, a manufacturer of small nonroad spark ignition 
engines certifies an engine family of 500 engines that are sold for $50 
apiece. In this case, under the proposed fee schedule the full fee 
would be $827. Under the reduced fee provisions, the manufacturer would 
determine 1 percent of the total retail sales price of the engines and 
determine whether this amount is less than the full fee or the minimum 
fee of $300. The aggregated retail sales price of the engines is 
$25,000; 1.0 percent of that is $250. Therefore, the manufacturer pays 
the minimum fee of $300 (or $.60 per engine).

500 * $50 * .01 = $250
$250  $300 minimum fee
Fee = $300

    EPA also had a fees rule briefing which was offered in Ann Arbor, 
MI, to regulated industries on August 29, 2001. The purpose of the 
briefing was to give businesses enough time to plan for fees in their 
2003 FY budgets. We continue to be interested in the potential impacts 
of the proposed fees on small entities and welcome comments on issues 
related to such impacts.

C. Paperwork Reduction Act

    The information collection requirements in this proposed rule have 
been submitted for approval to the Office of Management and Budget 
(OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. An 
Information Collection Request (ICR) document has been prepared by EPA 
(ICR No. ) and a copy may be obtained from Susan Auby by mail at 
Collection Strategies Division; U.S. Environmental Protection Agency 
(2822); 1200 Pennsylvania Ave., NW, Washington, DC 20460, by email at 
[email protected], or by calling (202) 260-4901. A copy may 
also be downloaded off the internet at 
http://www.epa.gov/icr.
    The information to be collected is necessary to assure that the 
fees collected are properly credited to the both the firm paying them 
and the specific product to be certified. In addition, under some 
circumstances, a fee may be reduced or refunded; information collected 
will be used to verify that such action is appropriate. Except for 
reduced fees and refunds, the submission of information is mandatory.
    The collection is authorized by the Clean Air Act (42 U.S.C. 7552) 
and the Independent Offices Appropriations Act (31 U.S.C. 9701). 
Information collected will be available to the public.
    EPA estimates that 1600 certifications will be requested annually 
of which 180 will qualify for a reduced fee. In addition, approximately 
50 fee refunds will be processed each year. The total burden of these 
projected responses per year is 500 hours; an average of 18 minutes per 
response. There are no capital, start-up, operation, maintenance or 
other costs associated with this collection.
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose or 
provide information to or for a Federal agency. This includes the time 
needed to review instructions; develop, acquire, install, and utilize 
technology and systems for the purposes of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search data sources; complete and review the collection of information; 
and transmit or otherwise disclose the information.
    An Agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations are listed in 40 CFR part 9 and 48 CFR Chapter 15.
    Comments are requested on the Agency's need for this information, 
the accuracy of the provided burden estimates, and any suggested 
methods for minimizing respondent burden, including through the use of 
automated collection techniques. Send comments on the ICR to the 
Director, Collection Strategies Division; U.S. Environmental Protection 
Agency (2822); 1200 Pennsylvania Ave., NW., Washington, DC 20460; and 
to the Office of Information and Regulatory Affairs, Office of 
Management and Budget, 725 17th St., NW., Washington, DC 20503, marked 
``Attention: Desk Officer for EPA.'' Include the ICR number in any 
correspondence. Since OMB is required to make a decision concerning the 
ICR between 30 and 60 days after August 7, 2002, a comment to OMB is 
best assured of having its full effect if OMB receives it by September 
6, 2002. The final rule will respond to any OMB or public comments on 
the information collection requirements contained in this proposal.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory action on state, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures by state, local, and tribal governments, in 
the aggregate, or by the private sector, of $100 million or more in any 
one year. Before promulgation of an EPA rule for which a written 
statement is needed, section 205 of the UMRA generally requires EPA to 
identify and consider a reasonable number of regulatory alternatives 
and adopt the least costly, most cost-effective or least burdensome 
alternative that achieves the objectives of the rule. The provisions of 
section 205 do not apply when they are inconsistent with applicable 
law. Moreover, section 205 allows EPA to adopt an alternative other 
than the least costly, most cost-effective or least burdensome 
alternative if the Administrator publishes with the final rule an 
explanation why that alternative was not adopted.
    Before we establish any regulatory requirement that may 
significantly or uniquely affect small governments, including tribal 
governments, we must develop, under section 203 of the UMRA, a small 
government agency plan. The plan must provide for notifying potentially 
affected small governments, enabling officials of affected small 
governments to have meaningful and timely input in the development of 
our regulatory proposals with significant federal intergovernmental 
mandates. The plan must also provide for informing, educating, and 
advising small governments on compliance with the regulatory 
requirements.
    Today's proposed rule contains no Federal mandates for state, 
local, or tribal governments. Nor does this proposed rule have Federal 
mandates that may result in the expenditures of $100 million or more in 
any year by the private sector as defined by the provisions of Title II 
of the UMRA as the total cost of the fee program is estimated to be 
below 20 million dollars. Nothing in the proposed rule would 
significantly or uniquely affect small governments.

