4736 Federal Register / Vol. 77, No. 20 / Tuesday, January 31, 2012 / Proposed Rules 

you submit. If the EPA cannot read your 

comment due to technical difficulties 

and cannot contact you for clarification, 

the EPA may not be able to consider 

your comment. Electronic files should 

avoid the use of special characters, 

avoid any form of encryption, and be 

free of any defects or viruses. For 

additional information about the EPA’s 

public docket, visit the EPA Docket 

Center homepage at www.epa.gov/ 

epahome/dockets.htm. 

Docket. All documents in the docket 

are listed in the www.regulations.gov 

index. Although listed in the index, 

some information is not publicly 

available, e.g., CBI or other information 

whose disclosure is restricted by statute. 

Certain other material, such as 

copyrighted material, will be publicly 

available only in hard copy. Publicly 

available docket materials are available 

either electronically in 

www.regulations.gov or in hard copy at 

the U.S. Environmental Protection 

Agency, Air Docket, EPA/DC, EPA West 

Building, Room 3334, 1301 Constitution 

Ave., NW., Washington, DC. The Public 

Reading Room is open from 8:30 a.m. to 

4:30 p.m., Monday through Friday, 

excluding legal holidays. The telephone 

number for the Public Reading Room is 

(202) 566–1744, and the telephone 

number for the Air Docket is (202) 566– 

1742. 

FOR FURTHER INFORMATION CONTACT: For 

information on this proposed rule, 

contact Ms. Martha Keating, Air Quality 

Policy Division, Office of Air Quality 

Planning and Standards (C504–03), 

Environmental Protection Agency, 

Research Triangle Park, NC 27711; 

telephone number: (919) 541–9407; fax 

number: (919) 685–3700; email address: 

keating.martha@mailto:epa.gov. 

SUPPLEMENTARY INFORMATION: 

I. General Information 

A. What should I consider as I prepare 

my comments for the EPA? 

1. Submitting CBI. Do not submit this 

information to the EPA through 

www.regulations.gov or email. Clearly 

mark the part or all of the information 

that you claim to be CBI. For CBI 

information in a disk or CD ROM that 

you mail to the EPA, mark the outside 

of the disk or CD ROM as CBI and then 

identify electronically within the disk or 

CD ROM the specific information that is 

claimed as CBI. In addition to one 

complete version of the comment that 

includes information claimed as CBI, a 

copy of the comment that does not 

contain the information claimed as CBI 

must be submitted for inclusion in the 

public docket. Information so marked 

will not be disclosed except in 

accordance with procedures set forth in 

40 CFR part 2. Send or deliver 

information identified as CBI only to the 

following address: Roberto Morales, 

OAQPS Document Control Officer 

(C404–02), U.S. EPA, Research Triangle 

Park, NC 27711, Attention Docket ID 

No. EPA–HQ–OAR–2011–0729. 

2. Tips for Preparing Your Comments. 

When submitting comments, remember 

to 

• Identify the rulemaking by docket 

number and other identifying 

information (subject heading, Federal 

Register date and page number). 

• Follow directions—The agency may 

ask you to respond to specific questions 

or organize comments by referencing a 

Code of Federal Regulations (CFR) part 

or section number. 

• Explain why you agree or disagree; 

suggest alternatives and substitute 

language for your requested changes. 

• Describe any assumptions and 

provide any technical information and/ 

or data that you used. 

• If you estimate potential costs or 

burdens, explain how you arrived at 

your estimate in sufficient detail to 

allow for it to be reproduced. 

• Provide specific examples to 

illustrate your concerns, and suggest 

alternatives. 

• Explain your views as clearly as 

possible, avoiding the use of profanity 

or personal threats. 

• Make sure to submit your 

comments by the comment period 

deadline identified. 

B. Where can I get a copy of this 

document and other related 

information? 

In addition to being available in the 

docket, an electronic copy of this notice 

will also be available on the World 

Wide Web (WWW). Following 

signature, a copy of this notice will be 

posted at http://www.epa.gov/ttn/ 

oargpg/new.html. 

Dated: January 20, 2012. 

Jennifer Noonan-Edmonds, 

Acting Director, Office of Air Quality Planning 

and Standards. 

[FR Doc. 2012–2070 Filed 1–30–12; 8:45 am] 

BILLING CODE 6560–50–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 86 

[AMS–FRL–9623–9] 

Nonconformance Penalties for OnHighway Heavy-Duty Diesel Engines 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Notice of proposed rulemaking. 

SUMMARY: EPA is proposing to make 

nonconformance penalties (NCPs) 

available to manufacturers of heavyduty diesel engines in model years 2012 

and later for emissions of oxides of 

nitrogen (NOx). In general, the 

availability of NCPs allows a 

manufacturer of heavy-duty engines 

(HDEs) whose engines fail to conform to 

specified applicable emission standards, 

but do not exceed a designated upper 

limit, to be issued a certificate of 

conformity upon payment of a monetary 

penalty to the United States 

Government. The proposed upper limit 

associated with these NCPs is 0.50 

grams of NOx per horsepower-hour. 

DATES: Comments: Comments on all 

aspects of this proposal must be 

received on or before April 4, 2012. See 

the SUPPLEMENTARY INFORMATION section 

on ‘‘Public Participation’’ for more 

information about written comments. 

Public Hearings: EPA will hold a 

public hearing on the following date: 

March 5, 2012. The hearing will start at 

10 a.m. local time and continue until 5 

p.m. or until everyone has had a chance 

to speak. See ‘‘How Do I Participate in 

the Public Hearings?’’ below at VII. B. 

under the SUPPLEMENTARY INFORMATION

section on ‘‘Public Participation’’ for 

more information about the public 

hearings. 

ADDRESSES: Submit your comments to 

Docket EPA–HQ–OAR–2011–1000, by 

one of the following methods: http:// 

www.regulations.gov: Follow the on-line 

instructions for submitting comments. 

Email: a-and-r-docket@epa.gov. 

Fax: EPA: (202) 566–9744. 

Mail: EPA: Air Docket, Environmental 

Protection Agency, EPA Docket Center, 

Mailcode: 2822T, 1200 Pennsylvania 

Avenue NW., Washington, DC 20460. 

Hand Delivery: EPA: EPA Docket 

Center, (Air Docket), U.S. 

Environmental Protection Agency, EPA 

West Building, 1301 Constitution 

Avenue NW., Room: 3334, Mail Code 

2822T, Washington, DC. Such deliveries 

are only accepted during the Docket’s 

normal hours of operation, and special 

arrangements should be made for 

deliveries of boxed information. 

Instructions: Direct your comments to 

Docket ID No. EPA–HQ–OAR–2011– 

1000. See the SUPPLEMENTARY

INFORMATION section on ‘‘Public 

Participation’’ for additional 

instructions on submitting written 

comments. 

Docket: All documents in the docket 

are listed in the http:// 

www.regulations.gov index. Although 

listed in the index, some information is 


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not publicly available, e.g., confidential 

business information or other 

information whose disclosure is 

restricted by statute. Certain other 

material, such as copyrighted material, 

will be publicly available only in hard 

copy in the docket. Publicly available 

docket materials are available either 

electronically in http:// 

www.regulations.gov or in hard copy at 

the following locations: 

EPA: EPA Docket Center, EPA/DC, 

EPA West, Room 3334, 1301 

Constitution Avenue NW., Washington, 

DC. The Public Reading Room is open 

from 8:30 a.m. to 4:30 p.m., Monday 

through Friday, excluding legal 

holidays. The telephone number for the 

Air Docket is (202) 566–1742. 

FOR FURTHER INFORMATION CONTACT: 

Chuck Moulis, U.S. EPA, National 

Vehicle and Fuel Emissions Laboratory, 

2000 Traverwood, Ann Arbor, MI 

48105; Telephone (734) 214–4826; 

Email moulis.charles@epa.gov. 

SUPPLEMENTARY INFORMATION:

Regulated Entities 

This proposed action would affect 

you if you produce or import new 

heavy-duty diesel engines which are 

intended for use in highway vehicles 

such as trucks and buses or heavy-duty 

highway vehicles. The table below gives 

some examples of entities that may have 

to follow the proposed regulations. But 

because these are only examples, you 

should carefully examine the proposed 

and existing regulations in 40 CFR part 

86. If you have questions, call the 

person listed in the FOR FURTHER

INFORMATION CONTACT section above. 

Category NAICSa

Codes Examples of potentially regulated entities 

Industry ............................................................. 336112 Engine and truck manufacturers. 

336120 

a North American Industry Classification System (NAICS). 

Table of Contents 

I. Statutory Authority and Regulatory 

Background 

A. Statutory Authority 

B. Background Regarding Nonconformance 

Penalty Rules 

C. 2007 and 2010 NOX Standards 

II. Interim Final Rule 

III. Nonconformance Penalties for 2012 and 

Later Heavy-Duty Engines and HeavyDuty Vehicles 

A. NCP Eligibility: Emission Standards for 

Which NCPs Are Being Established in 

This Interim Final Rule 

B. NCP Eligibility: Emission Standards for 

Which NCPs Are Not Proposed 

IV. Penalty Rates 

A. Parameters 

B. Issues and Alternatives for NCPs 

V. Economic Impact 

VI. Environmental Impact 

VII. Public Participation 

A. How do I submit comments? 

B. Will there be a public hearing? 

VIII. Statutory and Executive Order Reviews 

A. Executive Order 12866: Regulatory 

Planning and Review and Executive 

Order 13563: Improving Regulation and 

Regulatory Review 

B. Paperwork Reduction Act 

C. Regulatory Flexibility Act 

D. Unfunded Mandates Reform Act 

E. Executive Order 13132 (Federalism) 

F. Executive Order 13175 (Consultation 

and Coordination With Indian Tribal 

Governments 

G. Executive Order 13045: ‘‘Protection of 

Children From Environmental Health 

Risks and Safety Risks’’ 

H. Executive Order 13211 (Energy Effects) 

I. National Technology Transfer 

Advancement Act 

J. Executive Order 12898: Federal Actions 

To Address Environmental Justice in 

Minority Populations and Low-Income 

Populations 

IX. Statutory Provisions and Legal Authority 

I. Statutory Authority and Regulatory 

Background 

A. Statutory Authority 

Section 206(g) of the Clean Air Act 

(the Act), 42 U.S.C. 7525(g), allows EPA 

to promulgate regulations permitting 

manufacturers of heavy-duty engines 

(HDEs) or heavy-duty vehicles (HDVs) 

to receive a certificate of conformity for 

HDEs or HDVs that exceed a federal 

emissions standard, but do not exceed 

an upper limit associated with that 

standard, if the manufacturer pays a 

nonconformance penalty (NCP) 

established by rulemaking. Congress 

adopted section 206(g) in the Clean Air 

Act Amendments of 1977 as a response 

to a concern with requiring technologyforcing emissions standards for heavyduty engines. The concern was if strict 

technology-forcing standards were 

promulgated, then some manufacturers 

might be unable to comply initially and 

would be forced out of the marketplace. 

