[Federal Register: May 13, 1999 (Volume 64, Number 92)]
[Proposed Rules]               
Page 26103-26142]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13my99-30]
 
 Control of Air Pollution From New Motor Vehicles: Proposed Tier 2 
Motor Vehicle Emissions Standards and Gasoline Sulfur Control 
Requirements

[[Continued from page 26102]]


public hearings, we ask that you notify the contact person listed above 
two weeks before the date of the hearing at which you plan to testify. 
You should include in this notification the date of the hearing at 
which the testimony will be presented, an estimate of the time required 
for the presentation, and any need for audio/visual equipment. We also 
suggest that sufficient copies of the statement or material to be 
presented be made available to the audience. In addition, it is helpful 
if the contact person receives a copy of the testimony or material 
before the hearing.
    The hearings will be conducted informally, and technical rules of 
evidence will not apply. A sign-up sheet will be available at the 
hearings for scheduling the order of testimony. At the scheduled two 
day hearing, we suggest that testimony that primarily pertains to the 
proposed fuel requirements be presented on the first day of the 
hearings and that testimony that primarily pertains to the proposed 
vehicle standards (and/or other aspects of this proposal) be presented 
on the second day of the hearings. Written transcripts of the hearings 
will be prepared. The official record of the hearings will be kept open 
for 30 days after the hearing dates to allow submittal of supplementary 
information.

VIII. Administrative Requirements

A. Administrative Designation and Regulatory Analysis

    Under Executive Order 12866 (58 FR 51735, Oct. 4, 1993), the Agency 
is required to determine whether this regulatory action would be 
``significant'' and therefore subject to review by the Office of 
Management and Budget (OMB) and the requirements of the Executive 
Order. The order defines a ``significant regulatory action'' as any 
regulatory action that is likely to result in a rule that may:
    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;
    &lt;bullet&gt; Create a serious inconsistency or otherwise interfere with 
an action taken or planned by another agency;
    &lt;bullet&gt; Materially alter the budgetary impact of entitlements, 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or,
    &lt;bullet&gt; Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    Pursuant to the terms of Executive Order 12866, EPA has determined 
that this proposal is a ``significant regulatory action'' because the 
proposed vehicle standards, gasoline sulfur standards, and other 
proposed regulatory provisions, if implemented, would have an annual 
effect on the economy in excess of $100 million. Accordingly, a Draft 
Regulatory Impact Analysis (RIA) has been prepared and is available in 
the docket for this rulemaking. This action was submitted to the Office 
of Management and Budget (OMB) for review as required by Executive 
Order 12866. Written comments from OMB on today's action and responses 
from EPA to OMB comments are in the public docket for this rulemaking.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601-612, was amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA), Public Law 104-121, to ensure that concerns regarding small 
entities are adequately considered during the development of new 
regulations that affect them. In response to the provisions of this 
statute, EPA has identified industries subject to this proposed rule 
and has provided information to, and received comment from, small 
entities and representatives of small entities in these industries. An 
Initial Regulatory Flexibility Analysis (RFA) has been prepared by the 
Agency to evaluate the economic impacts of today's proposal on small 
entities.&lt;SUP&gt;108&lt;/SUP&gt; The key elements of the Initial RFA include:
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    \108\ The Initial RFA is contained in Chapter 8 of the 
Regulatory Impact Analysis.
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    &lt;bullet&gt; The number of affected small entities;
    &lt;bullet&gt; The projected reporting, record keeping, and other 
compliance requirements of the proposed rule, including the classes of 
small entities that would be affected and the type of professional 
skills necessary for preparation of the report or record;
    &lt;bullet&gt; Other federal rules that may duplicate, overlap, or 
conflict with the proposed rule; and,
    &lt;bullet&gt; Any significant alternatives to the proposed rule that 
accomplish the stated objectives of applicable statutes and that 
minimize significant economic impacts of the proposed rule on small 
entities.
    The Agency convened a Small Business Advocacy Review Panel (the 
Panel) under section 609(b) of the Regulatory Flexibility Act as added 
by SBREFA. The purpose of the Panel was to collect the advice and 
recommendations of representatives of small entities that could be 
affected by today's proposed rule and to report on those comments and 
the Panel's findings as to issues related to the key elements of the 
Initial Regulatory Flexibility Analysis under section 603 of the 
Regulatory Flexibility Act. The report of the Panel has been placed in 
the rulemaking record.&lt;SUP&gt;109&lt;/SUP&gt;
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    \109\ Report of the Small Business Advocacy Panel on Tier 2 
Light-Duty Vehicle and Light-Duty Truck Emission Standards, Heavy-
Duty Gasoline Engine Standards, and Gasoline Sulfur Standards, 
October 1998.
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    The contents of today's proposal and the Initial Regulatory 
Flexibility Analysis reflect the recommendations in the Panel's report. 
We summarize our outreach to small entities and our responses to the 
recommendations of the Panel below. The Agency continues to be 
interested in the potential impacts of the proposed rule on small 
entities and welcomes additional comments during the rulemaking process 
on issues related to such impacts.
1. Potentially Affected Small Businesses
    The Initial Regulatory Flexibility Analysis identified small 
businesses from the industries in the following table as subject to the 
provisions of today's proposed rule:

       Table VIII.1.--Industries Containing Small Businesses Potentially Affected by Today's Proposed Rule
----------------------------------------------------------------------------------------------------------------
              Industry                NAICS &lt;SUP&gt;a&lt;/SUP&gt; codes    SIC &lt;SUP&gt;b&lt;/SUP&gt; codes     Defined by SBA as a small business if: &lt;SUP&gt;c&lt;/SUP&gt;
----------------------------------------------------------------------------------------------------------------
Motor Vehicle Manufacturers........          336111            3711  &lt;1000 employees.
                                             336112
                                             336120
Alternative Fuel Vehicle Converters          336311            3592  &lt;500 employees.
                                             541690            8931
                                             336312            3714  &lt;750 employees.

[[<strong>Page</strong> 26104]]


                                             422720            5172  &lt;100 employees.
                                             454312            5984  &lt;$5 million annual sales.
                                             811198            7549
                                             541514            8742
Independent Commercial Importers of          811112            7533  &lt;$5 million annual sales.
 Vehicles and Vehicle Components.            811198            7549
                                             541514            8742
Petroleum Refiners.................          324110            2911  &lt;1500 employees.
Petroleum Marketers and                      422710            5171  &lt;100 employees.
 Distributors.                               422720            5172
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&lt;SUP&gt;a&lt;/SUP&gt; North American Industry Classification System.
&lt;SUP&gt;b&lt;/SUP&gt; Standard Industrial Classification system.
&lt;SUP&gt;c&lt;/SUP&gt; According to SBA's regulations (13 CFR 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.

    The Initial RFA identified about 15 small petroleum refiners, 
several hundred small petroleum marketers, and about 15 small 
certifiers of covered vehicles (belonging to the other categories in 
the above table) that would be subject to the proposed rule.
2. Small Business Advocacy Review Panel and the Evaluation of 
Regulatory Alternatives
    The Small Business Advocacy Review Panel was convened by EPA on 
August 27, 1998. The Panel consisted of representatives of the Small 
Business Administration (SBA), the Office of Management and Budget 
(OMB), and EPA. During the development of today's proposal, EPA and the 
Panel were in contact with representatives from the small businesses 
that would be subject to the provisions in today's proposal. In 
addition to verbal comments from industry noted by the Panel at 
meetings and teleconferences, written comments were received from each 
of the affected industry segments or their representatives. These 
comments, alternatives suggested by the Panel to mitigate adverse 
impacts on small businesses, and issues the Panel requested EPA take 
additional comment on are contained in the report of the Panel and are 
summarized below. Today's proposal incorporates or requests comment on 
the alternatives and issues suggested by the Panel.

Fuel-Related Small Business Issues

    Most of the small refiners stated that if they were required to 
achieve 30 ppm sulfur levels on average with an 80 ppm per-gallon cap 
without some regulatory relief, they would be forced out of business. 
Thus, the Panel devoted much attention to regulatory alternatives to 
address this concern. Most small refiners strongly supported delaying 
mandatory compliance for their facilities. On the other hand, most 
small refiners stated that a phase-in of gasoline sulfur standards 
would not be helpful because it would be more cost-effective for them 
to install the maximum technology required for the most stringent 
sulfur levels that would ultimately be imposed.
    The Society of Independent Gasoline Marketers of America (SIGMA) 
commented that EPA should consider giving relief not only to refiners 
that meet the SBA definition of small refiner but also to refineries 
with relatively small production capacity that are owned by large 
refining companies. This was because a refinery with a small production 
capacity would operate essentially as an SBA-defined small refiner 
would. SIGMA also noted that small gasoline marketers would be affected 
by the closure of any refinery with small production capacity, whether 
it was owned by a large company or an SBA-defined small refining 
company.
    The Panel recommended that small refiners be given a four to six 
year period of relief during which less stringent gasoline sulfur 
requirements would apply. The Panel also advised that EPA specifically 
request comment on an alternative duration of ten years for the relief 
period. Small refiners would be assigned interim sulfur standards 
during this relief period based on their current individual refinery 
sulfur levels. Following this relief period, small refiners would be 
required to meet the industry-wide standard, although temporary 
hardship relief would be available on a case-by-case basis. The 
additional time provided to small refiners before compliance with the 
industry-wide standard was required would allow (1) new sulfur-
reduction technologies to be proven-out by larger refiners, (2) the 
costs of advanced technology units to drop as the volume of their sales 
increases, (3) industry engineering and construction resources to be 
freed-up, and (4) the acquisition of the necessary capital by small 
refiners. The provisions that EPA is proposing for small refiners and 
our requests for specific comments are found in Section IV.C.3.b.above. 
The Panel concluded that adding gasoline sulfur to the fuel parameters 
already being sampled and tested by gasoline marketers would likely 
result in little, if any, additional burden. Therefore, the Panel did 
not recommend any special provision for gasoline marketers.

Vehicle-Related Small Business Issues

    Independent commercial importers of vehicles (ICIs) suggested that 
the new emissions standards be phased-in with the phase-in schedule 
based on the small vehicle manufacturer's annual production volume. 
Secondly, the ICIs requested that small testing laboratories be 
permitted to use older technology dynamometers than proposed for use by 
the Agency. Finally, the ICIs commented that the certification process 
should be waived for certain foreign vehicles. Small-volume vehicle 
manufacturers (SVMs) stated that a phase-in of Tier-2 emissions 
standards is essential. They further stated that SVMs should not be 
required to comply until the end of the phase-in period, which should 
not be before model year 2007. The SVMs also stated that a case-by-case 
hardship relief provision should be provided for their members. SVMs 
requested that a credit program be established with incentives for 
larger manufacturers to make credits available to SVMs in meeting their 
compliance goals.
    Based on the above comments, the Panel advised that EPA consider 
several

[[<strong>Page</strong> 26105]]

alternatives, individually or in combination, for the potential relief 
that they might provide to small certifiers of vehicles. Our requests 
for comments on these alternatives are found in Section V.A.8 above.
    The Initial Regulatory Flexibility Analysis evaluates the financial 
impacts of the proposed vehicle standards and fuel controls on small 
entities. EPA believes that the regulatory alternatives considered in 
today's document will provide substantial relief to small business from 
the potential adverse economic impacts of complying with today's 
proposed rule.

C. Paperwork Reduction Act

    The information collection requirements (ICR) 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. The 
Agency may not conduct or sponsor an information collection, and a 
person is not required to respond to a request for information unless 
the information collection request 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.
    The information collection requirements associated with today's 
proposed rule belong to two distinct categories: (1) Those that pertain 
to the proposed amendments to the vehicle certification requirements, 
and (2) those that pertain to the proposed requirements for the control 
of gasoline sulfur content. The information collection requirements are 
contained in two separate ICR documents according to the category to 
which they belong.&lt;SUP&gt;110&lt;/SUP&gt;
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    \110\ The information collection requirements associated with 
the proposed amendments to the requirements for vehicle 
certification are contained in the Information Collection Request 
entitled ``Amendments to the Reporting and Recordkeeping 
Requirements for Motor Vehicle Certification Under the Proposed Tier 
2 Rule''. The information collection requirements associated with 
the proposed gasoline sulfur control program are contained in the 
Information Collection Request entitled ``Recordkeeping and 
Reporting Requirements Regarding the Sulfur Content of Motor Vehicle 
Gasoline Under the Tier 2 Rule''.
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    The Paperwork Reduction Act stipulates that ICR documents estimate 
the burden of activities that would be required of regulated parties 
within a three year time period. Consequently, the ICR documents that 
accompany today's proposed rule provide burden estimates for the 
activities that would be required under the first three years of the 
proposed program.

ICRs Pertaining to the Proposed Amendments to Vehicle Certification 
Requirements

    The information collection burden to vehicle certifiers associated 
with the proposed amendments to the vehicle certification requirements 
in today's document pertain to the proposed fleet-average 
NO&lt;INF&gt;X&lt;/INF&gt; standard and emission credits provisions. These proposed 
requirements are very similar to those under the voluntary National Low 
Emission Vehicle (NLEV) program, which includes a fleet-average 
standard for nonmethane hydrocarbon organic gases (NMOG) and associated 
emission credits provisions. The hours spent annually by a given 
vehicle certifier on the information collection activities associated 
with the proposed recordkeeping and reporting requirements depends upon 
certifier-specific variables, including: the scope/variety of their 
product line as reflected in the number of test groups and strategy 
used to comply with the proposed fleet-average NO&lt;INF&gt;X&lt;/INF&gt; standard, 
the extent they utilize the proposed emissions credits provisions, and 
whether they opted into the NLEV program. Vehicle certifiers that use 
the proposed provisions for early banking of emission credits would be 
subject to the associated information collection requirements as early 
as September 1, 2000.&lt;SUP&gt;111&lt;/SUP&gt; All vehicle certifiers would be 
required to comply with the information collection requirements 
associated with the amendments to the vehicle certification program 
beginning September 1, 2003.&lt;SUP&gt;112&lt;/SUP&gt; The ICR document for the 
proposed amendments to the vehicle certification program provides 
burden estimates for all of the associated information collection 
requirements. The total information collection burden associated with 
the proposed amendments to the vehicle certification requirements is 
estimated at 8,361 hours and $564,172 annually for the certifiers of 
light-duty vehicles and light-duty trucks.
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    \111\ These ICRs would become effective on the date that model 
year 2001 vehicles are introduced into commerce. EPA assumes that 
September 1, 2000 is the earliest date that model year 2001 vehicles 
will be marketed.
    \112\ Assuming model year 2004 vehicles are introduced into 
commerce on this date.
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ICRs Pertaining to the Proposed Requirements for Gasoline Sulfur 
Control

    The information collection burden to gasoline refiners, importers, 
marketers, distributors, retailers and wholesale purchaser-consumers 
(WPCs), and users of research and development (R&amp;D) gasoline pertain to 
the proposed gasoline sulfur control requirements. The scope of the 
recordkeeping and reporting requirements for each regulated party, and 
therefore the cost to that party, reflects the party's opportunity to 
create, control, or alter the sulfur content of gasoline. As a result, 
refiners and importers would have significant requirements, which are 
necessary both for their own tracking, and that of downstream parties, 
and for EPA enforcement. Parties downstream from the gasoline 
production or import point, such as retailers, would have minimal 
burdens that are primarily associated with the transfer and retention 
of product transfer documents. Many of the reporting and recordkeeping 
requirements for refiners and importers regarding the sulfur content of 
gasoline on which the proposed rule would rely currently exist under 
EPA's Reformulated Gasoline (RFG) and Anti-Dumping programs. The ICR 
for the RFG program covered start up costs associated with reporting 
gasoline sulfur content under the RFG program. Consequently, much of 
the cost of the information collection requirements under the proposed 
gasoline sulfur control program has already been accounted for under 
the RFG program ICR.
    The information collection requirements under the proposed sulfur 
control program would evolve over time as the program is phased-in. 
Beginning July 1, 2000, certain requirements would apply to parties 
that voluntarily opt to generate credits for early sulfur reduction 
under the proposed average banking and trading (ABT) provisions. Many 
of the requirements would not become applicable until the beginning of 
the sulfur control program on October 1, 2003, when all refiners would 
be required to meet the proposed standards. The information collection 
requirements under the proposed program would become stable after 
January 1, 2008, when the optional small refiner provisions would 
expire.&lt;SUP&gt;113&lt;/SUP&gt;
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    \113\ A refiner could petition EPA for an extension of the small 
refiner provisions beyond January 1, 2008, based on hardship.
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    The ICR document for the proposed gasoline sulfur control program 
provides burden estimates for the activities that would be required 
under the first three years of the sulfur control program, from July 1, 
2000 through June 30, 2003. The burden associated with activities that 
would be required after June 30, 2003 will be estimated in later ICRs. 
The initial ICR for the gasoline sulfur control program, however, does

[[<strong>Page</strong> 26106]]

provide a qualitative characterization of all of the required 
activities and associated burdens for the various regulated parties as 
they develop, and until they become stable after January 1, 2008.
    We estimate that the total burden of the information collection 
requirements that would be applicable during the first three years of 
the proposed gasoline sulfur control program would be 42,479 hours and 
$2,149,865 annually. The estimated annual burden for the various 
regulated entities under the initial three year period of the proposed 
gasoline sulfur control program are as follows:

--Refiners: 31,231 hours, $1,879,822
--Importers: 40 hours, $2,067
--Pipelines: 85 hours, $2,785
--Terminals: 1,700 hours, $55,700
--Truckers: 3,333 hours, $118,000
--Retailers/WPCs: 6,087 hours, $ 91,298
--R&amp;D Gasoline Users: 3 hours, $193

Total Burden of the Proposed ICRs

    We estimate that the total burden of the recordkeeping and 
reporting requirements associated with the proposed vehicle 
certification and gasoline sulfur control requirements would be at 
50,840 hours and $2,714,037 annually over the first three years that 
these requirements would be in effect.

Comments on EPA's Burden Estimates

    We request comments on the Agency's need for the information 
proposed to be collected, the accuracy of our estimates of the 
associated burdens, and any suggested methods for minimizing the 
burden, including the use of automated techniques for the collection of 
information. Comments on the ICR should be sent to: the Office of 
Policy, Regulatory Information Division, U.S. Environmental Protection 
Agency (Mail Code 2136), 401 M Street, SW., Washington, DC 20460, 
marked ``Attention: Director of OP;'' and to the Office of Information 
and Regulatory Affairs, Office of Management and Budget, 725 17th 
Street, NW., Washington, DC 20503, marked ``Attention: Desk Officer for 
EPA.'' Include the ICR number in any such correspondence. OMB is 
required to make a decision concerning the ICR between 30 and 60 days 
after publication of a proposed rule. Therefore, comments to OMB on the 
ICR are most useful if received within 30 days of the publication date 
of today's document. Any comments from OMB and from the public on the 
information collection requirements in today's proposal will be placed 
in the docket and addressed by EPA in the final rule.
    Copies of the ICR documents can be obtained from Sandy Farmer, 
Office of Policy, Regulatory Information Division, U.S. Environmental 
Protection Agency (Mail Code 2137), 401 M Street, SW., Washington, DC 
20460, or by calling (202) 260-2740. Insert the ICR title and/or OMB 
control number in any correspondence. Copies may also be downloaded 
from the internet at http://www.epa.gov.icr.

D. Intergovernmental Relations

1. 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 actions on state, local, and tribal 
governments, and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``federal mandates'' that 
may result in expenditures to state, local, and tribal governments, in 
the aggregate, or to the private sector, of $100 million or more for 
any single year. Before promulgating a 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 that is 
not the least costly, most cost-effective, or least burdensome 
alternative if EPA provides an explanation in the final rule of why 
such an alternative was adopted.
    Before we establish any regulatory requirement that may 
significantly or uniquely affect small governments, including tribal 
governments, we must develop a small government plan pursuant to 
section 203 of the UMRA. Such a plan must provide for notifying 
potentially affected small governments, and 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.
    This proposed rule contains no federal mandates for state, local, 
or tribal governments as defined by the provisions of Title II of the 
UMRA. The rule imposes no enforceable duties on any of these 
governmental entities. Nothing in the proposed rule would significantly 
or uniquely affect small governments.
    EPA has determined that this rule contains federal mandates that 
may result in expenditures of more than $100 million to the private 
sector in any single year. EPA believes that the proposed program 
represents the least costly, most cost-effective approach to achieve 
the air quality goals of the proposed rule. The cost-benefit analysis 
required by the UMRA is discussed in Section IV.D. above and in the 
Draft RIA. See the ``Administrative Designation and Regulatory 
Analysis'' section in today's preamble (VIII.A.) for further 
information regarding these analyses.
2. Executive Order 12875: Enhancing Intergovernmental Partnerships
    Under Executive Order 12875, EPA may not issue a regulation that is 
not required by statute and that creates a mandate upon a state, local 
or Tribal government, unless the federal government provides the funds 
necessary to pay the direct compliance costs incurred by those 
governments, or EPA consults with those governments. If EPA complies by 
consulting, Executive Order 12875 requires EPA to provide to the Office 
of Management and Budget a description of the extent of EPA's prior 
consultation with representatives of affected state, local and tribal 
governments, the nature of their concerns, copies of any written 
communications from the governments, and a statement supporting the 
need to issue the regulation. In addition, Executive Order 12875 
requires EPA to develop an effective process permitting elected 
officials and other representatives of state, local and Tribal 
governments ``to provide meaningful and timely input in the development 
of regulatory proposals containing significant unfunded mandates.''
    Today's proposed rule would not create a mandate on state, local or 
Tribal governments. The proposed rule would not impose any enforceable 
duties on these entities. Accordingly, the requirements of section 1(a) 
of Executive Order 12875 do not apply to this rule.
3. Executive Order 13084: Consultation and Coordination With Indian 
Tribal Governments
    Under Executive Order 13084, EPA may not issue a regulation that is 
not required by statute, that significantly or uniquely affects the 
communities of Indian Tribal governments, and that imposes substantial 
direct compliance

[[<strong>Page</strong> 26107]]

costs on those communities, unless the federal government provides the 
funds necessary to pay the direct compliance costs incurred by the 
tribal governments, or EPA consults with those governments. If EPA 
complies by consulting, Executive Order 13084 requires EPA to provide 
to the Office of Management and Budget, in a separately identified 
section of the preamble to the rule, a description of the extent of 
EPA's prior consultation with representatives of affected tribal 
governments, a summary of the nature of their concerns, and a statement 
supporting the need to issue the regulation. In addition, Executive 
Order 13084 requires EPA to develop an effective process permitting 
elected officials and other representatives of Indian tribal 
governments ``to provide meaningful and timely input in the development 
of regulatory policies on matters that significantly or uniquely affect 
their communities.''
    Today's rule does not significantly or uniquely affect the 
communities of Indian Tribal governments. The proposed motor vehicle 
emissions, motor vehicle fuel, and other related requirements for 
private businesses in today's document would have national 
applicability, and thus would not uniquely affect the communities of 
Indian Tribal Governments. Further, no circumstances specific to such 
communities exist that would cause an impact on these communities 
beyond those discussed in the other sections of today's document. Thus, 
EPA's conclusions regarding the impacts from the implementation of 
today's proposed rule discussed in the other sections of today's 
document are equally applicable to the communities of Indian Tribal 
governments. Accordingly, the requirements of section 3(b) of Executive 
Order 13084 do not apply to this rule.

E. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Section 12(d) of Public Law 104-113, directs EPA 
to use voluntary consensus standards in its regulatory activities 
unless it would be inconsistent with applicable law or otherwise 
impractical. Voluntary consensus standards are technical standards 
(e.g., materials specifications, test methods, sampling procedures, and 
business practices) developed or adopted by voluntary consensus 
standards bodies. The NTTAA directs EPA to provide Congress, through 
OMB, explanations when the Agency decides not to use available and 
applicable voluntary consensus standards.
    This proposed rule references technical standards adopted by the 
Agency through previous rulemakings. No new technical standards are 
proposed in today's document. The standards referenced in today's 
proposed rule involve the measurement of gasoline fuel parameters and 
motor vehicle emissions. The measurement standards for gasoline fuel 
parameters referenced in today's proposal are all voluntary consensus 
standards. The motor vehicle emissions measurement standards referenced 
in today's proposed rule are government-unique standards that were 
developed by the Agency through previous rulemakings. These standards 
have served the Agency's emissions control goals well since their 
implementation and have been well accepted by industry. EPA is not 
aware of any voluntary consensus standards for the measurement of motor 
vehicle emissions. Therefore, the Agency proposes to use the existing 
EPA-developed standards found in 40 CFR part 86 for the measurement of 
motor vehicle emissions.
    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 (E.O.) 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 E.O. 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, section 5-501 of the Order directs the Agency to 
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.
    This proposed rule is subject to the Executive Order because it is 
an economically significant regulatory action as defined by E.O. 12866 
and it concerns in part an environmental health or safety risk that EPA 
has reason to believe may have a disproportionate effect on children.
    This rulemaking will achieve significant reductions of various 
emissions from passenger cars and light trucks, primarily 
NO&lt;INF&gt;X&lt;/INF&gt;, but also NMOG and PM. These pollutants raise concerns 
regarding environmental health or safety risks that EPA has reason to 
believe may have a disproportionate effect on children, such as impacts 
from ozone, PM and certain toxic air pollutants. See Section III of 
this proposal and the RIA for a further discussion of these issues.
    The effects of ozone and PM on children's health were addressed in 
detail in EPA's rulemaking to establish the NAAQS for these pollutants, 
and EPA is not revisiting those issues here. EPA believes, however, 
that the emission reductions from the strategies proposed in this 
rulemaking will further reduce air toxics and the related adverse 
impacts on children's health. EPA will be addressing the issues raised 
by air toxics from motor vehicles and their fuels in a separate 
rulemaking that EPA will initiate in the near future under section 
202(l) of the Act. That rulemaking will address the emissions of 
hazardous air pollutants from vehicles and fuels, and the appropriate 
level of control of HAPs from these sources.
    In this proposal, EPA has evaluated several regulatory strategies 
for reductions in emissions from passenger cars and light trucks. (See 
sections IV, V, and VI of this proposal as well as the RIA.) For the 
reasons described there, EPA believes that the strategies proposed are 
preferable under the Clean Air Act to other potentially effective and 
reasonably feasible alternatives considered by the Agency, for purposes 
of reducing emissions from these sources as a way of helping areas 
achieve and maintain the NAAQS for ozone and PM. Moreover, EPA believes 
that it has selected for proposal the most stringent and effective 
control reasonably feasible at this time, in light of the technology 
and cost requirements of the Act.

IX. Statutory Provisions and Legal Authority

    Statutory authority for the vehicle controls proposed in today's 
document can be found in sections 202, 206, 207, 208, and 301 of the 
Clean Air Act (CAA), as amended, 42 U.S.C. sections 7521, 7525, 7541, 
and 7601.
    Statutory authority for the fuel controls proposed in today's 
document comes from section 211(c) of the CAA, which allows EPA to 
regulate fuels that either contribute to air pollution which endangers 
public health or welfare or which impair emission control equipment. 
Both criteria are satisfied for

[[<strong>Page</strong> 26108]]

the proposed gasoline sulfur controls. Additional support for the 
procedural and enforcement-related aspects of the fuel's controls in 
today's proposal, including the proposed record keeping requirements, 
comes from sections 114(a) and 301(a) of the CAA.

List of Subjects

40 CFR Part 80

    Environmental protection, Administrative practice and procedure, 
Fuel Additives, Gasoline, Imports, Labeling, Motor vehicle pollution, 
Penalties, Reporting and recordkeeping requirements.

40 CFR Part 85

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

40 CFR Part 86

    Environmental protection, Administrative practice and procedure, 
Confidential business information, Labeling, Motor vehicle pollution, 
Penalties, Reporting and recordkeeping requirements.

    Dated: May 1, 1999.
Carol M. Browner,
Administrator.

    For the reasons set forth in the preamble, we propose to amend 
parts 80, 85 and 86 of title 40, of the Code of Federal Regulations as 
follows:

PART 80--REGULATION OF FUELS AND FUEL ADDITIVES

    1. The authority citation for part 80 continues to read as follows:

    Authority: Secs. 114, 211, and 301(a) of the Clean Air Act, as 
amended (42 U.S.C. 7414, 7545 and 7601(a)).

    2. Section 80.2 is amended by removing and reserving paragraph (aa) 
and revising paragraphs (h), (s), (w) and (gg) to read as follows:


Sec. 80.2  Definitions.

* * * * *
    (h) Refinery means any facility, including but not limited to, a 
plant, tanker truck, or vessel where gasoline or diesel fuel is 
produced, including any facility at which blendstocks are combined to 
produce gasoline or diesel fuel, or at which blendstock is added to 
gasoline or diesel fuel.
* * * * *
    (s) Gasoline blending stock, blendstock, or component means any 
liquid compound which is blended with other liquid compounds to produce 
gasoline.
* * * * *
    (w) Previously certified gasoline means gasoline or RBOB that 
previously has been included in a batch for purposes of complying with 
the standards for reformulated gasoline, conventional gasoline or 
gasoline sulfur, as appropriate.
* * * * *
    (aa) [Reserved]
* * * * *
    (gg) Batch of gasoline means a quantity of gasoline that is 
homogeneous with regard to those properties that are specified for 
conventional or reformulated gasoline.
* * * * *
    3. Section 80.46 is amended by revising paragraphs (a) and (h) to 
read as follows:


Sec. 80.46  Measurement of reformulated gasoline fuel parameters.

    (a) Sulfur. Sulfur content must be determined by using one of the 
following methods:
    (1) Primary method. American Society for Testing and Materials 
(ASTM) standard method D-2622-98, entitled ``Standard Test Method for 
Sulfur in Petroleum Products by Wavelength Dispersive X-ray 
Fluorescence Spectrometry.''
    (2) Alternative method. ASTM D-5453-93, entitled ``Standard Test 
Method for Determination of Total Sulfur in Light Hydrocarbons, Motor 
fuels and Oils by Ultraviolet Fluorescence.''
* * * * *
    (h) Incorporations by reference. ASTM standard methods D-2622-98, 
D-5453-93, D-3606-92, D-1319-93, D-4815-93, and D-86-90 with the 
exception of the degrees Fahrenheit figures in Table 9 of D-86-90, are 
incorporated by reference. These incorporations by reference were 
approved by the Director of the Federal Register in accordance with 5 
U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from the 
American Society for Testing and Materials, 100 Barr Harbor Dr., West 
Conshohocken, PA 19428. Copies may be inspected at the Air Docket 
Section (LE-131), room M-1500, U.S. Environmental Protection Agency, 
Docket No. A-97-03, 401 M Street, SW., Washington, DC 20460, or at the 
Office of the Federal Register, 800 North Capitol Street, NW., Suite 
700, Washington, DC.
    4. Subpart H is added to read as follows:

Subpart H--Gasoline Sulfur

General Information

Sec.
80.180  What are the implementation dates for the gasoline sulfur 
program?
80.185  [Reserved]
80.190  Am I required to register with EPA under the sulfur program?