[[Page 51416]]

E. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Public Law 104-113, 12(d) (15 U.S.C. 272), directs 
the EPA to use voluntary consensus standards (VCS) in its regulatory 
activities unless to do so would be inconsistent with applicable law or 
otherwise impractical. Voluntary consensus standards are technical 
standards (e.g., materials specifications, test methods, sampling 
procedures, business practices, etc.) that are developed or adopted by 
voluntary consensus standard bodies. The NTTAA requires EPA to provide 
Congress, through OMB, explanations when the Agency decides not to use 
available and applicable voluntary consensus standards.
    EPA welcomes comments on this aspect of the proposed rulemaking 
and, specifically, invites the public to identify potentially 
applicable voluntary consensus standards and to explain why such 
standards should be used in this regulation.

F. Executive Order 13045: Children's Health Protection

    Executive Order 13045: ``Protection of Children from Environmental 
Health Risks and Safety Risks'' (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 believes this proposed rule is not subject to the Executive 
Order because it is not an economically significant regulatory action 
as defined by Executive Order 12866. In addition, this proposed rule is 
not subject to the Executive Order because it does not involve 
decisions based on environmental health or safety risks that may 
disproportionately affect children. Today's proposed rule seeks to 
implement a fees program and is expected to have no impact on 
environmental health or safety risks that would affect the public or 
disproportionately affect children.

G. 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.''
    This proposed rule will not have federalism implications. It will 
not have 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. This proposed rule will impose no direct 
compliance costs on states. Thus, the requirements of section 6 of 
Executive Order 13132 do not apply to this rule.
    In the spirit of Executive Order 13132, and consistent with EPA 
policy to promote communications between EPA and State and local 
governments, EPA specifically solicits comment on this proposed rule 
from State and local officials.

H. Executive Order 13211: Energy Effects

    This proposed rule is not a ``significant energy action'' as 
defined in Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 28355 
(May 22, 2001) because it will not have a significant adverse effect on 
the supply, distribution, or use of energy. Further, we have determined 
that this proposed rule is not likely to have any adverse energy 
effects.

I. Executive Order 13175: Consultation With Indian Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 6, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by tribal officials in the development of regulatory 
policies that have tribal implications.'' This proposed rule does not 
have tribal implications. It will not have substantial direct effects 
on tribal governments, on the relationship between the Federal 
government and Indian tribes, or on the distribution of power and 
responsibilities between the Federal government and Indian tribes, as 
specified in Executive Order 13175. The requirements proposed by this 
action impact private sector businesses, particularly the vehicle and 
engine manufacturing industries. Thus, Executive Order 13175 does not 
apply to this rule.

List of Subjects

40 CFR Part 85

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

40 CFR Part 86

    Environmental protection, Administrative practice and procedure, 
Air Pollution Control, Confidential business information, Diesel, 
Gasoline, Fees, Imports, Incorporation by reference, Labeling, Motor 
vehicle pollution, Motor vehicles, Reporting and recordkeeping 
requirements.

    Dated: July 17, 2002.
Christine Todd Whitman,
Administrator.

    For the reasons set forth in the preamble, title 40, chapter I of 
the Code of Federal Regulations is proposed to be amended as follows:

PART 85--CONTROL OF AIR POLLUTION FROM MOBILE SOURCES

    1. The Authority for part 85 continues to read as follows:

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

    2. Add a new Subpart Y to Part 85 to read as follows:
Subpart Y--Fees for the Motor Vehicle and Engine Compliance Program
Sec.
85.2401  To whom do these requirements apply?
85.2402  [Reserved]
85.2403  What definitions apply to this subpart?
85.2404  What abbreviations apply to this subpart?
85.2405  How much are the fees?
85.2406  Can I qualify for reduced fees?
85.2407  Can I get a refund if I don't get a certificate or overpay?
85.2408  How do I make a fee payment?
85.2409  Deficiencies
85.2410   Special provisions applicable to the 2003 model year only.