NCPs were intended to remedy this 

concern. The nonconforming 

manufacturers would have a temporary 

alternative that would permit them to 

sell their engines or vehicles by 

payment of a penalty. At the same time, 

conforming manufacturers would not 

suffer a competitive disadvantage 

compared to nonconforming 

manufacturers, because the NCPs would 

be based, in part, on money saved by the 

nonconforming manufacturer. 

Under section 206(g)(1), NCPs may be 

offered for HDVs or HDEs. The penalty 

may vary by pollutant and by class or 

category of vehicle or engine. Section 

206(g)(3) requires that NCPs: 

• Account for the degree of emission 

nonconformity; 

• Increase periodically to provide 

incentive for nonconforming 

manufacturers to achieve the emission 

standards; and 

• Remove the competitive 

disadvantage to conforming 

manufacturers. 

Section 206(g) authorizes EPA to 

require testing of production vehicles or 

engines in order to determine the 

emission level upon which the penalty 

is based. If the emission level of a 

vehicle or engine exceeds an upper limit 

of nonconformity established by EPA 

through regulation, the vehicle or 

engine would not qualify for an NCP 

under section 206(g) and no certificate 

of conformity could be issued to the 

manufacturer. If the emission level is 

below the upper limit but above the 

standard, that emission level becomes 

the ‘‘compliance level,’’ which is also 

the benchmark for warranty and recall 

liability. The manufacturer who elects 

to pay the NCP is liable for vehicles or 

engines that exceed the compliance 

level in use. The manufacturer does not 

have in-use warranty or recall liability 

for emissions levels above the standard 

but below the compliance level. 

B. Background Regarding 

Nonconformance Penalty Rules 

Since the promulgation of the first 

NCP rule in 1985, subsequent NCP rules 

generally have been described as 

continuing ‘‘phases’’ of the initial NCP 

rule. The first NCP rule (Phase I), 

sometimes referred to as the ‘‘generic’’ 

NCP rule, established three basic criteria 

for determining the eligibility of 

emission standards for nonconformance 

penalties in any given model year (50 

FR 35374, August 30, 1985). As 

described in section III. A. of this notice, 


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1FELs serve are emission levels specified by the 

manufacturer that serve as the applicable emission 

standard for engines participating in the emission 

averaging program. The FEL cap is the highest FEL 

to which a manufacturer may certify an engine 

using emission credits. 

2NMHC stands for non-methane hydrocarbons, 

which is a measure of total hydrocarbons with the 

methane emissions subtracted out. For typical onhighway diesel fueled heavy-duty engines, methane 

emissions are on the order of 10 percent of the total 

hydrocarbon emissions. 

3For this proposed rule, EPA describes those 

manufacturers that have achieved the 0.20 g/hp-hr 

emission standard as ‘‘compliant’’ or ‘‘complying’’ 

manufacturers, and those that have not as the 

‘‘noncompliant’’ or ‘‘noncomplying’’ manufacturers. 

However, it is important to clarify that 

manufacturers certifying above the 0.20 g/hp-hr 

NOX emission standard using emission credits are 

in compliance with regulations as long as they have 

enough emission credits to offset their total NOX

emissions above the standard. 

we have determined that these criteria 

have been met for one manufacturer. 

(For regulatory language, see 40 CFR 

86.1103–87.) The first criterion is that 

the emission standard in question must 

become more difficult to meet. This can 

occur in two ways, either by the 

emission standard itself becoming more 

stringent, or due to its interaction with 

another emission standard that has 

become more stringent. Second, 

substantial work must be required in 

order to meet the emission standard. 

EPA considers ‘‘substantial work’’ to 

mean the application of technology not 

previously used in that vehicle or 

engine class/subclass, or a significant 

modification of existing technology, in 

order to bring that vehicle/engine into 

compliance. EPA does not consider 

minor modifications or calibration 

changes to be classified as substantial 

work. Third, EPA must find that a 

manufacturer is likely to be 

noncomplying for technological reasons 

(referred to in earlier rules as a 

‘‘technological laggard’’). Prior NCP 

rules have considered such a 

technological laggard to be a 

manufacturer who cannot meet a 

particular emission standard due to 

technological (not economic) difficulties 

and who, in the absence of NCPs, might 

be forced from the marketplace. As 

described in section III. A. of this notice, 

we have determined that this criterion 

has been met for one manufacturer. This 

manufacturer notified us late in 2011 

that it would not have enough emission 

credits for its model year 2012 heavy 

heavy-duty engines. 

The criteria and methodologies 

established in the 1985 NCP rule have 

since been used to determine eligibility 

and to establish NCPs for a number of 

heavy-duty emission standards. Phases 

II, III, IV, V, and VI published in the 

period from 1985 to 2002, established 

NCPs that, in combination, cover the 

full range of heavy-duty—from heavy 

light-duty trucks (6,000–8,500 pounds 

gross vehicle weight) to the largest 

diesel truck and urban bus engines. 

NCPs have been established for 

hydrocarbons (HC), carbon monoxide 

(CO), nitrogen oxides (NOX), and 

particulate matter (PM). The most recent 

NCP rule (67 FR 51464, August 8, 2002) 

established NCPs for the 2004 and later 

model year NOX standard for heavyduty diesel engines (HDDEs). The NCP 

rulemaking phases are summarized in 

greater detail in the Interim and 

Proposed Technical Support Document 

for this rulemaking. 

C. 2007 and 2010 NOX Standards 

The 0.20 g/hp-hr NOX standard that 

applies for current and future heavyduty engines was adopted January 18, 

2001 (66 FR 5001), and first applied in 

the 2007 model year. However, because 

of phase-in provisions adopted in that 

rule and use of emission credits 

generated by manufacturers for early 

compliance, manufacturers have been 

able to continue to produce engines 

with NOX emissions greater than 0.20 

g/hp-hr. The phase-in provisions ended 

after model year 2009 so that the 0.20 

g/hp-hr NOX standard was fully phasedin for model year 2010. Equally 

important, the cap applicable to Family 

Emission Limits (FELs) 1 for credit using 

engine families was lowered to 0.50 

g/hp-hr beginning in model year 2010. 

Because of these changes that occurred 

in model year 2010, the 0.20 g/hp-hr 

NOX emission standard is often referred 

to as the 2010 NOX emission standard, 

even though it applied to engines as 

early as model year 2007. 

While some manufacturers retain NOX

emission credits that currently allow 

them to produce engines with NOX

emissions as high as 0.50 g/hp-hr, we 

expect that one of these manufacturers 

could exhaust their supplies of credits 

in the near future. 

II. Interim Final Rule 

EPA is also publishing an Interim 

Final Rule (IFR) addressing NCPs for 

heavy heavy-duty engines. The NCPs in 

the Final Rule for this NPRM are 

expected to supersede the NCPs being 

promulgated in that Interim Final Rule. 

For example, if the Final Rule is 

published September 14, 2012, it would 

likely have an effective date of 

November 13, 2012. Should the Final 

Rule establish different NCPs for heavy 

heavy-duty engines than the interim 

NCPs, we could apply those new NCPs 

to any engines produced on or after 

November 13, 2012, instead of the 

interim NCPs. 

Note that Docket Number EPA–HQ– 

OAR–2011–1000 is being used for both 

the Interim Final Rule and this NPRM. 

III. Nonconformance Penalties for 2012 

and Later Heavy-Duty Engines and 

Heavy-Duty Vehicles 

A. NCP Eligibility: Emission Standards 

for Which NCPs Are Being Established 

in This Interim Final Rule 

(1) Heavy Heavy-Duty Diesel NOX

Standard 

As discussed in section I.B., EPA 

must determine that three criteria are 

met in order to determine that an NCP 

should be established in any given 

model year. For the 2010 NOX standard, 

we believe these criteria have been met 

for heavy heavy-duty diesel engines and 

it is therefore appropriate to establish 

NCPs for this standard beginning in the 

current model year. 

The first criterion requires that the 

emission standard in question must 

become more difficult to meet. This is 

the case with the 2010 NOX standard. 

The previous emission standard for this 

category is a combined NMHC+NOX

standard of 2.4 g/hp-hr, or optionally a 

2.5 g/hp-hr NMHC+NOX with a limit of 

0.5 g/hp-hr NMHC.2 The 2010 (i.e., 

current) standards are 0.20 g/hp-hr for 

NOX and 0.14 g/hp-hr for NMHC. When 

promulgated, the Agency concluded 

that the 0.20 g/hp-hr NOX standard was 

a technology forcing standard. Second, 

all heavy heavy-duty diesel engines 

currently certified to the 0.20 g/hp-hr 

standard without using credits are using 

new aftertreatment systems to meet this 

standard.3 It is therefore logical to 

conclude the standard is more difficult 

to meet and that substantial work was 

required to meet the emission standard. 

Third, EPA is promulgating NCPs for 

heavy heavy-duty diesel engines 

because we have concluded that there is 

a significant likelihood that they will be 

needed by an engine manufacturer that 

has not yet met the requirements for 

technological reasons. One 

manufacturer is currently using NOX

credits to certify all of its heavy heavyduty diesel engines at nearly the FEL 

cap level of 0.50 g/hp-hr. Based on its 

current credit balance and projected 

sales for this service class, we do not 

expect this manufacturer to have 

sufficient credits to cover its entire 

model year 2012 production. This 

manufacturer intends to use a different 

technology to meet the NOX standard 

but has not yet submitted an application 

for the 2012 model year with NOX

emissions at or below the 0.20 g/hp-hr 

standard. Since it has not yet submitted 

an application for certification for any 

model year 2012 heavy heavy-duty 


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4The previous NCP rules include: the Phase VI 

rulemaking (67 FR 51464, August 8, 2002), Phase 

V rulemaking (61 FR 6949, February 23, 1996), 

Phase IV rulemaking (58 FR 68532, December 28, 

1993), Phase III rulemaking (55 FR 46622, 

November 5, 1990), the Phase II rulemaking (50 FR 

53454, December 31, 1985) as well as the Phase I 

rulemaking (50 FR 35374, August 30, 1985). 

diesel engines that would not require 

emission credits, we believe it is a 

reasonable possibility that this 

manufacturer may not be able to comply 

for technological reasons with respect to 

the 2010 NOX standards for heavy 

heavy-duty diesel engines. This 

manufacturer notified us late in 2011 

that it would not have enough emission 

credits for its model year 2012 heavy 

heavy-duty engines. 