Gasoline Sulfur Standards

80.195  What are the gasoline sulfur standards for refiners and 
importers?
80.200  What gasoline is subject to the sulfur standards?
80.205  How is compliance with the annual average sulfur level 
determined?
80.210  What sulfur standards apply to gasoline downstream from 
refineries and importers?
80.215  What requirements apply to oxygenate blenders?
80.220  [Reserved]

Small Refiner Provisions

80.225  What is the definition of a small refiner?
80.230  Who is not eligible for the small refiner provisions?
80.235  How does a refiner obtain approval as a small refiner?
80.240  What are the small refiner gasoline sulfur standards?
80.245  How does small refiner apply for a sulfur baseline?
80.250  How is the small refiner sulfur baseline determined?
80.255  [Reserved]
80.260  What are the procedures and requirements for obtaining a 
hardship extension?
80.265  How will the EPA approve or disapprove of my hardship 
extension application?
80.270-80.275  [Reserved]

Sulfur Averaging, Banking, Trading--General Information

80.280  What is the sulfur Averaging, Banking and Trading (ABT) 
program?
80.285  Who may participate in the sulfur ABT program?

Sulfur ABT Program--Baseline

80.290  How do I apply for a sulfur baseline?
80.295  How is a refinery or importer sulfur baseline determined?
80.300  What if I did not produce or import gasoline during 1997 or 
1998?

Sulfur ABT Program--Credit Generation

80.305  How are credits generated during the time period 2001 
through 2003?
80.310  How are credits generated beginning in 2004?

Sulfur ABT Program--Credit Use

80.315  How are credits used?
80.320  What are the reporting requirements for the sulfur ABT 
program?
80.325  [Reserved]

Sampling, Testing and Retention Requirements for Refiners and Importers

80.330  What are the sampling and testing requirements for refiners 
and importers?

[[<strong>Page</strong> 26109]]

80.335  What gasoline sample retention requirements apply to 
refiners and importers?
80.340  What alternative standards, sampling and testing 
requirements apply to refiners producing gasoline by blending 
blendstocks into previously certified gasoline (PCG)?
80.345  [Reserved]
80.350  What alternative sulfur standards, sampling and testing 
requirements apply to importers who transport gasoline by truck?
80.355  [Reserved]

Recordkeeping and Reporting Requirements

80.360  What are the product transfer document requirements?
80.365  What records must be kept?
80.370  What are the annual reporting requirements?

Exemptions

80.375  What requirements apply to California gasoline?
80.380  What are the requirements for obtaining an exemption for 
gasoline used for research, development or testing purposes?

Violation Provisions

80.385  What acts are prohibited under the gasoline sulfur program?
80.390  What evidence may be used to determine compliance with the 
prohibitions and requirements of this subpart and liability for 
violations of this subpart?
80.395  Who is liable for violations under the gasoline sulfur 
program?
80.400  What defenses apply to persons deemed liable for a violation 
of a prohibited act?
80.405  What penalties am I subject to?

Provisions for Foreign Refiners With Individual Sulfur Baselines

80.410  What are the additional requirements for gasoline produced 
at foreign refineries having individual small refiner sulfur 
baselines?

Attest Engagements

80.415  What are the attest engagement requirements for gasoline 
sulfur compliance?

Subpart H--Gasoline Sulfur

General Information


Sec. 80.180  What are the implementation dates for the gasoline sulfur 
program?

    (a) July 1, 2000. Deadline for submittal of sulfur baseline 
determinations for averaging, banking and trading program per 
Sec. 80.290.
    (b) June 1, 2002. Deadline for small refiner applications per 
Sec. 80.235.
    (c) October 1, 2003. Per-gallon caps apply, per Sec. 80.195 or 
Sec. 80.240, as applicable.
    (d) January 1, 2004. Refinery and importer average standards apply 
and corporate pool average gasoline standards apply, per Sec. 80.195. 
Small refinery average standards apply per Sec. 80.240.
    (e) February 1, 2004. Downstream caps apply, per Sec. 80.210.
    (f) January 1, 2005. Corporate pool average standards and per-
gallon caps are made more stringent per Sec. 80.195.
    (g) January 1, 2006. Corporate pool average gasoline standards no 
longer apply. Per-gallon caps are made more stringent per Sec. 80.195.
    (h) June 30, 2007. Deadline for small refiner hardship extension 
applications per Sec. 80.260.
    (i) January 1, 2008. With the exception of gasoline produced by 
small refiners with approved hardship extensions, every batch of 
gasoline is subject to the 80 ppm cap. With the exception of small 
refiners with approved hardship extensions, refinery and importer 
average gasoline sulfur standards apply, per Sec. 80.195.
    (j) January 1, 2010. Every batch of gasoline is subject to the 80 
ppm cap. Refinery and importer average gasoline sulfur standards apply, 
per Sec. 80.195.


Sec. 80.185  [Reserved]


Sec. 80.190  Am I required to register with EPA under the sulfur 
program?

    (a) Each refiner and importer must register with EPA according to 
the procedures specified in this section.
    (b) Refiners and importers subject to the standards in Sec. 80.195 
who are registered by EPA under Sec. 80.76(a) are deemed to be 
registered for purposes of this subpart. Refiners and importers subject 
to the standards in Sec. 80.195 who are not registered by EPA under 
Sec. 80.76(a) must provide to EPA the information required by 
Sec. 80.76 by November 1, 2003 or not later than three months in 
advance of the first date that such person produces or imports 
gasoline, whichever is later.
    (c) Refiners and individual refineries that are registered by EPA 
under Sec. 80.76(a) and have established small refiner individual 
refinery standards status under Sec. 80.235(f) are deemed to be 
registered for purposes of this subpart. Refiners having any refinery 
subject to the standards in Sec. 80.240 who are not registered by EPA 
under Sec. 80.76(a) must provide to EPA the information required by 
Sec. 80.76 by June 1, 2002.
    (d) Any refiner or importer who plans to generate credits in any 
year prior to 2004 must register with us no later than November 1 of 
the year prior to the first year of credit generation.

Gasoline Sulfur Standards


Sec. 80.195  What are the gasoline sulfur standards for refiners and 
importers?

    (a)(1) The gasoline sulfur standards for refiners and importers, 
excluding small refiners subject to the standards at Sec. 80.240, are 
shown in Table 1 of this section.
    (2) The averaging period is January 1 through December 31 of each 
year. For each averaging period, a refiner's or importer's average 
sulfur level must be no greater than the levels specified in Table 1 of 
this section, as follows:

                                       Table 1.--Gasoline Sulfur Standards
----------------------------------------------------------------------------------------------------------------
                                                                 For the averaging period beginning
                                                  --------------------------------------------------------------
                                                     January 1, 2004      January 1, 2005      January 1, 2006+
----------------------------------------------------------------------------------------------------------------
Refinery or Importer Average, ppm................                   30                   30                   30
Corporate Pool Average, ppm......................                  120                   90                  (&lt;SUP&gt;b&lt;/SUP&gt;)
Per-Gallon Cap, ppm..............................                 &lt;SUP&gt;a&lt;/SUP&gt;300                  180                   80
----------------------------------------------------------------------------------------------------------------
&lt;SUP&gt;a&lt;/SUP&gt; This per-gallon cap standard must be met beginning October 1, 2003.
&lt;SUP&gt;b&lt;/SUP&gt; Not applicable.

    (b) The refinery or importer average gasoline sulfur standard.
    (1) The refinery or importer average gasoline sulfur standard is 
the maximum average sulfur level, measured in parts per million (ppm), 
allowed for the combined reformulated and conventional gasoline 
produced at a refinery or imported by an importer

[[<strong>Page</strong> 26110]]

during each calendar year starting January 1, 2004.
    (2) The annual average sulfur level is calculated as specified in 
section Sec. 80.205.
    (3) The refinery or importer average gasoline sulfur standard may 
be met using credits according to Sec. 80.315, or any other potential 
sources of credits or allowances, if applicable.
    (c) The corporate pool average gasoline sulfur standard applicable 
in 2004 and 2005 is the maximum average sulfur level, in ppm, allowed 
for a refiner's or importer's combined reformulated and conventional 
gasoline production from all of a refiner's refineries and all gasoline 
imported by an importer in a calendar year. The corporate pool average 
is determined by volume-weighting each refinery's and importer's actual 
annual average sulfur levels by their respective production or import 
volumes, as specified in Sec. 80.205.
    (d) The per-gallon cap standard specified in Table 1 of this 
section for the averaging period beginning January 1, 2004, must be met 
beginning October 1, 2003.


Sec. 80.200  What gasoline is subject to the sulfur standards?

    All gasoline is subject to the standards in this subpart, with the 
following exceptions:
    (a) Gasoline that is used to fuel aircraft, racing vehicles or 
racing boats that are used only in sanctioned racing events, provided 
that:
    (1) Product transfer documents associated with such gasoline, and 
any pump stand from which such gasoline is dispensed, identify the 
gasoline either as gasoline that is restricted for use in aircraft, or 
as gasoline that is restricted for use in racing motor vehicles or 
racing boats that are used only in sanctioned racing events;
    (2) The gasoline is completely segregated from all other gasoline 
throughout production, distribution and sale to the ultimate consumer; 
and
    (3) The gasoline is not made available for use as motor vehicle 
gasoline, or dispensed for use in motor vehicles.
    (b) California gasoline as defined in Sec. 80.81(a)(2).
    (c) Gasoline that is exported for sale outside the U.S.


Sec. 80.205  How is compliance with the annual average sulfur level 
determined?

    (a) The refinery or importer average gasoline sulfur level is 
calculated as follows:
[GRAPHIC] [TIFF OMITTED] TP13MY99.005

Where:

S&lt;INF&gt;a&lt;/INF&gt; = The refinery or importer annual average sulfur value.
V&lt;INF&gt;i&lt;/INF&gt; = The volume of gasoline produced or imported in batch i.
S&lt;INF&gt;i&lt;/INF&gt; = The sulfur content of batch i as determined in 
accordance with the requirements of Sec. 80.330.
n = The number of batches of gasoline produced or imported during the 
averaging period.
i = Individual batch of gasoline produced or imported during the 
averaging period.

    (b) A refiner or importer may include oxygenate added downstream 
from the refinery or import facility when calculating the sulfur 
content, provided the following requirements are met:
    (1) For oxygenate added to conventional gasoline, the refiner or 
importer must comply with the requirements of Sec. 80.101(d)(4)(ii).
    (2) For oxygenate added to RBOB, the refiner or importer must 
comply with the requirements of Sec. 80.69(a).
    (c) Refiners and importers must exclude from compliance 
calculations all of the following:
    (1) Gasoline that was not produced at the refinery or was not 
imported by the importer (or that was imported as Certified Sulfur-
FRGAS).
    (2) Blending stocks or gasoline that have been included in another 
refiner's compliance calculations.
    (3) Gasoline exempted from standards under Sec. 80.200.
    (d) Compliance deficit. A refinery or importer may exceed the 
refinery or importer annual average sulfur standard specified in 
Sec. 80.195 under the following conditions:
    (1) In the calendar year following the year the standard is not 
met, the refinery or importer achieves compliance with the refinery or 
importer annual average sulfur standard specified in Sec. 80.195; and
    (2) In the calendar year following the year the standard is not 
met, and after achieving compliance with the refinery or importer 
annual average sulfur standard specified in Sec. 80.195, the refinery 
or importer must have sufficient additional credits and/or actual 
reduction in sulfur levels to equal the compliance deficit of the 
previous year.


Sec. 80.210  What sulfur standards apply to gasoline downstream from 
refineries and importers?

    (a) Definition. S-RGAS means gasoline produced by a domestic 
refinery that is subject to the standards in Sec. 80.240, and to 
Certified Sulfur-FRGAS, as defined in Sec. 80.410, except that no batch 
of gasoline may be classified as S-RGAS if the actual sulfur content is 
less than the national refinery cap standard specified in Sec. 80.195.
    (b) The sulfur cap standard for gasoline at any point in the 
gasoline distribution system downstream from refineries and import 
facilities, including gasoline at facilities of distributors, carriers, 
retailers and wholesale purchaser-consumers, is as follows:
    (1) The following standards apply to gasoline except where product 
transfer documents indicate the presence of any S-RGAS:

------------------------------------------------------------------------
                                                              National
                                                             Downstream
                     During the Period                       Sulfur Cap
                                                              Standard
                                                                (ppm)
------------------------------------------------------------------------
February 1, 2004, through January 31, 2005................  &lt;ls-thn-eq&gt;3
                                                                      26
February 1, 2005, through January 31, 2006................  &lt;ls-thn-eq&gt;2
                                                                      01
February 1, 2006, and thereafter..........................  &lt;ls-thn-eq&gt;9
                                                                       5
------------------------------------------------------------------------

    (2) For gasoline, including a mixture of gasoline batches from 
different refineries, where product transfer documents indicate the 
presence of any S-RGAS, the downstream cap standard for the gasoline is 
the highest downstream cap standard applicable to any gasoline in the 
mixture, except that if a test result indicates the sulfur content of 
the mixture is less than or equal to the applicable national downstream 
cap standard, the gasoline is subject to the national downstream cap 
standard.


Sec. 80.215  What requirements apply to oxygenate blenders?

    Oxygenate blenders, as defined by Sec. 80.2(mm), are subject to the 
requirements of this subpart except for the reporting requirements of 
Sec. 80.370 and the requirements under Sec. 80.330 to sample and test 
each batch of gasoline produced.


Sec. 80.220  [Reserved]

Small Refiner Provisions


Sec. 80.225  What is the definition of a small refiner?

    (a) A small refiner is defined as any person, as defined by 42 
U.S.C. 7602(e), which, as of January 1, 1999:

[[<strong>Page</strong> 26111]]

    (1) Produced gasoline at a refinery by processing crude oil through 
refinery processing units; and
    (2)(i) Employed no more than 1500 people, including subsidiaries, 
and in the case of a refiner who operates a refinery as a joint venture 
with other refiners, including the total number of employees of all 
corporate entities in the venture; or
    (ii) Is a subsidiary, in which case the employees of the parent 
company and any wholly-owned subsidiaries of the parent company must be 
included in determining if the 1,500 employee limit is exceeded.
    (b) This definition applies to domestic and foreign refiners.
    (c) If, without merger with or acquisition of another business 
unit, a company with approved small refiner status exceeds 1500 
employees after January 1, 1999, it will be considered a small refiner 
for the duration of the small refiner program.
    (d) A refiner that was not in operation as of January 1, 1999, that 
begins operation before January 1, 2001, and meets all other criteria 
of this subpart, may apply for small refiner status according to 
Sec. 80.235.


Sec. 80.230  Who is not eligible for the small refiner provisions?

    (a) The following are not eligible for the small refiner 
provisions:
    (1) Refineries built or started up after January 1, 1999, unless 
the criteria of Sec. 80.225(d) are met; or
    (2) Persons that employ more than 1500 people on January 1, 1999, 
but employ fewer than 1500 people after that date; or
    (3) Importers; or
    (4) Refiners employing 1500 or fewer people which were part of a 
larger corporation as of January 1, 1999 but subsequently were sold to 
form a new company.
    (b) Disqualification as a small refiner. (1) Refiners who qualify 
as small under Sec. 80.225, and subsequently employ more than 1500 
people as a result of merger with or acquisition of another entity, are 
disqualified as small refiners and must meet the standards in 
Sec. 80.195 beginning on January 1 of the first calendar year following 
such merger or acquisition.
    (2) If a small refiner is no longer eligible for small refiner 
status or elects to change the status of any refinery operating under a 
small refiner individual refinery standard to subject the refinery to 
the standards in Sec. 80.195, the refiner must notify EPA in writing 
within 20 days of the disqualifying event or, in the case of a 
voluntary election, no later than November 15 prior to the year that 
the change will occur. Each refinery of the small refiner no longer 
eligible for small refiner status must meet the standards inSec. 80.195 
for the next averaging period.


Sec. 80.235  How does a refiner obtain approval as a small refiner?

    (a) A refiner must apply to EPA for small refiner status by June 1, 
2002.
    (b) Applications for small refiner status must be sent to: U.S. 
EPA--FED, Gasoline Sulfur Small Refiner Status, 2000 Traverwood, Ann 
Arbor, MI 48105.
    (c) The small refiner status application must contain the following 
information:
    (1) A listing of the name and address of each location where any 
employee of the refiner worked on January 1, 1999, the total number of 
employees at each location, and the type of business activities carried 
out at each location.
    (2) A letter signed by the president, chief operating or chief 
executive officer of the company, or his/her designee, stating that the 
information contained in the application is true to the best of his/her 
knowledge.
    (3) Name, address, phone number, facsimile number and E-mail 
address of a corporate contact person.
    (d) For joint ventures, the total employee count includes the 
combined employee count of all corporate entities in the venture.
    (e) For government-owned refiners, the total employee count 
includes all government employees.
    (f) Refiners who apply for small refiner status based on the number 
of employees after January 1, 1999 but before January 1, 2001, as 
permitted under Sec. 80.225(d), must comply with paragraphs (a) through 
(c) of this section.
    (g) EPA will notify a refiner of approval or disapproval of small 
refiner status by letter.
    (1) If approved, EPA will notify the refiner of each refinery's 
approved baseline, refinery per-gallon cap, and downstream per-gallon 
cap standard under Sec. 80.210.
    (2) If disapproved, the refiner must comply with the standards in 
Sec. 80.195.


Sec. 80.240  What are the small refiner gasoline sulfur standards?

    (a) The gasoline sulfur standards for an approved small refiner 
depend on the refinery baseline sulfur level, and are shown in Table 1 
of this section, as follows:

     Table 1.--Gasoline Sulfur Standards for Approved Small Refiners
------------------------------------------------------------------------
                                        Refinery annual average and per-
                                             gallon (``cap'') sulfur
 Refinery baseline sulfur level (ppm)      standards (ppm) that apply
                                                during 2004-2007
------------------------------------------------------------------------
0 to 30...............................  Refinery average: 30.
                                        Cap: 80.
31 to 80..............................  Refinery average: no
                                         requirement.
                                        Cap: 80.
81 to 200.............................  Refinery average: baseline
                                         level.
                                        Cap: Factor of 2 above the
                                         baseline.
201 and above.........................  Refinery average: 200 ppm or 50%
                                         of baseline, whichever is
                                         higher, but in no event greater
                                         than 300 ppm.
                                        Cap: Factor of 1.5 above
                                         baseline level.
------------------------------------------------------------------------

    (b) The average standards specified in Table 1 of this section 
apply to the combined reformulated and conventional gasoline produced 
at a refinery.
    (c) The refinery average sulfur standards specified in Table 1 of 
this section must be met on an annual calendar year basis for each 
refinery owned by a small refiner.
    (d) The per-gallon cap standards specified in Table 1 of this 
section for the averaging period beginning January 1, 2004 must be met 
beginning October 1, 2003.
    (e) Volume limitation. (1) The refinery average standards specified 
in Table 1 of this section apply to the volume of gasoline produced by 
a small refiner's refinery up to the lesser of:
    (i) 105% of the baseline gasoline volume; or
    (ii) The volume of gasoline produced at that refinery during the 
average period by processing crude oil.
    (2) If a refiner exceeds the volume limitation in paragraph (e)(1) 
of this section during the calendar year, the annual average sulfur 
standard is calculated as follows:
[GRAPHIC] [TIFF OMITTED] TP13MY99.007

Where:

S&lt;INF&gt;sr&lt;/INF&gt; = Small refiner annual average sulfur standard.
V&lt;INF&gt;b&lt;/INF&gt; = Applicable volume under paragraph (e)(1) of this 
section.
V&lt;INF&gt;a&lt;/INF&gt; = Averaging period gasoline volume.
S&lt;INF&gt;b&lt;/INF&gt; = Small refiner sulfur baseline.

    (3) The applicable volume from paragraph (e)(1) of this section 
excludes volumes of gasoline blending stocks used in the small 
refinery's gasoline

[[<strong>Page</strong> 26112]]

production that were received from external sources, unless such 
blending stocks are substantially transformed through the refinery's 
processing operations and have not been included in any other refiner's 
or importer's compliance determination.
    (4) The applicable per-gallon cap standards in Table 1 of this 
section apply to all gasoline produced by small refiners.
    (f) Withdrawal of small refiner status. Refiners that receive 
notification from EPA under Sec. 80.235(f) of their qualification as 
small refiners will have that status withdrawn if EPA finds that the 
refiner provided false or inaccurate information on its application for 
small refiner status. Such refiners will be subject to the standards in 
Sec. 80.195 beginning on January 1, 2004.


Sec. 80.245  How does a small refiner apply for a sulfur baseline?

    (a) A refiner seeking small refiner status must establish an 
individual sulfur baseline for every refinery covered by the small 
refiner status application by June 1, 2002
    (1) If a sulfur baseline was submitted for the refinery under 
Sec. 80.290, the refiner does not need to resubmit that information.
    (2) If no sulfur baseline was previously submitted, the refiner 
must submit a sulfur baseline for every refinery according to 
Sec. 80.250.
    (b) The sulfur baselines must be submitted to the address specified 
in Sec. 80.235(b).


Sec. 80.250  How is the small refiner sulfur baseline determined?

    (a) The small refiner sulfur baseline is determined as follows:
    [GRAPHIC] [TIFF OMITTED] TP13MY99.008
    
Where:

S&lt;INF&gt;b&lt;/INF&gt; = Sulfur baseline value.
V&lt;INF&gt;i&lt;/INF&gt; = Volume of gasoline batch i.
S&lt;INF&gt;i&lt;/INF&gt; = Sulfur content of batch i.
n = Total number of batches of conventional gasoline produced from 
January 1, 1997 through December 31, 1998.
i = Individual batch of conventional gasoline produced from January 1, 
1997 through December 31, 1998.

    (b) Foreign small refiners must also comply with the baseline 
establishment requirements in Sec. 80.410(b).
    (c) An approved small refiner may not aggregate the gasoline 
volumes and sulfur levels of its refineries for compliance with the 
applicable standards specified in Sec. 80.240.
    (d) If at any time a small refinery baseline is determined to be 
incorrect, the corrected baseline applies ab initio and the annual 
average standards and cap standards are deemed to be those applicable 
under the corrected information.
    (e) If a small refiner does not have the data specified in 
paragraph (a) of this section to generate a sulfur baseline, or if any 
refineries owned by that refiner were not operating in 1997-1998, EPA 
will assign each refinery a baseline average sulfur level of 150 ppm 
sulfur and a baseline CG volume equivalent to the annual gasoline 
volume capability of the refinery at the time it applies for small 
refiner status.


Sec. 80.255  [Reserved].


Sec. 80.260  What are the procedures and requirements for obtaining a 
hardship extension?

    (a) An approved small refiner may apply to EPA for a hardship 
extension of the small refiner standards for calendar years 2008 and 
2009. The application must be submitted no later than June 30, 2007 to 
U.S. EPA-FED, Small Refiner Hardship Extension, 2000 Traverwood, Ann 
Arbor, MI 48105.
    (b) The application must provide a detailed discussion regarding 
the inability of the refinery to produce gasoline meeting the 
requirements of Sec. 80.195. Such an application must include, at a 
minimum, the following information:
    (1) A detailed analysis of the reasons the refinery is unable to 
produce gasoline meeting the requirements of Sec. 80.195 in 2008, 
including costs, specification of equipment still needed, potential 
equipment suppliers, and efforts already completed to obtain the 
necessary equipment;
    (2) If unavailability of equipment is part of the reason for the 
inability to comply, a discussion of other options considered, and the 
reasons these other options are not feasible;
    (3) If relevant, a demonstration that a needed or lower cost 
technology is immediately unavailable, but will be available in the 
near future, and full information regarding when and from what sources 
it will be available;
    (4) Schematic drawings of the refinery configuration as of January 
1, 1997 and as of the date of the hardship extension application, and 
any planned future additions or changes;
    (5) If relevant, a demonstration that a temporary unavailability 
exists of engineering or construction resources necessary for design or 
installation of the needed equipment;
    (6) If sources of crude oil lower in sulfur than what the refiner 
is currently using are available, full information regarding the 
availability of these different crude sources, the sulfur content of 
those crude sources, the cost of the different crude sources over the 
past five years, and an estimate of gasoline sulfur levels achievable 
by your refinery if the lower sulfur crude sources were used;
    (7) A discussion of any sulfur reductions that can be achieved from 
current levels;
    (8) The date the refiner anticipates compliance with the standards 
in Sec. 80.195 can be achieved at its refinery;
    (9) An analysis of the economic impact of compliance on the 
refiner's business (including financial statements from the last 5 
years, or for any time period up to 10 years, at EPA's request); and
    (10) Any other information regarding other strategies considered, 
including strategies, or components of strategies, that do not involve 
installation of equipment, and why meeting the standards in Sec. 80.195 
beginning in 2008 is infeasible.
    (c) The hardship extension application must contain a letter signed 
by the president, chief operating or chief executive officer, of the 
company, or his/her designee, stating that the information contained in 
the application is true to the best of his/her knowledge.


Sec. 80.265  How will the EPA approve or disapprove of my hardship 
extension application?

    (a) EPA will evaluate each application for hardship extension on a 
case-by-case basis. An extension will be granted for a refinery if the 
small refiner who owns the refinery adequately demonstrates that severe 
economic hardship would result if compliance with the standards in 
Sec. 80.195 is required in 2008 and/or 2009.
    (b) EPA may request more information, if necessary, for evaluation 
of the application. If requested information is not submitted within 
the time specified in EPA's request, or any extensions granted, the 
application may be denied.
    (c) EPA will notify the refiner of approval or disapproval of 
hardship extension by letter.
    (1) If approved, EPA will also notify the refiner of the date that 
full compliance with the standards specified at Sec. 80.195 must be 
achieved or what interim sulfur levels or schedules apply, if any.

[[<strong>Page</strong> 26113]]

    (2) If disapproved, beginning January 1, 2008, the refinery is 
subject to the requirements in Sec. 80.195.


Sec. 80.270-80.275  [Reserved]

Sulfur Averaging, Banking, Trading-General Information


Sec. 80.280  What is the sulfur Averaging, Banking and Trading (ABT) 
program?

    (a) The sulfur averaging, banking and trading program is a 
voluntary program which allows eligible, participating refiners and 
importers to generate, bank, trade and use credits.
    (b) Beginning in 2000, refiners and importers may generate credits 
by producing or importing gasoline with sulfur levels below the 
applicable baseline as calculated under Sec. 80.295.
    (c) Beginning in 2004, sulfur credits may be:
    (1) Used by the refiner or importer who generated the credits;
    (2) Banked for later use or transfer; or
    (3) Traded or sold to another refiner or importer.
    (d) This subpart contains specific requirements for the following:
    (1) Using, generating, selling and trading credits; and
    (2) The duration of the ABT program.
    (e) The gasoline sulfur ABT program is summarized in Table 1 of 
this section as follows:

BILLING CODE 6560-50-P
[GRAPHIC] [TIFF OMITTED] TP13MY99.009


BILLING CODE 6560-50-C


Sec. 80.285  Who may participate in the sulfur ABT program?

    (a) Any refiner or importer of gasoline, may participate in the 
program, except that participation by small refiners is limited under 
paragraph (d) of this section.
    (b) Refiners and importers who choose to generate credits in the 
ABT program must establish a sulfur baseline under Sec. 80.290.
    (c) Oxygenate blenders may not participate in the program.
    (d) Small refiners with any refinery subject to the standards 
specified in Sec. 80.240:
    (1) May not use sulfur credits to meet the average standard 
applicable to the refinery.
    (2) May generate early credits under Sec. 80.305 and bank and trade 
such sulfur credits throughout the duration of the sulfur ABT program.

Sulfur ABT Program--Baseline


Sec. 80.290  How do I apply for a sulfur baseline?

    (a) Each refiner or importer who wishes to generate ABT program 
credits during 2000-2003 must submit a sulfur baseline notification to 
EPA by July 1, 2000.
    (b) The sulfur baseline notification must be sent to: U.S. EPA-FED, 
ABT Sulfur Baseline, 2000 Traverwood, Ann Arbor, MI 48105.
    (c) The sulfur baseline notification must include the following 
information:
    (1) A listing of the names and addresses of all refineries and/or 
import facilities owned by the corporation;
    (2) The conventional gasoline sulfur baseline value, calculated as 
specified in Sec. 80.295(a), for each refinery and import facility of 
the corporation.
    (3) The conventional gasoline baseline volume, calculated as 
specified in Sec. 80.295(c), for each refinery and import facility of 
the corporation.
    (4) A letter signed by the president, chief operating or chief 
executive officer, of the company, or his/her delegate, stating that 
the information contained in the sulfur baseline determination is true 
to the best of his/her knowledge.
    (5) Name, address, phone number, facsimile number and E-mail 
address of a corporate contact person.
    (d)(1) A refiner or importer may generate credits as specified in 
Sec. 80.305, beginning in calendar year 2000, based on the sulfur 
baseline submitted to EPA according to paragraph (c) of this section.
    (2) If at any time the baseline submitted in accordance with the 
requirements of this section is determined to be incorrect, the 
corrected baseline applies. Credits

[[<strong>Page</strong> 26114]]

generated, banked, used or traded will be adjusted to reflect the 
correction.


Sec. 80.295  How is a refinery or importer sulfur baseline determined?

    (a) A refinery's or importer's conventional gasoline sulfur 
baseline is calculated using the following equation:
[GRAPHIC] [TIFF OMITTED] TP13MY99.010

Where:

S&lt;INF&gt;BCG&lt;/INF&gt; = Conventional gasoline sulfur baseline value.
V&lt;INF&gt;i&lt;/INF&gt; = Volume of conventional gasoline batch i.
S&lt;INF&gt;i&lt;/INF&gt; = Sulfur content of conventional gasoline batch i.
n = Total number of batches of conventional gasoline produced or 
imported during January 1, 1997 through December 31, 1998.
i = Individual batch of conventional gasoline produced or imported 
during January 1, 1997 through December 31, 1998.

    (b) The individual sulfur baseline for summer reformulated gasoline 
is 150 ppm.
    (c) The individual sulfur baseline for winter reformulated gasoline 
is equivalent to the conventional gasoline sulfur baseline calculated 
under paragraph (a) of this section.
    (d) The baseline volumes are as follows:
    (1) The conventional gasoline baseline volume is one half of the 
total 1997 and 1998 volume of conventional gasoline produced or 
imported.
    (2) There is no baseline volume for either summer or winter RFG 
produced or imported.
    (e) Any refiner or importer who, under Sec. 80.65 or 
Sec. 80.101(d)(4), included oxygenate blended downstream in 
conventional gasoline compliance calculations for 1997-1998 must 
include this oxygenate in the baseline calculations for sulfur content 
and volume under paragraphs (a) and (d) of this section.
    (f) The baseline calculations for sulfur content and volume under 
paragraphs (a) and (d) of this section for non-oxygenated blendstock, 
such as natural gasoline or butane, that is blended into gasoline must 
be calculated using the sulfur content and volume of the blendstock 
only.