[[Page 51417]]

Subpart Y--Fees for the Motor Vehicle and Engine Compliance Program


Sec. 85.2401  To whom do these requirements apply?

    (a) This subpart prescribes fees manufacturers must pay for the 
motor vehicle and engine compliance program (MVECP) activities 
performed by the EPA. The prescribed fees and the provisions of this 
subpart apply to manufacturers of:
    (1) Light-duty vehicles (cars and trucks) (See 40 CFR Part 86);
    (2) Medium Duty Passenger Vehicles (See 40 CFR Part 86);
    (3) Complete gasoline-fueled highway heavy duty vehicles (See 40 
CFR Part 86);
    (4) Heavy-duty highway diesel and gasoline engines (See 40 CFR Part 
86);
    (5) On-highway motorcycles (See 40 CFR Part 86);
    (6) Nonroad compression ignition engines (See 40 CFR Part 89);
    (7) Locomotives (See 40 CFR Part 92);
    (8) Marine diesel and gasoline engines (See 40 CFR Parts 91, 94, or 
1045 and MARPOL 73/78, as applicable);
    (9) Small nonroad spark ignition engines (engines  19kW) 
(See 40 CFR Part 90);
    (10) Recreational vehicles (including, but not limited to, 
snowmobiles, all-terrain vehicles and off-highway motorcycles) (See 40 
CFR Part 1051);
    (11) Heavy-duty highway gasoline vehicles (evaporative emissions 
certification only) (See 40 CFR Part 86); and
    (12) Large nonroad spark ignition engines (engines > 19 kW) (See 40 
CFR Part 1048).
    (b) This subpart applies to manufacturers that submit 2003 and 
later model year certification requests received on or after [60 days 
after the date of publication of the final rule].
    (c) Certification requests for the 2003 model year which are 
complete, contain all required data, and are received prior to [60 days 
after the date of publication of the final rule] are subject to the 
provisions of 40 CFR part 86, subpart J.
    (d) Nothing in this subpart will be construed to limit the 
Administrator's authority to require manufacturer or confirmatory 
testing as provided in the Clean Air Act, including authority to 
require manufacturer in-use testing as provided in section 208 of the 
Clean Air Act.


Sec. 85.2402  [Reserved]


Sec. 85.2403  What definitions apply to this subpart?

    (a) The following definitions apply to this subpart:
    Agency or EPA means the U.S. Environmental Protection Agency.
    Body Builder means a manufacturer, other than the OEM, who installs 
certified on-highway HD engines into equipment such as trucks.
    California-only certificate is a Certificate of Conformity issued 
by EPA which only signifies compliance with the emission standards 
established by California.
    Certification request means a manufacturer's request for 
certification evidenced by the submission of an application for 
certification, ESI data sheet, or ICI Carryover data sheet. A single 
certification request covers one test group, engine family, or engine 
system combination as applicable. For HDV evaporative certification, 
the certification request covers one evaporative family.
    Consumer Price Index means the consumer price index for all U.S. 
cities using the ``U.S. city average'' area , ``all items'' and ``not 
seasonally adjusted'' numbers calculated by the Department of Labor.
    Federal certificate is a Certificate of Conformity issued by EPA 
which signifies compliance with emission requirements in 40 CFR part 
85, 86, 89, 90, 91, 92, 94, 1045, 1048, and/or 1051 as applicable.
    Filing form means the MVECP Fee Filing Form to be sent with payment 
of the MVECP fee.
    Fuel economy basic engine means a unique combination of 
manufacturer, engine displacement, number of cylinders, fuel system, 
catalyst usage, and other characteristics specified by the 
Administrator.
    MARPOL 73/78 is the international treaty regulating disposal of 
wastes generated by normal operation of vessels (Title: International 
Convention for the Prevention of Pollution from Ships).
    Recreational means the engines subject to 40 CFR 1051 which 
includes off road motorcycles, all-terrain vehicles, and snowmobiles.
    (b) The definitions contained in the following parts also apply to 
this subpart. If the term is defined in paragraph (a) of this section 
then that definition will take precedence.
    (1) 40 CFR Part 85;
    (2) 40 CFR Part 86;
    (3) 40 CFR Part 89;
    (4) 40 CFR Part 90;
    (5) 40 CFR Part 91;
    (6) 40 CFR Part 92;
    (7) 40 CFR Part 94;
    (8) 40 CFR Part 1045;
    (9) 40 CFR Part 1048; and
    (10) 40 CFR Part 1051.