(2) Medium Heavy-Duty Diesel NOX

Standard 

EPA believes that the first two NCP 

criteria have also been met for medium 

heavy-duty diesel engines. We have also 

determined that there is a significant 

chance that NCPs will be needed by an 

engine manufacturer that has not yet 

met the 2010 NOX standards for 

medium heavy-duty diesel engines for 

technological reasons. As is true for 

heavy heavy-duty engine, one 

manufacturer is currently using NOX

credits to certify all of its medium 

heavy-duty diesel engines above 0.20 g/ 

hp-hr. This manufacturer intends to use 

a different technology to meet the NOX

standard but has not yet submitted an 

application for any upcoming model 

year with NOX emissions at or below the 

0.20 g/hp-hr standard. Since it has not 

yet submitted an application for 

certification for any model year medium 

heavy-duty diesel engines that would 

not require emission credits, we believe 

it is prudent to promulgate NCPs given 

the possibility that this manufacturer 

may not be able to comply for 

technological reasons with respect to 

the 2010 NOX standards for medium 

heavy-duty diesel engines before it 

exhausts its supply of emission credits 

for medium heavy-duty engines. 

B. NCP Eligibility: Emission Standards 

for Which NCPs Are Not Proposed 

(1) Light Heavy-Duty Diesel NOX

Standard 

EPA believes that the first two NCP 

criteria have been met for the 2010 NOX

standard for light heavy-duty diesel 

engines. However, we have not 

determined that any manufacturer of 

light heavy-duty diesel engines will be 

unable to certify to the 2010 NOX

standard through use of emission credits 

until it develops emissions controls that 

allow its light heavy-duty diesel engines 

to achieve NOX emissions at or below 

0.20 g/hp-hr. 

(2) Heavy-Duty Gasoline Engine 

Standards 

In a final rule published on January 

18, 2001 (66 FR 5001), EPA established 

more stringent emission standards for 

all heavy-duty gasoline (or ‘‘Otto-cycle’’) 

vehicles and engines. These standards 

took two forms: a chassis-based set of 

standards for complete vehicles under 

14,000 pounds GVWR (the chassisbased program), and an engine-based set 

of standards for all other Otto-cycle 

heavy-duty engines (the engine-based 

program). Each of the two programs has 

an associated averaging, banking, and 

trading (ABT) program. The new 

standards generally took effect starting 

with the 2008 model year, and all 

manufacturers are in compliance with 

them. 

(3) Heavy-Duty Diesel Engine NMHC, 

CO, and PM Standards 

EPA adopted new NMHC and PM for 

model year 2007 and later heavy-duty 

engines in the same rule that set the 

2010 NOX emission standard (66 FR 

5001, January 18, 2001). The CO 

standard was not changed. We are not 

considering NCPs for any of these other 

standards because all manufacturers are 

already fully compliant with them. 

(4) Heavy-Duty CO2 Standards 

In a final rule published on 

September 15, 2011 (76 FR 57106), EPA 

established new CO2 emission standards 

for all heavy-duty vehicles and engines. 

We are not considering NCPs for any of 

these standards at this time because we 

currently do not have a basis to 

conclude that a technological laggard is 

likely to develop. 

We are proposing to add a new 

regulatory provision related to these 

CO2 emission standards. The provision 

would prohibit generating CO2 emission 

credits from engines paying NCPs for 

NOX. Given the general tradeoff between 

CO2 and NOX emissions, we were 

concerned that a manufacturer capable 

of meeting the 0.20 g/hp-hr NOX

emission standard could choose to pay 

an NCP in order to generate CO2 credits 

by recalibrating its engines for higher 

NOX emissions and lower CO2. There 

are two reasons this would be 

inappropriate. First, emission credits are 

supposed to provide an incentive for a 

manufacturer to go beyond what is 

normally required to meet emission 

standards. However, allowing 

manufacturers to generate CO2 credits 

while paying NCPs would actually 

create an incentive for manufacturers to 

do less than is required to meet the 

emission standards. Equally important, 

NCPs have always been intended for 

manufacturers that cannot meet an 

emission standard for technological 

reasons rather than manufacturers 

choosing not to comply. 

IV. Penalty Rates 

This proposed rule is the most recent 

in a series of NCP rulemakings. These 

are referred to as Phases and are 

referenced below.4 The discussions of 

penalty rates in those rulemakings are 

incorporated by reference. This section 

briefly reviews the penalty rate formula 

originally promulgated in the Phase I 

rule (currently found at 40 CFR 

86.1113–87) and discusses how EPA 

arrived at the proposed penalty rates. 

The penalty rates being established in 

this rule rely on the existing NCP 

regulatory structure. Thus, the only 

changes being made to the regulations 

are updates to the cost parameters to 

reflect the compliance costs for the 2010 

standards, setting of the upper limit, 

and clarifying in § 86.1104–91 that EPA 

may set the upper limit at a level below 

the previous standard if we determine 

that the lower level is achievable by all 

engines. 

The NCP rates being proposed are 

specified for model year 2012. As 

required by the Clean Air Act, the 

existing regulations include a formula 

that increases the penalty rates with 

each new model year. We proposed to 

apply this annual adjustment formula to 

the NCPs by setting the 2012 model year 

as year number one. Traditionally, NCPs 

are available the first year of the new 

emission standard and that becomes 

year one for purposes of the annual 

escalator. However, EPA believes the 

2012 model year is the correct year for 

the first year of the escalator calculation 

even though the NOX emission standard 

began in 2010. 

A. Parameters 

As in the previous NCP rules, we are 

specifying the NCP formula for each 

standard using the following 

parameters: COC50, COC90, MC50, F, and 

UL. The NCP formula is the same as that 

promulgated in the Phase I rule. As was 

done in previous NCP rules, costs 

consider additional manufacturer costs 

and additional owner costs, but do not 

consider certification costs because both 

complying and noncomplying 

manufacturers must incur certification 

costs. COC50 is an estimate of the 

industry-wide average incremental cost 

per engine (references to engines are 

intended to include vehicles as well) 

associated with meeting the standard for 

which an NCP is offered, compared with 


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meeting the upper limit. COC90 is an 

estimate of the 90th percentile 

incremental cost per-engine associated 

with meeting the standard for which an 

NCP is offered, compared with meeting 

the associated upper limit. 

Conceptually, COC50 represents costs for 

a typical or average manufacturer, while 

COC90 represents costs for the 

manufacturers with the highest 

compliance costs. 

MC50 is an estimate of the industrywide average marginal cost of 

compliance per unit of reduced 

pollutant associated with the least cost 

effective emission control technology 

installed to meet the new standard. 

MC50 is measured in dollars per g/hp-hr 

for heavy-duty engines. F is a factor 

used to derive MC90, the 90th percentile 

marginal cost of compliance with the 

NCP standard for engines in the NCP 

category. MC90 defines the slope of the 

penalty rate curve near the standard and 

is equal to MC50 multiplied by F. UL is 

the upper limit above which no engine 

may be certified. 

The derivation of the cost parameters 

is described in a support document 

entitled ‘‘Interim and Proposed 

Technical Support Document: 

Nonconformance Penalties for 2012 and 

later Highway Heavy-Duty Diesel 

Engines,’’ which is available in the 

public docket for this rulemaking. All 

costs are presented in 2011 dollars. 

(1) Upper Limit 

We are proposing to revise the 

regulations in § 86.1104–91 to clarify 

that EPA may set (during rulemaking) 

the upper limit at a level below the 

previous standard if we determine that 

the lower level is achievable by all 

engines. We would also specify that 

EPA could set the upper limit at a level 

above the previous standard in unusual 

circumstances, such as those that 

occurred for heavy heavy-duty engines 

with the 2004 standards. As described 

below, we are also establishing the 

upper limit for this NCP rule at 0.50 g/ 

hp-hr. These are the only regulatory 

changes being made with respect to the 

upper limit. 

The upper limit is the emission level 

established by regulation above which 

NCPs are not available and a heavy duty 

engine cannot be certified or introduced 

into commerce. CAA section 206(g)(2) 

refers to the upper limit as a percentage 

above the emission standard, set by 

regulation, that corresponds to an 

emission level EPA determines to be 

‘‘practicable.’’ The upper limit is an 

important aspect of the NCP regulations 

not only because it establishes an 

emission level above which no engine 

may be certified, but it is also a critical 

component of the cost analysis used to 

develop the penalty rates. The 

regulations specify that the relevant 

costs for determining the COC50 and the 

COC90 factors are the difference between 

an engine at the upper limit and one 

that meets the applicable standards (see 

40 CFR 86.1113–87). 

The regulatory approach adopted 

under the prior NCP rules sets the 

default Upper Limit (UL) at the prior 

emission standard when a prior 

emission standard exists and is then 

changed to become more stringent. EPA 

concluded that the upper limit should 

be reasonably achievable by all 

manufacturers with vehicles in the 

relevant class. It should be within reach 

of all manufacturers of HDEs or HDVs 

that are currently allowed so that they 

can, if they choose, pay NCPs and 

continue to sell their engines and 

vehicles while finishing their 

development of fully complying 

engines. A manufacturer of a previously 

certified engine or vehicle should not be 

forced to immediately remove an HDE 

or HDV from the market when an 

emission standard becomes more 

stringent. The prior emissions standard 

generally meets these goals because 

manufactures have already certified 

their vehicles to that standard. 

In the past, EPA has rejected 

suggestions that the upper limit should 

be more stringent than the prior 

emission standard because it would be 

very difficult to identify a limit that 

could be met by all manufacturers. For 

this rule, however, all manufacturers are 

currently certifying all of their engines 

at or below the 0.50 g/hp-hr FEL cap. 

Thus, since NCPs were not intended to 

allow manufacturers to increase 

emissions, we are setting the upper limit 

for this NCP rule at 0.50 g/hp-hr NOX. 

This will conform to the purpose of 

NCPs, which is to allow manufacturers 

to continue selling engines they are 

producing, but not to allow backsliding. 

(2) Cost Parameter Values 

The regulations being adopted specify 

that the values in Table 1 (in 2011 

dollars) be used in the NCP formula for 

the 2012 and later model year NOX

standard of 0.20 g/hp-hr for diesel 

heavy-duty engines. The basis is 

summarized here. The complete 

derivation of these parameters is 

described in the Interim and Proposed 

Technical Support Document for this 

rulemaking. We request comment on 

our estimates of these parameters. 

We also considered other 

methodologies for estimating the 

incremental compliance costs between 

the upper limit and the standard. We 

rejected these alternatives because we 

are not confident that we could estimate 

the costs with sufficient accuracy or 

describe our basis without revealing 

confidential business information. 

Moreover, we have no reason to believe 

that these alternative methodologies 

would have been better with respect to 

the statutory requirement to remove the 

competitive disadvantage of the 

complying manufacturers. 