Sec. 80.300  What if I did not produce or import gasoline during 1997 
or 1998?

    A refiner or importer who did not produce or import gasoline during 
1997 or 1998 is assigned a baseline sulfur level of 150 ppm for 
conventional gasoline and RFG (winter and summer).

Sulfur ABT Program--Credit Generation


Sec. 80.305  How are credits generated during the time period 2000 
through 2003?

    (a) General. (1) Sulfur credits may be generated annually during 
calendar years 2000-2003.
    (2) Credits must be calculated separately for Conventional gasoline 
and RFG. Credits must be calculated by multiplying the volume of 
gasoline for which credits are generated under paragraphs (b) and (c) 
of this section by the amount of sulfur reduction in ppm below the 
refiner's or importer's applicable sulfur baseline. The refiner or 
importer may include any oxygenates included in its RFG or Conventional 
gasoline volume under Secs. 80.65 and 80.101(d)(4), respectively, for 
the purpose of generating credits.
    (3) A refiner's or importer's total credit generation is the sum of 
the separate credit calculations for Conventional gasoline and RFG.
    (4) Credits under this program are in units of ``ppm-gallons''.
    (5) Credits must be identified by the year of creation, the year of 
transfer (if any), and the year of use (as specified in Sec. 80.315). 
Records relating to credit generation, use, and transfer, including the 
applicable years, must be maintained pursuant to Sec. 80.365.
    (b) Calculation of credits for conventional gasoline. (1) Refiners 
and importers may generate credits for conventional gasoline produced 
or imported during an averaging period only if the annual average 
sulfur level for the conventional gasoline produced during the 
averaging period is less than 150 ppm.
    (2) Refiners and importers whose conventional gasoline volume for 
the averaging period is less than or equal to 105% of its baseline 
volume for conventional gasoline, must calculate credits as follows:

    CR&lt;INF&gt;CG&lt;/INF&gt; = (V&lt;INF&gt;CG&lt;/INF&gt;)  x  
S&lt;INF&gt;BCG&lt;/INF&gt;-S&lt;INF&gt;ACG&lt;/INF&gt;)

Where:

CR&lt;INF&gt;CG&lt;/INF&gt; = Credits generated for conventional gasoline.
V&lt;INF&gt;CG&lt;/INF&gt; = Volume of conventional gasoline produced or imported 
during the averaging period.
S&lt;INF&gt;BCG&lt;/INF&gt; = Sulfur baseline value for conventional gasoline or 
150, whichever is greater .
S&lt;INF&gt;ACG&lt;/INF&gt; = Annual average sulfur level for conventional gasoline 
produced or imported during the averaging period.

    (3) Refiners and importers whose conventional gasoline volume for 
the averaging period is greater than 105% of the baseline volume for 
conventional gasoline, must calculate credits as follows:

CR&lt;INF&gt;CG&lt;/INF&gt; = (V&lt;INF&gt;BCG&lt;/INF&gt;  x  1.05)  x  
(S&lt;INF&gt;BCG&lt;/INF&gt;-S&lt;INF&gt;ACG&lt;/INF&gt;) + (V&lt;INF&gt;CG&lt;/INF&gt;-(1.05  x  
V&lt;INF&gt;BCG&lt;/INF&gt;))  x  (150-S&lt;INF&gt;ACG&lt;/INF&gt;)

Where:

CR&lt;INF&gt;CG&lt;/INF&gt; = Credits generated for conventional gasoline.
V&lt;INF&gt;BCG&lt;/INF&gt; = Baseline volume of conventional gasoline.
S&lt;INF&gt;BCG&lt;/INF&gt; = Sulfur baseline value for conventional gasoline or 
150, whichever is greater.
S&lt;INF&gt;ACG&lt;/INF&gt; = Annual average sulfur level for conventional gasoline 
produced or imported during the averaging period.
V&lt;INF&gt;CG&lt;/INF&gt; = Volume of conventional gasoline produced or imported 
during the averaging period.

    (c) Calculation of credits for RFG. (1) Refiners and importers may 
generate credits for summer RFG produced or imported during an 
averaging period only if the average sulfur level for the summer RFG 
produced or imported during the averaging period is less than 150 ppm. 
Summer RFG credits are calculated as follows:

CR&lt;INF&gt;SRFG&lt;/INF&gt; = (V&lt;INF&gt;SRFG&lt;/INF&gt;)  x  (150-S&lt;INF&gt;SRFG&lt;/INF&gt;)

Where:

CR&lt;INF&gt;SRFG&lt;/INF&gt; = Credits generated for summer reformulated gasoline.
V&lt;INF&gt;SRFG&lt;/INF&gt; = Volume of summer RFG produced or imported during the 
averaging period.
S&lt;INF&gt;SRFG&lt;/INF&gt; = Average sulfur level for summer RFG produced or 
imported during the averaging period.

    (2) Refiners and importers may generate credits for winter RFG 
produced or imported during an averaging period only if the average 
sulfur level for the winter RFG produced or imported during the 
averaging period is less than 150 ppm. Winter RFG credits calculated as 
follows:

CR&lt;INF&gt;WRFG&lt;/INF&gt; = (V&lt;INF&gt;WRFG&lt;/INF&gt;)  x  
(S&lt;INF&gt;BCG&lt;/INF&gt;-S&lt;INF&gt;WRFG&lt;/INF&gt;)

Where:

CR&lt;INF&gt;WRFG&lt;/INF&gt; = Credits generated for winter reformulated gasoline.
V&lt;INF&gt;WRFG&lt;/INF&gt; = Volume of winter RFG produced or imported during the 
averaging period.
S&lt;INF&gt;BCG&lt;/INF&gt; = Sulfur baseline value for conventional gasoline or 
150, whichever is greater.
S&lt;INF&gt;WRFG&lt;/INF&gt; = Average sulfur level for winter RFG produced or 
imported during the averaging period.

[[<strong>Page</strong> 26115]]

Sec. 80.310  How are credits generated beginning in 2004?

    (a) A refiner, for any refinery owned by it, or an importer may 
generate credits for annual average sulfur reductions if the annual 
average sulfur level for the combined RFG and conventional gasoline 
produced by any refinery owned by the refiner or imported by the 
importer for the averaging period is less than 30 ppm.
    (b) Credits calculated as follows:

CR&lt;INF&gt;A&lt;/INF&gt; = (V&lt;INF&gt;A&lt;/INF&gt;)  x  (30-S&lt;INF&gt;A&lt;/INF&gt;)

Where:

CR&lt;INF&gt;A&lt;/INF&gt; = Credits generated for the averaging period.
V&lt;INF&gt;A&lt;/INF&gt; = Total annual combined volume of RFG and conventional 
gasoline produced in a refinery or imported during the averaging 
period.
S&lt;INF&gt;A&lt;/INF&gt; = Annual average sulfur level of RFG and conventional 
gasoline produced in a refinery or imported during the averaging 
period.

    (c) Credits must be identified by the year of creation, the year of 
transfer (if any), and the year of use (as specified in Sec. 80.315). 
Records relating to credit generation, use, and transfer, including the 
applicable years, must be maintained pursuant to Sec. 80.365.

Sulfur ABT Program-Credit Use


Sec. 80.315  How are credits used?

    (a) Credits may be used, beginning with the 2004 averaging period, 
to meet the applicable annual average sulfur standard of 30 ppm, 
provided that:
    (1) Sulfur credits used were generated pursuant to the requirements 
of this subpart; and
    (2) The requirements of paragraphs (b) and (e) of this section are 
met.
    (b) Credits may not be used to meet the applicable corporate pool 
average under Sec. 80.195.
    (c) Credit transfers. (1) Credits obtained from other persons may 
be used to meet the annual averaged 30 ppm standard specified in 
Sec. 80.195 if all the following conditions are met:
    (i) The credits are generated and reported according to the 
requirements of this subpart.
    (ii) The credits are used in compliance with the limitations 
regarding the appropriate periods for credit use in this subpart.
    (iii) Any credit transfer takes place no later than the last day of 
February following the calendar year averaging period when the credits 
are used.
    (iv) Only the refiner or importer who generates the credits 
transfers them, and only a refiner or importer who uses the credits to 
achieve its compliance with the averaged standards obtains them from 
the transferor refiner or importer.
    (v) The credit transferor must apply any credits necessary to meet 
the transferor's applicable average standard, including credits 
generated during 2000, 2001, 2002 and 2003, before transferring credits 
to any other refiner or importer. No credits may be transferred that 
would result in the transferor having a negative credit balance.
    (vi) The transferor must supply to the transferee records 
indicating the year(s) the credits were generated.
    (2) In the case of credits that have been calculated or created 
improperly, or are otherwise determined to be invalid in violation of 
the requirements of this subpart, the following provisions apply:
    (i) Invalid credits cannot be used to achieve compliance with the 
transferee's averaging standard, regardless of the transferee's good 
faith belief that the credits were valid.
    (ii) The refiner or importer who used the credits, and any 
transferor of the credits, must adjust its sulfur calculations to 
reflect the proper credits.
    (iii) Any properly created credits existing in the transferor's 
credit balance after correcting the credit balance, and after the 
transferor applies credits as needed to meet the average standard at 
the end of the compliance year, must first be applied to correct the 
invalid transfers before the transferor trades or banks the credits.
    (d) Limitations on credit use. (1) Credits generated prior to 2004 
must be used or transferred no later than 2007.
    (2) Credits generated in 2004 or later must be used or transferred 
within five years of generation.
    (3) Credits transferred must be used by the transferee within five 
years of transfer, or no more than ten years of the year of generation, 
whichever is less.
    (4) A refiner possessing credits must use all credits prior to 
falling into compliance deficit, as defined under Sec. 80.205(d) (2).
    (e) If the recordkeeping requirements of Sec. 80.365(d) are not 
met, credits used under this subpart are invalid.


Sec. 80.320  What are the reporting requirements for the sulfur ABT 
program?

    (a) A refiner or importer who generates, uses, or transfers credits 
under the sulfur ABT program must file an annual report with EPA which 
must be submitted with the refiner's or importer's annual compliance 
report under Sec. 80.370.
    (b) The report must include the following information:
    (1) For credits generated in 2000, 2001, 2002 and 2003, the 
applicable Conventional gasoline sulfur content baseline, in ppm, and 
Conventional gasoline baseline;
    (2) The actual annual average sulfur content, in ppm, before the 
application of credits, separately for Conventional gasoline and 
separately, the average sulfur content, in ppm, for winter RFG and for 
summer RFG;
    (3) For refiners, the annual volume of conventional gasoline 
produced, and for importers, the annual volume of Non-Certified S-FRGAS 
imported, in gallons;
    (4) The number of credits used in ppm-gallons, in the averaging 
period;
    (5) The number of credits banked, credits transferred and credits 
acquired, in ppm-gallons;
    (6) The identity of the refiners and importers involved in these 
transactions, including their registration numbers, under Sec. 80.190, 
and the number of credits in ppm-gallons in each transaction; and
    (7) The number of credits, if any, for which the refiner is 
deficient, as defined under Sec. 80.205 (d), and the use of credits in 
the following year to cure the deficiency under Sec. 80.205(d)(2).


Sec. 80.325  [Reserved].

Sampling, Testing and Retention Requirements for Refiners and 
Importers


Sec. 80.330  What are the sampling and testing requirements for 
refiners and importers?

    (a) Sample and test each batch of gasoline. (1) Refiners and 
importers of gasoline must collect a representative sample from each 
batch of gasoline produced or imported and test each sample to 
determine its sulfur content for compliance with requirements under 
this subpart prior to the gasoline leaving the refinery or import 
facility, using the sampling and testing methods provided in this 
section.
    (2) The requirements of this section apply beginning October 1, 
2003, or January 1 of the first year of credit generation for refiners 
and importers generating early credits under Sec. 80.305.
    (b) Sampling methods. Refiners and importers must sample each batch 
of gasoline by using one of the following methods:
    (1) Manual sampling of tanks and pipelines must be performed 
according to the applicable procedures specified in one of the two 
following methods:
    (i) American Society for Testing and Materials (ASTM) method D 
4057-95, entitled ``Standard Practice for Manual Sampling of Petroleum 
and Petroleum Products.''
    (ii) Samples collected under the applicable procedures in ASTM D 
5842-95, entitled ``Standard Practice for Sampling and Handling of 
Fuels for Volatility Measurement,'' may be used

[[<strong>Page</strong> 26116]]

for measuring sulfur content if you assure that there is no 
contamination present that could affect the sulfur test result.
    (2) Automatic sampling of petroleum products in pipelines must be 
performed according to the applicable procedures specified in ASTM 
method D 4177-95, entitled ``Standard Practice for Automatic Sampling 
of Petroleum and Petroleum Products.''
    (c) Test method for measuring the sulfur content of gasoline. 
Refiners and importers must use the method provided in Sec. 80.46(a) to 
measure the sulfur content of gasoline they produce or import.
    (d) Test method for sulfur in Butane. The sulfur content of butane 
must be determined by ASTM D-5623-94, entitled ``Standard Test Method 
for Sulfur Compounds in Light Petroleum Liquids by Gas Chromatography 
and Sulfur Selective Detection.''
    (e) Incorporations by reference. ASTM standard practices D 4057-95, 
D 4177-95 and D 5842-95, and ASTM standard method D 5623-94 are 
incorporated by reference. These incorporations by reference were 
approved by the Director of the Federal Register in accordance with 5 
U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from the 
American Society for Testing and Materials, 100 Barr Harbor Dr., West 
Conshohocken, PA 19428. Copies may be inspected at the Air Docket 
Section (LE-131), room M-1500, U.S. Environmental Protection Agency, 
Docket No. A-97-03, 401 M Street, SW., Washington, DC 20460, or at the 
Office of the Federal Register, 800 North Capitol Street, NW., suite 
700, Washington, DC.


Sec. 80.335  What gasoline sample retention requirements apply to 
refiners and importers?

    (a) For each batch of gasoline produced or imported, refiners and 
importers must:
    (1) Retain a representative sample of at least 330 ml, collected 
from the batch and keep the sample for a period not less than 30 days 
from the date the batch was collected.
    (2) Comply with the gasoline sample handling and storage procedures 
found in the sampling procedures specified in Sec. 80.330 for each 
sample retained.
    (3) Provide the sample retained under paragraph (a) of this section 
to the Administrator's authorized representative upon request by EPA, 
and if requested by EPA, ship the sample to EPA within two working days 
by an overnight shipping service or comparable means, following the 
procedures specified by EPA when the request is made.
    (4) Include with each annual report filed under Sec. 80.370, the 
following statement, signed and dated by the same person who signs the 
annual report:

    I certify that I have made inquiries that are sufficient to give 
me knowledge of the procedures to collect and store gasoline 
samples, and I further certify that the procedures meet the 
requirements of the ASTM procedures required under Sec. 80.330.

    (b) The requirements of this section apply beginning October 1, 
2003, or January 1 of the first year of credit generation for refiners 
and importers generating early credits under Sec. 80.305.


Sec. 80.340  What alternative standards, sampling and testing 
requirements apply to refiners producing gasoline by blending 
blendstocks into previously certified gasoline (PCG)?

    (a) Any refiner who produces gasoline by blending blendstock into 
PCG must meet the requirement of Sec. 80.330 to sample and test every 
batch of gasoline as follows:
    (1)(i) Sample and test to determine the volume and sulfur content 
of the PCG prior to blendstock blending;
    (ii) Sample and test to determine the volume and sulfur content of 
the gasoline subsequent to blendstock blending;
    (iii) Calculate the volume and sulfur content of the blendstock, 
which is a batch for purposes of compliance calculations and reporting, 
by subtracting the volume and sulfur content of the PCG from the volume 
and sulfur content of the gasoline subsequent to blendstock blending.
    (2) In the alternative, and provided every batch of blendstock used 
at a refinery during an averaging period has a sulfur content that is 
equal to or less than the applicable per-gallon cap standard under 
Sec. 80.195, a refiner may sample and test each batch of blendstock 
when received at the refinery to determine the volume and sulfur 
content, and treat each blendstock receipt as a separate batch for 
purposes of compliance calculations for the annual average sulfur 
standard and for reporting.
    (b) Refiners that blend only butane into PCG may meet the sampling 
and testing requirements by using sulfur test results of the butane 
supplier, provided that the following requirements are also met:
    (1) The sulfur content of the butane received from the butane 
supplier must not exceed 30 ppm on a per-gallon basis.
    (2) The butane supplier must demonstrate that the sulfur content of 
each load of butane supplied does not exceed the per-gallon sulfur 
standard of 30 ppm through test results of samples of the butane 
contained in the storage tank from which the butane blender is 
supplied.
    (i) Testing for the sulfur content of the butane by the supplier 
must be subsequent to each time butane is supplied to the supplier's 
storage tank, or the testing must be immediately before transfer of 
butane to the butane blender.
    (ii) The testing must be performed by the method specified in 
Sec. 80.330(d).
    (iii) The butane blender must obtain a copy of the butane 
supplier's test results, at the time of each transfer of butane to the 
butane blender, that reflect the sulfur content of each load of butane 
supplied to the butane blender.
    (3) The sulfur content and volume of each batch of gasoline 
produced must be that of the butane the refiner blends into gasoline 
for purposes of calculating compliance with the standards in 
Sec. 80.195.
    (4) The refiner must conduct a quality assurance program of 
sampling and testing for each butane supplier that demonstrates the 
butane sulfur content does not exceed 30 ppm. The frequency of butane 
sampling and testing, for each butane supplier, must be one sample for 
every 500,000 gallons of butane received, or one sample every 3 months, 
whichever results in more frequent sampling.
    (5) If any of the requirements of this section are not met, in 
whole or in part, for any butane blended into gasoline, that butane is 
deemed in violation of the gasoline sulfur standards in Sec. 80.195.


Sec. 80.345  [Reserved]


Sec. 80.350  What alternative sulfur standards, sampling and testing 
requirements apply to importers who transport gasoline by truck?

    Importers who import gasoline into the United States by truck, as 
an alternative to the requirements to sample and test every batch of 
gasoline under Sec. 80.330(a), and the annual sulfur average and per-
gallon cap standards otherwise applicable to importers under 
Sec. 80.195, may instead comply with the following requirements:
    (a) Per-gallon standard. The imported gasoline must meet a sulfur 
standard of 30 ppm on a per-gallon basis.
    (b) Terminal testing. The terminal operator must demonstrate the 
gasoline does not exceed 30 ppm sulfur on a per-gallon basis, through 
testing of the gasoline contained in the storage tank from which the 
trucks used to transport gasoline into the United States are loaded.

[[<strong>Page</strong> 26117]]

    (1) This sampling and testing must be performed after each receipt 
of gasoline into the storage tank, or immediately before each transfer 
of gasoline to the importer's truck.
    (2) The sampling and testing must be performed using the methods 
specified in Sec. 80.330.
    (3) At the time of each transfer of gasoline to the importer's 
truck, the importer must obtain a copy of the terminal test result that 
indicates the sulfur content of each truck load of gasoline that is 
imported into the United States.
    (c) Quality assurance program. The importer must conduct a quality 
assurance program, as specified in this paragraph, for each truck 
loading terminal.
    (1) Quality assurance samples must be obtained from the truck-
loading terminal and tested by the importer, or by an independent 
laboratory, and the terminal operator must not know in advance when 
samples are to be collected.
    (2) The sampling and testing must be performed using the methods 
specified in Sec. 80.330.
    (3) The quality assurance test results for sulfur must be within 12 
ppm of the terminal's test results.
    (4) The frequency of the quality assurance sampling and testing 
must be at least one sample for each fifty of an importer's trucks that 
are loaded at a terminal, or one sample per month, whichever is more 
frequent.
    (d) Instead of conducting the quality assurance program specified 
in paragraph (c) of this section an importer may meet the quality 
assurance program requirement if the sampling and testing requirements 
of paragraph (b) of this section are conducted by an independent 
laboratory that meets the requirements in Sec. 80.65(f)(2)(iii).
    (e) The importer must treat each truck load of imported gasoline as 
a separate batch for purposes of assigning batch numbers and 
maintaining records under Sec. 80.365, and reporting under Sec. 80.370.
    (f) EPA inspectors or auditors, and auditors conducting attest 
engagements under Sec. 80.415, must be given full and immediate access 
to the truck-loading terminal and any laboratory at which samples of 
gasoline collected at the terminal are analyzed, and must be allowed to 
conduct inspections, review records, collect gasoline samples, and 
perform audits. These inspections or audits may be either announced or 
unannounced.
    (g) This section does not apply to Certified Sulfur-FRGAS.
    (h) If any of the requirements of this section are not met, all 
gasoline imported by the truck importer during the time any 
requirements are not met is deemed in violation of the gasoline sulfur 
average and per-gallon cap standards in Sec. 80.195. In addition, the 
truck importer may not in the future use the sampling and testing 
provisions in this section in lieu of the provisions in Sec. 80.330.


Sec. 80.355  [Reserved]

Recordkeeping and Reporting Requirements


Sec. 80.360  What are the product transfer document requirements?

    (a) On each occasion that any person transfers custody of or title 
to S-RGAS, as defined in Sec. 80.210, other than when S-RGAS is sold or 
dispensed for use in motor vehicles at a retail outlet or wholesale 
purchaser-consumer facility, the product transfer documents must 
include a statement identifying the gasoline as S-RGAS and the 
applicable downstream cap under Sec. 80.210(b).
    (b) Except for transfers to truck carriers, retailers and wholesale 
purchaser-consumers, product codes may be used to convey the 
information required by this section if such codes are clearly 
understood by each transferee.


Sec. 80.365  What records must be kept?

    (a) Records that must be kept. Beginning January 1, 2004, any 
person who sells, offers for sale, dispenses, distributes, supplies, 
offers for supply, stores, or transports gasoline, must keep the 
following records:
    (1) The product transfer documents required under Secs. 80.106, 
80.77 and 80.360;
    (2) For any sampling and testing for sulfur content conducted:
    (i) The location, date, time and storage tank or truck 
identification for each sample collected;
    (ii) The name and title of the person who collected the sample and 
the person who performed the testing;
    (iii) The results of the tests for sulfur content and the test 
volume; and
    (3) Reasonable business records documenting the actions you took to 
stop the sale or distribution of any gasoline found not to be in 
compliance with the sulfur standards specified in this subpart, and the 
actions you took to identify the cause of any noncompliance and prevent 
future instances of noncompliance.
    (b) Additional records that refiners and importers must keep. 
Beginning October 1, 2003, or January 1 of the first year of early 
credit generation for refiners and importers generating credits under 
Sec. 80.305, refiners and importers must keep records that include the 
following information:
    (1) The volume of each batch of gasoline produced or imported;
    (2) For credit generation, the information required by paragraph 
(a)(2) of this section as well as the information required under 
Sec. 80.305(a)(5) and Sec. 80.310(c);
    (3) The batch number assigned to each batch of gasoline under 
Sec. 80.65(d)(3); however, if composite samples that represent multiple 
batches of conventional gasoline for anti-dumping purposes are used, a 
separate batch number must be assigned to each batch for purposes of 
this subpart;
    (4) The date of production or importation of each batch of gasoline 
produced or imported;
    (5) The calculations and records used in making the calculations to 
determine compliance with the applicable sulfur standard on average, 
including compliance with the debit provision of this subpart and 
records regarding the generation, use, transfer, and banking of credits 
under Secs. 80.195, 80.305, 80.310 and 80.315; and
    (6) A copy of all reports and other documents submitted to the EPA 
pursuant to the requirements of this subpart.
    (c) Additional records importers must keep. Importers must maintain 
documentation which verifies the source of each batch of certified 
Sulfur-FRGAS and non-certified Sulfur-FRGAS imported.
    (d) Length of time records must be kept. The records required in 
paragraphs (a), (b) and (c) of this section must be maintained for five 
years from the date they were created, except for the following:
    (1) For any person who generates credits, and/or uses the credits 
so generated, the records required by paragraphs (a), (b) and (c) of 
this section must be retained for five years from the date the credits 
were used, and in no case must the records be retained for more than 
ten years from the year they were generated.
    (2) In the case of credits that were transferred between two 
parties, both parties must retain records of those credits for ten 
years from the date the credits were generated.
    (e) Make records available to EPA. The records required in 
paragraphs (a), (b) and (c) of this section must be made available to 
the Administrator or the Administrator's authorized representative upon 
request.


Sec. 80.370  What are the annual reporting requirements?

    Beginning with the 2004 averaging period, or the first year of 
credit

[[<strong>Page</strong> 26118]]

generation for refiners and importers generating early credits under 
Sec. 80.305, and continuing for each averaging period thereafter, 
refiners and importers must submit to the Administrator a report that 
contains the information required in this section and such other 
information as EPA may require. A refiner's annual reports for 2004 and 
2005 must include the refiner's RFG and conventional gasoline 
production for all refineries during the averaging period. Beginning in 
2006 and thereafter, a refiner must submit a separate annual report for 
each refinery that produced gasoline during the averaging period. An 
importer must submit a report for all of the gasoline imported during 
the averaging period no later than the last day of February following 
the previous year's averaging period.
    (a) Information required in a refiner's report. For refiners, the 
annual sulfur averaging report must include the following information:
    (1) The EPA refiner and refinery facility registration numbers;
    (2) The total gallons of gasoline (winter reformulated, summer 
reformulated, and conventional) produced at the refinery or aggregation 
of refineries;
    (3) The annual average sulfur content of the gasoline (winter 
reformulated, summer reformulated, and conventional) produced at the 
refinery, or aggregation of refineries, in parts per million;
    (4) For each batch of gasoline produced during the averaging 
period:
    (i) The batch number assigned under Sec. 80.65(d)(3); however, if 
composite samples that represent multiple batches of conventional 
gasoline are tested for conventional gasoline, a separate batch number 
must be assigned to each batch, using the batch numbering procedures 
specified in Sec. 80.65(d)(3);
    (ii) The date the batch was produced;
    (iii) The volume of the batch;
    (iv) The sulfur content of the batch as determined under 
Sec. 80.330;
    (v) The information on individual batches submitted to EPA under 
Sec. 80.75(a)(2) and 80.105(a)(5) satisfies the requirements of this 
paragraph (a)(4) unless compositing of samples is used for anti-dumping 
rule batch reporting under Sec. 80.105(a)(5);
    (5) A refiner's annual report for 2004 and 2005 must include the 
refiner's winter reformulated RFG, summer RFG, and conventional 
gasoline for all refineries during the averaging period;
    (6) Beginning in 2006 and thereafter, a refiner must submit a 
separate annual report for each of its refineries that produced 
gasoline during the averaging period.
    (b) Information required in an importer's report. An importer must 
submit a report for all the gasoline it imported during the averaging 
period. The report must include the following information:
    (1) The EPA importer registration number;
    (2) The total gallons of gasoline (reformulated and conventional) 
imported during the averaging period, excluding certified Sulfur-FRGAS;
    (3) The annual average sulfur content of the gasoline (reformulated 
and conventional) imported during the averaging period, excluding 
certified Sulfur-FRGAS, in parts per million;
    (4) For gasoline imported during the averaging period from any 
small foreign refiner who has an EPA approved individual baseline under 
the small refiner provisions at Sec. 80.410, include the following 
information:
    (i) The EPA refiner and refinery registration numbers of each such 
small foreign refiner and refinery facility; and
    (ii) The total gallons of certified Sulfur-FRGAS and non-certified 
Sulfur-FRGAS imported from each such small foreign refiner;
    (5) The batch information required in paragraph (a)(4) of this 
section.
    (c) Sulfur credit program activity. Refiners and importers who 
generate, bank, transfer, or use sulfur credits must submit to EPA an 
annual report in accordance with the provisions of Sec. 80.320.
    (d) The report must state the debit for the current year, as 
applicable, and credits applied to the previous compliance year's 
debit, as applicable.
    (e) Report submission. Each annual report required under this 
section must be:
    (1) Signed and certified as meeting all of the applicable 
requirements of this subpart H by the owner or a responsible corporate 
officer of the refiner or importer; and
    (2) Submitted to EPA no later than the last day of February for the 
prior calendar year averaging period.
    (f) Attest reports. Attest reports for refiner and importer attest 
engagements must be submitted to the Administrator by May 30 of each 
year under Sec. 80.415.

Exemptions


Sec. 80.375  What requirements apply to California gasoline?

    (a) Definition. For purposes of this subpart, California gasoline 
is defined under Sec. 80.81(a)(2).
    (b) California gasoline exemptions. California gasoline is exempt 
from all requirements of this subpart with the exception of the 
segregation requirement described in paragraph (c) of this section and 
the product transfer document requirements described in paragraph (d) 
of this section.
    (c) Segregation requirement. California gasoline produced at a 
refinery located outside of the state of California must be kept 
segregated from all gasoline that is not California gasoline at all 
points in the distribution system.
    (d) Product transfer documents. For California gasoline produced at 
a refinery located outside the state of California, the transferors and 
transferees must comply with the product transfer document requirements 
in Sec. 80.81(g).
    (e) Use of California test methods and off site sampling 
procedures. Any refiner of gasoline produced in California or importer 
of gasoline imported into California whose gasoline is used outside of 
California may:
    (1) Use the sampling and testing methods approved in Title 13 of 
the California Code of Regulations, as permitted under Sec. 80.81(h)(1) 
as an alternative to the sampling and testing methods required by 
Sec. 80.330; and
    (2) Determine the sulfur content of gasoline at off site tankage as 
permitted in Sec. 80.81(h)(2).


Sec. 80.380  What are the requirements for obtaining an exemption for 
gasoline used for research, development or testing purposes?

    (a) R&amp;D application. Any person may request an exemption from the 
provisions of this subpart for gasoline used for research, development 
or testing (``R&amp;D'') purposes by submitting an application that 
includes all the information listed in paragraph (c) of this section 
to:

Director (6406J), Fuels and Energy Division, U.S. Environmental 
Protection Agency, 401 M Street SW, Washington, DC 20460; and
Director (2242A), Air Enforcement Division, U.S. Environmental 
Protection Agency, 401 M Street, SW, Washington, DC 20460.