Sec. 85.2404  What abbreviations apply to this subpart?

    The abbreviations in this section apply to this subpart and have 
the following meanings:

Cal--California;
CI--Compression Ignition (Diesel) cycle engine;
CPI--Consumer Price Index;
ESI--Engine System Information;
EPA--U.S. Environmental Protection Agency;
Evap--Evaporative Emissions;
Fed--Federal;
HD--Heavy-duty engine;
HDV--Heavy-duty vehicle;
HW--On Highway versions of a vehicle or engine;
ICI--Independent Commercial Importer;
IMO--International Maritime Organization;
LD--Light-Duty including both LDT and LDV;
LDT--Light-duty truck;
LDV--Light-duty vehicle;
MARPOL--An IMO treaty for the control of marine pollution;
MC--Motorcycle;
MDPV--Medium-Duty Passenger Vehicle;
MVECP--Motor Vehicle and Engine Compliance Program;
MY--Model Year;
NR--Nonroad version of a vehicle or engine;
OEM--Original equipment manufacturer;
SI--Spark Ignition (Otto) cycle engine.


Sec. 85.2405  How much are the fees?

    (a) Fees for the 2003 and 2004 model years. The fee for each 
certification request is in the following table:

------------------------------------------------------------------------
             Category                  Certificate type          Fee
------------------------------------------------------------------------
(1) LD, excluding ICIs...........  Fed Certificate.........       33,911
(2) LD, excluding ICIs...........  Cal-only Certificate....       16,958
(3) MDPV, excluding ICIs.........  Fed Certificate.........       33,911
(4) MDPV, excluding ICIs.........  Cal-only Certificate....       16,958
(5) Complete SI HDVs, excluding    Fed Certificate.........       33,911
 ICIs.
(6) Complete SI HDVs, excluding    Cal-only Certificate....       16,958
 ICIs.

[[Page 51418]]

 
(7) ICIs for the following         All Types...............        8,394
 industries: LD, MDPV, or
 Complete SI HDVs.
(8) MC HW, including ICIs........  All Types...............        2,416
(9) HD HW, including ICIs........  Fed Certificate.........       30,437
(10) HD HW, including ICIs.......  Cal-only Certificate....          827
(11) HDV (evap), including ICIs..  Evap Certificate........          827
(12) NR CI, including ICIs, but    All Types...............        2,156
 excluding Locomotives, Marine
 and Recreational engines.
(13) NR SI, including ICIs.......  All Types...............          827
(14) All Marine, including ICIs..  All Types and IMO.......          827
(15) All Recreational, including   All Types...............          827
 ICIs, but excluding marine
 engines.
(16) Locomotives, including ICIs.  All Types...............          827
------------------------------------------------------------------------

    (b) Fees for 2005 model year and beyond.
    (1) Starting with the 2005 model year, the fees due for each 
certification request will be calculated using an equation which 
adjusts the fees in paragraph (a) of this section for the change in the 
consumer price index.
    (2) Fees for 2005 model year and later certification requests will 
be calculated using the following equation.

FeesMY = Feesbase  x  (CPIMY-2 / 
CPI2002)

Where:

FeesMY is the applicable fee for the model year of the 
certification request.
Feesbase is the applicable fee from paragraph (a) of this 
section.
CPIMY-2 is the consumer price index for all U.S. cities 
using the ``U.S. city average'' area , ``all items'' and ``not 
seasonally adjusted'' numbers calculated by the Department of Labor 
listed for the month of July of the year two years before the model 
year. (e.g., for the 2005 MY use the CPI based on the date of July, 
2003).
CPI2002 is the consumer price index for all U.S. cities 
using the ``U.S. city average'' area , ``all items'' and ``not 
seasonally adjusted'' numbers calculated by the Department of Labor for 
December, 2002.