(a) General Methodology 

Based on our review of the various 

hypothetical baseline engine designs, 

we selected a straightforward ‘‘baseline 

engine’’ technology package with 

associated costs that were determinable 

within a reasonably high degree of 

certainty. This approach best limited the 

sensitivity of the penalty rate versus 

small variations in any of the ‘‘baseline 

engine’’ technology package elements. 

This cost stability mitigated the 

hypothetical nature of the ‘‘baseline 

engine’’ technology package, which, in 

turn, led to a penalty rate that we 

believe is reasonable. As is described in 

the TSD, we believe estimating costs by 

this approach is the least speculative 

method to determine compliance costs. 

We selected a baseline engine 

technology package that would employ 

the same basic emission controls used to 

meet the 2007 NOX and PM emission 

standards (e.g. cooled exhaust gas 

recirculation), optimized turbocharging, optimized fuel injection, 

diesel particulate filters), plus liquid 

urea based Selective Catalytic Reduction 

(SCR) NOX emissions control 

technology with an appropriately sized 

tank for the diesel exhaust fluid (DEF). 

Further details are provided in this 

rule’s TSD. While EPA selected the 

baseline engine (or upper limit engine) 

to be a fully optimized, SCR-equipped 

engine that complies with all other 

emission standards and requirements, 

the NCPs may be used for engines using 

other technologies. 

This approach differs slightly from 

that used In previous NCP rules, where 

EPA based the NCPs directly on an 

average of actual compliance costs for 

all manufacturers. This was appropriate 

in those prior rules because each of the 

manufacturers had actually produced 

engines at the upper limit (which was 

usually the previous emission standard). 

It was relatively straightforward for 

them to provide us with a confidential 

engineering analysis of the costs they 

actually incurred: the real costs of 

additional hardware and fluids and the 

differences in performance 

characteristics. We have always sought 

full understanding of the manufacturers’ 

inputs, and for previous NCP rules it 

was also reasonable for EPA to conclude 


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that the manufacturers’ input accurately 

reflected the manufacturers’ actual costs 

because the costs were derived directly 

from actual in-production engine 

information. In the case of this NCP 

rule, however, compliant manufacturers 

have not designed and optimized inproduction engines for the U.S. market 

at 0.50 g/hp-hr NOX (the upper limit). 

Thus, a compliance cost estimate based 

directly on actual experience for inproduction engines was not available for 

this NCP rule. 

Instead of averaging actual costs 

(because none were available), the NCP 

penalty formulas for this rule are based 

primarily on EPA’s estimate of the cost 

difference between an engine emitting at 

the upper limit (the ‘‘baseline engine’’) 

and one emitting at the standard (the 

‘‘compliant engine’’). We requested cost 

of compliance information from several 

engine manufacturers and used that 

information to inform our own analysis 

of compliance costs, as described in the 

Interim and Proposed Technical 

Support Document. The engine 

manufacturers we contacted approached 

this cost analysis in the same way we 

did. That is, the scenarios we and the 

manufacturers considered were all 

based upon hypothetical baseline 

engine designs that were intended to 

meet the 0.50 g/hp-hr NOX upper limit. 

It is worth noting that each of the five 

engine manufacturers we contacted 

considered hypothetical baseline 

engines with different technology 

packages. Two complying 

manufacturers based their compliance 

costs on a baseline engine equipped 

with similar (but not identical) 

hardware as EPA; another on an SCRequipped engine without exhaust gas 

recirculation, and a fourth on its 

estimation of the non-complying 

engines produced by a competitor. All 

four manufacturers meeting the 0.20 g/ 

hp-hr NOX standard compared the costs 

for their hypothetical baseline engines 

to the costs for their actual compliant 

engines. The one non-SCR manufacturer 

we contacted (that has not yet certified 

any engines with NOX emissions at 0.20 

g/hp-hr) provided its projections of 

what it will spend to bring its current 

2011 engine into compliance without 

the use of emission credits. 

(b) Calculated Values 

The most significant of the NCP 

parameters is the 90th percentile costs 

of compliance, COC90, which defines 

the penalty for engines emitting at the 

upper limit. The value of COC50 only 

matters when EPA estimates that 

marginal compliance costs change as the 

compliance level approaches the 

standard. In such cases, COC50 defines 

that point on the curve at which the 

slope changes. We estimated COC90 and 

COC50 by assuming the baseline engine 

would have been an SCR equipped 

engine with NOX emissions at 0.50 g/ 

hp-hr and that it looked very similar to 

an engine with NOX emissions at 0.20 

g/hp-hr. However, the higher NOX

emissions of the baseline engine would 

allow the use of less expensive 

hardware and would require less 

consumption of liquid urea (also known 

as diesel emission fluid or ‘‘DEF’’). 

We estimated the marginal costs of 

compliance as being equal to the total 

incremental costs of compliance divided 

by 0.30 g/hp-hr (the difference between 

the upper limit and the standard). This 

assumes that the cost to reduce 

emissions from 0.30 g/hp-hr to 0.20 g/ 

hp-hr is not significantly different from 

the cost to reduce emissions from 0.50 

g/hp-hr to 0.40 g/hp-hr. This results in 

a penalty curve for heavy heavy-duty 

engines that is a straight line, which in 

turn makes our estimate of the average 

cost of compliance irrelevant to the 

calculation of the penalty. In other 

words, the COC50 point lies directly 

between zero cost at 0.20 g/hp-hr and 

COC90 at the Upper Limit of 0.50 g/hphr NOX. The penalty paid for engines at 

the upper limit would be equal to EPA’s 

estimate of the highest marginal cost 

paid by a complying manufacturer for 

the same emission range. 

TABLE 1—PROPOSED NCP CALCULATION PARAMETERS

Parameter Medium heavy-duty diesel engines Heavy heavy-duty diesel engines 

COC50 .................................. $462 ................................................................................ $1,561. 

COC90 .................................. $682 ................................................................................ $1,919. 

MC50 ..................................... $1,540 per gram per horsepower-hour ........................... $5,203 per gram per horsepower-hour. 

F ........................................... 1.30 ................................................................................. 1.23. 

UL ......................................... 0.50 g/hp-hr ..................................................................... 0.50 g/hp-hr. 

(3) Resulting Penalties 

The calculation parameters listed in 

Table 1 are used to calculate the penalty 

rate. These parameters are used in the 

penalty rate formulas which are defined 

in the existing NCP regulations (See 40 

CFR 86.1113(a)(1) and (2)). Using the 

parameters in Table 1, and the equations 

in the existing NCP regulations, we have 

plotted penalty rates versus compliance 

levels in Figure 1 and Figure 2 below. 

This penalty curve is for the first year 

of use of the NCPs (i.e., the annual 

adjustment factors specified in the 

existing NCP regulations have been set 

equal to one). 

The Clean Air Act NCP provisions 

require that the penalty be set at such 

a level that it removes any competitive 

disadvantage to a complying 

manufacturer by requiring noncomplying manufacturers to pay NCPs. 

Our methodology for developing the 

NCP is detailed in the Interim and 

Proposed Technical Support Document. 

Our technology approach includes 

relatively minor hardware upgrades, 

calibration changes, and increased use 

of DEF. For the reasons described in the 

Interim and Proposed Technical 

Support Document, we believe that the 

NCPs being established in this 

rulemaking will remove any competitive 

disadvantage that complying 

manufacturers may face. 


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B. Issues and Alternatives for NCPs 

The analysis presented in detail in the 

Interim and Proposed Technical 

Support Document deals with an 

assessment of the cost of compliance, 

using essentially the same methodology 

that has historically been used to 

establish NCPs. We believe that our 

estimates of the costs are appropriate 

and that the methodology is sound. As 

noted earlier, section 206(g)(3) specifies 

certain requirements for NCPs. The 

requirements for the NCP to account for 

the degree of emission nonconformity, 

and to increase periodically have been 

built into the regulatory structure such 

that they are automatically achieved 

with each new phase of NCPs. However, 

the Clean Air Act also requires EPA to 

set the NCPs ‘‘to remove any 

competitive disadvantage to 


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Federal Register / Vol. 77, No. 20 / Tuesday, January 31, 2012 / Proposed Rules 4743 

manufacturers whose engines or 

vehicles achieve the required degree of 

emission reduction.’’ This section 

discusses several issues and alternatives 

that we have evaluated, especially in the 

context of this third requirement. 

(1) Competitive Advantage for NonComplying Manufacturers 

In establishing prior NCP rules, we 

have frequently made it clear that 

satisfying the statutory objective of 

protecting the complying manufacturer 

was paramount. The generic NCP rule 

established an approach which attempts 

to remove any competitive disadvantage 

to complying manufacturers by 

assessing a cost to the manufacturer of 

a non-complying engine in the form of 

an NCP, with the expectation that this 

cost is at least equivalent to or exceeds 

the value of the competitive benefit 

gained by building a noncomplying 

engine. Imposing such a cost is a way 

to level the playing field without 

interfering in the actual marketing or 

pricing of the engines. However, since 

the issue of competitive advantage 

involves many subjective factors, the 

regulatory structure cannot by itself 

ensure that no competitive advantage 

remains. 

A manufacturer of a non-complying 

engine generally gains a competitive 

advantage or benefit of two types. The 

first typically involves production 

expenses saved by not producing a 

complying engine, such as fixed costs 

and hardware costs. The second 

category involves, in some cases, the 

competitive benefits gained by 

producing an engine that has some 

convenience or better performance 

characteristics compared to a complying 

engine. 

The first category is easier to quantify, 

as it involves considering costs directly 

incurred by the industry, and it is 

generally easier to get a fuller 

quantification of amounts in categories 

such as hardware costs. The second 

category is much harder to quantify 

with certainty. As discussed with 

respect to DEF and fuel consumption, 

the actual amount of costs or savings to 

the operator will vary based on several 

factors. An even harder to quantify 

competitive advantage is the benefit in 

the marketplace from producing an 

engine that is, or may be perceived to 

be, more convenient to operate. 

The factors that affect the issue of 

whether the proposed NCP would 

remove competitive disadvantage 

involve the purchase price, operating 

cost, and purchaser perception. Even 

with an NCP set at a level which 

addresses quantifiable cost differences 

between complying and non-complying 

engines, in the eyes of the purchaser 

there still may be an advantage to 

paying the higher first cost for an engine 

(including the NCP) with known 

performance. 

It is clear that producing engines that 

comply with a 0.20 g/hp-hr NOX

emission standard is more difficult than 

producing comparable engines with 

NOX emissions at 0.50 g/hp-hr. Thus it 

can be presumed that allowing a 

manufacturer to produce engines with 

NOX emissions at 0.50 g/hp-hr without 

paying an NCP would bestow some 

competitive advantage. The question for 

this rulemaking is how significant is 

that advantage? To answer this question, 

we included an analysis of the heavyduty truck and engine sales over the 

past four years. As described in the 

Interim and Proposed Technical 

Support Document, the available data 

do not directly answer this question 

because of a number of confounding 

factors. Nevertheless, since these data 

do not show any substantial shift in 

market share, it seems unlikely that the 

competitive advantage that exists is very 

large. This analysis supports our 

conclusion that the penalty being 

adopted is large enough to meet the 

statutory requirement to remove any 

competitive disadvantage for complying 

manufacturers. We request comment on 

this conclusion. 