    (b) Criteria for an R&amp;D exemption. For an R&amp;D exemption to be 
granted, the proposed test program must:
    (1) Have a purpose that constitutes an appropriate basis for 
exemption;
    (2) Necessitate the granting of an exemption;
    (3) Be reasonable in scope; and
    (4) Have a degree of control consistent with the purpose of the 
program and EPA's monitoring requirements.
    (c) Information required to be submitted. To demonstrate each of 
the four elements in paragraphs (b)(1) through (4) of this section, the

[[<strong>Page</strong> 26119]]

application required under paragraph (a) of this section must include 
the following information:
    (1) A concise statement of the purpose of the program demonstrating 
that the program has an appropriate R&amp;D purpose.
    (2) An explanation of why the stated purpose of the program cannot 
be achieved in a practicable manner without performing one or more of 
the prohibited acts under Sec. 80.385.
    (3) To demonstrate the reasonableness of the scope of the program:
    (i) An estimate of the program's duration;
    (ii) An estimate of the maximum number of vehicles or engines 
involved in the program;
    (iii) The time or mileage duration of the program;
    (iv) The range of sulfur content of the gasoline expected to be 
used in the program, in ppm; and
    (v) The quantity of gasoline which exceeds the applicable sulfur 
standard that is expected to be used in the program.
    (4) With regard to control, a demonstration that the program 
affords EPA a monitoring capability, including at a minimum:
    (i) The technical nature of the program;
    (ii) The site(s) of the program (including street address, city, 
county, State, and zip code);
    (iii) The manner in which information on vehicles and engines used 
in the program will be recorded and made available to the 
Administrator;
    (iv) The manner in which results of the program will be recorded 
and made available to the Administrator;
    (v) The manner in which information on the gasoline used in the 
program (including quantity, sulfur content, name, address, telephone 
number and contact person of the supplier, and the date received from 
the supplier), will be recorded and made available to the 
Administrator;
    (vi) The manner in which distribution pumps will be labeled to 
insure proper use of the gasoline;
    (vii) The name, address, telephone number and title of the 
person(s) in the organization requesting an exemption from whom further 
information on the application may be obtained; and
    (viii) The name, address, telephone number and title of the 
person(s) in the organization requesting an exemption who is 
responsible for recording and making available the information 
specified in paragraphs (b)(4)(iii), (iv) and (v) of this section, and 
the location in which such information will be maintained.
    (d) Additional requirements. (1) The product transfer documents 
associated with R&amp;D gasoline must identify the gasoline as such, and 
must state that the gasoline is to be used only for research, 
development, or testing purposes.
    (2) The R&amp;D gasoline must be kept segregated from non-exempt 
gasoline at all points in distribution of the gasoline.
    (3) The R&amp;D gasoline must not be sold, distributed, offered for 
sale or distribution, dispensed, supplied, offered for supply, 
transported to or from, or stored by a gasoline retail outlet, or by a 
wholesale purchaser-consumer facility, unless the wholesale purchaser-
consumer facility is associated with the R&amp;D program that uses the 
gasoline.
    (e) Memorandum of exemption. The Administrator will grant an R&amp;D 
exemption upon a demonstration that the requirements of this section 
have been met. The R&amp;D exemption will be granted in the form of a 
memorandum of exemption signed by the applicant and the Administrator 
(or delegate), which will include such terms and conditions as the 
Administrator determines necessary to monitor the exemption and to 
carry out the purposes of this section. Any violation of such a term or 
condition of the exemption or any requirement under this section will 
cause the exemption to be void ab initio.

Violation Provisions


Sec. 80.385  What acts are prohibited under the gasoline sulfur 
program?

    No person may:
    (a) Produce or import gasoline that does not comply with the 
applicable sulfur average standards at Sec. 80.195 or Sec. 80.240.
    (b) Produce, import, sell, offer for sale, dispense, supply, offer 
for supply, store or transport gasoline that does not comply with the 
applicable sulfur cap standards at Sec. 80.195, Sec. 80.210 or 
Sec. 80.240.
    (c) Cause another person to commit an act in violation of paragraph 
(b) of this section.
    (d) Cause gasoline that does not comply with an applicable refiner/
importer or downstream cap standard under Sec. 80.195, Sec. 80.210 or 
Sec. 80.240 to be in the gasoline distribution system.


Sec. 80.390  What evidence may be used to determine compliance with the 
prohibitions and requirements of this subpart and liability for 
violations of this subpart?

    (a) Compliance with the sulfur standards of this subpart must be 
determined based on the sulfur level of the gasoline, measured using 
the methodologies specified in Sec. 80.330. Any evidence or 
information, including the exclusive use of such evidence or 
information, may be used to establish the sulfur level of gasoline if 
the evidence or information is relevant to whether the sulfur level of 
gasoline would have been in compliance with the standards if the 
appropriate sampling and testing methodology had been correctly 
performed. Such evidence may be obtained from any source or location 
and may include, but is not limited to, test results using methods 
other than those specified in Sec. 80.330, business records, and 
commercial documents.
    (b) Determination of compliance with the requirements of this 
subpart other than the sulfur standards, and determination of liability 
for any violation of this subpart, are based on probative evidence or 
information obtained from any source or location. Such evidence may 
include, but is not limited to, business records and commercial 
documents.


Sec. 80.395  Who is liable for violations under the gasoline sulfur 
program?

    (a) Persons liable for violations of prohibited acts. (1) Any 
refiner or importer who violates Sec. 80.385(a) is liable for the 
violation.
    (2) Any refiner, importer, distributor, reseller, carrier, retailer 
or wholesale purchaser-consumer who owned, leased, operated, controlled 
or supervised a facility where a violation of Sec. 80.385(b) occurred, 
is deemed in violation of Sec. 80.385(b).
    (3) Any refiner, importer, distributor, reseller, retailer, or 
wholesale purchaser-consumer who produced, imported, sold, offered for 
sale, dispensed, supplied, offered for supply, stored, transported, or 
caused the transportation or storage of gasoline that is the subject of 
a violation of Sec. 80.385(b), is deemed in violation of 
Sec. 80.385(c).
    (4) Any refiner or importer whose corporate, trade, or brand name, 
or whose marketing subsidiary's corporate, trade, or brand name 
appeared at a facility where a violation of Sec. 80.385(b) occurred, is 
deemed in violation of Sec. 80.385(b).
    (5) Any carrier who dispensed, supplied, stored, or transported 
gasoline which is the subject of a violation of Sec. 80.385(b), is 
deemed in violation of Sec. 80.385(c) provided that EPA demonstrates, 
by reasonably specific showing by direct or circumstantial evidence, 
that any such carrier caused the violation.
    (6) Any refiner, importer, distributor, reseller, or carrier who 
owned, leased, operated, controlled or supervised a facility from which 
gasoline that does

[[<strong>Page</strong> 26120]]

not comply with an applicable refiner/importer or downstream sulfur cap 
standard at Sec. 80.195, Sec. 80.210 or Sec. 80.240 was released into 
the distribution system, is deemed in violation of Sec. 80.385(d).
    (7) Any person who caused another party to violate Sec. 80.385(a), 
is liable for causing a violation of Sec. 80.385(a).
    (b) Persons liable for failure to meet other requirements of this 
subpart. (1) Any person who failed to meet a requirement of this 
subpart not addressed in paragraph (a) of this section is liable for a 
violation of that requirement.
    (2) Any person who caused another person to fail to meet a 
requirement of this subpart not addressed in paragraph (a) of this 
section is liable for causing a violation of that requirement.


Sec. 80.400  What defenses apply to persons deemed liable for a 
violation of a prohibited act?

    (a) Any person deemed liable for a violation of a prohibition under 
Sec. 80.395(a), will not be deemed in violation if the person 
demonstrates:
    (1) That the violation was not caused by the person or the person's 
employee or agent; and
    (2) That the person conducted a quality assurance sampling and 
testing program, as described in paragraph (d) of this section. A 
carrier may rely on the quality assurance program carried out by 
another party, including the party who owns the gasoline in question, 
provided that the quality assurance program is carried out properly. 
Retailers and wholesale purchaser-consumers are not required to conduct 
quality assurance programs.
    (b) In the case of a violation found at a facility operating under 
the corporate, trade or brand name of a refiner or importer, or a 
refiner's or importer's marketing subsidiary, the refiner or importer 
must show, in addition to the defense elements required by paragraph 
(a) of this section, that the violation was caused by:
    (1) An act in violation of law (other than the Clean Air Act or 
this Part 80), or an act of sabotage or vandalism;
    (2) The action of any refiner, importer, retailer, distributor, 
reseller, carrier, retailer or wholesale purchaser-consumer in 
violation of a contractual agreement between the branded refiner or 
importer and the person designed to prevent such action, and despite 
periodic sampling and testing by the branded refiner or importer to 
ensure compliance with such contractual obligation; or
    (3) The action of any carrier or other distributor not subject to a 
contract with the refiner or importer, but engaged for transportation 
of gasoline, despite specifications or inspections of procedures and 
equipment which are reasonably calculated to prevent such action.
    (c) Under paragraph (a) of this section, for any person to show 
that the violation was not caused by it, or under paragraph (b) of this 
section, to show that the violation was caused by any of the specified 
actions, the person must demonstrate by reasonably specific showing, by 
direct or circumstantial evidence, that the violation was caused or 
must have been caused by another person and that the person asserting 
the defense did not contribute to that other person's causation.
    (d) Quality assurance program. To demonstrate an acceptable quality 
assurance program under paragraph (a)(2) of this section, a person must 
present evidence of the following:
    (1) A periodic sampling and testing program to ensure the gasoline 
the person sold, dispensed, supplied, stored, or transported, meets the 
applicable sulfur standard;
    (2) On each occasion when gasoline is found not in compliance with 
the applicable sulfur standard:
    (i) The person immediately ceases selling, offering for sale, 
dispensing, supplying, offering for supply, storing or transporting the 
non-complying product; and
    (ii) The person promptly remedies the violation and the factors 
that caused the violation (for example, by removing the non-complying 
product from the distribution system until the applicable standard is 
achieved and taking steps to prevent future violations of a similar 
nature from occurring); and
    (3) Any carrier who transports gasoline in a tank truck, the 
quality assurance program required under this paragraph (d) of this 
section is not required to include periodic sampling and testing of 
gasoline in the tank truck, but instead of such sampling and testing, 
the carrier must present evidence of an oversight program relating to 
the transport or storage of gasoline by tank truck, such as appropriate 
guidance to drivers regarding compliance with the applicable sulfur 
standard and product transfer document requirements, and the periodic 
review of records received in the ordinary course of business 
concerning gasoline quality and delivery.


Sec. 80.405  What Penalties Am I Subject To?

    (a) Any person liable for a violation under Sec. 80.395, is subject 
to a civil penalty of not more than $27,500 for every day of each such 
violation and the amount of economic benefit or savings resulting from 
each violation.
    (b) Any person liable under Sec. 80.395(a) for a violation of the 
applicable sulfur average standard or causing another party to violate 
that standard during any averaging period, is subject to a separate day 
of violation for each and every day in the averaging period. Any person 
liable under Sec. 80.395(b) for a failure to fulfill any credit 
creation or transfer requirement, is subject to a separate day of 
violation for each and every day in the averaging period.
    (c)(1) Any person liable under Sec. 80.395(a) for causing gasoline 
that does not comply with an applicable refiner/importer or downstream 
sulfur cap standard to be in the gasoline distribution system in 
violation of Sec. 80.385(d), is subject to a separate day of violation 
for each and every day that the non-complying gasoline remains any 
place in the gasoline distribution system.
    (2) For purposes of paragraph (c) of this section, the length of 
time the gasoline in question remained in the gasoline distribution 
system is deemed to be twenty-five days, unless a person subject to 
liability or EPA demonstrates by reasonably specific showings, by 
direct or circumstantial evidence, that the non-complying gasoline 
remained in the gasoline distribution system for fewer than or more 
than twenty-five days.
    (d) Any person liable under Sec. 80.395(b) for failure to meet, or 
causing a failure to meet, a requirement of this subpart is liable for 
a separate day of violation for each and every day such requirement 
remains unfulfilled.

Provisions for Foreign Refiners With Individual Sulfur Baselines


Sec. 80.410  What are the additional requirements for gasoline produced 
at foreign refineries having individual small refiner sulfur baselines?

    (a) Definitions. (1) A foreign refinery is a refinery that is 
located outside the United States, the Commonwealth of Puerto Rico, the 
Virgin Islands, Guam, American Samoa, and the Commonwealth of the 
Northern Mariana Islands (collectively referred to in this section as 
``the United States'').
    (2) A foreign refiner is a person who meets the definition of 
refiner under Sec. 80.2(i) for foreign refinery.
    (3) A small foreign refiner is a refiner that meets the definition 
of a small refiner under Sec. 80.225.
    (4) ``Sulfur-FRGAS'' means gasoline produced at a foreign refinery 
that has been assigned an individual refinery

[[<strong>Page</strong> 26121]]

sulfur baseline and that is imported into the United States.
    (5) ``Non-Sulfur-FRGAS'' means gasoline that is produced at a 
foreign refinery that has not been assigned an individual refinery 
sulfur baseline, gasoline produced at a foreign refinery with an 
individual refinery sulfur baseline that is not imported into the 
United States, and gasoline produced at a foreign refinery with an 
individual sulfur baseline during a year when the foreign refiner has 
opted to not participate in the Sulfur-FRGAS program under paragraph 
(c)(3) of this section.
    (6) ``Certified Sulfur-FRGAS'' means Sulfur-FRGAS the foreign 
refiner intends to include in the foreign refinery's sulfur compliance 
calculations under Sec. 80.205, and does include in these compliance 
calculations when reported to EPA.
    (7) ``Non-Certified Sulfur-FRGAS'' means Sulfur-FRGAS that is not 
Certified Sulfur-FRGAS.
    (b) Baseline establishment. Any foreign refiner that meets the 
definition of small under Sec. 80.225, may submit to a petition to the 
Administrator for an individual refinery sulfur baseline, under 
Sec. 80.235 by June 1, 2002.
    (1) The baseline for a foreign refinery must reflect only the 
volume and properties of gasoline produced in 1997 and 1998 that was 
imported into the United States.
    (2) In making determinations for foreign refinery baselines EPA 
will consider all information supplied by a foreign refiner, and in 
addition may rely on any and all appropriate assumptions necessary to 
make such a determination.
    (3) Where a foreign refiner submits a petition that is incomplete 
or inadequate to establish an accurate baseline, and the refiner fails 
to cure this defect after a request for more information, then EPA will 
not assign an individual refinery sulfur baseline.
    (c) General requirements for foreign refiners with individual 
refinery sulfur baselines. A foreign refiner of a refinery that has 
been assigned an individual sulfur baseline under paragraph (b) of this 
section must designate all gasoline produced at the foreign refinery 
that is exported to the United States as either Certified Sulfur-FRGAS 
or as Non-Certified Sulfur-FRGAS, except as provided in paragraph 
(c)(3) of this section.
    (1) In the case of Certified Sulfur-FRGAS, the foreign refiner must 
meet all requirements that apply to refiners under this subpart.
    (2) In the case of Non-Certified Sulfur-FRGAS, the foreign refiner 
must meet all the following requirements:
    (i) The designation requirements in this section.
    (ii) The recordkeeping requirements in Secs. 80.360 and 80.365.
    (iii) The reporting requirements in Sec. 80.370 and this section.
    (iv) The product transfer document requirements in this section.
    (v) The prohibitions in this section and Sec. 80.385.
    (vi) The independent audit requirements in Sec. 80.415 and 
paragraph (h) of this section.
    (3)(i) Any foreign refiner that has been assigned an individual 
sulfur baseline for a foreign refinery under paragraph (b) of this 
section may elect to classify no gasoline imported into the United 
States as Sulfur-FRGAS, provided the foreign refiner notifies EPA of 
the election no later than November 1 of the prior calendar year.
    (ii) An election under paragraph (c)(3)(i) of this section must:
    (A) Be for an entire calendar year averaging period and apply to 
all gasoline produced during the calendar year at the foreign refinery 
that is used in the United States; and
    (B) Remain in effect for each succeeding calendar year averaging 
period, unless and until the foreign refiner notifies EPA of a 
termination of the election. The change in election takes effect at the 
beginning of the next calendar year.
    (d) Designation, product transfer documents, and foreign refiner 
certification. (1) Any foreign refiner of a foreign refinery that has 
been assigned an individual sulfur baseline must designate each batch 
of Sulfur-FRGAS as such at the time the gasoline is produced, unless 
the refiner has elected to classify no gasoline exported to the United 
States as Sulfur-FRGAS under paragraph (c)(3)(i) of this section.
    (2) On each occasion when any person transfers custody or title to 
any Sulfur-FRGAS prior to its being imported into the United States, 
they must include the following information as part of the product 
transfer document information in this section:
    (i) Identification of the gasoline as Certified Sulfur-FRGAS or as 
Non-Certified Sulfur-FRGAS; and
    (ii) The name and EPA refinery registration number of the refinery 
where the Sulfur-FRGAS was produced.
    (3) On each occasion when Sulfur-FRGAS is loaded onto a vessel or 
other transportation mode for transport to the United States, the 
foreign refiner must prepare a certification for each batch of the 
Sulfur-FRGAS that meets the following requirements:
    (i) The certification must include the report of the independent 
third party under paragraph (f) of this section, and the following 
additional information:
    (A) The name and EPA registration number of the refinery that 
produced the Sulfur-FRGAS;
    (B) The identification of the gasoline as Certified Sulfur-FRGAS or 
Non-Certified Sulfur-FRGAS, and for Certified Sulfur-FRGAS the 
information required by Sec. 80.360;
    (C) The volume of Sulfur-FRGAS being transported, in gallons;
    (D) A declaration that the Sulfur-FRGAS is being included in the 
compliance baseline calculations under Sec. 80.250 for the refinery 
that produced the Sulfur-FRGAS; and
    (E) In the case of Certified Sulfur-FRGAS:
    (1) The sulfur content as determined under paragraph (f) of this 
section; and
    (2) A declaration that the Sulfur-FRGAS is being included in the 
compliance calculations under Sec. 80.205 for the refinery that 
produced the Sulfur-FRGAS.
    (ii) The certification must be made part of the product transfer 
documents for the Sulfur-FRGAS.
    (e) Transfers of Sulfur-FRGAS to non-United States markets. The 
foreign refiner is responsible to ensure that all gasoline classified 
as Sulfur-FRGAS is imported into the United States. A foreign refiner 
may remove the Sulfur-FRGAS classification, and the gasoline need not 
be imported into the United States, but only if:
    (1)(i) The foreign refiner excludes:
    (A) The volume of gasoline from the refinery's compliance baseline 
calculations under Sec. 80.250; and
    (B) In the case of Certified Sulfur-FRGAS, the volume and sulfur 
content of the gasoline from the compliance calculations under 
Sec. 80.205;
    (ii) The exclusions under paragraph (e)(1)(i) of this section must 
be on the basis of the parameter and volumes determined under paragraph 
(f) of this section; and
    (2) The foreign refiner obtains sufficient evidence in the form of 
documentation that the gasoline was not imported into the United 
States.
    (f) Load port independent sampling, testing and refinery 
identification. (1) On each occasion Sulfur-FRGAS is loaded onto a 
vessel for transport to the United States a foreign refiner must have 
an independent third party:
    (i) Inspect the vessel prior to loading and determine the volume of 
any tank bottoms;
    (ii) Determine the volume of Sulfur-FRGAS loaded onto the vessel 
(exclusive of any tank bottoms present before vessel loading);

[[<strong>Page</strong> 26122]]

    (iii) Obtain the EPA-assigned registration number of the foreign 
refinery;
    (iv) Determine the name and country of registration of the vessel 
used to transport the Sulfur-FRGAS to the United States; and
    (v) Determine the date and time the vessel departs the port serving 
the foreign refinery.
    (2) On each occasion Certified Sulfur-FRGAS is loaded onto a vessel 
for transport to the United States a foreign refiner must have an 
independent third party:
    (i) Collect a representative sample of the Certified Sulfur-FRGAS 
from each vessel compartment subsequent to loading on the vessel and 
prior to departure of the vessel from the port serving the foreign 
refinery;
    (ii) Prepare a volume-weighted vessel composite sample from the 
compartment samples, and determine the value for sulfur using the 
methodology specified in Sec. 80.330 by:
    (A) The third party analyzing the sample; or
    (B) The third party observing the foreign refiner analyze the 
sample;
    (iii) Review original documents that reflect movement and storage 
of the certified Sulfur-FRGAS from the refinery to the load port, and 
from this review determine:
    (A) The refinery at which the Sulfur-FRGAS was produced; and
    (B) That the Sulfur-FRGAS remained segregated from:
    (1) Non-Sulfur-FRGAS and Non-Certified Sulfur-FRGAS; and
    (2) Other Certified Sulfur-FRGAS produced at a different refinery.
    (3) The independent third party must submit a report:
    (i) To the foreign refiner containing the information required 
under paragraphs (f)(1) and (2) of this section, to accompany the 
product transfer documents for the vessel; and
    (ii) To the Administrator containing the information required under 
paragraphs (f)(1) and (2) of this section, within thirty days following 
the date of the independent third party's inspection. This report must 
include a description of the method used to determine the identity of 
the refinery at which the gasoline was produced, assurance that the 
gasoline remained segregated as specified in paragraph (n)(1) of this 
section, and a description of the gasoline's movement and storage 
between production at the source refinery and vessel loading.
    (4) The independent third party must:
    (i) Be approved in advance by EPA, based on a demonstration of 
ability to perform the procedures required in this paragraph (f);
    (ii) Be independent under the criteria specified in 
Sec. 80.65(f)(2)(iii); and
    (iii) Sign a commitment that contains the provisions specified in 
paragraph (i) of this section with regard to activities, facilities and 
documents relevant to compliance with the requirements of this 
paragraph (f).
    (g) Comparison of load port and port of entry testing. (1)(i) Any 
foreign refiner and any United States importer of Certified Sulfur-
FRGAS must compare the results from the load port testing under 
paragraph (f) of this section, with the port of entry testing as 
reported under paragraph (o) of this section, for the volume of 
gasoline and the sulfur value; except that
    (ii) Where a vessel transporting Certified Sulfur-FRGAS off loads 
this gasoline at more than one United States port of entry, and the 
conditions of paragraph (g)(2)(i) of this section are met at the first 
United States port of entry, the requirements of paragraph (g)(2) of 
this section do not apply at subsequent ports of entry if the United 
States importer obtains a certification from the vessel owner, that 
meets the requirements of paragraph(s) of this section, that the vessel 
has not loaded any gasoline or blendstock between the first United 
States port of entry and the subsequent port of entry.
    (2)(i) The requirements of this paragraph (g)(2) apply if:
    (A) The temperature-corrected volumes determined at the port of 
entry and at the load port differ by more than one percent; or
    (B) The sulfur value determined at the port of entry is higher than 
the sulfur value determined at the load port, and the amount of this 
difference is greater than the reproducibility amount specified for the 
port of entry test result by the American Society of Testing and 
Materials (ASTM).
    (ii) The United States importer and the foreign refiner must treat 
the gasoline as Non-Certified Sulfur-FRGAS, and the foreign refiner 
must:
    (A) Exclude the gasoline volume and properties from its gasoline 
sulfur compliance calculations under Sec. 80.205; and
    (B) Include the gasoline volume in its compliance baseline 
calculation under Sec. 80.250.
    (h) Attest requirements. The following additional procedures must 
be carried out by any foreign refiner of Sulfur-FRGAS as part of the 
attest engagement for each foreign refinery under Sec. 80.415:
    (1) The inventory reconciliation analysis under Sec. 80.128(b) and 
the tender analysis under Sec. 80.128(c) must include Non-Sulfur-FRGAS 
in addition to the gasoline types listed in Sec. 80.128(b) and (c).
    (2) Obtain separate listings of all tenders of Certified Sulfur-
FRGAS, and of Non-Certified Sulfur-FRGAS. Agree the total volume of 
tenders from the listings to the gasoline inventory reconciliation 
analysis in Sec. 80.128(b), and to the volumes determined by the third 
party under paragraph (f)(1) of this section.
    (3) For each tender under paragraph (h)(2) of this section where 
the gasoline is loaded onto a marine vessel, report as a finding the 
name and country of registration of each vessel, and the volumes of 
Sulfur-FRGAS loaded onto each vessel.
    (4) Select a sample from the list of vessels identified in 
paragraph (h)(3) of this section used to transport Certified Sulfur-
FRGAS, in accordance with the guidelines in Sec. 80.127, and for each 
vessel selected perform the following:
    (i) Obtain the report of the independent third party, under 
paragraph (f) of this section, and of the United States importer under 
paragraph (o) of this section.
    (A) Agree the information in these reports with regard to vessel 
identification, gasoline volumes and test results.
    (B) Identify, and report as a finding, each occasion the load port 
and port of entry parameter and volume results differ by more than the 
amounts allowed in paragraph (g) of this section, and determine whether 
the foreign refiner adjusted its refinery calculations as required in 
paragraph (g) of this section.
    (ii) Obtain the documents used by the independent third party to 
determine transportation and storage of the Certified Sulfur-FRGAS from 
the refinery to the load port, under paragraph (f) of this section. 
Obtain tank activity records for any storage tank where the Certified 
Sulfur-FRGAS is stored, and pipeline activity records for any pipeline 
used to transport the Certified Sulfur-FRGAS, prior to being loaded 
onto the vessel. Use these records to determine whether the Certified 
Sulfur-FRGAS was produced at the refinery that is the subject of the 
attest engagement, and whether the Certified Sulfur-FRGAS was mixed 
with any Non-Certified Sulfur-FRGAS, Non-Sulfur-FRGAS, or any Certified 
Sulfur-FRGAS produced at a different refinery.
    (5) Select a sample from the list of vessels identified in 
paragraph (h)(3) of this section used to transport certified and Non-
Certified Sulfur-FRGAS, in accordance with the guidelines in 
Sec. 80.127, and for each vessel selected perform the following:

[[<strong>Page</strong> 26123]]

    (i) Obtain a commercial document of general circulation that lists 
vessel arrivals and departures, and that includes the port and date of 
departure of the vessel, and the port of entry and date of arrival of 
the vessel.
    (ii) Agree the vessel's departure and arrival locations and dates 
from the independent third party and United States importer reports to 
the information contained in the commercial document.
    (6) Obtain separate listings of all tenders of Non-Sulfur-FRGAS, 
and perform the following:
    (i) Agree the total volume of tenders from the listings to the 
gasoline inventory reconciliation analysis in Sec. 80.128(b).
    (ii) Obtain a separate listing of the tenders under this paragraph 
(h)(6) where the gasoline is loaded onto a marine vessel. Select a 
sample from this listing in accordance with the guidelines in 
Sec. 80.127, and obtain a commercial document of general circulation 
that lists vessel arrivals and departures, and that includes the port 
and date of departure and the ports and dates where the gasoline was 
off loaded for the selected vessels. Determine and report as a finding 
the country where the gasoline was off loaded for each vessel selected.
    (7) In order to complete the requirements of this paragraph (h) an 
auditor must:
    (i) Be independent of the foreign refiner;
    (ii) Be licensed as a Certified Public Accountant in the United 
States and a citizen of the United States, or be approved in advance by 
EPA based on a demonstration of ability to perform the procedures 
required in Sec. 80.125 through 130 and this paragraph (h); and
    (iii) Sign a commitment that contains the provisions specified in 
paragraph (i) of this section with regard to activities and documents 
relevant to compliance with the requirements of Sec. 80.125 through 
80.130 and this paragraph (h).
    (i) Foreign refiner commitments. Any foreign refiner must commit to 
and comply with the provisions contained in this paragraph (i) as a 
condition to being assigned an individual refinery sulfur baseline.
    (1) Any United States Environmental Protection Agency inspector or 
auditor must be given full, complete and immediate access to conduct 
inspections and audits of the foreign refinery.
    (i) Inspections and audits may be either announced in advance by 
EPA, or unannounced.
    (ii) Access must be provided to any location where:
    (A) Gasoline is produced;
    (B) Documents related to refinery operations are kept;
    (C) Gasoline or blendstock samples are tested or stored; and
    (D) Sulfur-FRGAS is stored or transported between the foreign 
refinery and the United States, including storage tanks, vessels and 
pipelines.
    (iii) Inspections and audits may be by EPA employees or contractors 
to EPA.
    (iv) Any documents requested that are related to matters covered by 
inspections and audits must be provided to an EPA inspector or auditor 
on request.
    (v) Inspections and audits by EPA may include review and copying of 
any documents related to:
    (A) Refinery baseline establishment, including the volume and 
sulfur content, and transfers of title or custody, of any gasoline or 
blendstocks, whether Sulfur-FRGAS or Non-Sulfur-FRGAS, produced at the 
foreign refinery during the period January 1, 1997 through the date of 
the refinery baseline petition or through the date of the inspection or 
audit if a baseline petition has not been approved, and any work papers 
related to refinery baseline establishment;
    (B) The volume and sulfur content of Sulfur-FRGAS;
    (C) The proper classification of gasoline as being Sulfur-FRGAS or 
as not being Sulfur-FRGAS, or as Certified Sulfur-FRGAS or as Non-
Certified Sulfur-FRGAS;
    (D) Transfers of title or custody to Sulfur-FRGAS;
    (E) Sampling and testing of Sulfur-FRGAS;
    (F) Worked performed and reports prepared by independent third 
parties and by independent auditors under the requirements of this 
section and Sec. 80.415, including work papers; and
    (G) Reports prepared for submission to EPA, and any work papers 
related to such reports.
    (vi) Inspections and audits by EPA may include taking samples of 
gasoline or blendstock, and interviewing employees.
    (vii) Any employee of the foreign refiner must be made available 
for interview by the EPA inspector or auditor, on request, within a 
reasonable time period.
    (viii) English language translations of any documents must be 
provided to an EPA inspector or auditor, on request, within 10 working 
days.
    (ix) English language interpreters must be provided to accompany 
EPA inspectors and auditors, on request.
    (2) An agent for service of process located in the District of 
Columbia must be named, and service on this agent constitutes service 
on the foreign refiner or any employee of the foreign refiner for any 
action by EPA or otherwise by the United States related to the 
requirements of this subpart.
    (3) The forum for any civil or criminal enforcement action related 
to the provisions of this section for violations of the Clean Air Act 
or regulations promulgated thereunder are governed by the Clean Air 
Act, including the EPA administrative forum where allowed under the 
Clean Air Act.
    (4) United States substantive and procedural laws apply to any 
civil or criminal enforcement action against the foreign refiner or any 
employee of the foreign refiner related to the provisions of this 
section.
    (5) Submitting a petition for an individual refinery sulfur 
baseline, producing and exporting gasoline under an individual refinery 
sulfur baseline, and all other actions to comply with the requirements 
of this subpart relating to the establishment and use of an individual 
refinery sulfur baseline constitute actions or activities that satisfy 
the provisions of 28 U.S.C. 1605(a)(2), but solely with respect to 
actions instituted against the foreign refiner, its agents and 
employees in any court or other tribunal in the United States for 
conduct that violates the requirements applicable to the foreign 
refiner under this subpart, including conduct that violates 18 U.S.C. 
1001 and Clean Air Act section 113(c)(2).
    (6) The foreign refiner, or its agents or employees, must not 
detain or impose civil or criminal remedies against EPA inspectors or 
auditors, whether EPA employees or EPA contractors, for actions 
performed within the scope of EPA employment related to the provisions 
of this section.
    (7) The commitment required by this paragraph (i) must be signed by 
the owner or president of the foreign refiner business.
    (8) In any case where Sulfur-FRGAS produced at a foreign refinery 
is stored or transported by another company between the refinery and 
the vessel that transports the Sulfur-FRGAS to the United States, the 
foreign refiner must obtain from each such other company a commitment 
that meets the requirements specified in paragraphs (i)(1) through (7) 
of this section, and these commitments must be included in the foreign 
refiner's baseline petition.
    (j) Sovereign immunity. By submitting a petition for an individual 
foreign refinery baseline under this section, or by producing and 
exporting gasoline to the United States under an individual refinery 
sulfur baseline under this section, the foreign refiner, its agents

[[<strong>Page</strong> 26124]]

and employees, without exception, become subject to the full operation 
of the administrative and judicial enforcement powers and provisions of 
the United States without limitation based on sovereign immunity, with 
respect to actions instituted against the foreign refiner, its agents 
and employees in any court or other tribunal in the United States for 
conduct that violates the requirements applicable to the foreign 
refiner under this subpart, including conduct that violates 18 U.S.C. 
1001 and Clean Air Act section 113(c)(2).
    (k) Bond posting. Any foreign refiner must meet the requirements of 
this paragraph (k) as a condition to being assigned an individual 
refinery sulfur baseline.
    (1) The foreign refiner must post a bond of the amount calculated 
using the following equation:

Bond = G  x  $0.01

Where:

Bond = Amount of the bond in U. S. dollars.
G = The largest volume of gasoline produced at the foreign refinery and 
exported to the United States, in gallons, during a single calendar 
year among the most recent of the following calendar years, up to a 
maximum of five calendar years: the calendar year immediately preceding 
the date the baseline petition is submitted, the calendar year the 
baseline petition is submitted, and each succeeding calendar year.