    (c) A single fee will be charged when a manufacturer seeks to 
certify multiple evaporative families within a single engine family or 
test group.
    (d) A body builder, who exceeds the maximum fuel tank size for a 
HDV that has been certified by an OEM and consequently makes a request 
for HDV certification, must pay a separate fee for each certification 
request. The fee will be that listed in paragraphs (a) and (b) of this 
section, paragraph (c) does not apply.


Sec. 85.2406  Can I qualify for reduced fees?

    (a) Eligibility Requirements. To be eligible for a reduced fee, the 
following conditions must be satisfied:
    (1) The certificate is to be used for sale of vehicles or engines 
within the United States; and
    (2) The full fee for certification request for a MY exceeds 1.0% of 
the aggregate projected retail sales price of all vehicles or engines 
covered by that certificate.
    (b) Initial Reduced Fee Calculation.
    (1) If the requirements of paragraph (a) of this section are 
satisfied, the fee to be paid by the applicant (the ``initial reduced 
fee'') will be the greater of:
    (i) 1.0% of the aggregate projected retail sales price of all the 
vehicles or engines to be covered by the certification request; or
    (ii) A minimum fee of $300.
    (2) For vehicles or engines that are converted to operate on an 
alternative fuel using as the basis for the conversion a vehicle or 
engine which is covered by an existing OEM certificate of conformity, 
the cost basis used in this section must be the aggregate projected 
retail value-added to the vehicle or engine by the conversion rather 
than the full cost of the vehicle or engine. To qualify for this 
provision, the applicable OEM certificate must cover the same sales 
area and model year as requested certificate for the converted vehicle 
or engine.
    (3) For ICI certification requests, the cost basis of this section 
must be the aggregate projected retail cost of the entire vehicle(s) or 
engine(s), not just the value added by the conversion. If the vehicles/
engines covered by an ICI certificate are not being offered for sale, 
the manufacturer shall use the fair retail market value of the 
vehicles/engines as the retail sale price required in this section. For 
an ICI certification request, the retail sales price (or fair retail 
market value) must be based on the applicable National Automobile 
Dealer's Association (NADA) appraisal guide and/or other evidence of 
the actual market value.
    (4) The aggregate cost used in this section must be based on the 
total projected sales of all vehicles and engines under a certificate, 
including vehicles and engines modified under the modification and test 
option in 40 CFR 85.1509 and 89.609. The projection of the number of 
vehicles or engines to be covered by the certificate and their 
projected retail selling price must be based on the latest information 
available at the time of the fee payment.
    (5) A manufacturer may submit a reduced fee as described in 
paragraphs (a) and (b)(1) through (b)(4) of this section if it is 
accompanied by a certification from the manufacturer that the reduced 
fee is appropriate under this section. The reduced fee shall be deemed 
approved, unless EPA determines that the criteria of this section have 
not been met. The Agency may make such determination either before or 
after EPA issues a certificate of conformity. If the Agency determines 
that the requirements of this section have not been met, EPA may:
    (i) Require that future reduced fee eligibility determinations be 
made by the Agency;
    (ii) Require that the manufacturer for future reduced fee requests 
use the special provisions contained in paragraph (b) (7); or
    (iii) Deny future reduced fee requests and require submission of 
the full fee payment until such time as the manufacturer demonstrates 
to the satisfaction of the Administrator that its reduced fee 
submissions are based on accurate date and that final fee payments are 
made within 45 days of the end of the model year.
    (6) If the reduced fee is denied by the Administrator, the 
applicant will have 30 days from the date of notification of the denial 
to submit the appropriate fee to EPA or appeal the denial.
    (7) The following special provisions are available for 
manufacturers which meet the requirements of paragraph (a) of this 
section but, due to the nature of their business, are unable to make 
good estimates of the aggregate projected retail sales price of all the 
vehicles or engines to be covered by the