(2) Baseline Engine Technology 

Most manufacturers generally have 

never had production engines at 0.50 

g/hp-hr (the upper limit). Therefore, 

EPA considered different types of 

baseline engines. As already noted, we 

are assuming the baseline engine is 

already equipped with SCR. 

Conceptually, what we are doing in this 

rule is to imagine what would have 

happened if the prior standard had been 

0.50 g/hp-hr. Conversations with 

manufacturers have generally supported 

our assumption that had there been a 

0.50 g/hp-hr standard, most 

manufacturers would have chosen to 

rely on SCR to reduce NOX emissions, 

especially in the context of the recently 

adopted greenhouse gas emission 

standards. 

Another important reason we are not 

assuming a non-SCR baseline engine is 

that there is only one manufacturer 

producing such an engine. We are 

concerned that we would need to rely 

on confidential business information 

(CBI) from that one non-SCR 

manufacturer in order to accurately 

calculate costs differences, but could 

not reliably protect such data from 

disclosure. Normally when we rely on 

CBI, we collect it from multiple 

manufacturers and protect the CBI by 

disclosing only an aggregated summary 

of the data. Public commenters can 

comment on the summary, which 

frequently serves the basis of the rule. 

Another disadvantage of assuming a 

non-SCR baseline engine is that the 

complying manufacturers did not 

produce such an engine. Thus they 

would be unable to provide accurate 

data for the difference in operating costs 

between their complying engines and 

the theoretical baseline engine. 

Nevertheless, while they generally did 

not sell SCR engines at 0.50 g/hp-hr, 

they have development data that allow 

them to estimate differences in 

operating costs between a theoretical 

SCR-equipped baseline engine and their 

compliant engines. 

Another advantage of assuming the 

baseline engine is equipped with SCR is 

that it results in a penalty curve that is 

consistent with the marginal costs of 

compliance for all NOX values between 

0.50 g/hp-hr and 0.20 g/hp-hr. 

We request comment on our 

assumption of a baseline engine with 

SCR that is calibrated to have NOX

emissions at 0.50 g/hp-hr. Commenters 

should address whether assuming a 

different baseline engine would result in 

higher or lower penalties, and whether 

they would better protect the complying 

manufacturers from a competitive 

disadvantage. 

(3) Costs Not Included 

By basing the NCP primarily on the 

differences in amount of DEF used to 

reduce emissions and minor hardware 

costs, the analysis excludes certain 

other costs, which are described below. 

Commenters supporting the inclusion of 

any of these costs should discuss them 

in the context of the statutory 

requirement to eliminate competitive 

disadvantage and whether the costs are 

associated with other savings or 

benefits. 

Perhaps the most obvious cost not 

included in the analysis is the 

significant cost of the SCR hardware 

itself. However, including this cost 

would be inconsistent with the baseline 

engine. Commenters supporting the 

inclusion of the total hardware costs 

should do so in the context of changing 

the baseline engine. For example, it 

would be important to consider the 

extent to which SCR hardware cost is 

offset by significantly lower fuel costs 

for engines equipped with SCR. We do 

not believe that we could base the NCP 

on the cost of SCR hardware without 

also accounting for the fuel savings. 

We are also not including significant 

fixed costs for research and 

development (R&D). As noted earlier, 

the analysis assumes the baseline engine 


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5U.S. Energy Information Administration. 

Annual Energy Outlook 2011. Last accessed on 

November 18, 2011 at http://38.96.246.204/ 

forecasts/aeo/. 

6 DieselExhaustFluid.com. Last accessed on 

November 14, 2011 at http:// 

www.dieselexhaustfluid.com/. 

7 Information regarding the MOVES model can be 

found at http://www.epa.gov/otaq/models/moves/ 

index.htm. 

8U.S. EPA. Final Rulemaking to Establish 

Greenhouse Gas Emissions Standards and Fuel 

Efficiency Standards for Medium- and Heavy-Duty 

Engines and Vehicles—Regulatory Impact Analysis. 

Page 6–2. The baseline fuel efficiency for HHD is 

20.3 gal/100 mile and vocational diesel vehicles 

equal 10.3 gal/100 mile. 

is a fully optimized engine that 

complies with all other emission 

standards and requirements. We do not 

believe that there would be significant 

R&D costs to recalibrate the SCR system 

on such an engine to further reduce 

NOX emission to 0.20 g/hp-hr. 

(4) Projected Fuel and DEF Costs 

Two of the most significant categories 

of potential cost are the impact of the 

standards on DEF and/or fuel 

consumption rates. However, such cost 

elements are challenging to estimate 

because actual DEF and fuel costs will 

vary based on prices and on the vehicle 

operation. We, therefore, are requesting 

comment on our estimates. Specifically, 

we are requesting comments on the 

following aspects of our analysis of fuel 

and DEF costs: 

• Projected fuel and DEF prices. 

• Estimated changes in fuel and DEF 

consumption rates. 

• Projected annual mileage 

accumulation rates and miles per gallon. 

• Discounting of future costs 

(discussed in the following section). 

For the NCP analysis, we used the 

Energy Information Administration’s 

(EIA) Annual Energy Outlook 2011 

(AEO2011) to project fuel prices through 

2035.5 AEO2011 contains diesel fuel 

price projections for the transportation 

sector through 2035. These fuel prices 

include federal and state taxes, but do 

not include county or local taxes. Fuel 

price varies with time and with 

location. This is compounded by 

differences in state and local taxes. This 

regional variability could potentially 

impact our analysis. Some trucks may 

operate locally in an area that has fuel 

prices significantly higher than the 

national average. However, we believe 

that the number of these trucks will be 

relatively small, and thus did not 

include a regional fuel price component 

in our analysis. Nevertheless, we 

request comment on this issue. 

AEO2011 includes five price 

scenarios—a reference, high oil price, 

low oil price, high economic growth and 

low economic growth case. Typically, 

EPA uses the reference case in our 

analysis of mobile source rules, and we 

used that scenario in this proposal, but 

we welcome comment supporting the 

use of one of the alternative scenarios. 

The annual diesel price per gallon 

values used in this analysis were 

adjusted from 2009 dollars (as supplied 

in AEO2011) to 2011 dollars based on 

the Consumer Price Index. The annual 

fuel price projections are included in 

Appendix A of the Technical Support 

Document. 

DEF prices vary depending on the 

geography and whether it is purchased 

by the bottle, by the gallon, or in bulk. 

Unlike the case for fuel prices, we are 

not aware of a source which projects a 

national average DEF cost into the 

future. For this analysis we used a DEF 

cost of $2.99 per gallon based on the 

national retail pump average in 

November 2011.6 We are using a 

constant value for the DEF price 

throughout the analysis because we are 

not aware of any reliable projections 

that the price will change significantly 

in the coming years. We welcome 

comment on our DEF cost projections. 

A change in fuel consumption due to 

the reduction in NOX emissions would 

drive a change in fuel costs for this rule. 

However, as discussed in the Interim 

and Proposed Technical Support 

Document, we are estimating that the 

0.50 g/hp-hr baseline engine and the 

fully compliant engine will have the 

same fuel consumption rates. The two 

primary reasons for this are the relative 

importance operators place on keeping 

fuel consumption rates low for the 

customer and the upcoming GHG 

emission standards. The Heavy-Duty 

GHG rule requires that manufacturers 

reduce their CO2 emissions/fuel 

consumption starting in 2014 model 

year by an average of three to five 

percent from a baseline 2010 model year 

engine. Thus, a pathway to reduce NOX

that leads to an increase in fuel 

consumption in 2012 model year would 

require the manufacturer to apply 

technologies to recover the increase by 

2014 model year. Therefore, our 

analysis is based on a technology path 

that does not change the engine-out 

NOX emissions, and therefore does not 

impact the fuel consumption of the 

engine. 

Our cost analysis is based on a 

technology path that reduces tailpipe 

NOX emissions from the baseline engine 

with 0.50 g/hp-hr NOX to 0.20 g/hp-hr 

NOX by increasing DEF consumption. In 

the Interim and Proposed Technical 

Support Document, we detail the 

calculation of the ideal DEF 

consumption rate change required to 

reduce NOX emissions by 0.30 g/hp-hr. 

For the proposal, we calculated an ideal 

DEF rate increase of 0.38 gallons per 100 

gallons of fuel consumed and increased 

it by five percent to account for 

overdosing. The proposed NCP costs 

include DEF consumption costs based 

on an increase in DEF consumption of 

0.40 gallons per 100 gallons of fuel 

consumed. 

Another important factor in 

estimating DEF and fuel cost is how 

much fuel a model year 2012 vehicle 

will use over its lifetime. This is most 

important for heavy-heavy duty engines. 

Some vehicles may be scrapped after 

their useful life (435,000 miles) while 

others may be rebuilt more than once 

and not be scrapped until after 2 million 

miles. Thus, the fuel cost could vary by 

a factor of four from one vehicle to 

another. For this analysis, we used the 

projected mileage accumulation rates 

generated by the Motor Vehicle 

Emissions Simulator, more commonly 

called MOVES, EPA’s official mobile 

source emission inventory model.7

These annual vehicle miles travelled 

(VMT) projections are shown in 

Appendix A of the Interim and 

Proposed Technical Support Document 

and include a projection of vehicle 

survival fractions that are based on 

scrappage rates. The lifetime mileage 

estimates that we used in our analysis 

are shown in Table 2 below. The Interim 

and Proposed Technical Support 

Document contains more information 

about how we used these mileage 

estimates. We welcome comments on 

the lifetime mileage of trucks used in 

our analysis. 

TABLE 2—LIFETIME VEHICLE MILES

TRAVELLED

Lifetime VMT 

for average 

vehicle 

Medium Heavy-Duty Vehicle 372,684 

Heavy Heavy-Duty Vehicle ... 965,095 

Finally, our methodology for 

calculating the cost of changes in fuel 

and DEF consumption uses estimates of 

average miles driven per gallon of fuel 

used. The estimates used in this 

proposal are 9.71 and 4.93 miles per 

gallon (mpg) for medium and heavyheavy duty, respectively.8 We used 

these same estimates for both the COC50

and COC90 analyses. Using different 

estimates could significantly change the 

projected costs. We request comment on 

these mpg estimates. 