    (2) Bonds must be posted by:
    (i) Paying the amount of the bond to the Treasurer of the United 
States;
    (ii) Obtaining a bond in the proper amount from a third party 
surety agent that is payable to satisfy United States administrative or 
judicial judgments against the foreign refiner, provided EPA agrees in 
advance as to the third party and the nature of the surety agreement; 
or
    (iii) An alternative commitment that results in assets of an 
appropriate liquidity and value being readily available to the United 
States, provided EPA agrees in advance as to the alternative 
commitment.
    (3) If the bond amount for a foreign refinery increases the foreign 
refiner must increase the bond to cover the shortfall within 90 days of 
the date the bond amount changes. If the bond amount decreases, the 
foreign refiner may reduce the amount of the bond beginning 90 days 
after the date the bond amount changes.
    (4) Bonds posted under this paragraph (k) must be used to satisfy 
any judicial judgment that results from an administrative or judicial 
enforcement action for conduct in violation of this subpart, including 
where such conduct violates 18 U.S.C. 1001 and Clean Air Act section 
113(c)(2).
    (5) On any occasion a foreign refiner bond is used to satisfy any 
judgment, the foreign refiner must increase the bond to cover the 
amount used within 90 days of the date the bond is used.
    (l) [Reserved]
    (m) English language reports. Any report or other document 
submitted to EPA by an foreign refiner must be in English language, or 
must include an English language translation.
    (n) Prohibitions. (1) No person may combine Certified Sulfur-FRGAS 
with any Non-Certified Sulfur-FRGAS or Non-Sulfur-FRGAS, and no person 
may combine Certified Sulfur-FRGAS with any Certified Sulfur-FRGAS 
produced at a different refinery, except as provided in paragraph (e) 
of this section.
    (2) No foreign refiner or other person may cause another person to 
commit an action prohibited in paragraph (n)(1) of this section, or 
that otherwise violates the requirements of this section.
    (o) United States importer requirements. Any United States importer 
must meet the following requirements:
    (1) Each batch of imported gasoline must be classified by the 
importer as being Sulfur-FRGAS or as Non-Sulfur-FRGAS, and each batch 
classified as Sulfur-FRGAS must be further classified as Certified 
Sulfur-FRGAS or as Non-certified Sulfur-FRGAS.
    (2) Gasoline must be classified as Certified Sulfur-FRGAS or as 
Non-Certified Sulfur-FRGAS according to the designation by the foreign 
refiner if this designation is supported by product transfer documents 
prepared by the foreign refiner as required in paragraph (d) of this 
section, unless the gasoline is classified as Non-Certified Sulfur-
FRGAS under paragraph (g) of this section.
    (3) For each gasoline batch classified as Sulfur-FRGAS, any United 
States importer must perform the following procedures:
    (i) In the case of both Certified and Non-Certified Sulfur-FRGAS, 
have an independent third party:
    (A) Determine the volume of gasoline in the vessel;
    (B) Use the foreign refiner's Sulfur-FRGAS certification to 
determine the name and EPA-assigned registration number of the foreign 
refinery that produced the Sulfur-FRGAS;
    (C) Determine the name and country of registration of the vessel 
used to transport the Sulfur-FRGAS to the United States; and
    (D) Determine the date and time the vessel arrives at the United 
States port of entry.
    (ii) In the case of Certified Sulfur-FRGAS, have an independent 
third party:
    (A) Collect a representative sample from each vessel compartment 
subsequent to the vessel's arrival at the United States port of entry 
and prior to off loading any gasoline from the vessel;
    (B) Prepare a volume-weighted vessel composite sample from the 
compartment samples; and
    (C) Determine the sulfur value using the methodologies specified in 
Sec. 80.330, by:
    (1) The third party analyzing the sample; or
    (2) The third party observing the importer analyze the sample.
    (4) Any importer must submit reports within thirty days following 
the date any vessel transporting Sulfur-FRGAS arrives at the United 
States port of entry:
    (i) To the Administrator containing the information determined 
under paragraph (o)(3) of this section; and
    (ii) To the foreign refiner containing the information determined 
under paragraph (o)(3)(ii) of this section.
    (5) Any United States importer must meet the requirements specified 
in Sec. 80.195 for any imported gasoline that is not classified as 
Certified Sulfur-FRGAS under paragraph (o)(2) of this section.
    (p) [Reserved]
    (q) Withdrawal or suspension of a foreign refinery's baseline EPA 
may withdraw or suspend a baseline that has been assigned to a foreign 
refinery where:
    (1) A foreign refiner fails to meet any requirement of this 
section;
    (2) A foreign government fails to allow EPA inspections as provided 
in paragraph (i)(1) of this section;
    (3) A foreign refiner asserts a claim of, or a right to claim, 
sovereign immunity in an action to enforce the requirements in this 
subpart; or
    (4) A foreign refiner fails to pay a civil or criminal penalty that 
is not satisfied using the foreign refiner bond specified in paragraph 
(k) of this section.
    (r) Any refiner whose Sulfur-FRGAS is transported into the United 
States by truck may petition EPA to use alternative procedures to meet 
the requirements for certification under paragraph (d)(5) of this 
section, load port and port of entry sampling and testing under 
paragraphs (f) and (g) of this section, attest under paragraph (h) of 
this section and importer testing under paragraph (o)(3) of this 
section.

[[<strong>Page</strong> 26125]]

These alternative procedures must ensure Certified Sulfur-FRGAS remains 
segregated from Non-Certified Sulfur-FRGAS and from Non-Sulfur-FRGAS 
until it is imported into the United States. The petition will be 
evaluated based on whether it adequately addresses the following:
    (1) Provisions for monitoring pipeline shipments, if applicable, 
from the refinery, that ensure segregation of Certified Sulfur-FRGAS 
from that refinery from all other gasoline.
    (2) Contracts with any terminals and/or pipelines that receive and/
or transport Certified Sulfur-FRGAS, that prohibit the commingling of 
Certified Sulfur-FRGAS with any of the following:
    (i) Other Certified Sulfur-FRGAS from other refineries.
    (ii) All Non-Certified Sulfur-FRGAS.
    (iii) All Non-Sulfur-FRGAS.
    (3) Procedures for obtaining and reviewing truck loading records 
and United States import documents for Certified Sulfur-FRGAS to ensure 
that such gasoline is only loaded into trucks making deliveries to the 
United States.
    (4) Attest procedures to be conducted annually by an independent 
third party that review loading records and import documents based on 
volume reconciliation, or other criteria, to confirm that all Certified 
Sulfur-FRGAS remains segregated throughout the distribution system and 
is only loaded into trucks for import into the United States.
    (5) The petition required by this section must be submitted to EPA 
along with the application for small refiner status and individual 
refinery sulfur baseline and standards under Sec. 80.235 and this 
section.
    (s) Additional requirements for petitions, reports and 
certificates. Any petition for a refinery baseline under paragraph (b) 
of this section, any alternative procedures under paragraph (r) of this 
section, any report or other submission required by paragraphs (c), 
(f)(2), or (i) of this section, and any certification under paragraph 
(d)(3) of this section must be:
    (1) Submitted in accordance with procedures specified by the 
Administrator, including use of any forms that may specified by the 
Administrator.
    (2) Be signed by the president or owner of the foreign refiner 
company, or by that person's immediate designee, and must contain the 
following declaration:

    I hereby certify: (1) that I have actual authority to sign on 
behalf of and to bind [insert name of foreign refiner] with regard 
to all statements contained herein; (2) that I am aware that the 
information contained herein is being certified, or submitted to the 
United States Environmental Protection Agency, under the 
requirements of 40 CFR Part 80, subpart H and that the information 
is material for determining compliance under these regulations; and 
(3) that I have read and understand the information being certified 
or submitted, and this information is true, complete and correct to 
the best of my knowledge and belief after I have taken reasonable 
and appropriate steps to verify the accuracy thereof.
    I affirm that I have read and understand the provisions of 40 
CFR Part 80, subpart H, including 40 CFR Sec. 80.410 [insert name of 
foreign refiner]. Pursuant to Clean Air Act section 113(c) and Title 
18, United States Code, section 1001, the penalty for furnishing 
false, incomplete or misleading information in this certification or 
submission is a fine of up to $10,000, and/or imprisonment for up to 
five years.

Attest Engagements


Sec. 80.415  What are the attest engagement requirements for gasoline 
sulfur compliance?

    Refiners and importers, for each annual averaging period, must 
arrange to have an attest engagement performed of the underlying 
documentation that forms the basis of any report required under this 
section. The attest engagement must comply with the procedures and 
requirements that apply to refiners and importers under Secs. 80.125 
through 80.130, and must be submitted to the Administrator of EPA by 
May 30 of each year.

PART 85--CONTROL OF AIR POLLUTION FROM MOBILE SOURCES

    5. The authority citation for part 85 continues to read as follows:

    Authority: 42 U.S.C. 7521, 7522, 7524, 7525, 7541, 7542, 
7601(a).

    6. Section 85.1515 is amended by redesignating the existing 
paragraph (c) as paragraph (c)(1) and adding new paragraphs (c)(2), 
(c)(3), (c)(4) and (c)(5) to read as follows:


Sec. 85.1515  Emission standards and test procedures applicable to 
imported nonconforming motor vehicles and motor vehicle engines.

* * * * *
    (c)(1) * * *
    (2) The provisions of paragraph (c)(1) of this section 
notwithstanding, nonconforming light duty vehicles or light light-duty 
trucks (LDV/LLDTs) modified in model years 2004, 2005 or 2006 must meet 
the interim FTP exhaust and evaporative emission standards for light 
duty vehicles and light light-duty trucks specified in 40 CFR 86.1811-
04(l) and 86.1811-04(e)(5). Nonconforming LDT3s and LDT4s (HLDTs) 
modified in model years 2004 through 2008 must meet the interim non-
Tier 2 FTP exhaust and evaporative standards for HLDTs specified in 40 
CFR 86.1811-04(l) and 86.1811-04(e)(5). Optionally, independent 
commercial importers may elect to meet the Tier 2 FTP exhaust and 
evaporative emission standards set forth in 40 CFR 86.1811-04(c) and 
(e) during those years. ICIs are exempt from the Tier 2 and the interim 
non-Tier 2 phase-in percentage requirements described in 40 CFR 
86.1811-04.
    (3) Nonconforming light duty vehicles and light light-duty trucks 
(LDV/LLDTs) modified in model years 2007 or later must meet the exhaust 
and evaporative emission requirements set forth for all 2007 and later 
model year LDV/LLDTs in 40 CFR 86.1811-04.
    (4) Nonconforming heavy light-duty trucks (HLDTs) modified in model 
years 2009 or later must meet the exhaust and evaporative emission 
requirements set forth for all 2009 and later model year HLDTs in 40 
CFR 86.1811-04.
    (5) The requirements of 40 CFR 86.1811-04 related to fleet average 
NO&lt;INF&gt;X&lt;/INF&gt; standards and requirements to comply with such standards 
do not apply to vehicles modified under this subpart.
* * * * *

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

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

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

    8. Section 86.1 is amended by revising the entry for ``California 
Regulatory Requirements Applicable to the National Low Emission Vehicle 
Program, October, 1996'', and by adding an entry in alphabetical order 
in the table in paragraph (b)(4) to read as follows:


Sec. 86.1  Reference materials.

* * * * *
    (b) * * *
    (4) * * *

[[<strong>Page</strong> 26126]]



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

*                  *                  *                  *                  *                  *
                                                        *
California Regulatory Requirements Applicable to the     86.1830-01; 86.1806-01; 86.1810-01; 86.1811-04; 86.1844-
 ``LEV II'' Program, including                            01.
    1. Amendments to California Exhaust and Evaporative
     Emission Standards and Test Procedures for
     Passenger Cars, Light-duty Trucks and Medium-duty
     Vehicles and Amendments to California Motor
     Vehicle Certification, Assembly-line and In-use
     Test Requirements ``CAP 2000''.
    2. California Zero-Emission and Hybrid Electric
     Vehicle Exhaust Emission Standards and Test
     Procedures for 2003 and Subsequent Model Passenger
     Cars, Light-duty Trucks and Medium-duty Vehicles.
    3. California Exhaust Emission Standards and Test
     Procedures for 2001 and Subsequent Model Passenger
     Cars, Light-duty Trucks and Medium-duty Vehicles.
    4. California Non-Methane Organic Gas Test
     Procedures.
    5. California Evaporative Emission Standards and
     Test Procedures for 2001 and Subsequent Model
     Motor Vehicles.
    6. California Refueling Emission Standards and Test
     Procedures for 2001 and Subsequent Model Motor
     Vehicles.
California Regulatory Requirements Applicable to the     86.113-004; 86.612-97; 86.1012-97; 86.1702-99; 86.1708-
 National Low Emission Vehicle Program, October 1996.     99; 86.1709-99; 86.1717-99; 86.1735-99; 86.1771-99;
                                                          86.1775-99; 86.1776-99; 86.1777-99; Appendix XVI;
                                                          Appendix XVII.
----------------------------------------------------------------------------------------------------------------

* * * * *

Subpart B--Emission Regulations for 1997 and Later Model Year New 
Light-duty Vehicles and New Light-duty Trucks; Test Procedures

    9. Section 86.113-04 is added to read as follows:


Sec. 86.113-04  Fuel Specifications.

    This section includes text that specifies requirements that differ 
from Sec. 86.113-94. Where a paragraph in Sec. 86.113-94 is identical 
and applicable to this section, this will be indicated by specifying 
the corresponding paragraph and the statement ``[Reserved]. For 
guidance see Sec. 86.113-94.''
    (a) Gasoline fuel. (1) Gasoline having the following specifications 
will be used by the Administrator in exhaust and evaporative emission 
testing of petroleum-fueled Otto-cycle vehicles. Gasoline having the 
following specification or substantially equivalent specifications 
Approved by the Administrator, must be used by the manufacturer in 
exhaust and evaporative testing except that octane specifications do 
not apply:

----------------------------------------------------------------------------------------------------------------
                  Item                      ASTM test method No.                        Value
----------------------------------------------------------------------------------------------------------------
Octane, Research, Min...................  D2699                     93.
Sensitivity, Min........................  ........................  .7.5
Lead (organic), maximum: g/U.S. gal. (g/  D3237                     0.050 (0.013).
 liter).
Distillation Range......................  D86                       ............................................
    IBP \1\: deg. F (deg. C)............  ........................  75-95 (23.9-35).
    10 pct. point: deg.F (deg.C)........  ........................  120-135 (48.9-57.2).
    50 pct. point: deg.F. (deg.C).......  ........................  200-230 (93.3-110).
    90 pct. point: deg.F (deg.C)........  ........................  300-325 (148.9-162.8).
    EP, max: deg.F (deg.C)D86...........  ........................  415 (212.8).
Sulfur, weight pct......................  D1266                     0.003-0.008.
Phosphorous, max. g/U.S. gal (g/liter)..  D3231                     0.005 (0.0013).
RVP &lt;SUP&gt;2&lt;/SUP&gt; &lt;SUP&gt;3&lt;/SUP&gt;.................................  D3231                     8.7-9.2 (60.0-63.4).
Hydrocarbon composition.................  D1319                     ............................................
    Olefins, max. pct...................  ........................  10.
    Aromatics, max, pct.................  ........................  35.
    Saturates...........................  ........................  Remainder.
----------------------------------------------------------------------------------------------------------------
\1\ For testing at altitudes above 1,219 m (4000 feet), the specified range is 75-105 deg. F (23.9-40.6 deg. C).

\2\ For testing which is unrelated to evaporative emission control, the specified range is 8.0-9.2 psi (55.2-
  63.4 kPa).
\3\ For testing at altitudes above 1,219 m (4000 feet), the specified range is 7.6-8.0 psi (52-55 kPa).

    (2) For light-duty vehicles and light-duty trucks certified for 50 
state sale, ``California Phase 2'' gasoline having the specifications 
listed in the table in this section may be used in exhaust emission 
testing as an option to the specifications in paragraph (a)(1) of this 
section. If a manufacturer elects to utilize this option, exhaust 
emission testing must be conducted by the manufacturer with gasoline 
having the specifications listed in the table in this paragraph (a)(2) 
and the Administrator must also conduct exhaust emission testing with 
gasoline having the specifications listed in the table in this 
paragraph (a)(2), except that the Administrator may use or require the 
use of test fuel meeting the specifications in paragraph (a)(1) of this 
section for selective enforcement auditing and in-use testing. All fuel 
property test methods for this fuel are contained in Chapter 4 of the 
California

[[<strong>Page</strong> 26127]]

Regulatory Requirements Applicable to the National Low Emission Vehicle 
Program (October, 1996). These requirements are incorporated by 
reference (see Sec. 86.1). The table follows:

------------------------------------------------------------------------
             Fuel property                            Limit
------------------------------------------------------------------------
Octane, (R+M)/2 (min)..................  91.
Sensitivity (min)......................  7.5.
Lead, g/gal (max) (No lead added)......  0-0.01.
Distillation Range,  deg.F
10 pct. point,.........................  130-150.
50 pct. point,.........................  200-210.
90 pct. point,.........................  290-300.
EP, maximum............................  390.
Residue, vol% (max)....................  2.0.
Sulfur, ppm by wt......................  30-40.
Phosphorous, g/gal (max)...............  0.005.
RVP, psi...............................  6.7-7.0.
Olefins, vol %.........................  4.0-6.0.
Total Aromatic Hydrocarbons (vol%).....  22-25.
Benzene, vol %.........................  0.8-1.0.
Multi-Substituted Alkyl Aromatic         12-14.
 Hydrocarbons, vol%.
MTBE, vol%.............................  10.8-11.2.
Additives..............................  See Chapter 4 of the California
                                          Regulatory Requirements
                                          Applicable to the National Low
                                          Emission Vehicle Program
                                          (October, 1996). These
                                          procedures are incorporated by
                                          reference (see Sec.  86.1).
Copper Corrosion.......................  No. 1.
Gum, Washed, mg/100 ml (max)...........  3.0.
 Oxidation Stability, minutes (min)....  1000.
Specific Gravity.......................  No limit; report to purchaser
                                          required.
Heat of Combustion.....................  No limit; report to purchaser
                                          required.
Carbon, wt%............................  No limit; report to purchaser
                                          required.
Hydrogen, wt%..........................  No limit; report to purchaser
                                          required.
------------------------------------------------------------------------

    (3)(i) Unless otherwise approved by the Administrator, unleaded 
gasoline representative of commercial gasoline that will be generally 
available through retail outlets must be used in service accumulation. 
Unless otherwise approved by the Administrator, where the vehicle is to 
be used for evaporative emission durability demonstration, such fuel 
must contain ethanol as required by Sec. 86.1824-01(a)(2)(iii). Leaded 
gasoline must not be used in service accumulation.
    (ii) The octane rating of the gasoline used must be no higher than 
1.0 Research octane number above the minimum recommended by the 
manufacturer and have a minimum sensitivity of 7.5 octane numbers, 
where sensitivity is defined as the Research octane number minus the 
Motor octane number.
    (iii) The Reid Vapor Pressure of the gasoline used must be 
characteristic of the motor fuel used during the season in which the 
service accumulation takes place.
    (4) The specification range of the gasoline to be used under 
paragraph (a) of this section must be reported in accordance with 
Secs. 86.094-21(b)(3) and 86.1844-01.
    (b) through (g) ``[Reserved]. For guidance see Sec. 86.113-94.''
    6. Section 86.129-00 is amended by adding a new paragraph 
(f)(1)(ii)(C) to read as follows:


Sec. 86.129-00  Road load power, test weight, and inertia weight class 
determination.

* * * * *
    (f) * * *
    (1) * * *
    (ii) * * *
    (C) Regardless of other requirements in this section relating to 
the testing of heavy light duty trucks, for Tier 2 heavy light duty 
trucks, the test weight basis for FTP and SFTP testing (both US06 and 
SC03) is the vehicle curb weight plus 300 pounds.
* * * * *

Subpart C--Emission Regulations for 1994 and Later Model Year 
Gasoline-Fueled New Light-duty Vehicles and New Light-duty Trucks; 
Cold Temperature Test Procedures

    10. Section 86.213-04 is added to read as follows:


Sec. 86.213-04  Fuel specifications.

    Gasoline having the following specifications will be used by the 
Administrator. Gasoline having the specifications set forth in the 
table in this section may be used by the manufacturer except that the 
octane specification does not apply. In lieu of using gasoline having 
these specifications, the manufacturer may, for certification testing, 
use gasoline having the specifications specified in Sec. 86.113-04 
provided the cold CO emissions are not decreased. Documentation showing 
that cold CO emissions are not decreased must be maintained by the 
manufacturer and must be made available to the Administrator upon 
request. The table listing the cold CO fuel specifications described in 
the text in this section follows:

[[<strong>Page</strong> 26128]]



                                       Table--Cold CO Fuel Specifications
----------------------------------------------------------------------------------------------------------------
                                        Cold CO low octane value or
              Item              -------------------------------------------   Cold CO high octane \1\ value or
                                     ASTM test              Range                           range
----------------------------------------------------------------------------------------------------------------
(RON+MON)/2, min...............  D2699             87.8&lt;plus-minus&gt;.3.....   92.3&lt;plus-minus&gt;0.5.
Sensitivity, min...............  D2699             7.5....................  7.5.
Distillation range:
    IBP, deg.F.................  D86               76-96..................  76-96.
    10% point, deg.F...........  D86               98-118.................  105-125.
    50% point, deg.F...........  D86               179-214................  195-225.
    90% point, deg.F...........  D86               316-346................  316-346.
    EP, max, deg.F.............  D86               413....................  413.
Sulfur, wt. %..................  D3120             0.003-0.008............  0.003-0.008.
Phosphorous, g/U.S gal, max....  D3231             0.005..................  0.005.
Lead, g/gal, max...............  ................  0.01...................  0.01.
RVP, psi.......................  D4953             11.5&lt;plus-minus&gt;.3.....  11.5&lt;plus-minus&gt;.3.
Hydrocarbon composition........  D1319
    Olefins, vol. pct..........  ................  12.5&lt;plus-minus&gt;5.0....  10.0&lt;plus-minus&gt;5.0.
    Aromatics, vol. pct........  ................  26.4&lt;plus-minus&gt;4.0....  32.0&lt;plus-minus&gt;4.0.
    Saturates..................  ................  Remainder..............  Remainder.
----------------------------------------------------------------------------------------------------------------
\1\ Gasoline having these specifications may be used for vehicles which are designed for the use of high-octane
  premium fuel.

Subpart R--General Provisions for the Voluntary National Low 
Emission Vehicle Program for Light-duty Vehicles and Light-duty 
Trucks

    11. Section 86.1701-99 is amended by adding paragraph (f) to read 
as follows:


Sec. 86.1701-99  General applicability.

* * * * *
    (f) The provisions of this subpart are not applicable to 2004 or 
later model year vehicles, except where specific references to 
provisions of this subpart are made in conjunction with provisions 
applicable to such vehicles.

Subpart S--General Compliance Provisions for Control of Air 
Pollution From New and In-use Light-duty Vehicles and Light-duty 
Trucks

    12. Section 86.1801-01 is amended by revising the first sentence of 
paragraph (a) and the first sentence of paragraph (e) and adding 
paragraphs (f) and (g) to read as follows:


Sec. 86.1801-01  Applicability.

    (a) Except as otherwise indicated, the provisions of this subpart 
apply to new 2001 and later model year Otto-cycle and diesel cycle 
light duty vehicles and light duty trucks, including alternative 
fueled, hybrid electric, and zero emission vehicles.* * *
* * * * *
    (e) National Low Emission Vehicle Program for light-duty vehicles 
and light light-duty trucks. A manufacturer may elect to certify 2001-
2003 model year light duty vehicles and light light-duty trucks (LDV/
LLDTs) to the provisions of the National Low Emission Vehicle Program 
contained in Subpart R of this part. * * *
    (f) ``Early'' Tier 2 LDV/Ts. Any LDV/LLDT which is certified to 
Tier 2 FTP exhaust standards prior to the 2004 model year, or any HLDT 
which is certified to the Tier 2 FTP exhaust standards prior to the 
2008 model year, to utilize alternate phase-in schedules and/or for 
purposes of generating and banking NO&lt;INF&gt;X&lt;/INF&gt; credits, must comply 
with all the exhaust emission requirements applicable to Tier 2 LDV/Ts 
under this subpart.
    (g) Interim non-Tier 2 LDV/Ts. Model year 2004-2008 LDV/Ts, that do 
not comply with the Tier 2 FTP exhaust emission requirements (interim 
non-Tier 2 LDV/Ts) as permitted under the phase-in requirements of 
Sec. 86.1811-04(k) must comply with all interim non-Tier 2 exhaust 
emission requirements contained in this subpart, including FTP exhaust 
emission requirements for all interim non-Tier 2 LDV/Ts found at 
Sec. 86.1811-04(l). Separate emission requirements are provided for 
interim non-Tier 2 LDV/LLDTs and interim non-Tier 2 HLDTs.
    13. Section 86.1803-01 is amended by adding the following 
definitions in alphabetical order to read as follows:


Sec. 86.1803-01  Definitions.

* * * * *
    Bin or emission bin means a set of emission standards applicable to 
exhaust pollutants measured on the Federal Test Procedure (FTP). A bin 
is equivalent to a horizontal row of FTP standards in the various 
charts shown in this subpart. Manufacturers are generally free to 
choose the bin of standards that will apply to a certain test group of 
vehicles, provided that on a sales weighted average of those bins, all 
of their vehicles meet a specified fleet average standard for a 
particular pollutant.
* * * * *
    CalLEV II or California LEV II refers to California's second phase 
of its low emission vehicle (LEV) program. This program was adopted at 
the hearing of the California Air Resources Board held on November 5, 
1998.
* * * * *
    Fleet average NO&lt;INF&gt;X&lt;/INF&gt; standard means, for light-duty 
vehicles and light-duty trucks, a NO&lt;INF&gt;X&lt;/INF&gt; standard imposed over 
an individual manufacturer's total U.S. sales (or a fraction of total 
U.S. sales during phase-in years), as ``U.S. sales'' is defined in this 
subpart, of light duty vehicles and trucks of a given model year. 
Manufacturers determine their compliance with such a standard by 
averaging, on a sales weighted basis, the individual NO&lt;INF&gt;X&lt;/INF&gt; 
standards they choose for the fleet of light duty vehicles and trucks 
they sell of that model year.
* * * * *
    Interim non-Tier 2 vehicle or interim non-Tier 2 LDV/T or interim 
vehicle means any 2004 or later model year light duty vehicle or light 
duty truck not certified to Tier 2 FTP exhaust emission standards 
during the Tier 2 phase-in period.
* * * * *
    LDV/T means light duty vehicles and light duty trucks collectively, 
without regard to category.
* * * * *
    Non-methane organic gases (NMOG) means the sum of oxygenated and 
non-oxygenated hydrocarbons contained in a gas sample as measured in 
accordance with the California Non-Methane Organic Gas Test Procedures. 
These

[[<strong>Page</strong> 26129]]

requirements are incorporated by reference (see Sec. 86.1).
* * * * *
    Periodically regenerating trap oxidizer system means a trap 
oxidizer that utilizes, during normal driving conditions, an automated 
regeneration mode for cleaning the trap, the operation of which can be 
easily detected.
* * * * *
    Point of first sale means the location where the completed light 
duty vehicle or light duty truck is first purchased. This term is 
synonymous with final product purchase location. The point of first 
sale may be a retail customer, dealer, distributor, fleet operator, 
broker, secondary manufacturer, or any other entity which purchases a 
vehicle from a manufacturer. In cases where the end user purchases the 
completed vehicle directly from the manufacturer, the end user is the 
point of first sale.
* * * * *
    Round, rounded or rounding means, unless otherwise specified, that 
numbers will be rounded according to ASTM-E29-93a, which is 
incorporated by reference in this part pursuant to Sec. 86.1.
* * * * *
    Tier 2 standards means those FTP exhaust emission standards 
applicable to new light-duty vehicles and light light duty trucks and 
that begin a phase-in in the 2004 model year, and those exhaust 
emission standards applicable to heavy light duty trucks that begin a 
phase-in in the 2008 model year. These standards are found in 
Sec. 86.1811-04.
    Tier 2 vehicle or Tier 2 LDV/T means any light duty vehicle or 
light duty truck, including HEVs and ZEVs, of the 2004 or later model 
year certified to comply with the Tier 2 FTP exhaust standards 
contained in Sec. 86.1811-04. The term Tier 2 vehicle also includes any 
light duty vehicle or truck, of any model year, which is certified to 
Tier 2 FTP exhaust standards for purposes of generating or banking 
early NO&lt;INF&gt;X&lt;/INF&gt; credits for averaging under Tier 2 requirements as 
allowed in this subpart.
* * * * *
    U.S. sales means, unless otherwise specified, sales in any state of 
the United States except for California or a state that has adopted 
California motor vehicle standards for that model year pursuant to 
section 177 of the Clean Air Act. This definition applies only to those 
regulatory requirements addressing Tier 2 and interim non-Tier 2 LDV/
Ts.
* * * * *
    14. Section 86.1804-01 is amended by adding the following acronyms 
and abbreviations, in alphabetical order, to read as follows:


Sec. 86.1804-01  Acronyms and abbreviations.