[[Page 51419]]

certification request as required in paragraph (b)(1) of this section. 
EPA may also require a manufacturer to use these special provisions 
rather than the process described in paragraph (b)(5) of this section 
if EPA makes such a determination under paragraph (b)(5)(ii) of this 
section.
    (i) A manufacturer's request to use of these provisions requires 
advance Agency approval and will be based on a determination of whether 
the requirements of this section have been met. The request to use 
these provisions shall be made prior to the submission of its 
application for certification. The manufacturer shall provide as part 
of this request:
    (A) A statement that the eligibility requirements of paragraph (a) 
of this section are satisfied; and
    (B) The reasons why it is unable to make a good estimate of the 
aggregate projected retail sales price of all the vehicles or engines 
to be covered by the certification request as required in paragraph 
(b)(1) of this section.
    (ii) If the request is approved, the initial reduced fee is the 
greater of:
    (A) 1% of the retail selling price of 5 vehicles, engines, or 
conversions, as appropriate; or
    (B) A minimum fee of $300.
    (c) Final Reduced Fee Calculation and Adjustment.
    (1) Within 30 days of the end of the model year, the manufacturer 
shall submit a model year reduced fee payment report covering all 
certificates issued in the model year for which the manufacturer has 
paid a reduced fee. This report will include:
    (i) The fee amount paid at certification time;
    (ii) The total actual number of vehicles covered by the 
certificate;
    (iii) A calculation of the actual final reduced fee due for each 
certificate; and
    (iv) A difference between the total fees paid and the total final 
fees due for the manufacturer.
    (2) The final reduced fee shall be calculated using the procedures 
of paragraph (b) of this section but using actual numbers rather than 
projections.
    (3) If the difference calculated in paragraph (c)(1)(iv) of this 
section exceeds $500 which is due to the Agency, then the manufacturer 
shall pay any difference due between the initial reduced fee and the 
final reduced fee using the provisions of Sec. 85.2408. This payment 
shall be paid within 45 days of the end of the model year. The total 
fees paid for a certificate shall not exceed the applicable full fee of 
Sec. 85.2405. If a manufacturer fails to make complete payment within 
45 days or to submit the report under paragraph (c)(1) of this section 
then the Agency may void ab initio the applicable certificate. EPA may 
also refuse to grant reduced fee requests submitted under paragraph 
(b)(5) or (b)(7) of this section.
    (4) If the initial reduced fee paid exceeds the final reduced fee 
then the manufacturer may request a refund using the procedures of 
Sec. 85.2407.
    (5) Manufacturers must retain in their records the basis used to 
calculate the projected sales and fair retail market value and the 
actual sales and retail price for the vehicles and engines covered by 
each certificate that is issued under the reduced fee provisions of 
this section. This information must be retained for a period of at 
least three years after the issuance of the certificate and must be 
provided to the Agency within 30 days of request. Manufacturers are 
also subject to the applicable maintenance of records requirements of 
Part 86, Subpart A. If a manufacturer fails to maintain the records or 
provide such records to EPA as required by this paragraph then EPA may 
void ab initio the certificate for which such records shall be kept.


Sec. 85.2407  Can I get a refund if I don't get a certificate or 
overpay?

    (a) Full Refund. The Administrator may refund the total fee imposed 
by Sec. 85.2405 if the applicant fails to obtain a certificate and 
requests a refund.
    (b) Partial Refund. The Administrator may refund a portion of a 
reduced fee, paid under Sec. 85.2406, due to a decrease in the 
aggregate projected retail sales price of the vehicles or engines 
covered by the certification request.
    (1) Partial refunds are only available for certificates which were 
used for the sale of vehicles or engines within the United States.
    (2) Requests for a partial refund may only be made once the model 
year for the applicable certificate has ended. Requests for a partial 
refund must be submitted no later than six months after the model year 
has ended.
    (3) EPA will only consider requests which result in at least a $500 
refund. Smaller amounts of money will not be refunded, nor can they be 
credited to other certification fee payments due to the Agency.
    (4) Requests for a partial refund must include all the following:
    (i) A statement that the applicable certificate was used for the 
sale of vehicles or engines within the United States.
    (ii) A statement of the fee amount paid (the reduced fee) under the 
applicable certificate.
    (iii) The actual number of vehicles or engines produced under the 
certificate (whether or not the vehicles/engines have been actually 
sold).
    (iv) The actual retail selling or asking price for the vehicles or 
engines produced under the certificate.
    (v) The calculation of the reduced fee amount using actual 
production levels and retail prices. The calculated reduced fee amount 
may not be less than $300 under the provisions of 
Sec. 85.2406(b)(1)(ii).
    (vi) The calculated amount of the refund. Refund requests for less 
than $500 will not be considered under the provisions of paragraph 
(b)(3) of this section.
    (c) Refunds due to errors in submission. The Agency will approve 
requests from manufacturers to correct errors in the amount or 
application of fees if the manufacturer provides satisfactory evidence 
that the change is due to an accidental error rather than a change in 
plans. Requests to correct errors must be made to the Administrator as 
soon as possible after identifying the error. The Agency will not 
consider requests to reduce fee amounts due to errors that are reported 
more than 90 days after the issuance of the applicable certificate of 
conformity.
    (d) In lieu of a refund, the manufacturer may apply the refund 
amount to the amount due on another certification request.
    (e) A request for a full or partial refund of a fee or a report of 
an error in the fee payment or its application must be submitted in 
writing to: U.S. Environmental Protection Agency, Vehicle Programs and 
Compliance Division, Fee Program Specialist, National Vehicle and Fuel 
Emission Laboratory, 2000 Traverwood, Ann Arbor, MI 48105.