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(5) Discounting Future Costs 

All of the compliance costs in this 

analysis are presented in terms of net 

present value (NPV) for calendar year 

2012. This means that costs that occur 

before 2012 are adjusted upward, and 

costs that occur after 2012 are adjusted 

downward to reflect the time or 

opportunity value of the money 

involved. (i.e., discounted). 

The NPV analysis requires that all inuse operating costs be adjusted 

downward to reflect the time value of 

money for future costs. More 

specifically, the stream of operating 

costs must be discounted to make them 

equivalent to costs incurred at the time 

of purchase. Truck purchasers would 

use this approach before purchase when 

comparing future operating costs of two 

or more engines before purchase. We 

used a seven percent discount rate for 

these costs as well. However, there is 

evidence in other contexts that users 

might apply a different discount rate 

than seven percent when considering 

future operating costs during a purchase 

decision. We request comment on 

whether there is evidence to support the 

application of such an alternative 

discount rate to operating costs in the 

various segments of the heavy duty 

engine market. Your comments in 

support of an alternative discount rate 

should include a discussion of the 

supporting economic and business 

rationale for the alternative rate. 

It is commonly stated that truck 

purchasers only consider operating 

costs that will occur in the first five 

years (or less) of the truck’s life. We also 

request comment on whether we should 

include discounted costs for all future 

years. For example, should we limit our 

consideration of operating costs to only 

those that will occur within the first five 

years? 

(6) F Factor 

The parameter F is defined in the 

existing regulations as a value from 1.1 

to 1.3 that describes the ratio of the 90th 

percentile marginal cost (MC90) to MC50. 

For this proposal, we calculated F by 

first calculating an MC90 in the same 

way that we calculated MC50. We then 

calculated the value of F that would 

give these values of MC90, and then set 

F equal to MC90 divided by MC50. This 

led to F values of 1.48 for medium 

heavy-duty and 1.23 for heavy heavyduty. However, since F is capped at 1.3 

under the regulations, we were required 

to set F equal to 1.3 for medium heavyduty engines. This resulted in a penalty 

curve that is inverted from the normal 

shape. For most NCP curves, the slope 

of the penalty rate is greater for 

compliance levels less than X than it is 

for compliance levels greater than X. 

However for the proposed medium 

heavy-duty NCP curve, the opposite is 

true; the slope of the penalty rate is less 

for compliance levels less than X than 

it is for compliance levels greater than 

X. We request comment on whether this 

should be allowed. More specifically, 

should we modify the regulations to 

specify that the product of MC50 and F 

cannot be less than COC90 divided by 

the difference between the upper limit 

and the standard. In the case of the 

proposed NCPs, this would mean setting 

F at 1.48 for medium heavy-duty. 

(7) First Year of the Escalator 

Adjustment Factor for NCP Calculation 

As required by the Clean Air Act, the 

existing regulations include a formula 

that increases the penalty rates with 

each new model year. We have 

proposed to apply this formula to the 

NCPs beginning with the 2013 model 

year by setting the 2012 model year as 

year number one. Traditionally, NCPs 

are available the first year of the new 

emission standard and that becomes 

year one for purposes of the annual 

escalator. However, due to the 

availability of emission credits for 2010 

and 2011, it did not become apparent 

that there might be a manufacturer who 

might need NCPs until late in the 2011 

model year. Under these circumstances, 

EPA believes the 2012 model year is the 

correct year for the first year of the 

escalator calculation even though the 

NOX emission standard began in 2010. 

However, there may be reasons to 

consider model year 2010 or some other 

model year as the first year for this 

annual escalator. We welcome 

comments on alternative first year 

model years. 

(8) Alternative Penalties 

Historically, NCPs are defined solely 

in terms of a dollar amount, with 

payment of the NCP in the form of cash 

payments paid directly to the U.S. 

Treasury. We are asking for comment on 

whether we could or should also 

include a non-monetary value as an 

option in the definition of the 

noncompliance penalty. For example, 

assume a manufacturer’s penalty would 

be $1,919 per engine for 10,000 engines 

($19,190,000 total), based on 

certification of engines to an FEL of 0.50 

g/bhp-hr, 0.30 g/bhp-hr above the 

standard. Should there be an option 

where the penalty could be defined as 

the amount of NOX emission reductions 

that would not be achieved by the 

engine compared to the applicable 

standard? Achieving these reductions 

would then be the payment of the NCP 

as defined under this option. The 

Agency is considering including this 

option in the Final Rule as a way to 

recover the environmental loss due to 

the higher emissions of the NCP 

engines. 

One example of such an approach 

would be to require a manufacturer to 

comply with all of the provisions of the 

NCP regulations but to define the 

penalty that must be paid in terms of 

recouping environmental loss of a 

defined amount of tons of NOX

reduction, rather than a penalty that 

must be paid in terms of a cash 

payment. The manufacturer would need 

to: 

• Calculate the total excess NOX

emissions expected from the NCP 

engines over their lifetimes, including 

emissions that would occur beyond the 

useful life period. This calculation 

would be done consistent with the 

analyses described in the Interim and 

Proposed Technical Support Document 

for this rulemaking. 

• Develop a plan to offset these NOX

tons. The plan must demonstrate that 

the emissions reduction would not have 

otherwise occurred. 

• Obtain EPA approval of the plan 

prior to production of the NCP engines. 

• Demonstrate to EPA that the 

emission reductions actually occur. 

• Demonstrate that the cost to the 

manufacturer of achieving the emissions 

reductions is at least as great as the 

dollar amount of the NCP that would 

otherwise be applicable. 

The certificate issued for such engines 

would be conditioned on the 

manufacturer fulfilling all of these 

requirements. We could void a 

certificate ab initio if a manufacturer 

failed to fulfill these requirements. 

We welcome comment on any legal, 

practical, competitive, or other concerns 

regarding using such an approach and 

how such an approach could be 

implemented in the regulations. 

Commenters supporting this option 

should address how to determine the 

equivalent amount of NOX reductions. 

Based on uncertainty in determining 

actual tons of NOX that are reduced, 

should they be set slightly above the 

excess tons of expected lifetime NOX

emissions that will occur from the 

engines certified using NCPs? We 

believe that, in order to meet the 

statutory requirement to remove the 

competitive disadvantage for complying 

manufacturers, it would be necessary to 

require that the burden associated with 

providing NOX tons must be at least as 

large as the cash payment that would 

otherwise be required. Thus we would 

not approve an alternative in which it 


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was cheaper for a manufacturer to 

obtain NOX tons than to pay the cash 

penalty, unless the manufacturer could 

demonstrate that there was some other 

non-financial burden that offset any 

competitive advantage. 

V. Economic Impact 

Because the use of NCPs is optional, 

manufacturers have the flexibility and 

will likely choose whether or not to use 

NCPs based on their ability to comply 

with emissions standards. If no 

manufacturer elects to use NCPs, these 

manufacturers and the users of their 

products will not incur any additional 

costs related to NCPs. NCPs remedy the 

potential problem of having a 

manufacturer forced out of the 

marketplace due to that manufacturer’s 

inability to conform to new, strict 

emission standards in a timely manner. 

Without NCPs, a manufacturer which 

has difficulty certifying HDEs in 

conformance with emission standards or 

whose engines fail a Selective 

Enforcement Audit (SEA) has only two 

alternatives: fix the nonconforming 

engines, perhaps at a prohibitive cost, or 

prevent their introduction into 

commerce. The availability of NCPs 

provides manufacturers with a third 

alternative: continue production and 

introduce into commerce upon payment 

of a penalty an engine that exceeds the 

standard until an emission conformance 

technique is developed. Therefore, 

NCPs represent a regulatory mechanism 

that allows affected manufacturers to 

have increased flexibility. A decision to 

use NCPs may be a manufacturer’s only 

way to continue to introduce its 

products into commerce. 

VI. Environmental Impact 

When evaluating the environmental 

impact of this rule, one must keep in 

mind that, under the Act, NCPs are a 

consequence of enacting new, more 

stringent emissions requirements for 

heavy duty engines. Emission standards 

are set at a level that most, but not 

necessarily all, manufacturers can 

achieve by the model year in which the 

standard becomes effective. Following 

International Harvester v. Ruckelshaus, 

478 F. 2d 615 (DC Cir. 1973), Congress 

realized the dilemma that technologyforcing standards could potentially 

cause, and allowed manufacturers of 

heavy-duty engines to certify 

nonconforming vehicles/engines upon 

the payment of an NCP, under certain 

terms and conditions. This mechanism 

was intended to allow manufacturer(s) 

who cannot meet technology-forcing 

standards immediately to continue to 

manufacture nonconforming engines 

while they tackle the technological 

problems associated with meeting new 

emission standard(s). Thus, as part of 

the statutory structure to force 

technological improvements without 

driving manufacturers or individual 

engine models out of the market, NCPs 

provide a flexibility that fosters longterm emissions improvement through 

the setting of lower emission standards 

at an earlier date than could otherwise 

be feasible. Because NCPs are designed 

to increase with time, manufacturers 

using NCPs are likely to reduce 

emission levels to meet the standard as 

quickly as possible, which minimizes 

the environmental impact. 

As is always the case with NCPs, the 

potential exists for there to be more 

extensive use of NCPs beyond what may 

be expected to be used by the 

manufacturer that we believe will need 

them. For example, depending upon the 

penalty rate and other factors, some 

otherwise fully compliant 

manufacturers could elect to pay the 

NCP in order to reconfigure their 0.20 

g/hp-hr NOX compliant engines to emit 

up to 0.50 g/hp-hr so that they can reoptimize engine hardware and vehicle 

operating costs. This potential action is 

not without R&D and other financial 

costs to the manufacturer and thus is 

not a decision which would be taken 

lightly, given the short-term nature of 

the NCPs allowed for in this interim 

final rule. Furthermore, we believe that 

any such impacts would be short-term 

and self-limiting in nature because the 

NCP annual adjustment factor, 

established via prior NCP rules, 

increases the levels of the penalties over 

time and based on the extent of the use 

of NCPs by all manufacturers. In other 

words the NCP program is structured 

such that the incentives to produce 

engines that meet the standard increase 

year-by-year and increase upon NCP 

use. The practical impact of this 

adjustment factor is that the NCPs will 

rapidly become an undesirable option 

for all manufacturers that may elect to 

use them. However, while we expect 

their use to be limited, we have no way 

of predicting at this time how many 

manufacturers will make use of the 

NCPs, or how many engine families 

would be subject to the NCP program. 

Because of these uncertainties we are 

unable to accurately quantify the 

potential impact the NCPs might have 

on emission inventories, although, as 

stated above, any impacts are expected 

to be short-term and self-limiting in 

nature. 

VII. Public Participation 

We request comment by April 4, 

2012.on all aspects of this proposal. 

This section describes how you can 

participate in this process. 