* * * * *
    HCHO--Formaldehyde.
* * * * *
    HEV--Hybrid electric vehicle.
* * * * *
    HLDT--Heavy light duty truck. Includes only those trucks over 
6000 pounds GVWR (LDT3s and LDT4s).
* * * * *
    LDV/LLDT--Light duty vehicles and light light-duty trucks. 
Includes only those trucks rated at 6000 pounds GVWR or less (LDT1s 
and LDT2s).
    LDV/T--Light duty vehicles and light duty trucks. This term is 
used collectively to include, or to show that a provision applies 
to, all light duty vehicles and all categories of light duty trucks, 
i.e.
    LDT1, LDT2, LDT3 and LDT4.
    LEV--Low Emission Vehicle.
* * * * *
    NLEV--Refers to the National Low Emission Vehicle Program. 
Regulations governing this program are found at subpart R of this 
part.
* * * * *
    NMOG--Non-methane organic gases.
* * * * *
    RAF--Reactivity adjustment factor.
* * * * *
    SULEV--Super Ultra Low Emission Vehicle.
* * * * *
    TLEV--Transitional Low Emission Vehicle.
* * * * *
    ULEV--Ultra Low Emission Vehicle.
* * * * *
    ZEV--Zero Emission Vehicle.
* * * * *
    15. Section 86.1805-04 is added to read as follows:


Sec. 86.1805-04  Useful life.

    (a) Except as required under paragraph (b) of this section or 
permitted under paragraphs (d) and (e) of this section, the full useful 
life for all LDVs, LDT1s and LDT2s is a period of use of 10 years or 
120,000 miles, whichever occurs first. For all HLDTs, full useful life 
is a period of 11 years or 120,000 miles, whichever occurs first. This 
full useful life applies to exhaust, evaporative and refueling emission 
requirements except for standards which are specified to only be 
applicable at the time of certification.
    (b) Manufacturers may elect to optionally certify a test group to 
the Tier 2 exhaust emission standards for 150,000 miles to gain 
additional NO&lt;INF&gt;X&lt;/INF&gt; credits, as permitted in Sec. 86.1860-04(g). 
In such cases, useful life is a period of use of 15 years or 150,000 
miles, whichever occurs first, for all exhaust, evaporative and 
refueling emission requirements except for cold CO standards and 
standards which are applicable only at the time of certification.
    (c) Where intermediate useful life exhaust emission standards are 
applicable, such standards are applicable for five years or 50,000 
miles, whichever occurs first.
    (d)(1) Manufacturers may petition the Administrator to provide 
alternative useful life periods for idle CO requirements for light duty 
trucks when they believe that the useful life period described in this 
section is significantly unrepresentative for one or more test groups 
(either too long or too short). This petition must include the full 
rationale behind the request, together with any supporting data and 
other evidence. Based on this or other information, the Administrator 
may assign an alternative useful life period. Any petition should be 
submitted in a timely manner to allow adequate time for a thorough 
evaluation.
    (2) Where cold CO standards are applicable, the useful life 
requirement for compliance with the cold CO standard only, is 5 years 
or 50,000 miles whichever occurs first.
    (e) Where LDVs, LDT1s and LDT2s of the 2003 or earlier model years 
are certified to Tier 2 exhaust emission standards for purposes of 
generating early NO&lt;INF&gt;X&lt;/INF&gt; credits, manufacturers may certify 
those vehicles to full useful lives of 100,000 miles in lieu of the 
otherwise required 120,000 mile full useful lives, as provided under 
Sec. 86.1861-04(c)(4).
    16. Section 86.1806-01 is amended by adding paragraph (b)(8) to 
read as follows:


Sec. 86.1806-01  On-board diagnostics.

* * * * *
    (b)* * *
    (8) For Tier 2 and interim non-Tier 2 hybrid electric vehicles 
(HEVs) only. Unless added to HEVs in compliance with other requirements 
of this section, or unless otherwise approved by the Administrator:
    (i) The manufacturer must equip each HEV with a maintenance 
indicator consisting of a light that must activate automatically by 
illuminating the first time the minimum performance level is observed 
for each battery system component. Possible battery system components 
requiring monitoring are: battery water level, temperature control, 
pressure control, and other parameters critical for determining battery 
condition.
    (ii) The manufacturer must equip ``off-vehicle charge capable 
HEVs'' with a useful life indicator for the battery

[[<strong>Page</strong> 26130]]

system consisting of a light that must illuminate the first time the 
battery system is unable to achieve an all-electric operating range 
(starting from a full state-of-charge) which is at least 75 percent of 
the range determined for the vehicle in the Urban Driving Schedule 
portion of the All-Electric Range Test (see the California Zero-
Emission and Hybrid Electric Vehicle Exhaust Emission Standards and 
Test Procedures for 2003 and Subsequent Model Year Passenger Cars, 
Light-Duty Trucks and Medium Duty Vehicles. These requirements are 
incorporated by reference (see Sec. 86.1)
    (iii) The manufacturer must equip each HEV with a separate odometer 
or other device subject to the approval of the Administrator that can 
accurately measure the mileage accumulation on the engines used in 
these vehicles.
* * * * *
    17. Section 86.1807-01 is amended by revising paragraph (a)(3)(vi) 
to read as follows:


Sec. 86.1807-01  Vehicle labeling.

    (a) * * *
    (3) * * *
    (vi) The exhaust emission standards to which the test group is 
certified, and for test groups having different in-use standards, the 
corresponding exhaust emission standards that the test group must meet 
in use. In lieu of this requirement, manufacturers may use the 
standardized test group name designated by EPA;
* * * * *
    18. Section 86.1809-01 is amended by adding paragraph (e) to read 
as follows:


Sec. 86.1809-01  Prohibition of defeat devices.

* * * * *
    (e) For each test group of Tier 2 and interim non-Tier 2 LDV/Ts, 
the manufacturer must submit, with the Part II certification 
application, an engineering evaluation demonstrating to the 
satisfaction of the Administrator that a discontinuity in emissions of 
non-methane organic gases, carbon monoxide, oxides of nitrogen and 
formaldehyde measured on the Federal Test Procedure (subpart B of this 
part) does not occur in the temperature range of 20 to 86 degrees F. 
For diesel vehicles, the engineering evaluation must also include 
particulate emissions.
    19. Section 86.1810-01 is amended by adding two new sentences to 
the end of the introductory text; by adding a new sentence to the end 
of paragraph (i)(6); and by adding new paragraphs (i)(13), (i)(14), (o) 
and (p) to read as follows:


Sec. 86.1810-01  General standards; increase in emissions; unsafe 
conditions; waivers.

    * * * For Tier 2 and interim non-Tier 2 LDV/Ts, this section also 
applies to hybrid electric vehicles and zero emission vehicles. Unless 
otherwise specified, requirements and provisions of this subpart 
applicable to methanol fueled vehicles are also applicable to Tier 2 
and interim non-Tier 2 ethanol fueled LDV/Ts.
* * * * *
    (i) * * *
    (6) * * * For Tier 2 and interim non-Tier 2 LDV/Ts, this provision 
does not apply to enrichment that occurs upon cold start, warm-up 
conditions and rapid-throttle motion conditions (``tip-in'' or ``tip-
out'' conditions).
* * * * *
    (13) A/C-on specific calibrations. (i) For Tier 2 and interim non-
Tier 2 LDV/Ts, A/C-on specific calibrations (e.g. air to fuel ratio, 
spark timing, and exhaust gas recirculation), may be used which differ 
from A/C-off calibrations for given engine operating conditions (e.g., 
engine speed, manifold pressure, coolant temperature, air charge 
temperature, and any other parameters).
    (ii) Such calibrations must not unnecessarily reduce the 
NMHC+NO&lt;INF&gt;X&lt;/INF&gt; emission control effectiveness during A/C-on 
operation when the vehicle is operated under conditions which may 
reasonably be expected to be encountered during normal operation and 
use.
    (iii) If reductions in control system NMHC+NO&lt;INF&gt;X&lt;/INF&gt; 
effectiveness do occur as a result of such calibrations, the 
manufacturer must, in the Application for Certification, specify the 
circumstances under which such reductions do occur, and the reason for 
the use of such calibrations resulting in such reductions in control 
system effectiveness.
    (iv) A/C-on specific ``open-loop'' or ``commanded enrichment'' air-
fuel enrichment strategies (as defined below), which differ from A/C-
off ``open-loop'' or ``commanded enrichment'' air-fuel enrichment 
strategies, may not be used, with the following exceptions: Cold-start 
and warm-up conditions, or, subject to Administrator approval, 
conditions requiring the protection of the vehicle, occupants, engine, 
or emission control hardware. Other than these exceptions, such 
strategies which are invoked based on manifold pressure, engine speed, 
throttle position, or other engine parameters must use the same engine 
parameter criteria for the invoking of this air-fuel enrichment 
strategy and the same degree of enrichment regardless of whether the A/
C is on or off. ``Open-loop'' or ``commanded'' air-fuel enrichment 
strategy is defined as enrichment of the air to fuel ratio beyond 
stoichiometry for the purposes of increasing engine power output and 
the protection of engine or emissions control hardware. However, 
``closed-loop biasing,'' defined as small changes in the air-fuel ratio 
for the purposes of optimizing vehicle emissions or driveability, must 
not be considered an ``open-loop'' or ``commanded'' air-fuel enrichment 
strategy. In addition, ``transient'' air-fuel enrichment strategy (or 
``tip-in'' and ``tip-out'' enrichment), defined as the temporary use of 
an air-fuel ratio rich of stoichiometry at the beginning or duration of 
rapid throttle motion, must not be considered an ``open-loop'' or 
``commanded'' air-fuel enrichment strategy.
    (14) ``Lean-on-cruise'' calibration strategies. (i) For Tier 2 and 
interim non-Tier 2 LDV/Ts, the manufacturer must state in the 
Application for Certification whether any ``lean-on-cruise'' strategies 
are incorporated into the vehicle design. A ``lean-on-cruise'' air-fuel 
calibration strategy is defined as the use of an air-fuel ratio 
significantly greater than stoichiometry, during non-deceleration 
conditions at speeds above 40 mph. ``Lean-on-cruise'' air-fuel 
calibration strategies must not be employed during vehicle operation in 
normal driving conditions, including A/C usage, unless at least one of 
the following conditions is met:
    (A) Such strategies are substantially employed during the FTP or 
SFTP;
    (B) Such strategies are demonstrated not to significantly reduce 
vehicle NMHC+NO&lt;INF&gt;X&lt;/INF&gt; emission control effectiveness over the 
operating conditions in which they are employed; or
    (C) Such strategies are demonstrated to be necessary to protect the 
vehicle occupants, engine, or emission control hardware.
    (ii) If the manufacturer proposes to use a ``lean-on-cruise'' 
calibration strategy, the manufacturer must specify the circumstances 
under which such a calibration would be used, and the reason or reasons 
for the proposed use of such a calibration.
* * * * *
    (o) Unless otherwise approved by the Administrator, manufacturers 
must measure NMOG emissions in accordance with the California Non-
Methane Organic Gas Test Procedures. These procedures are incorporated 
by reference (see Sec. 86.1).
    (p) For diesel vehicles, manufacturers may measure non-methane 
hydrocarbons in lieu of NMOG.

[[<strong>Page</strong> 26131]]

    20. Section 86.1811-01 is amended by adding a sentence to the end 
of the introductory text to read as follows:


Sec. 86.1811-01  Emission standards for light-duty vehicles.

     * * * This section does not apply to 2004 and later model year 
vehicles, except as specifically referenced by Sec. 86.1811-04.
* * * * *
    21. Section 86.1811-04 is added to read as follows:


Sec. 86.1811-04  Emission standards for light duty vehicles and light 
duty trucks.

    (a) Applicability. (1) This section contains regulations 
implementing emission standards for all light duty vehicles and light 
duty trucks (LDV/Ts). This section applies to 2004 and later model year 
LDV/Ts fueled by gasoline, diesel, methanol, ethanol, natural gas and 
liquefied petroleum gas fuels, except as noted. Additionally, this 
section contains provisions applicable to hybrid electric vehicles 
(HEVs) and zero emission vehicles (ZEVs). Multi-fueled vehicles must 
comply with all requirements established for each consumed fuel.
    (2)(i) This section also applies to LDV/LLDTs of model years prior 
to 2004, when manufacturers certify such vehicles to Tier 2 exhaust 
emission requirements to utilize alternate phase-in schedules, as 
allowed under paragraph (k)(6) of this section, and/or to earn 
NO&lt;INF&gt;X&lt;/INF&gt; credits for use in complying with the Tier 2 fleet 
average NO&lt;INF&gt;X&lt;/INF&gt; standard which takes effect in the 2004 model 
year for LDV/LLDTs.
    (ii) This section also applies to HLDTs of model years prior to 
2004, when manufacturers certify such vehicles to Tier 2 exhaust 
emission requirements to utilize alternate phase-in schedules as 
allowed under paragraph (k)(6) of this section.
    (3) Except where otherwise specified, this section applies instead 
of Secs. 86.1811-01, 86.1812-01, 86.1813-01, 86.1814-01, 86.1814-02, 
86.1815-01, and 86.1815-02.
    (4) Except where otherwise specified, the provisions of this 
section apply equally to LDVs and all categories of LDTs, as reflected 
by the use of the term LDV/T.
    (5) The exhaust emission standards and evaporative emission 
standards of this section apply equally to certification and in-use 
LDV/Ts unless otherwise specified.
    (b) Test weight. (1) Except as required in paragraph (b)(2) of this 
section, emission testing of all LDV/Ts to determine compliance with 
any exhaust or evaporative emission standard set forth in this part 
must be on a loaded vehicle weight (LVW) basis, as that term is defined 
in this subpart.
    (2) Interim non-Tier 2 HLDTs tested to Tier 1 SFTP standards, must 
be tested on an adjusted loaded vehicle weight (ALVW) basis, as that 
term is defined in this subpart, during the SC03 element of the SFTP.
    (c) Tier 2 FTP exhaust emission standards. Exhaust emissions from 
Tier 2 LDV/Ts must not exceed the standards in Table S04-1 of this 
section at full useful life when tested over the Federal Test Procedure 
(FTP) described in subpart B of this part. Exhaust emissions from Tier 
2 LDV/Ts must not exceed the standards in Table S04-2 of this section 
at intermediate useful life, if applicable, when tested over the FTP. 
Manufacturers of LDV/Ts must meet these standards according to the 
phase-in schedules shown in Tables S04-6 and S04-7 of this section.
    (1) For a given test group a manufacturer desires to certify to 
operate only on one fuel, the manufacturer must select a set of 
standards from the same bin (line or row) in Table S04-1 of this 
section for non-methane organic gases (NMOG), carbon monoxide (CO), 
oxides of nitrogen (NO&lt;INF&gt;X&lt;/INF&gt;), formaldehyde (HCHO) and 
particulate matter (PM). The manufacturer must certify the test group 
to meet those standards, subject to all the applicable provisions of 
this subpart. The manufacturer must also certify the test group to meet 
the intermediate useful life standards (if any) in Table S04-2 of this 
section having the same EPA bin reference number as the chosen full 
useful life standards.
    (2) For a given test group of flexible-fueled, bi-fuel or dual fuel 
vehicles when operated on the alcohol or gaseous fuel they are designed 
to use, manufacturers must select a bin of standards from Table S04-1 
of this section and the corresponding bin in Table S04-2, if any. When 
these flexible-fueled, bi-fuel or dual fuel vehicles are certified to 
operate on gasoline or diesel fuel, the manufacturer may choose to 
comply with the next numerically higher NMOG standard above the bin 
which contains the standards selected for certification on the gaseous 
or alcohol fuel.
    (3) The bin 7 NMOG value may be used by alternative fueled vehicles 
when operated on gasoline or diesel fuel when such vehicles are 
certified to bin 6 standards on the gaseous or alcohol fuel on which 
they are designed to operate.
    (4) In addition to the bins shown in Tables S04-1 and 2 of this 
section, manufacturers may also use the applicable interim non-Tier 2 
bins for Tier 2 vehicles. These bins are shown in Tables S04-8 and 9 of 
this section for LDV/LLDTs and Tables S04-10 and 11 of this section for 
HLDTs. These bins may only be used through the last model year of the 
duration of the applicable interim program, i.e. 2006 for LDV/LLDTs and 
2008 for HLDTs. In a given model year, an individual vehicle may not be 
included in both the Tier 2 program and an interim program.
    (5) Tables S04-1 and S04-2 follow:

                Table S04-1.--Tier 2 Light Duty Full Useful Life Exhaust Mass Emission Standards
                                                [Grams per mile]
----------------------------------------------------------------------------------------------------------------
           EPA bin No.                 NMOG             CO             HCHO             NO&lt;INF&gt;X&lt;/INF&gt;             PM
----------------------------------------------------------------------------------------------------------------
7...............................         &lt;SUP&gt;a&lt;/SUP&gt; 0.156  ..............  ..............  ..............  ..............
7...............................           0.125             4.2            .018            0.20            0.02
6...............................           0.090             4.2           0.018            0.15            0.02
5...............................           0.090             4.2           0.018            0.07            0.01
4...............................           0.055             2.1           0.011            0.07            0.01
3...............................           0.070             2.1           0.011            0.04            0.01
2...............................           0.010             2.1           0.004            0.02            0.01
1...............................           0.000             0.0           0.000            0.00            0.0
----------------------------------------------------------------------------------------------------------------
&lt;SUP&gt;a&lt;/SUP&gt; Applicable only to flexible-fueled and dual-fuel bin 7 vehicles when certifying for operation on gasoline.


[[<strong>Page</strong> 26132]]


            Table S04-2.--Tier 2 Light Duty Intermediate Useful Life Exhaust Mass Emission Standards
                                                [Grams per mile]
----------------------------------------------------------------------------------------------------------------
           EPA bin No.                 NMOG             CO             HCHO             NO&lt;INF&gt;X&lt;/INF&gt;            PM &lt;SUP&gt;b&lt;/SUP&gt;
----------------------------------------------------------------------------------------------------------------
7...............................         &lt;SUP&gt;a&lt;/SUP&gt; 0.125  ..............  ..............  ..............  ..............
7...............................           0.100             3.4           0.015            0.14  ..............
6...............................           0.075             3.4           0.015            0.11  ..............
5...............................           0.075             3.4           0.015            0.05  ..............
4...............................           0.040             1.7           0.008            0.05  ..............
----------------------------------------------------------------------------------------------------------------
&lt;SUP&gt;a&lt;/SUP&gt; Applicable only to flexible-fueled and dual-fuel bin 7 vehicles when certifying for operation on gasoline.
&lt;SUP&gt;b&lt;/SUP&gt; The full useful life PM standards from Table S04-1 also apply at intermediate useful life.

    (d) Fleet average NO&lt;INF&gt;X&lt;/INF&gt; Standards. (1) For a given 
individual model year's sales of Tier 2 LDV/Ts, including model years 
during the phase-in years of the Tier 2 standards, manufacturers must 
comply with a fleet average oxides of nitrogen (NO&lt;INF&gt;X&lt;/INF&gt;) 
standard of 0.07 grams per mile. The manufacturer must calculate its 
fleet average NO&lt;INF&gt;X&lt;/INF&gt; emission level(s) as described in 
Sec. 86.1860-04. Up through and including model year 2008, 
manufacturers must calculate separate fleet average NO&lt;INF&gt;X&lt;/INF&gt; 
emission levels for LDV/LLDTs and HLDTs as described in Sec. 86.1860-
04.
    (2) For Early Tier 2 LDV/LLDTs. For model years prior to 2004, 
where the manufacturer desires to bank early Tier 2 NO&lt;INF&gt;X&lt;/INF&gt; 
credits as permitted under Sec. 86.1861(c), the manufacturer must 
comply with a fleet average standard of 0.07 grams per mile for its 
Tier 2 LDV/LLDTs. Manufacturers must determine compliance with the 
NO&lt;INF&gt;X&lt;/INF&gt; fleet average standard according to regulations in 
Sec. 86.1860-04.
    (3) For Early Tier 2 HLDTs. For model years prior to 2008, where 
the manufacturer desires to bank early Tier 2 NO&lt;INF&gt;X&lt;/INF&gt; credits as 
permitted under Sec. 86.1861(c), the manufacturer must comply with a 
fleet average standard of 0.07 grams per mile for its Tier 2 HLDTs. 
Manufacturers must determine compliance with the NO&lt;INF&gt;X&lt;/INF&gt; fleet 
average standard according to regulations in Sec. 86.1860-04.
    (e) Evaporative emission standards. Consistent with the phase-in 
requirements in paragraph (k) of this section, evaporative emissions 
from gasoline-fueled, natural gas-fueled, liquefied petroleum gas-
fueled, ethanol-fueled and methanol-fueled LDV/Ts must not exceed the 
standards in this paragraph. The standards apply equally to 
certification and in-use LDV/Ts, except that the spitback standard 
applies only to newly assembled LDV/Ts.
    (1) Diurnal-plus-hot soak evaporative hydrocarbon standards. 
Hydrocarbons for LDV/Ts must not exceed the diurnal plus hot soak 
standards shown in Table S04-3 for the full three diurnal test sequence 
and for the supplemental two diurnal test sequence. Table S04-3 
follows:

   Table S04-3.--Light-Duty Diurnal Plus Hot Soak Evaporative Emission
                                Standards
                            [Grams per test]
------------------------------------------------------------------------
                                                            Supplemental
                                                   3 day        2 day
               Vehicle category                  diurnal +    diurnal +
                                                 hot Soak     hot soak
------------------------------------------------------------------------
LDVs, LDT1s and LDT2s.........................        0.95          1.2
LDT3s and LDT4s...............................        1.2           1.5
------------------------------------------------------------------------

    (2) Running loss standard. Hydrocarbons for LDV/Ts measured on the 
running loss test must not exceed 0.05 grams per mile.
    (3) Refueling emission standards. Refueling emissions must not 
exceed the following standards:
    (i) For gasoline-fueled, diesel-fueled and methanol-fueled LDV/Ts: 
0.20 grams hydrocarbon per gallon (0.053 grams per liter) of fuel 
dispensed.
    (ii) For liquefied petroleum gas-fueled LDV/Ts: 0.15 grams 
hydrocarbon per gallon (0.04 grams per liter) of fuel dispensed.
    (iii) Refueling standards for LDT3s and LDT4s are subject to the 
phase-in requirements found in Sec. 86.1810-01(k).
    (4) Spitback standards. For gasoline and methanol fueled LDV/Ts, 
hydrocarbons measured on the fuel dispensing spitback test must not 
exceed 1.0 grams hydrocarbon (carbon if methanol-fueled) per test.
    (5) Vehicles not certified to meet the evaporative emission 
standards in this paragraph (e) as permitted under the phase-in 
schedule of paragraph (k) of this section, must meet applicable 
evaporative emission standards in Secs. 86.1811-01, 86.1812-01, 
86.1813-01, 86.1814-02 or 86.1815-02 except that all LDV/Ts must meet 
the refueling emission standards in paragraph (e)(3) of this section.
    (f) Supplemental exhaust emission standards for LDV/Ts. (1) 
Supplemental exhaust emissions from gasoline-fueled and diesel fueled 
LDV/Ts must not exceed the standards in Table S04-4 at full useful 
life. Supplemental exhaust emission standards are not applicable to 
alternative fueled LDV/Ts, or flexible fueled LDV/Ts when operated on a 
fuel other than gasoline or diesel. Table S04-4 follows:

           Table S04-4.-- Full Useful Life Supplemental Emission Standards (SFTP Standards) for LDV/Ts
                                                  [Grams/mile]
----------------------------------------------------------------------------------------------------------------
                Vehicle category                   USO6 NMHC+NO&lt;INF&gt;X&lt;/INF&gt;     USO6  CO      SCO3 NMHC+NO&lt;INF&gt;X&lt;/INF&gt;     SCO3  CO
----------------------------------------------------------------------------------------------------------------
LDV/LDT1........................................            0.20            11.1            0.26             4.2
LDT2............................................            0.37            14.6            0.39             5.5
LDT3............................................            0.53            16.9            0.44             6.4
LDT4............................................            0.78            19.3            0.62             7.3
----------------------------------------------------------------------------------------------------------------

    (2) Gasoline-fueled LDV/Ts, diesel-fueled LDV/Ts and flexible 
fueled LDV/Ts when operated on gasoline or diesel fuel, and subject to 
intermediate useful life FTP standards, must not exceed the 
intermediate useful life supplemental emission standards in Table S04-
5, as follows:

[[<strong>Page</strong> 26133]]



       Table S04-5.--Intermediate Useful Life Supplemental Emission Standards (SFTP Standards) for LDV/Ts
                                                  [Grams/mile]
----------------------------------------------------------------------------------------------------------------
                Vehicle category                   USO6 NMHC+NO&lt;INF&gt;X&lt;/INF&gt;     USO6  CO      SCO3 NMHC+NO&lt;INF&gt;X&lt;/INF&gt;     SCO3  CO
----------------------------------------------------------------------------------------------------------------
LDV/LDT1........................................            0.16             9.0            0.22             3.0
LDT2............................................            0.30            11.6            0.32             3.9
LDT3............................................            0.45            11.6            0.36             3.9
LDT4............................................            0.67            13.2            0.51             4.4
----------------------------------------------------------------------------------------------------------------

    (3) For interim non-Tier 2 gasoline, diesel and flexible-fueled 
LDT3s and LDT4s, manufacturers may, at their option, meet the gasoline 
SFTP standards found in Secs. 86.1814-02 and 86.1815-02, respectively.
    (4) Interim non-Tier 2 gasoline, diesel and flexible-fueled LDV/
LLDTs certified to bin 5 FTP exhaust emission standards from Table S04-
8 in this section may meet the gasoline Tier 1 SFTP requirements found 
at Sec. 86.1811-01(b).
    (g) Cold temperature exhaust emission standards for LDV/Ts. These 
standards are applicable only to gasoline fueled LDV/Ts. For cold 
temperature exhaust emission standards, a useful life of 50,000 miles 
applies.
    (1) For LDVs and LDT1s, the standard is 10.0 grams per mile CO.
    (2) For LDT2s, LDT3s and LDT4s, the standard is 12.5 grams per mile 
CO.
    (h) Certification short test exhaust emission standards for LDV/Ts. 
Certification short test emissions from all gasoline-fueled otto cycle 
LDV/Ts must not exceed the following standards:
    (1) Hydrocarbons: 100 ppm as hexane, for certification and SEA 
testing; 220 ppm as hexane, for in-use testing.
    (2) Carbon monoxide: 0.5% for certification and SEA testing; 1.2% 
for in-use testing.
    (i) Idle exhaust emission standards for light duty trucks. Exhaust 
emissions of carbon monoxide from gasoline, methanol, natural gas, and 
liquefied petroleum gas-fueled light duty trucks must not exceed 0.5% 
of exhaust gas flow at curb idle for the useful life of the trucks as 
defined in this part. This standard does not apply to light duty 
vehicles.
    (j) Highway NO&lt;INF&gt;X&lt;/INF&gt; exhaust emission standard for LDV/Ts. 
The maximum projected NO&lt;INF&gt;X&lt;/INF&gt; emissions measured on the federal 
Highway Fuel Economy Test in 40 CFR part 600, subpart B, must not be 
greater than 1.33 times the applicable FTP NO&lt;INF&gt;X&lt;/INF&gt; standard to 
which the manufacturer certifies the test group. Both the projected 
emissions and the product of the NO&lt;INF&gt;X&lt;/INF&gt; standard and 1.33 must 
be rounded to the nearest 0.01 g/mi before being compared.
    (k) Phase-in of the Tier 2 FTP exhaust and evaporative 
requirements; small volume manufacturer flexibilities. (1) 
Manufacturers must comply with the phase-in requirements in Tables S04-
6 and S04-7 of this section for the Tier 2 FTP exhaust emission 
requirements specified in paragraph (c) of this section. Separate 
phase-in schedules are provided for LDV/LLDTs and HLDTs. These 
requirements specify the minimum percentage of the manufacturer's LDV/
LLDT and HLDT U.S. sales, by model year, that must meet the Tier 2 
requirements for their full useful lives. Tables S04-6 and S04-7 
follow:

   Table S04-6.--Phase-In Percentages for LDV/LLDT Tier 2 Requirements
------------------------------------------------------------------------
                                                           Percentage of
                                                          LDV/LLDTs that
                       Model year                         must meet tier
                                                          2 requirements
------------------------------------------------------------------------
2004....................................................              25
2005....................................................              50
2006....................................................              75
2007 and subsequent.....................................             100
------------------------------------------------------------------------


     Table S04-7.--Phase-In Percentages for HLDT Tier 2 Requirements
------------------------------------------------------------------------
                                                             Percentage
                                                              of HLDTs
                        Model year                            that must
                                                             meet tier 2
                                                            requirements
------------------------------------------------------------------------
2008......................................................            50
2009 and subsequent.......................................           100
------------------------------------------------------------------------

    (2) Manufacturers must also comply with the phase-in requirements 
in Tables S04-6 and S04-7 of this section for the evaporative emission 
requirements contained in paragraph (e) of this section.
    (3) Manufacturers may opt to use different LDV/LLDTs and HLDTs to 
meet the phase-in requirements for evaporative emissions and FTP 
exhaust emissions, provided that the manufacturer meets the minimum 
phase-in requirements in Table S04-6 and Table S04-7 of this section 
for both FTP exhaust and evaporative emissions. A LDV or LDT counted 
toward compliance with any phase-in requirement for FTP exhaust or 
evaporative standards, must comply with all applicable Tier 2 exhaust 
requirements or all evaporative requirements, as applicable, described 
in this section.
    (4) LDVs and LDTs not certified to meet the Tier 2 FTP exhaust 
requirements during model years 2004-2008, as allowed under this 
subpart, are subject to the provisions of paragraph (l) of this 
section. LDVs and LDTs not certified to meet the evaporative 
requirements in paragraph (e) of this section during model years 2004-
2008, as allowed under this subpart, must meet all evaporative 
requirements found in Secs. 86.1811-01, 86.1812-01, 86.1813-01, 
86.1814-02 and 86.1815-02 as applicable, and the refueling requirements 
found in paragraph (e)(3) of this section.
    (5)(i) Small volume manufacturers, as defined in this part, are 
exempt from the LDV/LLDT phase-in requirements for model years 2004, 
2005 and 2006 in Table S04-6, but must comply with the 100% requirement 
for the 2007 and later model years.
    (ii) Small volume manufacturers, as defined in this part, are 
exempt from the HLDT phase-in requirement for model year 2008 in Table 
S04-7 of this section and the interim fleet average NO&lt;INF&gt;X&lt;/INF&gt; 
standard and the phase-in of the HLDT interim non-Tier 2 FTP exhaust 
standards for the 2004, 2005 and 2006 model years.
    (iii) Small volume manufacturers must comply with the interim non-
Tier 2 FTP exhaust emission standards of bin 5 or lower from Tables 
S04-10 and 11 of this section for HLDTs of model years 2004, 2005 and 
2006; the interim non-Tier 2 FTP exhaust standards from Tables S04-10 
and 11 and the 0.20 g/mi fleet average NO&lt;INF&gt;X&lt;/INF&gt; standard for the 
2007 and 2008 model year; and the Tier 2 FTP exhaust standards, 
evaporative standards, and the 0.07 g/mi fleet average NO&lt;INF&gt;X&lt;/INF&gt; 
standard for the 2009 and later model years.