Sec. 85.2408  How do I make a fee payment?

    (a) All fees required by this subpart must be paid by money order, 
bank draft, certified check, corporate check, or electronic funds 
transfer payable in U.S. dollars to the order of the Environmental 
Protection Agency.
    (b) A completed fee filing form must be sent to the address 
designated on the form for each fee payment made.
    (c) Fees must be paid prior to submission of an application for 
certification. The Agency will not process applications for which the 
appropriate fee (or reduced fee amount) has not been fully paid.
    (d) If EPA denies a reduced fee, the proper fee must be submitted 
within 30 days after the notice of denial, unless the decision is 
appealed. If the appeal is denied, then the proper fee must be 
submitted within 30 days after the notice of the appeal denial.

[[Page 51420]]

Sec. 85.2409  Deficiencies.

    (a) Any filing pursuant to this subpart that is not accompanied by 
a completed fee filing form and full payment of the appropriate fee is 
deemed to be deficient.
    (b) A deficient filing will be rejected and the amount paid 
refunded, unless the full appropriate fee is submitted within a time 
limit specified by the Administrator.
    (c) EPA will not process a request for certification associated 
with any filing that is deficient under this section.
    (d) The date of filing will be deemed the date on which EPA 
receives the full appropriate fee and the completed fee filing form.


Sec. 85.2410  Special provisions applicable to the 2003 model year 
only.

    (a) For the 2003 model year, the fees specified in sec. 85.2405 of 
this part will be waived for any light-duty vehicle, light-duty truck, 
or heavy-duty engine certification request that meets the small volume 
sales requirements of 40 CFR 86.1838-01 or 86.098-14, as applicable, 
and:
    (1) Is a dedicated gaseous-fueled vehicle or engine; or
    (2) Receives a certificate of conformity with the LEV, ILEV, ULEV, 
or ZEV emissions standards in 40 CFR part 88.
    (b) This section does not apply to 2004 model year and later 
vehicles or engines.

PART 86--CONTROL OF EMISSIONS FROM NEW AND IN-USE HIGHWAY VEHICLES 
AND ENGINES

    3. The Authority for Part 86 continues to read as follows:

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

Subpart J--[Amended]

    4. Section 86.903-93 is revised to read as follows:


Sec. 86.903-93  Applicability.

    (a) This subpart prescribes fees to be charged for the MVECP for 
the 1993 through 2003 model year. The fees charged will apply to all 
manufacturers' and ICIs', LDVs, LDTs, HDVs, HDEs, and MCs. Nothing in 
this subpart shall be construed to limit the Administrator's authority 
to require manufacturer or confirmatory testing as provided in the 
Clean Air Act, including authority to require manufacturer in-use 
testing as provided in section 208 of the Clean Air Act.
    (b) The fees prescribed in this subpart are replaced by the 
requirements of 40 CFR part 85, subpart Y for 2003 and later 
certification requests received on or after [60 days after the date of 
publication of the final rule].
    (c) The fees prescribed in this subpart will only apply to those 
2003 model year certification requests which are complete, include all 
data required by this title, and are received by the Agency prior to 
[60 days after the date of publication of the final rule].

[FR Doc. 02-19563 Filed 8-6-02; 8:45 am]
BILLING CODE 6560-50-P