A. How do I submit comments? 

We are opening a formal comment 

period by publishing this document. We 

will accept comments through April 4, 

2012. If you have an interest in the 

program described in this document, we 

encourage you to comment on any 

aspect of this rulemaking. We request 

comment on various topics throughout 

this proposal. 

Your comments will be most useful if 

you include appropriate and detailed 

supporting rationale, data, and analysis. 

If you disagree with parts of the 

proposed program, we encourage you to 

suggest and analyze alternate 

approaches to meeting the goals 

described in this proposal. You should 

send all comments, except those 

containing proprietary information, to 

our Air Docket (see ADDRESSES) before 

the end of the comment period. 

If you submit proprietary information 

for our consideration, you should 

clearly separate it from other comments 

by labeling it ‘‘Confidential Business 

Information.’’ You should also send it 

directly to the contact person listed 

under FOR FURTHER INFORMATION

CONTACT instead of the public docket. 

This will help ensure that no one 

inadvertently places proprietary 

information in the docket. If you want 

us to use your confidential information 

as part of the basis for the final rule, you 

should send a non-confidential version 

of the document summarizing the key 

data or information. We will disclose 

information covered by a claim of 

confidentiality only through the 

application of procedures described in 

40 CFR part 2. If you do not identify 

information as confidential when we 

receive it, we may make it available to 

the public without notifying you. 

B. Will there be a public hearing? 

We will hold a public hearing at the 

National Vehicle and Fuels Emission 

Laboratory in Ann Arbor, Michigan on 

March 5, 2012. The hearings will start 

at 10:00 am and continue until everyone 

has had a chance to speak. 

If you would like to present testimony 

at a public hearing, we ask that you 

notify the contact person listed above at 

least ten days before the hearing. You 

should estimate the time you will need 

for your presentation and identify any 

needed audio/visual equipment. We 

suggest that you bring copies of your 

statement or other material for the EPA 

panel and the audience. It would also be 

helpful if you send us a copy of your 

statement or other materials before the 

hearing. 


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Federal Register / Vol. 77, No. 20 / Tuesday, January 31, 2012 / Proposed Rules 4747 

We will make a tentative schedule for 

the order of testimony based on the 

notifications we receive. This schedule 

will be available on the morning of the 

hearing. In addition, we will reserve a 

block of time for anyone else in the 

audience who wants to give testimony. 

We will conduct the hearing informally, 

and technical rules of evidence won’t 

apply. We will arrange for a written 

transcript of the hearing and keep the 

official record of the hearing open for 30 

days to allow you to submit 

supplementary information. You may 

make arrangements for copies of the 

transcript directly with the court 

reporter. 

VIII. Statutory and Executive Order 

Reviews 

A. Executive Order 12866: Regulatory 

Planning and Review and Executive 

Order 13563: Improving Regulation and 

Regulatory Review 

This action is not a ‘‘significant 

regulatory action’’ under the terms of 

Executive Order 12866 (58 FR 51735, 

October 4, 1993) and is therefore not 

subject to review under Executive 

Orders 12866 and 13563 (76 FR 3821, 

January 21, 2011). 

B. Paperwork Reduction Act 

This action does not impose any new 

information collection burden. It only 

updates the penalty amounts to 

correspond to the current emission 

standards. However, the Office of 

Management and Budget (OMB) has 

previously approved the information 

collection requirements contained in the 

existing regulations 40 CFR part 86, 

subpart L under the provisions of the 

Paperwork Reduction Act, 44 U.S.C. 

3501 et seq. and has assigned OMB 

control number 2060–0132. The OMB 

control numbers for EPA’s regulations 

in 40 CFR are listed in 40 CFR part 9. 

C. Regulatory Flexibility Act 

(1) Overview 

The Regulatory Flexibility Act 

generally requires an agency to prepare 

a regulatory flexibility analysis of any 

rule subject to notice and comment 

rulemaking requirements under the 

Administrative Procedure Act or any 

other statute unless the agency certifies 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities. Small entities 

include small businesses, small 

organizations, and small governmental 

jurisdictions. 

For purposes of assessing the impacts 

of these rules on small entities, small 

entity is defined as: (1) A small business 

as defined by SBA regulations at 13 CFR 

121.201; (2) a small governmental 

jurisdiction that is a government of a 

city, county, town, school district or 

special district with a population of less 

than 50,000; and (3) a small 

organization that is any not-for-profit 

enterprise which is independently 

owned and operated and is not 

dominant in its field. 

(2) Summary of Potentially Affected 

Small Entities 

After considering the economic 

impacts of this proposed rule on small 

entities, I certify that this action will not 

have a significant impact on a 

substantial number of small entities. 

When these emission standards were 

established, the final rulemaking (66 FR 

5001, January 18, 2001) noted that we 

were not aware of ‘‘any manufacturers 

of heavy-duty engines that meet SBA’s 

definition of a small business.’’ Based 

on an updated assessment, EPA has 

identified a total of about 14 

manufacturers that produce diesel cycle 

heavy-duty motor vehicle engines. Of 

these, none of these are small businesses 

that are producing engines with NOX

emissions above 0.20 g/hp-hr. Based on 

this, we are certifying that this proposed 

rule will not have a significant 

economic impact on a substantial 

number of small entities. 

(3) Conclusions 

I therefore certify that this proposal 

will not have a significant economic 

impact on a substantial number of small 

entities. We continue to be interested in 

the potential impacts of the proposed 

rule on small entities and welcome 

comments on issues related to such 

impacts. 

D. Unfunded Mandates Reform Act 

This rule does not contain a Federal 

mandate that may result in expenditures 

of $100 million or more for State, local, 

and tribal governments, in the aggregate, 

or the private sector in any one year. 

The agency has determined that this 

action does not contain a Federal 

mandate that may result in expenditures 

of $100 million or more for the private 

sector in any one year. Because the use 

of NCPs is optional, manufacturers have 

the flexibility and will likely choose 

whether or not to use NCPs based on 

their ability to comply with emissions 

standards. The availability of NCPs 

provides manufacturers with a third 

alternative: to continue production and 

introduce into commerce upon payment 

of a penalty an engine that exceeds the 

standard until an emission conformance 

technique is developed. Therefore, 

NCPs represent a regulatory mechanism 

that allows affected manufacturers to 

have increased flexibility. Thus, this 

action is not subject to the requirements 

of sections 202 or 205 of the UMRA. 

This action is also not subject to the 

requirements of section 203 of the 

UMRA because it contains no regulatory 

requirements that might significantly or 

uniquely affect small governments. 

E. Executive Order 13132 (Federalism) 

Executive Order 13132, entitled 

‘‘Federalism’’ (64 FR 43255, August 10, 

1999), requires EPA to develop an 

accountable process to ensure 

‘‘meaningful and timely input by State 

and local officials in the development of 

regulatory policies that have federalism 

implications.’’ ‘‘Policies that have 

federalism implications’’ is defined in 

the Executive Order to include 

regulations that have ‘‘substantial direct 

effects on the States, on the relationship 

between the national government and 

the States, or on the distribution of 

power and responsibilities among the 

various levels of government.’’ 

This proposed action does not have 

federalism implications. It will not have 

substantial direct effects on the States, 

on the relationship between the national 

government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government, as specified in 

Executive Order 13132. These proposed 

rules will apply to manufacturers of onhighway engines and not to state or 

local governments. Thus, Executive 

Order 13132 does not apply to this 

action. 

In the spirit of Executive Order 13132, 

and consistent with EPA policy to 

promote communications between the 

agency and State and local governments, 

the agency specifically solicits comment 

on this proposed action from State and 

local officials. 

F. Executive Order 13175 (Consultation 

and Coordination With Indian Tribal 

Governments) 

This proposed rule does not have 

tribal implications, as specified in 

Executive Order 13175 (65 FR 67249, 

November 9, 2000). This proposal will 

be implemented at the Federal level and 

impose compliance costs only on engine 

manufacturers who elect to use the NCP 

regulatory flexibility to comply with 

emissions standards. Tribal 

governments would be affected only to 

the extent they purchase and use 

engines and vehicles to which an NCP 

has been applied. Thus, Executive Order 

13175 does not apply to this proposed 

rule. 

EPA specifically solicits additional 

comment on this proposed action from 

tribal officials. 


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4748 Federal Register / Vol. 77, No. 20 / Tuesday, January 31, 2012 / Proposed Rules 

G. Executive Order 13045: ‘‘Protection 

of Children From Environmental Health 

Risks and Safety Risks’’ 

Executive Order 13045: ‘‘Protection of 

Children from Environmental Health 

Risks and Safety Risks’’ (62 FR 19885, 

April 23, 1997) applies to any rule that: 

(1) Is determined to be ‘‘economically 

significant’’ as defined under Executive 

Order 12866, and (2) concerns an 

environmental health or safety risk that 

EPA has reason to believe may have a 

disproportionate effect on children. If 

the regulatory action meets both criteria, 

the agency must evaluate the 

environmental health or safety effects of 

the planned rule on children, and 

explain why the planned regulation is 

preferable to other potentially effective 

and reasonably feasible alternatives 

considered by the agency. 

EPA interprets Executive Order 13045 

as applying only to those regulatory 

actions that are based on health or safety 

risks, such that the analysis required 

under section 5–501 of the Order has 

the potential to influence the regulation. 

This proposed rule is not subject to 

Executive Order 13045 because it does 

not establish an environmental standard 

intended to mitigate health or safety 

risks. 

H. Executive Order 13211 (Energy 

Effects) 

This proposed action is not subject to 

Executive Order 13211 (66 FR 28355 

(May 22, 2001)), because it is not a 

significant regulatory action under 

Executive Order 12866. 

I. National Technology Transfer 

Advancement Act 

Section 12(d) of the National 

Technology Transfer and Advancement 

Act of 1995 (‘‘NTTAA’’), Public Law 

104–113, 12(d) (15 U.S.C. 272 note) 

directs the agencies to use voluntary 

consensus standards in its regulatory 

activities unless to do so would be 

inconsistent with applicable law or 

otherwise impractical. Voluntary 

consensus standards are technical 

standards (e.g., materials, specifications, 

test methods, sampling procedures, and 

business practices) that are developed or 

adopted by voluntary consensus 

standards bodies. NTTAA directs EPA 

to provide Congress, through OMB, 

explanations when the EPA decides not 

to use available and applicable 

voluntary consensus standards. 

This proposed rulemaking does not 

involve technical standards. Therefore, 

EPA is not considering the use of any 

voluntary consensus standards. 

J. Executive Order 12898: Federal 

Actions To Address Environmental 

Justice in Minority Populations and 

Low-Income Populations 

Executive Order 12898 (59 FR 7629, 

February 16, 1994) establishes federal 

executive policy on environmental 

justice. Its main provision directs 

federal agencies, to the greatest extent 

practicable and permitted by law, to 

make environmental justice part of their 

mission by identifying and addressing, 

as appropriate, disproportionately high 

and adverse human health or 

environmental effects of their programs, 

policies, and activities on minority 

populations and low-income 

populations in the United States. 