[[<strong>Page</strong> 26134]]

    (6)(i) A manufacturer may elect an alternate phase-in schedule that 
results in 100% phase-in for LDV/LLDTs by 2007 . Alternate phase-in 
schedules must produce a sum of at least 250% when the percentages of 
LDV/LLDTs certified to Tier 2 requirements for each model year from 
2001 through 2007 are summed. As an example, a 10/25/50/65/100 percent 
phase-in that began in 2003 would have a sum of 250 percent would be 
acceptable. However, a 10/25/40/70/100 percent phase-in that began the 
same year would have a sum of 245 percent and would not be acceptable.
    (ii) A manufacturer electing this option for LDV/LLDTs may 
calculate its compliance with the evaporative standards in paragraph 
(e)(1) of this section separately from its compliance with Tier 2 
exhaust standards, provided that the phase-in schedules for each 
separately produce a sum of at least 250 percent when calculated as 
described in paragraph (k)(6)(i) of this section. A vehicle counted 
towards compliance with any phase-in requirement for the Tier 2 exhaust 
standards or the evaporative standards in paragraph (e)(1) of this 
section, must comply with all applicable Tier 2 exhaust standards or 
all evaporative standards, as applicable, described in this section.
    (iii) In addition to the requirements of paragraph (k)(6)(i) and 
(ii) of this section, a manufacturer of LDV/LLDTs electing to use an 
alternate phase-in schedule for compliance with the Tier 2 exhaust 
standards or the evaporative standards in paragraph (e)(1) of this 
section must ensure that the sum of the percentages of vehicles from 
model years 2001 through 2004, meeting such exhaust or evaporative 
standards, as applicable, is at least 25%.
    (iv) A manufacturer may elect an alternate phase-in schedule that 
results in 100% phase-in for HLDTs by 2009. The requirements of 
paragraph (k)(6)(i) through (k)(6)(iii) of this section apply, except 
that for HLDTs, the calculation described in paragraph (k)(6)(i) of 
this section may cover model years 2001 through 2009 and must produce a 
sum of at least 150%.
    (7)(i) Sales percentages for the purpose of determining compliance 
with the phase-in of the Tier 2 requirements and the phase-in of the 
evaporative standards in paragraph (e)(1) of this section, must be 
based upon projected U.S. sales of LDV/LLDTs and HLDTs of the 
applicable model year by the manufacturer to the point of first sale. 
Such sales percentages must be rounded to the nearest one tenth of a 
percent, and must not include vehicles and trucks projected to be sold 
to points of first sale in California or a state that has adopted 
California requirements for that model year as permitted under section 
177 of the Act.
    (ii) Alternatively, the manufacturer may petition the Administrator 
to allow actual volume produced for U.S. sales to be used in lieu of 
projected U.S. sales for purposes of determining compliance with the 
phase-in percentage requirements under this section. The manufacturer 
must submit its petition within 30 days of the end of the model year to 
the Vehicle Programs and Compliance Division. For EPA to approve the 
use of actual volume produced for U.S. sales, the manufacturer must 
establish to the satisfaction of the Administrator, that actual 
production volume is functionally equivalent to actual sales volume of 
LDV/LLDTs and HLDTs sold in states other than California and states 
that have adopted California standards.
    (iii) Manufacturers must submit information showing compliance with 
all phase-in requirements of this section with its Part I application 
as required by Sec. 86.1844(d)(13).
    (l) FTP exhaust standards for interim non-Tier 2 LDV/LLDTs and 
HLDTs. (1) FTP exhaust emission standards for interim non-Tier 2 LDV/
LLDTs. (i) LDV/LLDTs that are not certified to meet Tier 2 FTP exhaust 
emission requirements during the Tier 2 phase-in period (model years 
2004-2006) must comply with the full useful life FTP exhaust emission 
standards listed in Table S04-8 of this section and, the corresponding 
intermediate useful life standards, if any, in Table S04-9 of this 
section. Manufacturers may choose the bin of full useful life standards 
to which they certify a test group of vehicles, subject to the 
requirements in paragraph (l)(3)(i) of this section. In addition to the 
bins shown in Tables S04-8 and S04-9 of this section, manufacturers may 
also use the Tier 2 bins shown in Tables S04-1 and S04-2 of this 
section. Manufacturers may include LDV/LLDTs in the interim program 
that are not used to meet the Tier 2 corporate average NO&lt;INF&gt;X&lt;/INF&gt; 
standard or the phase-in percentage requirements in the Tier 2 program 
or to generate Tier 2 NO&lt;INF&gt;X&lt;/INF&gt; credits. More simply, a 
manufacturer may use the Tier 2 bins for interim non-Tier 2 vehicles; 
but, in a given model year, an individual vehicle may not be included 
in both the Tier 2 program and an interim program. Tables S04-8 and 
S04-9 follow:

              Table S04-8.--Full Useful Life Interim Exhaust Mass Emission Standards for LDV/LLDTs
                                                [Grams per mile]
----------------------------------------------------------------------------------------------------------------
           EPA Bin No.                 NMOG             CO              NO&lt;INF&gt;X&lt;/INF&gt;            HCHO             PM
----------------------------------------------------------------------------------------------------------------
5...............................           0.156             4.2            0.60           0.018            0.06
4...............................           0.090             4.2            0.30           0.018            0.06
3...............................           0.055             2.1            0.30           0.011            0.04
2...............................           0.090             4.2            0.07           0.018            0.01
1...............................           0.000             0.0            0.00           0.000            0.0
----------------------------------------------------------------------------------------------------------------


          Table S04-9.--Intermediate Useful Life Interim Exhaust Mass Emission Standards for LDV/LLDTs
                                                [Grams per mile]
----------------------------------------------------------------------------------------------------------------
           EPA Bin No.                 NMOG             CO              NO&lt;INF&gt;X&lt;/INF&gt;            HCHO             PM
----------------------------------------------------------------------------------------------------------------
5...............................           0.125             3.4            0.40           0.015
4...............................           0.075             3.4            0.20           0.015
3...............................           0.040             1.7            0.20           0.008
2...............................           0.075             3.4            0.05           0.015
----------------------------------------------------------------------------------------------------------------

    (ii) Manufacturers must select a set of standards from the same bin 
in Table S04-8 of this section and the corresponding bin in Table S04-
9, if any, for a given test group of flexible-fueled, dual fuel or 
multi-fuel LDV/LLDTs, when operated

[[<strong>Page</strong> 26135]]

on the alcohol or gaseous fuel they are designed to use. When these 
flexible-fueled, dual fuel or multi fuel LDV/Ts are certified to 
operate on gasoline, the manufacturer may choose to comply with the 
next numerically higher NMOG standard (if there is one) above the bin 
which contains the standards selected for certification on the gaseous 
or alcohol fuel.
    (2) FTP exhaust emission standards for interim non-Tier 2 HLDTs. 
(i) HLDTs of model years 2004-2008 that are not certified to meet the 
Tier 2 FTP exhaust standards in paragraph (c) of this section must 
comply with the interim non-Tier 2 FTP exhaust emission standards in 
Tables S04-10 and S04-11 of this section.
    (ii) HLDTs of model years 2004-2008 that are not certified to meet 
the Tier 2 FTP exhaust standards in paragraph (c) of this section must 
also comply with the fleet average NO&lt;INF&gt;X&lt;/INF&gt; standard described in 
paragraph (l)(3)(ii) of this section subject to the phase-in schedule 
in paragraph (l)(2)(iv) of this section, i.e. 25 percent of the HLDTs 
must meet the fleet average standard of 0.20 g/mi in 2004, 50 percent 
in 2005, and so on.
    (iii) Manufacturers may choose the bin of full useful life 
standards to which they certify a test group of HLDTs, subject to the 
requirements in paragraph (l)(3)(ii) of this section. In addition to 
the bins shown in Tables S04-10 and S04-11 of this section, 
manufacturers may also use the Tier 2 bins shown in Tables S04-1 and 
S04-2 of this section. Therefore, manufacturers may include HLDTs in 
the interim program that are not used to meet the Tier 2 corporate 
average NO&lt;INF&gt;X&lt;/INF&gt; standard or the phase-in percentage requirements 
in the Tier 2 program or to generate Tier 2 NO&lt;INF&gt;X&lt;/INF&gt; credits. 
More simply, a manufacturer may use the Tier 2 bins for interim non-
Tier 2 vehicles; but, in a given model year, an individual vehicle may 
not be included in both the Tier 2 program and an interim program. 
Tables S04-10 and S04-11 follow:

                Table S04-10.--Full Useful Life Interim Exhaust Mass Emission Standards for HLDTs
                                                  [Grams/mile]
----------------------------------------------------------------------------------------------------------------
           EPA Bin No.                 NMOG             CO              NO&lt;INF&gt;X&lt;/INF&gt;            HCHO             PM
----------------------------------------------------------------------------------------------------------------
5...............................           0.230             4.2            0.60           0.018            0.06
4...............................           0.180             4.2            0.30           0.018            0.06
3...............................           0.156             4.2            0.20           0.018            0.02
2...............................           0.090             4.2            0.07           0.018            0.01
1...............................           0.000             0.0            0.00           0.000            0.0
----------------------------------------------------------------------------------------------------------------


            Table S04-11.--Intermediate Useful Life Interim Exhaust Mass Emission Standards for HLDTs
                                                [Grams per mile]
----------------------------------------------------------------------------------------------------------------
                EPA Bin No.                      NMOG             CO              NO&lt;INF&gt;X&lt;/INF&gt;            HCHO        PM
----------------------------------------------------------------------------------------------------------------
5.........................................           0.160             3.4            0.40           0.015  ....
4.........................................           0.140             3.4            0.20           0.015  ....
3.........................................           0.125             3.4            0.14           0.015  ....
2.........................................           0.075             3.4            0.05           0.015  ....
----------------------------------------------------------------------------------------------------------------

    (iv) Phase-in schedule for interim non-Tier 2 HLDT standards. Table 
S04-12 of this section specifies the minimum percentage of the 
manufacturer's non-Tier 2 HLDT U.S. sales, by model year, that must 
comply with the fleet average NO&lt;INF&gt;X&lt;/INF&gt; standard described in 
paragraph (l)(3(ii) of this section. Table S04-12 follows:

Table S04-12.--Phase-in Percentages for Interim Non-Tier 2 Fleet Average
                         NO&lt;INF&gt;X&lt;/INF&gt; Standard for HLDTs
------------------------------------------------------------------------
                                                           Percentage of
                                                            non-tier 2
                                                            HLDTs that
                                                             must meet
                       Model year                          interim non-
                                                           tier 2 fleet
                                                            average NO&lt;INF&gt;X&lt;/INF&gt;
                                                             standard
------------------------------------------------------------------------
2004....................................................              25
2005....................................................              50
2006....................................................              75
2007 and 2008...........................................             100
------------------------------------------------------------------------

    (v) A manufacturer may elect an alternate phase-in schedule, 
beginning as early as the 2001 model year, that results in 100% 
compliance by 2007 with the fleet average NO&lt;INF&gt;X&lt;/INF&gt; standard for 
HLDTs described in paragraph (1)(3)(ii) of this section. The 
requirements of paragraph (k)(6)(i) of this section apply to the 
selection of an alternate phase-in schedule.
    (vi) Manufacturers must select a set of standards from the same bin 
in Table S04-10 of this section and the corresponding bin in Table S04-
11, if any (or Tables S04-1 and S04-2 of this section), for a given 
test group of flexible-fueled, dual fuel or multi-fuel HLDTs, when 
operated on the alcohol or gaseous fuel they are designed to use. When 
these flexible-fueled, dual fuel or multi fuel HLDTs are certified to 
operate on gasoline, the manufacturer may choose to comply with the 
next numerically higher NMOG standard (if there is one) above the bin 
which contains the standards selected for certification on the gaseous 
or alcohol fuel.
    (3) Fleet average NO&lt;INF&gt;X&lt;/INF&gt; standards for interim non-Tier 2 
LDV/Ts. (i) Manufacturers must comply with a fleet average full useful 
life NO&lt;INF&gt;X&lt;/INF&gt; standard for their interim non-Tier 2 LDV/LLDTs, on 
an annual basis, of 0.30 grams per mile.
    (ii) Manufacturers must comply with a fleet average full useful 
life NO&lt;INF&gt;X&lt;/INF&gt; standard for their interim non-Tier 2 HLDTs, 
excluding those HLDTs not yet covered by the phase-in requirement 
described in paragraph (l)(2)(ii) of this section, on an annual basis, 
of 0.20 grams per mile.
    (iii) Manufacturers must determine their compliance with these 
interim fleet average NO&lt;INF&gt;X&lt;/INF&gt; standards for each model year by 
separately computing the sales weighted average NO&lt;INF&gt;X&lt;/INF&gt; level of 
all interim non-Tier 2 LDV/LLDTs and all interim non-Tier 2 HLDTs 
(excluding those not yet phased in as described in paragraph (l)(2)(ii) 
of this section), using the methodology in Sec. 86.1860.

[[<strong>Page</strong> 26136]]

    (iv) Manufacturers may generate, bank, average, trade and use 
interim non-Tier 2 NO&lt;INF&gt;X&lt;/INF&gt; credits based on their NO&lt;INF&gt;X&lt;/INF&gt; 
fleet average as determined under paragraph (l)(3)(iii) of this 
section. Unless waived or modified by the Administrator, the provisions 
of Sec. 86.1861 apply to the generation, banking, averaging, trading 
and use of credits generated by interim non-Tier 2 LDV/Ts. 
NO&lt;INF&gt;X&lt;/INF&gt; credits generated by interim non-Tier 2 LDV/Ts are not 
subject to any discount.
    (m) NMOG standards for diesel, flexible fueled and dual-fueled LDV/
Ts. (1) For diesel fueled LDV/Ts, the term ``NMOG'' in both the Tier 2 
and interim non-Tier 2 standards means non-methane hydrocarbons.
    (2) Flexible-fueled and dual-fuel Tier 2 LDV/Ts and interim non-
Tier 2 
LDV/Ts must be certified to NMOG exhaust emission standards both for 
operation on gasoline and on any alternate fuel they are designed to 
use.
    (n) Hybrid electric vehicle (HEV) and Zero Emission Vehicle (ZEV) 
requirements. For FTP and SFTP exhaust emissions, and unless otherwise 
approved by the Administrator, manufacturers must measure emissions 
from all HEVs and ZEVs according to the requirements and test 
procedures found in the document entitled California Zero-Emission and 
Hybrid Electric Vehicle Exhaust Emission Standards and Test Procedures 
for 2003 and Subsequent Model Passenger Cars, Light-duty Trucks and 
Medium-duty Vehicles. This document is incorporated by reference (see 
Sec. 86.1) . Requirements and procedures in this document that are 
relevant only to complying with the California ZEV mandate, computing 
partial and full ZEV allowance credits, or generating and using ZEV 
credits, are not relevant to the federal program and may be 
disregarded. Discussion in that document relevant to fleet average NMOG 
standards and NMOG credits may also be disregarded.
    (o) NMOG measurement. (1) Manufacturers must measure NMOG emissions 
in accordance with Part G of the California Non-Methane Organic Gas 
Test Procedures. These requirements are incorporated by reference (see 
Sec. 86.1).
    (2) Manufacturers must not apply reactivity adjustment factors 
(RAFs) to NMOG measurements. See Sec. 86.1841.
    (p) In-use standards for Tier 2 LDV/Ts. (1) Table S04-13 of this 
section contains in-use emission standards applicable only to Tier 2 
LDV/Ts certified to the bins shown in the table. These standards apply 
to in-use testing performed by the manufacturer pursuant to regulations 
at Secs. 1845-01, 1845-04 and 1846-01 and to in-use testing performed 
by EPA. These standards do not apply to certification or Selective 
Enforcement Auditing.
    (2) These standards apply only to Tier 2 LDV/LLDTs produced up 
through the 2008 model year, and Tier 2 HLDTs produced up through the 
2010 model year. These standards are subject to other limitations 
described in paragraph (p)(3) of this section.
    (3) For the first model year and also for the next model year after 
that, in which a test group of Tier 2 vehicles is certified to a bin of 
standards to which it has not previously been certified, the standards 
in Table S04-13 of this section apply for purposes of in-use testing 
only. The standards apply equally to Tier 2 LDV/Ts produced before, 
during and after the applicable Tier 2 phase-in period, subject to the 
model year limitation in paragraph (p)(2) of this section. Table S04-13 
follows:

                      Table S04-13.--In-Use Compliance Standards for Tier 2 Vehicles (g/mi)
                             [Certification standards shown for reference purposes]
----------------------------------------------------------------------------------------------------------------
                                Durability                          NO&lt;INF&gt;X&lt;/INF&gt;
           Bin No.            period (miles)    NO&lt;INF&gt;X&lt;/INF&gt; in-use     certification    NMOG in-use   NMOG certification
----------------------------------------------------------------------------------------------------------------
5,4.........................          50,000            0.07            0.05             n/a  0.075, 0.04
5,4.........................         120,000            0.10            0.07             n/a  0.090, 0.055
3...........................         120,000            0.06            0.04             n/a  0.070
2...........................         120,000            0.03            0.02            0.02  0.010
----------------------------------------------------------------------------------------------------------------

    22. Section 86.1812-01 is amended by adding the following sentence 
to the end of the introductory text to read as follows:


Sec. 86.1812-01  Emission standards for light-duty trucks 1.

    * * * This section does not apply to 2004 and later model year 
vehicles, except as specifically referenced by Sec. 86.1811-04.
* * * * *
    23. Section 86.1813-01 is amended by adding the following sentence 
to the end of the introductory text to read as follows:


Sec. 86.1813-01  Emission standards for light-duty trucks 2.

    * * * This section does not apply to 2004 and later model year 
vehicles, except as specifically referenced by Sec. 86.1811-04.
* * * * *
    24. Section 86.1814-02 is amended by adding the following sentence 
to the end of the introductory text to read as follows:


Sec. 86.1814-02  Emission standards for light-duty trucks 3.

    * * * This section does not apply to 2004 and later model year 
vehicles, except as specifically referenced by Sec. 86.1811-04.
* * * * *


Sec. 86.1814-04  [Removed]

    25. Section 86.1814-04 is removed.
    26. Section 86.1815-02 is amended by adding the following sentence 
to the end of the introductory text to read as follows:


Sec. 86.1815-02  Emission standards for light-duty trucks 4.

    * * * This section does not apply to 2004 and later model year 
vehicles, except as specifically referenced by Sec. 86.1811-04.
* * * * *


Sec. 86.1815-04  [Removed]

    27. Section 86.1815-04 is removed.
    28. Section 86.1824-01 is amended by adding paragraphs (a)(2)(iii) 
and (a)(2)(iv) to read as follows:


Sec. 86.1824-01  Durability demonstration procedures for evaporative 
emissions.

* * * * *
    (a) * * *
    (2) * * *
    (iii) For gasoline fueled LDV/Ts certified to meet the evaporative 
emission standards set forth in Sec. 86.1811-04(e)(1), any service 
accumulation method for evaporative emissions must employ gasoline fuel 
for the entire service accumulation period which contains ethanol in, 
at least, the highest concentration permissible in gasoline under 
federal law and that is

[[<strong>Page</strong> 26137]]

commercially available in any state in the United States. Unless 
otherwise approved by the Administrator, the manufacturer must 
determine the appropriate ethanol concentration by selecting the 
highest legal concentration commercially available during the calendar 
year before the one in which the manufacturer begins its service 
accumulation. The manufacturer must also provide information acceptable 
to the Administrator to indicate that the service accumulation method 
is of sufficient design, duration and severity to stabilize the 
permeability of all non-metallic fuel and evaporative system components 
to the service accumulation fuel constituents.
    (iv) For flexible-fueled, dual-fueled, multi-fueled, ethanol-fueled 
and methanol-fueled LDV/Ts certified to meet the evaporative emission 
standards set forth in Sec. 86.1811-04(e)(1), any service accumulation 
method must employ fuel for the entire service accumulation period 
which the vehicle is designed to use and which the Administrator 
determines will have the greatest impact upon the permeability of 
evaporative and fuel system components. The manufacturer must also 
provide information acceptable to the Administrator to indicate that 
the service accumulation method is of sufficient design, duration and 
severity to stabilize the permeability of all non-metallic fuel and 
evaporative system components to service accumulation fuel 
constituents.
* * * * *
    29. Section 86.1827-01 is amended by adding paragraph (e) to read 
as follows:


Sec. 86.1827-01  Test group determination.

* * * * *
    (e) Unless otherwise approved by the Administrator, a manufacturer 
of hybrid electric vehicles must create separate test groups based on 
both the type of battery technology employed by the HEV and upon 
features most related to their exhaust emission characteristics.
    30. Section 86.1829-01 is amended by adding paragraph (d) to read 
as follows:


Sec. 86.1829-01  Durability and emission testing requirements; waivers.

* * * * *
    (d)(1) Beginning in the 2004 model year, the exhaust emissions must 
be measured from all exhaust emission data vehicles tested in 
accordance with the federal Highway Fuel Economy Test (HWFET; 40 CFR 
part 600, subpart B). The oxides of nitrogen emissions measured during 
such tests must be multiplied by the oxides of nitrogen deterioration 
factor computed in accordance with Sec. 86.1824-01 and subsequent model 
year provisions, and then rounded and compared with the applicable 
emission standard in Sec. 86.1811-04. All data obtained from the 
testing required under this paragraph (d) must be reported in 
accordance with the procedures for reporting other exhaust emission 
data required under this subpart.
    (2) In the event that one or more emission data vehicles fail the 
applicable HWFET standard in Sec. 86.1811-04, the manufacturer may 
submit to the Administrator engineering data or other evidence showing 
that the system is capable of complying with the standard. If the 
Administrator finds, on the basis of an engineering evaluation, that 
the system can comply with the HWFET standard, he or she may accept the 
information supplied by the manufacturer in lieu of the test data.
    31. Section 86.1837-01 is amended by designating the existing text 
as paragraph (a) and by adding paragraph (b) to read as follows:


Sec. 86.1837-01  Rounding of emission measurements.

* * * * *
    (b) Fleet average NO&lt;INF&gt;X&lt;/INF&gt; value calculations, where 
applicable, must be rounded to one more decimal place than that of the 
applicable fleet average standard before comparing with the applicable 
fleet average NO&lt;INF&gt;X&lt;/INF&gt; standard to determine credit generation or 
credit needs.
    32. Section 86.1838-01 is amended by revising paragraph (c)(2)(iii) 
to read as follows:


Sec. 86.1838-01  Small volume manufacturer certification procedures.

* * * * *
    (c) * * *
    (2) * * *
    (iii) The provisions of Sec. 86.1845-01(c)(2) and Sec. 86.1845-
04(c)(2) that require one vehicle of each test group during high 
mileage in-use verification testing to have a minimum odometer mileage 
of 75 percent of the full useful life mileage for Tier 1 and NLEV LDV/
Ts, or 90,000 (or 105,000) miles for Tier 2 and interim non-Tier 2 LDV/
Ts, do not apply.
* * * * *
    33. Section 86.1840-01 is amended by adding paragraph (c) to read 
as follows:


Sec. 86.1840-01  Special test procedures.

* * * * *
    (c) Manufacturers of LDV/Ts equipped with periodically regenerating 
trap oxidizer systems must propose a procedure for testing and 
certifying such LDV/Ts including SFTP testing for the review and 
approval of the Administrator. The manufacturer must submit its 
proposal before it begins any service accumulation or emission testing. 
The manufacturer must provide with its submittal, sufficient 
documentation and data for the Administrator to fully evaluate the 
operation of the trap oxidizer system and the proposed certification 
and testing procedure.
    34. Section 86.1841-01 is amended by revising paragraph (a)(1)(iii) 
and adding paragraph (e) to read as follows:


Sec. 86.1841-01  Compliance with emission standards for the purpose of 
certification.

    (a) * * *
    (1) * * *
    (iii) For the SFTP composite standard of NMHC+NO&lt;INF&gt;X&lt;/INF&gt;, the 
measured results of NMHC and NO&lt;INF&gt;X&lt;/INF&gt; must each be adjusted by 
their corresponding deterioration factors before the composite 
NMHC+NO&lt;INF&gt;X&lt;/INF&gt; certification level is calculated. Where the 
applicable FTP exhaust hydrocarbon emission standard is an NMOG 
standard, the applicable NMOG deterioration factor must be used in 
place of the NMHC deterioration factor, unless otherwise approved by 
the Administrator.
* * * * *
    (e) Unless otherwise approved by the Administrator, manufacturers 
must not use Reactivity Adjustment Factors (RAFs) in their calculation 
of the certification levels of any pollutant, regardless of the fuel 
used in the test vehicle.
    35. Section 86.1844-01 is amended by adding a new paragraph 
(d)(15), a new paragraph (e)(6) and a new paragraph (i) to read as 
follows:


Sec. 86.1844-01  Information requirements: Application for 
certification and submittal of information upon request.

* * * * *
    (d) * * *
    (15) For HEVs, unless otherwise approved by the Administrator, the 
information required by the ``California Zero-Emission and Hybrid 
Electric Vehicle Standards and Test Procedures for 2003 and Subsequent 
Model Year Passenger Cars, Light-Duty Trucks and Medium-duty Vehicles'' 
must be supplied. These procedures are incorporated by reference (see 
Sec. 86.1).
    (e) * *  *
    (6) The NMOG/NMHC and formaldehyde to NMHC ratios established 
according to Sec. 86.1845-04.
* * * * *
    (i) For exhaust emission testing for Tier 2 and interim non-Tier 2 
LDV/Ts, if approved by the Administrator in advance, manufacturers may 
submit exhaust emission test data generated

[[<strong>Page</strong> 26138]]

under California test procedures to comply with any certification and 
in-use testing requirements under this subpart. The Administrator may 
require supporting information to establish that differences between 
California and Federal exhaust testing procedures and fuels will not 
produce significant differences in emission results. The Administrator 
may require that in-use testing be performed using Federal test fuels 
as specified in Sec. 86.113-04(a)(1).
    36. Section 86.1845-04 is amended by redesignating the text of 
paragraph (a) after the paragraph heading as paragraph (a)(1), adding 
paragraph (a)(2), revising paragraph (c)(2) and adding paragraph (f) to 
read as follows:


Sec. 86.1845-04  Manufacturer in-use verification testing requirements.

    (a) General requirements. (1) * * *
    (2) Unless otherwise approved by the Administrator, no emission 
measurements made under the requirements of this section may be 
adjusted by Reactivity Adjustment Factors (RAFs).
* * * * *
    (c) * * *
    (2) Vehicle mileage:
    (i) All test vehicles must have a minimum odometer mileage of 
50,000 miles. At least one vehicle of each test group must have a 
minimum odometer mileage of 75 percent of the full useful life mileage. 
See Sec. 86.1838-01(c)(2) for small volume manufacturer mileage 
requirements; or
    (ii) For engine families certified for a useful life of 150,000 
miles, at least one vehicle must have a minimum odometer mileage of 
105,000 miles. See Sec. 86.1838-01(c)(2) for small volume manufacturer 
mileage requirements.
* * * * *
    (f)(1) As an alternative to measuring the NMOG content, the 
Administrator may approve, upon submission of supporting data by a 
manufacturer, the use of NMOG to NMHC ratios. To request the use of 
NMOG to NMHC ratios, a manufacturer must establish during certification 
testing the ratio of measured NMOG exhaust emissions to measured NMHC 
exhaust emissions for each emission data vehicle for the applicable 
test group. The results must be submitted to the Administrator in the 
Part II application for certification. A manufacturer may conduct in-
use testing on the test group by measuring NMHC exhaust emissions 
rather than NMOG exhaust emissions. After approval by the 
Administrator, the measured NMHC exhaust emissions must be multiplied 
by the NMOG to NMHC ratio submitted in the application for 
certification for the test group to determine the equivalent NMOG 
exhaust emission values for the test vehicle. The equivalent NMOG 
exhaust emission value must be used in place of the measured NMOG 
exhaust emission value in determining the exhaust NMOG results. The 
equivalent NMOG exhaust emission values must be compared to the NMOG 
exhaust emission standard from the emission bin to which the test group 
was certified.
    (2) For flexible-fueled LDV/Ts certified to NMOG standards, the 
manufacturer may request from the Administrator the use of a methanol 
(M85) or ethanol (E85) NMOG exhaust emission to gasoline NMHC exhaust 
emission ratio which must be established during certification for each 
emission data vehicle for the applicable test group. The results must 
be submitted to the Administrator in the Part II application for 
certification. After approval by the Administrator, the measured 
gasoline NMHC exhaust emissions must be multiplied by the M85 or E85 
NMOG to gasoline NMHC ratio submitted in the application for 
certification for the test group to determine the equivalent NMOG 
exhaust emission values for the test vehicle. The equivalent NMOG 
exhaust emission value must be used in place of the measured NMOG 
exhaust emission value in determining the exhaust NMOG results. The 
equivalent NMOG exhaust emission values must be compared to the NMOG 
exhaust emission standard from the vehicle emission standard bin to 
which the test group was certified.
    (3) As an alternative to measuring the HCHO content, the 
Administrator may approve, upon submission of supporting data by a 
manufacturer, the use of HCHO to NMHC ratios. To request the use of 
HCHO to NMHC ratios, the manufacturer must establish during 
certification testing the ratio of measured HCHO exhaust emissions to 
measured NMHC exhaust emissions for each emission data vehicle for the 
applicable test group. The results must be submitted to the 
Administrator with the Part II application for certification. Following 
approval of the application for certification, the manufacturer may 
conduct in-use testing on the test group by measuring NMHC exhaust 
emissions rather than HCHO exhaust emissions. The measured NMHC exhaust 
emissions must be multiplied by the HCHO to NMHC ratio submitted in the 
application for certification for the test group to determine the 
equivalent HCHO exhaust emission values for the test vehicle. The 
equivalent HCHO exhaust emission values must be compared to the HCHO 
exhaust emission standard applicable to the test group.
    37. Section 86.1846-01 is amended by redesignating paragraph (a) as 
paragraph (a)(1) and adding paragraph (a)(2) to read as follows:


Sec. 86.1846-01  Manufacturer in-use confirmatory testing requirements.

    (a)(1) * * *
    (2) Except for vehicles certified under the NLEV provisions of 
subpart R of this part or unless otherwise approved by the 
Administrator, no emission measurements made under the requirements of 
this section may be adjusted by Reactivity Adjustment Factors (RAFs).
* * * * *
    38. Section 86.1848-01 is amended by adding paragraph (c)(7) to 
read as follows:


Sec. 86.1848-01  Certification.