EPA has determined that this action 

will not have disproportionately high 

and adverse human health or 

environmental effects on minority or 

low-income populations. The overall 

environmental impacts of this action are 

expected to be small and of limited 

duration. Moreover, there is no reason 

to believe that trucks using NCP engines 

will be more likely to operate near any 

minority or low-income populations 

than other trucks. 

IX. Statutory Provisions and Legal 

Authority 

Statutory authority for the vehicle 

controls in these rules is found in CAA 

section 206(g) of the CAA, 42 U.S.C. 

7525(g). 

List of Subjects in 40 CFR Part 86 

Administrative practice and 

procedure, Confidential business 

information, Motor vehicle pollution, 

Reporting and recordkeeping 

requirements. 

Dated: January 20, 2012. 

Lisa P. Jackson, 

Administrator. 

For the reasons set forth in the 

preamble, the Environmental Protection 

Agency proposes to amend 40 CFR 

chapter I of the Code of Federal 

Regulations as follows: 

PART 86—CONTROL OF EMISSIONS 

FROM NEW AND IN-USE HIGHWAY 

VEHICLES AND ENGINES 

1. The authority citation for part 86 

continues to read as follows: 

Authority: 42 U.S.C. 7401–7671q. 

Subpart L—[Amended] 

2. Section 86.1104–91 is revised to 

read as follows: 

§ 86.1104–91 Determination of upper 

limits. 

EPA shall set a separate upper limit 

for each phase of NCPs and for each 

service class. 

(a) The provisions of this section 

specify a default approach for 

determining the upper limit values. 

(1) The default upper limit applicable 

to a pollutant emission standard for a 

subclass of heavy-duty engines or 

heavy-duty vehicles for which an NCP 

is established in accordance with 

§ 86.1103–87, shall be the previous 

pollutant emission standard for that 

subclass. 

(2) If a manufacturer participates in 

any of the emissions averaging, trading, 

or banking programs, and carries over 

certification of an engine family from 

the prior model year, the upper limit for 

that engine family shall be the family 

emission limit of the prior model year, 

unless the family emission limit is less 

than the upper limit determined in 

paragraph (a) of this section. 

(b) If no previous standard existed for 

the pollutant under paragraph (a) of this 

section, the upper limit will be 

developed by EPA during rulemaking. 

(c) EPA may set the upper limit 

during rulemaking at a level below the 

default level specified in paragraph (a) 

of this section if we determine that a 

lower level is achievable by all engines. 

(d) In unusual circumstances, EPA 

may set the upper limit during 

rulemaking at a level above the default 

level specified in paragraph (a) of this 

section if we determine that the default 

level will not be achievable by all 

engines. For example, this may apply 

where a new standard for a different 

pollutant effectively increases the 

stringency of the standard for which 

NCPs would apply. 

3. Section 86.1105–87 is amended by 

revising paragraph (e) and paragraph (j) 

to read as follows: 

§ 86.1105–87 Emission standards for 

which nonconformance penalties are 

available. 

* * * * * 

(e) The values of COC50, COC90, and 

MC50 in paragraphs (a) and (b) of this 

section are expressed in December 1984 

dollars. The values of COC50, COC90, 

and MC50 in paragraphs (c) and (d) of 

this section are expressed in December 

1989 dollars. The values of COC50, 

COC90, and MC50 in paragraph (f) of this 

section are expressed in December 1991 

dollars. The values of COC50, COC90, 

and MC50 in paragraphs (g) and (h) of 

this section are expressed in December 

1994 dollars. The values of COC50, 

COC90, and MC50 in paragraph (i) of this 

section are expressed in December 2001 


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1LSC Act, section 2996e(b)(1)(A); 42 U.S.C. 

1006(b)(1)(A). 

2 45 CFR 1606.2(d). 

3 45 CFR 1606.2(d)(2)(v). 

dollars. The values of COC50, COC90, 

and MC50 in paragraph (j) of this section 

are expressed in December 2011 dollars. 

These values shall be adjusted for 

inflation to dollars as of January of the 

calendar year preceding the model year 

in which the NCP is first available by 

using the change in the overall 

Consumer Price Index, and rounded to 

the nearest whole dollar in accordance 

with ASTM E29–67 (reapproved 1980), 

Standard Recommended Practice for 

Indicating Which Places of Figures are 

to be Considered Significant in 

Specified Limiting Values. This method 

was approved by the Director of the 

Federal Register in accordance with 5 

U.S.C. 552(a) and 1 CFR part 51. This 

document is available from ASTM 

International, 100 Barr Harbor Drive, 

P.O. Box C700, West Conshohocken, PA 

19428–2959, and is also available for 

inspection as part of Docket A–91–06, 

located at the U.S. EPA, Air and 

Radiation Docket and Information 

Center, 1301 Constitution Ave. NW., 

Room 3334, EPA West Building, 

Washington, DC 20004, (202) 202–1744 

or at the National Archives and Records 

Administration (NARA). For 

information on the availability of this 

material at NARA, call 202–741–6030, 

or go to: http://www.archives.gov/ 

federal-register/cfr/ibr-locations.html. 

This incorporation by reference was 

approved by the Director of the Federal 

Register on January 13, 1992. These 

materials are incorporated as they exist 

on the date of the approval and a notice 

of any change in these materials will be 

published in the Federal Register. 

* * * * * 

(j) Effective in the 2012 and later 

model years, NCPs will be available for 

the following emission standard: 

(1) Diesel heavy-duty engine oxides of 

nitrogen standard of 0.20 grams per 

brake horsepower-hour in § 86.007– 

11(a)(1)(i). 

(i) For medium heavy-duty diesel 

engines: 

(A) The following values shall be used 

to calculate an NCP in accordance with 

§ 86.1113–87(a): 

(1) COC50: $462. 

(2) COC90: $682. 

(3) MC50: $1,540 per gram per brake 

horsepower-hour. 

(4) F: 1.30. 

(5 ) UL: 0.5 grams per brake 

horsepower-hour. 

(B) The following factor shall be used 

to calculate the engineering and 

development component of the NCP for 

the standard set forth in § 86.007– 

11(a)(1)(i) in accordance with 

§ 86.1113–87(h): 0.009. 

(ii) For heavy heavy-duty diesel 

engines: 

(A) The following values shall be used 

to calculate an NCP in accordance with 

§ 86.1113–87(a): 

(1) COC50: $1,561. 

(2) COC90: $1,919. 

(3) MC50: $5,203 per gram per brake 

horsepower-hour. 

(4) F: 1.23. 

(5) UL: 0.5 grams per brake 

horsepower-hour. 

(B) The following factor shall be used 

to calculate the engineering and 

development component of the NCP for 

the standard set forth in § 86.007– 

11(a)(1)(i) in accordance with 

§ 86.1113–87(h): 0.004. 

(2) Manufacturers may not generate 

emission credits for any pollutant from 

engines for which the manufacturer 

pays an NCP. 

(3) The penalty shall be adjusted 

annually as specified in § 86.1113–87 

with 2012 as the first year. Note that this 

means AAF2012 is equal to 1. 

[FR Doc. 2012–1936 Filed 1–30–12; 8:45 am] 

BILLING CODE 6560–50–P 

LEGAL SERVICES CORPORATION 

45 CFR Parts 1606, 1618, and 1623 

Termination, Limited Reductions in 

Funding, and Debarment Procedures; 

Recompetition; Enforcement; 

Suspension Procedures 

AGENCY: Legal Services Corporation. 

ACTION: Notice of Proposed Rulemaking. 

SUMMARY: This Notice of Proposed 

Rulemaking (NPRM) proposes 

amendments to the Legal Services 

Corporation’s regulations on 

termination procedures, enforcement, 

and suspension procedures. 

DATES: Comments on the NPRM are due 

April 2, 2012. 

FOR FURTHER INFORMATION CONTACT: 

Mattie Cohan, Senior Assistant General 

Counsel, Office of Legal Affairs, Legal 

Services Corporation, 3333 K Street 

NW., Washington DC 20007; (202) 295– 

1624 (ph); (202) 337–6519 (fax); 

mcohan@lsc.gov. 

SUPPLEMENTARY INFORMATION: 

Background 

Introduction 

The Legal Services Corporation (LSC) 

Act (the Act) provides general authority 

to the Corporation ‘‘to insure the 

compliance of recipients and their 

employees with the provisions of [the 

Act] and the rules, regulations, and 

guidelines promulgated pursuant to [the 

Act].’’ 1 LSC’s principal regulation 

discussing general enforcement 

authority and procedures is the 

Enforcement Procedures regulation at 45 

CFR part 1618. In accordance with the 

requirements of part 1618, LSC uses a 

variety of enforcement tools, formal and 

informal, to ensure compliance. Among 

these are informal consultations and 

compliance training, on-site Case 

Service Report/Case Management 

System reviews, the imposition of 

Required Corrective Actions (RCAs), 

and the imposition of Special Grant 

Conditions (SGCs) at the beginning of a 

grant year. Several additional 

enforcement tools are provided for in 

LSC-adopted regulations and are 

available to the Corporation to address 

significant non-compliance by a 

recipient. In particular, LSC has adopted 

suspension procedures (45 CFR part 

1623) and questioned-cost procedures 

(45 CFR part 1630). LSC has also 

adopted grant termination procedures 

(45 CFR part 1606) that provide for the 

termination of funding in whole or part 

in cases of a recipient’s substantial 

noncompliance with LSC statutory or 

regulatory requirements and other 

policies, instructions, or grant terms and 

conditions. Under the grant-termination 

provisions, a reduction of five percent 

or more of a recipient’s funding is 

considered a termination and can be 

implemented only in compliance with 

the termination procedures.2 Reductions 

of funding of less than five percent are 

not considered terminations. In order to 

reduce a recipient’s funding by less than 

five percent without using the 1606 

termination procedures, additional 

procedures have to be established by 

rulemaking.3 LSC has not yet adopted 

regulations establishing such standards 

and procedures. LSC also has the 

authority under Part 1606 to debar 

recipients from eligibility to receive 

future grants. 

The majority of LSC recipients are in 

substantial compliance with LSC 

requirements most of the time. When 

non-compliance occurs, recipients 

almost always work diligently and 

cooperatively with LSC staff to come 

promptly into compliance, but there 

have been exceptions. LSC is now 

considering adding enforcement tools to 

increase LSC’s flexibility in addressing 

compliance issues. 

LSC’s consideration of the adoption of 

additional enforcement tools responds 

to concerns expressed by the 

Government Accountability Office 


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