* * * * *
    (c) * * *
    (7) For Tier 2 LDV/Ts and interim non-Tier 2 LDV/Ts, all 
certificates of conformity issued are conditional upon compliance with 
all provisions of Secs. 86.1811-04, 86.1860-04, 86.1861-04 and 86.1862-
04 both during and after model year production.
    (i) Failure to meet the fleet average NO&lt;INF&gt;X&lt;/INF&gt; requirements 
of 0.07g/mi, 0.30
g/mi or 0.20 g/mi, as applicable, will be considered to be a failure to 
satisfy the terms and conditions upon which the certificate(s) was 
(were) issued and the LDV/Ts sold in violation of the fleet average 
NO&lt;INF&gt;X&lt;/INF&gt; standard will not be covered by the certificate(s).
    (ii) Failure to comply fully with the prohibition against selling 
credits that it has not generated or that are not available, as 
specified in Sec. 86.1861-04, will be considered to be a failure to 
satisfy the terms and conditions upon which the certificate(s) was 
(were) issued and the LDV/Ts sold in violation of this prohibition will 
not be covered by the certificate(s).
    (iii) Failure to comply fully with the phase-in requirements of 
Sec. 86.1811-04, will be considered to be a failure to satisfy the 
terms and conditions upon which the certificate(s) was (were) issued 
and the LDV/Ts sold which do not comply with Tier 2 or interim non-Tier 
2 requirements, up to the number needed to comply, will not be covered 
by the certificate(s).
    (iv) For paragraphs (c)(7) (i) through (iii) of this section:
    (A) The manufacturer must bear the burden of establishing to the 
satisfaction of the Administrator that the terms and conditions upon 
which the certificate(s) was (were) issued were satisfied.

[[<strong>Page</strong> 26139]]

    (B) For recall and warranty purposes, LDV/Ts not covered by a 
certificate of conformity will continue to be held to the standards 
stated or referenced in the certificate that otherwise would have 
applied to the LDV/Ts
* * * * *


Secs. 86.1854 through 86.1859  [Reserved]

    39. Sections 86.1854 through 86.1859 are added and reserved.
    40. Section 86.1860-04 is added to read as follows:


Sec. 86.1860-04  How to comply with the Tier 2 and interim non-Tier 2 
fleet average NO&lt;INF&gt;X&lt;/INF&gt; standards.

    (a) The fleet average standards referred to in this section are the 
corporate fleet average standards for FTP exhaust NO&lt;INF&gt;X&lt;/INF&gt; 
emissions set forth in: Sec. 86.1811-04(d) for Tier 2 LDV/Ts (0.07 g/
mi); Sec. 86.1811-04(l)(3) for interim non-Tier 2 LDV/LLDTs (0.30 g/
mi); and, Sec. 86.1811-04(l)(3) for interim non-Tier 2 HLDTs (0.20 g/
mi). Unless otherwise indicated in this section, the provisions of this 
section apply to all three corporate fleet average standards, except 
that the interim non-Tier 2 fleet average NO&lt;INF&gt;X&lt;/INF&gt; standards do 
not apply to a manufacturer whose U.S. LDV/T sales are 100% Tier 2 LDV/
Ts.
    (b) Each manufacturer must comply with the applicable fleet average 
NO&lt;INF&gt;X&lt;/INF&gt; standard, or standards, on a sales weighted average 
basis, at the end of each model year, using the procedure described in 
this section.
    (c)(1)(i) Each manufacturer must separately compute the sales 
weighted averages of the individual NO&lt;INF&gt;X&lt;/INF&gt; emission standards 
to which it certified all its Tier 2 LDV/Ts, interim non-Tier 2 LDV/
LLDTs, and interim non-Tier 2 HLDTs of a given model year as described 
in Sec. 86.1804(l)(2). The averages must be rounded to the same number 
of decimal places as those of the standard plus one additional decimal 
place.
    (ii) For model years up to and including 2008, manufacturers must 
compute separate NO&lt;INF&gt;X&lt;/INF&gt; fleet averages for Tier 2 LDV/LLDTs and 
Tier 2 HLDTs.
    (2)(i) For model years up to and including 2008, if a manufacturer 
certifies its entire U.S. sales of Tier 2 or interim non-Tier 2 LDV/
LLDTs or interim non-Tier 2 HLDTs, to full useful life bins having 
NO&lt;INF&gt;X&lt;/INF&gt; standards at or below the applicable fleet average 
NO&lt;INF&gt;X&lt;/INF&gt; standard, that manufacturer may elect not to compute a 
fleet average NO&lt;INF&gt;X&lt;/INF&gt; level for that category of vehicles. A 
manufacturer making such an election must not generate NO&lt;INF&gt;X&lt;/INF&gt; 
credits for that category of vehicles for that model year.
    (ii) For model years after 2008, if a manufacturer certifies its 
entire U.S. sales of Tier 2 vehicles to full useful life bins having 
NO&lt;INF&gt;X&lt;/INF&gt; standards at or below 0.07 gpm, that manufacturer may 
elect not to compute a fleet average NO&lt;INF&gt;X&lt;/INF&gt; level for its Tier 
2 vehicles. A manufacturer making such an election must not generate 
NO&lt;INF&gt;X&lt;/INF&gt; credits for that model year.
    (d) The sales weighted NO&lt;INF&gt;X&lt;/INF&gt; fleet averages determined 
pursuant to paragraph (c) of this section must be compared with the 
applicable fleet average standard; 0.07 g/mi for NO&lt;INF&gt;X&lt;/INF&gt; for 
Tier 2 LDV/Ts, 0.30 g/mi for NO&lt;INF&gt;X&lt;/INF&gt; for interim non-Tier 2 LDV/
LLDTs, and 0.20 g/mi for NO&lt;INF&gt;X&lt;/INF&gt; for interim non-Tier 2 HLDTs. 
Each manufacturer must comply on an annual basis with the fleet average 
standards by:
    (1) showing that its sales weighted average NO&lt;INF&gt;X&lt;/INF&gt; 
emissions of its LDV/LLDTs, HLDTs or LDV/Ts, as applicable, are at or 
below the applicable fleet average standard; or
    (2) if the sales weighted average is not at or below the applicable 
fleet average standard, obtaining and applying sufficient Tier 2 
NO&lt;INF&gt;X&lt;/INF&gt; credits, interim non-Tier 2 LDV/LLDT NO&lt;INF&gt;X&lt;/INF&gt; 
credits or interim non-Tier 2 HLDT NO&lt;INF&gt;X&lt;/INF&gt; credits as permitted 
under Sec. 86.1861-04 of this part. Manufacturers may not use NMOG 
credits generated under the NLEV program in subpart R of this part to 
meet any Tier 2 or interim non-Tier 2 NO&lt;INF&gt;X&lt;/INF&gt; fleet average 
standard. Tier 2 NO&lt;INF&gt;X&lt;/INF&gt; credits may not be used to meet any 
fleet average interim non-Tier 2 NO&lt;INF&gt;X&lt;/INF&gt; standard. Interim non-
Tier 2 NO&lt;INF&gt;X&lt;/INF&gt; credits may not be used to meet the Tier 2 
corporate average NO&lt;INF&gt;X&lt;/INF&gt; standard. Interim non-Tier 2 
NO&lt;INF&gt;X&lt;/INF&gt; credits from HLDTs may not be used to meet the fleet 
average NO&lt;INF&gt;X&lt;/INF&gt; standard for interim non-Tier 2 LDV/LLDTs, and 
interim non-Tier 2 credits from LDV/LLDTs may not be used to meet the 
fleet average NO&lt;INF&gt;X&lt;/INF&gt; standard for interim non-Tier 2 HLDTs.
    (e) Manufacturers that can not meet the requirements of paragraph 
(d) of this section, may carry forward a credit deficit for one model 
year, but may not carry a deficit forward in two consecutive model 
years, except that manufacturers may carry forward a credit deficit for 
interim non-Tier 2 LDV/LLDTs or interim non-Tier 2 HLDTs for more than 
one year but must cover the LDV/LLDT credit deficit with interim non-
Tier 2 LDV/LLDT NO&lt;INF&gt;X&lt;/INF&gt; credits by the end of model year 2006, 
and any interim non-Tier 2 HLDT deficit with interim non-Tier 2 HLDT 
NO&lt;INF&gt;X&lt;/INF&gt; credits by the end of model year 2008. No deficit from 
interim non-Tier 2 LDV/LLDTs of any model year may be carried forward 
into the 2007 model year. No deficit from interim non-Tier 2 HLDTs may 
be carried forward into the 2009 model year.
    (f) Computing fleet average NO&lt;INF&gt;X&lt;/INF&gt; emissions. (1) 
Manufacturers must separately compute these fleet NO&lt;INF&gt;X&lt;/INF&gt; 
averages using the equation contained in paragraph (f)(2) of this 
section:
    (i) Their Tier 2 LDV/LLDT and Tier 2 HLDT fleet average 
NO&lt;INF&gt;X&lt;/INF&gt; emissions for each model year through 2008;
    (ii) Their Tier 2 LDV/T fleet average NO&lt;INF&gt;X&lt;/INF&gt; emissions for 
each model year after 2008;
    (iii) Their interim non-Tier 2 LDV/LDT fleet average NO&lt;INF&gt;X&lt;/INF&gt; 
emissions for each model year through 2006; and
    (iv) Their interim non-Tier 2 HLDT fleet average NO&lt;INF&gt;X&lt;/INF&gt; 
emissions for each model year through 2008.
    (2) The equation for computing fleet average NO&lt;INF&gt;X&lt;/INF&gt; 
emissions is as follows:
[GRAPHIC] [TIFF OMITTED] TP13MY99.011

Where:
N = The number of LDV/Ts sold in the applicable category that were 
certified for each corresponding NO&lt;INF&gt;X&lt;/INF&gt; emission bin. N must be 
based on LDV/Ts counted to the point of first sale.
Emission standard = The individual full useful life NO&lt;INF&gt;X&lt;/INF&gt; 
emission standard for each bin for which the manufacturer had sales.

    (3) The results of the calculation in paragraph (f)(2) of this 
section must be rounded to one more decimal place than the number of 
decimal places of the fleet average NO&lt;INF&gt;X&lt;/INF&gt; standard.
    (4) When approved in advance by the Administrator, the numerator in 
the equation in paragraph (f)(2) of this section may be adjusted 
downward by the product of the number of HEVs from each NO&lt;INF&gt;X&lt;/INF&gt; 
emission bin times a HEV NO&lt;INF&gt;X&lt;/INF&gt; contribution factor determined 
through mathematical estimation of the reduction in NO&lt;INF&gt;X&lt;/INF&gt; 
emissions over the

[[<strong>Page</strong> 26140]]

test procedure used to certify the HEVs. The reduction in 
NO&lt;INF&gt;X&lt;/INF&gt; emissions must be determined using good engineering 
judgement and reflect the relation in actual full useful life 
NO&lt;INF&gt;X&lt;/INF&gt; emissions to the full useful life NO&lt;INF&gt;X&lt;/INF&gt; 
standards for the certification bin applicable to the LDV/Ts. The 
Administrator may require that calculation of the HEV NO&lt;INF&gt;X&lt;/INF&gt; 
contribution factor include vehicle parameters such as vehicle weight, 
portion of time during the test procedure that the HEV operates with 
zero exhaust emissions, zero emission range, NO&lt;INF&gt;X&lt;/INF&gt; emissions 
from fuel-fired heaters and NO&lt;INF&gt;X&lt;/INF&gt; emissions from electricity 
production and storage.
    (g) Additional credits for LDV/Ts certified to 150,000 mile useful 
lives. A manufacturer may certify any Tier 2 test group to an optional 
useful life of 150,000 miles. For any test group certified to the 
optional 150,000 mile useful life, the manufacturer, when calculating 
its fleet average by the procedure in paragraph (f) of this section, 
may substitute an adjusted NO&lt;INF&gt;X&lt;/INF&gt; standard for the applicable 
NO&lt;INF&gt;X&lt;/INF&gt; standards from the full useful life certification bin. 
The adjusted standard must be equal to the applicable full useful life 
NO&lt;INF&gt;X&lt;/INF&gt; standard multiplied by 0.85 and rounded to the same 
number of decimal places as the applicable full useful life 
NO&lt;INF&gt;X&lt;/INF&gt; standard.
    41. Section 86.1861-04 is added to read as follows:


Sec. 86.1861-04  How do the Tier 2 and interim non-Tier 2 
NO&lt;INF&gt;X&lt;/INF&gt; averaging, banking and trading programs work?

    (a) General provisions for Tier 2 credits and debits. (1) A 
manufacturer whose Tier 2 fleet average NO&lt;INF&gt;X&lt;/INF&gt; emissions 
exceeds the 0.07 g/mile standard must complete the calculation at 
paragraph (b) of this section to determine the size of its 
NO&lt;INF&gt;X&lt;/INF&gt; credit deficit. A manufacturer whose Tier 2 fleet 
average NO&lt;INF&gt;X&lt;/INF&gt; emissions is less than or equal to the 0.07 g/
mile standard must complete the calculation in paragraph (b) of this 
section if it desires to generate NO&lt;INF&gt;X&lt;/INF&gt; credits. In either 
case, the number of credits or debits determined in the calculation at 
paragraph (b) of this section must be rounded to the nearest whole 
number.
    (2) Credits generated according to the calculation in paragraph 
(b)(1) of this section may be banked for future use or traded to 
another manufacturer.
    (3) NO&lt;INF&gt;X&lt;/INF&gt; credits are not subject to any discount or 
expiration date.
    (4) If a manufacturer calculates that it has negative credits 
(debits or a credit deficit) for a given model year, it must obtain 
sufficient credits from LDV/Ts produced by itself or another 
manufacturer in a model year no later than the one following the model 
year for which it calculated the credit deficit. (Example: if a 
manufacturer calculates that it has a NO&lt;INF&gt;X&lt;/INF&gt; credit deficit for 
the 2008 model year, it must obtain sufficient NO&lt;INF&gt;X&lt;/INF&gt; credits 
to offset that deficit from its own production or that of other 
manufacturers' 2009 or earlier model year LDV/Ts.)
    (5) A manufacturer must not have a NO&lt;INF&gt;X&lt;/INF&gt; credit deficit 
for any two consecutive model years. (Example: A manufacturer that has 
a NO&lt;INF&gt;X&lt;/INF&gt; credit deficit at the end of the 2008 model year from 
its 2008 production that it can not offset with NO&lt;INF&gt;X&lt;/INF&gt; credits 
from 2008 or earlier model year LDV/Ts as allowed under this subpart, 
must not also have a NO&lt;INF&gt;X&lt;/INF&gt; credit deficit at the end of the 
2009 model year.)
    (6) Manufacturers may not use NO&lt;INF&gt;X&lt;/INF&gt; credits generated in 
the Tier 2 program to comply with the NLEV requirements of subpart R of 
this part. Manufacturers may not use NMOG credits generated by vehicles 
certified to the NLEV requirements of subpart R of this part to comply 
with any NO&lt;INF&gt;X&lt;/INF&gt; requirements of this subpart. Manufacturers may 
not use NO&lt;INF&gt;X&lt;/INF&gt; credits generated by interim non-Tier 2 LDV/Ts 
to comply with the corporate average NO&lt;INF&gt;X&lt;/INF&gt; standard for Tier 2 
LDV/Ts. Manufacturers may not use NO&lt;INF&gt;X&lt;/INF&gt; credits generated by 
Tier 2 LDV/Ts to comply with any corporate average NO&lt;INF&gt;X&lt;/INF&gt; 
standard for interim non-Tier 2 LDV/Ts. Manufacturers may not use 
NO&lt;INF&gt;X&lt;/INF&gt; credits generated by interim non-Tier 2 LDV/LLDTs to 
comply with the corporate average NO&lt;INF&gt;X&lt;/INF&gt; standard for interim 
non-Tier 2 HLDTs. Manufacturers may not use NO&lt;INF&gt;X&lt;/INF&gt; credits 
generated by interim non-Tier 2 HLDTs to comply with the corporate 
average NO&lt;INF&gt;X&lt;/INF&gt; standard for interim non-Tier 2 LDV/LLDTs.
    (7) Manufacturers may bank Tier 2 NO&lt;INF&gt;X&lt;/INF&gt; credits for later 
use to meet the Tier 2 corporate average NO&lt;INF&gt;X&lt;/INF&gt; standard or 
trade them to another manufacturer. Credits are earned on the last day 
of the model year. Before trading or carrying over credits to the next 
model year, a manufacturer must apply available credits to offset any 
credit deficit, where the deadline to offset that credit deficit has 
not yet passed.
    (8) There are no property rights associated with NO&lt;INF&gt;X&lt;/INF&gt; 
credits generated under this subpart. Credits are a limited 
authorization to emit the designated amount of emissions. Nothing in 
this part or any other provision of law should be construed to limit 
EPA's authority to terminate or limit this authorization through a 
rulemaking.
    (b) Calculating Tier 2 credits and debits. (1) Manufacturers that 
achieve fleet average NO&lt;INF&gt;X&lt;/INF&gt; values from the calculation in 
Sec. 86.1860-04(f), lower than the applicable fleet average 
NO&lt;INF&gt;X&lt;/INF&gt; standard, may generate credits for a given model year, 
in units of vehicle-g/mi NO&lt;INF&gt;X&lt;/INF&gt;, determined in this equation:

[(Fleet Average NO&lt;INF&gt;X&lt;/INF&gt; Standard)-(Manufacturer's Fleet Average 
NO&lt;INF&gt;X&lt;/INF&gt; Value)]  x  (Total number of Tier 2 LDV/Ts Sold, 
Including ZEVs and HEVs)

Where: The number of Tier 2 LDV/Ts sold is based on the point of first 
sale and does not include vehicles sold in California or a state that 
adopts, and has in effect for that model year, California emission 
requirements.

    (2) Where the result of the calculation in paragraph (b)(1) of this 
section is a negative number, the manufacturer must generate negative 
NO&lt;INF&gt;X&lt;/INF&gt; credits (debits).
    (c) Early banking. (1)(i) Manufacturers may certify LDV/LLDTs to 
the Tier 2 FTP exhaust standards in Sec. 86.1811-04 for model years 
2001-2003 in order to bank credits for use in the 2004 and later model 
years. Such vehicles must also meet SFTP exhaust emission standards 
specified in Sec. 86.1811-04.
    (ii) Manufacturers may certify HLDTs to the Tier 2 FTP exhaust 
standards in Sec. 86.1811-04 for model years 2004-2007 in order to bank 
credits for use in the 2008 and later model years. Such vehicles must 
also meet SFTP exhaust emission standards specified in Sec. 86.1811-04.
    (iii) This process is referred to as ``early banking'' and the 
resultant credits are referred to as ``early credits''. In order to 
bank early credits, a manufacturer must comply with all exhaust 
emission standards and requirements applicable to Tier 2 LDV/LLDTs and/
or HLDTs, as applicable, except as allowed under paragraph (c)(4) of 
this section.
    (2) To generate early credits, a manufacturer must separately 
compute the sales weighted NO&lt;INF&gt;X&lt;/INF&gt; average of the LDV/LLDTs and 
HLDTs it certifies to the Tier 2 exhaust requirements and separately 
compute credits using the calculations in this section and in 
Sec. 86.1860-04.
    (3) Early HLDT credits may not be applied to LDV/LLDTs before the 
2009 model year. Early LDV/LLDT credits may not be applied to HLDTs 
before the 2009 model year.
    (4) Manufacturers may generate early Tier 2 credits from LDVs, 
LDT1s and LDT2s that are certified to a full useful life of 100,000 
miles, provided that the credits are prorated by a multiplicative 
factor of 0.833 (the quotient of 100,000/120,000). Where a manufacturer 
has

[[<strong>Page</strong> 26141]]

both 100,000 and 120,000 mile full useful life vehicles for which it 
desires to bank early credits, it must compute the credits from each 
group of vehicles separately and then add them together.
    (5) Manufacturers may bank early credits for later use to meet the 
Tier 2 corporate average NO&lt;INF&gt;X&lt;/INF&gt; standard or trade them to 
another manufacturer subject to the restriction in paragraph (c)(3) of 
this section.
    (6) Early credits may not be used to comply with the corporate 
average NO&lt;INF&gt;X&lt;/INF&gt; standards for interim non-Tier 2 LDV/Ts.
    (d) Reporting and recordkeeping for Tier 2 NO&lt;INF&gt;X&lt;/INF&gt; credits 
including early credits. Each manufacturer must comply with the 
reporting and recordkeeping requirements of Sec. 86.1862-04.
    (e) Fleet average NO&lt;INF&gt;X&lt;/INF&gt; debits. (1) Manufacturers must 
offset any debits for a given model year by the fleet average 
NO&lt;INF&gt;X&lt;/INF&gt; reporting deadline for the model year following the 
model year in which the debits were generated. Manufacturers may offset 
debits by generating credits or acquiring credits generated by another 
manufacturer.
    (2)(i) Failure to meet the requirements of paragraphs (a) through 
(d) of this section within the required timeframe for offsetting debits 
will be considered to be a failure to satisfy the conditions upon which 
the certificate(s) was issued and the individual noncomplying LDV/Ts 
not covered by the certificate must be determined according to this 
section.
    (ii) If debits are not offset within the specified time period, the 
number of LDV/Ts not meeting the fleet average NO&lt;INF&gt;X&lt;/INF&gt; standards 
and not covered by the certificate must be calculated by dividing the 
total amount of debits for the model year by the fleet average 
NO&lt;INF&gt;X&lt;/INF&gt; standard applicable for the model year in which the 
debits were first incurred.
    (iii) EPA will determine the LDV/Ts for which the condition on the 
certificate was not satisfied by designating LDV/Ts in those engine 
families with the highest certification NO&lt;INF&gt;X&lt;/INF&gt; emission values 
first and continuing until a number of LDV/Ts equal to the calculated 
number of noncomplying LDV/Ts as determined above is reached. If this 
calculation determines that only a portion of LDV/Ts in an engine 
family contribute to the debit situation, then EPA will designate 
actual LDV/Ts in that engine family as not covered by the certificate, 
starting with the last vehicle produced and counting backwards.
    (3) If a manufacturer ceases production of LDV/Ts or is purchased 
by, merges with or otherwise combines with another manufacturer, the 
manufacturer continues to be responsible for offsetting any debits 
outstanding within the required time period. Any failure to offset the 
debits will be considered to be a violation of paragraph (e)(1) of this 
section and may subject the manufacturer to an enforcement action for 
sale of LDV/Ts not covered by a certificate, pursuant to paragraph 
(e)(2) of this section.
    (4) For purposes of calculating the statute of limitations, a 
violation of the requirements of paragraph (e)(1) of this section, a 
failure to satisfy the conditions upon which a certificate(s) was 
issued and hence a sale of LDV/Ts not covered by the certificate, all 
occur upon the expiration of the deadline for offsetting debits 
specified in paragraph (e)(1) of this section.
    (f) NO&lt;INF&gt;X&lt;/INF&gt; credit transfers. (1) EPA may reject 
NO&lt;INF&gt;X&lt;/INF&gt; credit transfers if the involved manufacturers fail to 
submit the credit transfer notification in the annual report.
    (2) A manufacturer may not sell credits that are not available for 
sale pursuant to the provisions in paragraphs (a)(2) and (a)(7) of this 
section.
    (3) In the event of a negative credit balance resulting from a 
transaction, both the buyer and seller are liable, except in cases 
involving fraud. EPA may void ab initio the certificates of conformity 
of all engine families participating in such a trade.
    (4)(i) If a manufacturer transfers a credit that it has not 
generated pursuant to paragraph (b) of this section or acquired from 
another party, the manufacturer will be considered to have generated a 
debit in the model year that the manufacturer transferred the credit. 
The manufacturer must offset such debits by the deadline for the annual 
report for that same model year.
    (ii) Failure to offset the debits within the required time period 
will be considered a failure to satisfy the conditions upon which the 
certificate(s) was issued and will be addressed pursuant to paragraph 
(e) of this section.
    (g) Interim non-Tier 2 NO&lt;INF&gt;X&lt;/INF&gt; credits and debits; Interim 
non-Tier 2 averaging, banking and trading. Interim non-Tier 2 
NO&lt;INF&gt;X&lt;/INF&gt; credits must be generated, calculated, tracked, 
averaged, banked, traded, accounted for and reported upon separately 
from Tier 2 credits. The provisions of this section applicable to Tier 
2 NO&lt;INF&gt;X&lt;/INF&gt; credits and debits and Tier 2 averaging banking and 
trading are applicable to interim non-Tier 2 LDV/Ts with the following 
exceptions:
    (1) Provisions for early banking under paragraph (c) of this 
section do not apply.
    (2) The fleet average NO&lt;INF&gt;X&lt;/INF&gt; standard used for calculating 
credits is 0.30 grams per mile for interim non-Tier 2 LDV/LLDTs and 
0.20 g/mi for interim non-Tier 2 HLDTs. (The interim non-Tier 2 
NO&lt;INF&gt;X&lt;/INF&gt; standard of 0.30 (or 0.20) 
g/mi replaces 0.07 in the text and calculation in this section.)
    (3) Interim non-Tier 2 NO&lt;INF&gt;X&lt;/INF&gt; credit deficits may be 
carried forward for more than one year, except that all credit deficits 
must be reduced to zero for interim non-Tier 2 LDV/LLDTs by the end of 
the 2006 model year, and by the end of the 2008 model year for interim 
non-Tier 2 HLDTs.
    42. Section 86.1862-04 is added to read as follows:


Sec. 86.1862-04  Maintenance of records and submittal of information 
relevant to compliance with fleet average NO&lt;INF&gt;X&lt;/INF&gt; standards.

    (a) Maintenance of records. (1) The manufacturer producing any 
light-duty vehicles and/or light-duty trucks subject to the provisions 
in this subpart must establish, maintain, and retain the following 
information in adequately organized and indexed records for each model 
year:
    (i) Model year;
    (ii) Applicable fleet average NO&lt;INF&gt;X&lt;/INF&gt; standard: 0.07g/mi for 
Tier 2 LDV/Ts; 0.30 g/mi for interim non-Tier 2 
LDV/LLDTs; or 0.20 g/mi for interim non-Tier 2 HLDTs;
    (iii) Fleet average NO&lt;INF&gt;X&lt;/INF&gt; value achieved; and
    (iv) All values used in calculating the fleet average 
NO&lt;INF&gt;X&lt;/INF&gt; value achieved.
    (2) The manufacturer producing any LDV/Ts subject to the provisions 
in this subpart must establish, maintain, and retain the following 
information in adequately organized and indexed records for each LDV/T 
subject to this subpart:
    (i) Model year;
    (ii) Applicable fleet average NO&lt;INF&gt;X&lt;/INF&gt; standard;
    (iii) EPA test group;
    (iv) Assembly plant;
    (v) Vehicle identification number;
    (vi) NO&lt;INF&gt;X&lt;/INF&gt; standard to which the 
LDV/T is certified; and
    (vii) Information on the point of first sale, including the 
purchaser, city, and state.
    (3) The manufacturer must retain all records required to be 
maintained under this section for a period of eight years from the due 
date for the annual report. Records may be retained as hard copy or 
reduced to microfilm, ADP diskettes, and so forth, depending on the 
manufacturer's record retention procedure; provided, that in every case 
all information contained in the hard copy is retained.
    (4) Nothing in this section limits the Administrator's discretion 
to require the

[[<strong>Page</strong> <strong>26142</strong>]]

manufacturer to retain additional records or submit information not 
specifically required by this section.
    (5) Pursuant to a request made by the Administrator, the 
manufacturer must submit to the Administrator the information that the 
manufacturer is required to retain.
    (6) EPA may void ab initio a certificate of conformity for a LDV/T 
certified to emission standards as set forth or otherwise referenced in 
this subpart for which the manufacturer fails to retain the records 
required in this section or to provide such information to the 
Administrator upon request.
    (b) Reporting. (1) Each covered manufacturer must submit an annual 
report. Except as provided in paragraph (b)(2) of this section, the 
annual report must contain, for each applicable fleet average 
NO&lt;INF&gt;X&lt;/INF&gt; standard, the fleet average NO&lt;INF&gt;X&lt;/INF&gt; value 
achieved, all values required to calculate the NO&lt;INF&gt;X&lt;/INF&gt; value, 
the number of credits generated or debits incurred, and all the values 
required to calculate the credits or debits. The annual report must 
contain the resulting balance of credits or debits.
    (2) When a manufacturer calculates compliance with the fleet 
average NO&lt;INF&gt;X&lt;/INF&gt; standard using the provisions in Sec. 86.1860-
04(c)(2), then the annual report must state that the manufacturer has 
elected to use such provision and must contain the fleet average 
NO&lt;INF&gt;X&lt;/INF&gt; standard as the fleet average NO&lt;INF&gt;X&lt;/INF&gt; value for 
that model year.
    (3) For each applicable fleet average NO&lt;INF&gt;X&lt;/INF&gt; standard, the 
annual report must also include documentation on all credit 
transactions the manufacturer has engaged in since those included in 
the last report. Information for each transaction must include:
    (i) Name of credit provider;
    (ii) Name of credit recipient;
    (iii) Date the transfer occurred;
    (iv) Quantity of credits transferred; and
    (v) Model year in which the credits were earned.
    (4) Unless a manufacturer reports the data required by this section 
in the annual production report required under Sec. 86.1844-01(e) and 
subsequent model year provisions, a manufacturer must submit an annual 
report for each model year after production ends for all affected 
vehicles and trucks produced by the manufacturer subject to the 
provisions of this subpart and no later than May 1 of the calendar year 
following the given model year. Annual reports must be submitted to: 
Director, Vehicle Programs and Compliance Division, U.S. Environmental 
Protection Agency, 2000 Traverwood, Ann Arbor, Michigan 48105.
    (5) Failure by a manufacturer to submit the annual report in the 
specified time period for all vehicles and trucks subject to the 
provisions in this section is a violation of section 203(a)(1) of the 
Clean Air Act for each subject vehicle and truck produced by that 
manufacturer.
    (6) If EPA or the manufacturer determines that a reporting error 
occurred on an annual report previously submitted to EPA, the 
manufacturer's credit or debit calculations will be recalculated. EPA 
may void erroneous credits, unless transferred, and must adjust 
erroneous debits. In the case of transferred erroneous credits, EPA 
must adjust the manufacturer's credit or debit balance to reflect the 
sale of such credits and any resulting generation of debits.
    (c) Notice of opportunity for hearing. Any voiding of the 
certificate under paragraph (a)(6) of this section will be made only 
after EPA has offered the manufacturer concerned an opportunity for a 
hearing conducted in accordance with Sec. 86.614 for light-duty 
vehicles or Sec. 86.1014 for light-duty trucks and, if a manufacturer 
requests such a hearing, will be made only after an initial decision by 
the Presiding Officer.

[FR Doc. 99-11384 Filed 5-6-99; 11:03 am]
BILLING CODE 6560-50-P